XVI FEDERAL MARITIME COMMISSION

P

Aleutian Homes Inc v Coastwise Line 5 FMB 602 nnn nnnn n 383 574 

American Export Isbrandtsen Lines Inc 14 FMC 82 n nn nn nnn 46 

American Export Isbrandtsen Lines Inc v FMC 409 F2d 1258 n n n 789 

American Export Isbrandtsen Lines Inc v FMC 444 F2d 824nn unnnn 

American Tobacco Co v Cie Generale Transatlantique 1 USSB 53 n n n 752

American Warehousemen s Association v Port of Portland Dkt No 7330 nn 

A N Deringer Inc v United States 40 Cust Ct 261 nnnn nnnn 

Anglo Canadian Shipping Co Ltd v Mitsui S S Co Ltd 4 FMB 535 nnn 

Application for Freight Forwarding License 9 FMC 72 unnn n n nnn 

A P St Philip Inc v Atlantic Land Improvement Co

13 FMC 166 551 554 

Armament Deppe S A v United States 399 F2d 794 n n nnn n 

Atchison Leather Products Co v Atchison T S F Ry Co 274 ICC 328 nn 

Atchison T S F R Co v Witchita Board of Trade 412 US 8oo n n 

BallmiD Lumber Sales Corp v Port of New York Authority 11 FMC 494 nn 

Baltimore Ohio Ry Co v United States 305 US 507 nn nn n n n 

Bank of Kentucky v Adams Express Co 93 US 174 nnn nnnnn n 

Barre Granite Assn Inc Freight Forwarder Application 265ICC 637 n n 52 

Beaumont Port Commission v Seatrain Lines 3 FMB 556 nn n n nn 

Bernard Ulmann Co Inc v Porto Rican

Express Co 3 FMC 771 nn n n nn un nnn 51 52 54 56 

Bird v United States 187 US 118nn n n n n n nn n nn n 

Boise City Irr Land Co v Clark 131 Fed 415 nnnn h nnnnn 

Bolton Mitchell Inc 15 FMC 248 16 FMC 284 affd 17 FMC 151

reconsideration den 16 SRR 87 nnnn n nnn nnnnn 186 188 

Bulkley Dunton Overseas S A v Blue Star

Shipping Corp 8 FMC 137 nnn n nn nnnn nn n 102 389 

Bunker Fuel Surcharges Violations of Section 14 Fourth 16 First and 17 15

FMC 92 13 SRR 526 nnnnn n n n n nnnn unnnn 

California v United States 320 US 577 n nnn nn n n n 

California Stevedore Ballast Co v Stockton Port District 7 FMC 75 nn n554 

California Stevedore Ballast Co v Stockton Elevators Inc 8 FMC 97 n u 554 

Capt Foure The 10 F2d 950 nnnn n n nn nnnnn n n n 

Carborundum Co v Royal Netherlands S S Co

19 FMC 431 nnnnm mnnnnnnnmmnnm 428 429 677 

Carnation Co v Pacific Westbound Conference

383 US 213 n unnnnn nU nnnnnunnnnn n 454 587 723 

Carolina Cotton Woolen MiDs Co v Southern Ry Co 195ICC 654 n n 

CaterpiDar Overseas S A v South African Marine Corp Dkt No 7639 

Chicago Etc R Co v Acme Fast Freight 336 US 465 nnnnn n 53 

Chr Salveson Co Ltd v West Michigan D M Corp 9 SRR 1154 nnn 

Chr Salveson Co Ltd v West Michigan Dock and Market Corp 12 FMC

135 

Cie Generale Transatlantique Inc v American Tobacco Co 34 F2d 663 n n 

City of Dunkirk 10 F2d 609 n nn nnnn n nnnnh nn nnn 

City of Long Beach and Transocean Gateway Corp 13 FMC 70 n n n n 

City of Los Angeles Agreements 12 FMC 110 n nnnnn nn nnn 

City of Portland v Pacific Westbound Conference 4 FMB 664 5 FMB 118 n 



j


19 F MC 1

FEDERAL MARITIME COMMISSION

INFORMAL DOCKET No 343 1

UNIROYAL INC

v

HAPAG LLOYD AKTIENGESELLSCHAFf

NOTICE OF DETERMINATION NOT TO REVIEW

April 15 1975

Notice is hereby given that the Commission on April 15 1976 has

determined not to review the decision of the Settlement Officer in this

proceeding served April 8 1976

Inthe first sentence ofpage two ofthe Settlement Officer s decision the

reference to the weight of the shipment as 3 260 pounds should read

3 620 pounds

By the Commission

SEAL S FRANCIS C HURNEY

Secretary
FEDERAL MARITIME COMMISSION

INFORMAL DOCKET No 343 I

UNIROYAL INC

v

HAPAGLLOYD AKTIENGESELLSCHAFT

Reparation Awarded

DECISION OF WALDO R PUTNAM SETILEMENT OFFICER

By complaint tiled March 5 1976 Uniroyal Inc complainant alle

that Hapag Uoyd Aktiengesellschaft carrier assessed ocean fre

charges on a shipment of industrial tires which were in excess of th

lawfully applicable at the time of the transportation in violation ofSec

18bl 3 of the Shipping Act 1916

The carrier denied the involved claim solely on the basis ofClause 8 

Page 11 ofNorth Atlantic Continental Freight Conference Tariff FMC 

which time bani claims for acljustments offreight charges not received 

the carrier within six months after date of shipment

In support of its claim the claimant furnished a

copy of the bil

lading and the carrier s denial ofthe claim

The claim involves a shipment of 220 industrial tires weighing 3 

pounds and measuring 168 cubic feet from New York to Antwe

Belgium on October 4 1974 The shipment was rated as 168 cubic fee

159 00 per 40 cubic feet which produced ocean freight revenue 

667 80

Eleventh Revised Page 186 of the aforementioned conference ta

which was in effect at the time ofthe shipment provides a weight rate 

the subject commodity of 159 000 per long ton Properly rated 

shipment would have produced ocean freight revenue of 256 95 1

wt x 159 00 Accordingly the complainant was overcharged in 

amount of 410 85 667 80 less 256 95

The carrier in its response to the instant complaint admitted that 

Both parties having consented to the informal procedure of Rule 19 46 CPR 502 301 304 as amended 

decision will be final unless the Commission elects to review it within 15 days from the dateof service thereof

This rateincludes an Emergency Surcharge of 950 applicable to aU weiaht based rates 14th Revise Title 

effectiveOctober I 1974

2 19 F M 
UNIROYAL INC v HAPAG LLOYD AG 3

involved claim was denied solely in accordance with its published tariff

provision which reads in pertinent part claims for adjustment of

freight charges must be presented to the member line in writing within six

months after date ofshipment The canier also admitted in its response

that it did not and could not contest the amount of the overcharge

claimed

The Commission in Informal Docket No 115 1 Colgate Palmolive

Company v United Fruit Company reiterated what is specifically stated

in Proposed Rules Time Limit on Filing Overcharge Claims 12 F MC

298 308 1969 that

once a claim has finally been denied by a carrier the shipper may still seek and in

a proper case recover reparation before the Commission at any time within two years of

the alleged injury and this is true whether the claim has been denied on the merits or on

the basis of a time limitation rule

Section 18 b 3 of the Shipping Act 1916 makes it unlawful for a

canier to charge demand collect or receive a greater compensation than

the rates or charges which are specified in its tariff

The fuing of a timely complaint with this Commission effectively

ovenides any tariff technicality under which an overcharge claim legally

may be denied by a water canier subject to our jurisdiction during the

two year statutory period for recovering reparation set forth in Section 22

of the Shipping Act 1916 A proper case for the recovery of reparation

having been made a refund in the amount of 410 85 is due the claimant

and it is so ordered

S WALDO R PUTNAM

Settlement Officer

19 F M C
TITLE 46SHIPPING

Chapter IV Federal Maritime Commission

DOCKET NO 7353 GENERAL ORDER 19 AMDT I

Part 538Dual Rate Contract Systems in the Foreign Commerce of

United States

PROMULGATION OF PROCEDURES AND REQUIREMENTS F

IMPOSING AND ALTERING CURRENCY ADJUSTMENT

SURCHARGES IN THE EVENT OFA CHANGE IN THE

EXCHANGE RATE OF THE TARIFF CURRENCY

July 1 1975

The purpose of this regulation is to provide a nonexclusive proced

by which a conference of carriers operating in the foreign commerc

the United States and under an approved dual rate system may ju

and impose uniformly applied currency surcharges on all rates within 

scope ofits dual rate contract on less than 90day notice when neces

because ofdepreciation ofthe conference s tariffcurrency This regula

amends Subpart A ofPart 538 ofthe Commission s

regulations by I

addition of a new section 538 4 titled Procedures and Requirements 

Imposing and Altering Currency Adjustment Surcharges in the Event 

Change in the Exchange Rate of the Tariff Currency and 2 

addition of a new paragraph 14d to the Uniform Merchant s Con

currently set forth in section 538 10 ofSubpart B ofPart 538

By Notice published in August 1973 38 F R 22495 August 21 1

the Commission issued its proposed rule regarding short notice con

rate currency surcharges based upon tariff currency depreciation 

original rule was divided into two lengthy subsections which provided 

surcharge imposition and removal or modification respectively C

ments to the proposed rule werefiled by II parties representing the v

of 30 conferences and the Committee of European Shipowners 

called Council ofEuropean Japanese Shipowners Association

While no party commenting raised objection to the policy expresse

the proposed rule many of the parties objected to various spe

provisions of the rule as being complex and burdensome to a de

which made the proposed relief provisions virtually illusory In resp

4 19 F 
IMPOSING ALTERING CURRENCY ADJUSTMENTS 5

to such comments and following thorough review and analysis of the

parties views Hearing Counsel tiled its Reply to Comments of the

parties

Based on its exhaustive review ofthe Comments filed Hearing Counsel

viewed the originally proposed rule as requiring sweeping modification in

order to incorporate the comments of the parties to streamline the

proposed rule and to make the rule workable Hearing Counsel s Reply

to Comments therefore consisted of a major revision ofthe original rule

and provides the fundamental scheme ofthe final rule promulgated here

Following Hearing Counsels filing of its revised rule Reply to

Comments eight parties filed Answers which consisted of comments

upon the revision ofthe rules as proposed by Hearing Counsel While the

revised rule proposed by Hearing Counsel still contained minor points

requiring clarification in the opinion of the commenting parties the

majority ofthose parties f1ling comments endorsed the revision suggested

by Hearing Counsel and generally urged its adoption while reserving

certain minor objections

The rule in this proceeding in its revised form then came before the

Commission and the Commission members as well raised certain

questions which they felt required clarification By Order of Reopening

served on December 31 1974 the Commission reopened the proceeding

for the limited purpose of allowing Hearing Counsel to respond to the

questions of the Commission and affording interested parties the oppor

tunity to comment further upon any issues raised thereby Hearing

Counsel thereafter submitted its responses and nine interested parties

fIled comments The rule herein promulgated is derived from the revision

proposed by Hearing Counsel and conforms closely to that revision As

such the discussion of comments is limited to issues raised in comments

to that revision and considered by the Commission

As revised by Hearing Counsel the rule here promulgated consists of

a system by which tariff currency depreciation may serve as a basis on

which an adjustment to rates by surcharge may be justified The

c mputation and justification is founded upon a calculation of major

operating currencies and the percentage of expenses incurred by a

conference and its members in those currencies The percentage of

expenses information is to be maintained up to date by the conferences

and those figures submitted to the Commission on a quarterly basis The

relative values of major operating currencies and the tariff currency are

then compared to a base date specified in the dual rate contract and if

fluctuations when weighted by percentage of expenses so indicate a

currency adjustment surcharge may be imposed on short notice

One of the major continuing objections to this rule raised by

commenting parties has been the alleged burden upon the conferences

which compilation of these quarterly statements entails The Commission

has thoroughly considered this allegation and is unable to agree that the

burden is such as to warrant elimination of these expense reports It has

19 F M C
6 FEDERAL MARITIME COMMISSION

been the experience of the Commission in the past that conferences h

been able rapidly to provide such data when requested to do so by 

Commission in particular instance It is the Commission s opinion 

such information is reasonably vailable on a quarterly basis and 

maintained in the normal course 0 business by the member carriers 

conference This being so the rtance of the data received rend

unavoidable the slight burden w ch may be imposed by this quart

reporting requirement Therefol the requirement of the filing o

quarterly statement of percentage of expense in various major opera

currencies has been maintained

A second recurring objection to hese rules pertains to the requirem

in the rule that currency sUl Char s imposed must similarly be remo

or reduced when the tariff currenc appreciates in relation to other m

operating currencies The Com ission has considered the sugge

omission of the requirement but i unable to accept the proposal Th

would appear to be an overwhelm ng inequity involved in any rule wh

would permit an increase in rates by sUl Charge when the tariff curre

depreciates but no removal or red ction of such imposed SUl Charge w

the tariff currency appreciates

Additional comments have raise the suggestion that the base date u

to compare relative currency value should not be the day this provis

was adopted as proposed by earing Counsel Rather it has b

suggested that a more flexible ap oach be taken allowing the base 

to be the date when the claus in the contract was adopted b

conference the date on which the ast previous sUl Charge was imposed 

some other date The Commissio has reviewed these suggestions 

has dete1lIlined that more flexibili y should be allowed in the fixing 

base date Therefore the rule as dopted provides for the conferenc

select its own base date which it shall specify in its dual rate cont

However in order to preclude the troactive recovery ofcurrency lo

and consequent large sUl Charges Commission makes it clear tha

base date may be chosen which a edates the day onwhich the amen

contract is submitted to the Com ssion for approval

A further issue arose from qu stions posed by the Commission 

Hearing Counsel which merits iscussion As a part of the revis

suggested by Hearing Counsel t was recommended that sUl Charges

justified by the computations i the rule be permitted to be m

applicable to the conference trade as awhole or to particular trades 

segments oftrades covered by the erms ofthe dual rate contract and 

tariff of the conference involved his recommendation has been adop

in the final rule However it is perative that these terms be cle

understood as they relate to this e For purposes ofthis rule the te

trade or trade segment to which a

currency sUl Charge may 

applied are used to mean the foil ing

Trade means those ports wit the scope ofa dual rate contract 

which are included in or are based upon a simple rate group

19 F 
IMPOSING ALTERING CURRENCY ADJUSTMENTS 7

Trade segment means any port or combination of ports which

comprise a portion or segment of a trade

A further modification has been adopted which was previously implicit

in the proposed rule but which has now been made explicit Except as

otherwise provided specifically in the rule any surcharge imposed

pursuant to this rule must be kept completely separate from the general

rate structure of the conference This requirement has been included to

ward off the obvious regulatory quagmire which the Commission would

face in attempting to ascertain the justifiability of a surcharge which had

been incorporated into the general rate structure of a conference in the

foreign commerce of the United States Without such a separation of

general rates and surcharges the equitable requirement of reduction in

surcharges would have been gutted Such a lack of enforceability of

reductions would have been a disservice to the industry and its shippers

and would have resulted in a steady upward spiral of rates Such an

impetus has been determined not to be in the best interest ofthe public

One final modification to the rule has been accomplished with respect

to the requirement that any currency adjustment surcharge be imple

mented in certain increments As proposed the incremental requirement

provided Each such surcharge shall take place in increments ofnot less

than two percent It is the opinion of the Commission that such a

provision might be improperly construed as requiring aconference which

could justify a three percent surcharge to impose no more than the two

percent increment This would force the conference to absorb the

remaining one percent until such time as a four percent surcharge would

have justified imposing the next two percent increment To avoid this

possible confusion the rule has been amended by changing the provision

quoted above to read Each such surcharge imposed shall take place in

increments oftwo percent or more

In the course of the lengthy proceeding many other issues have been

raised pertaining to specific portions of this rule which have not been

discussed here In the main they have not been discussed because they

were considered and incorporated in the rule A limited number of

suggestions raised in the many comments however have not been

reflected in this rule Any such suggestions have been thoroughly

reviewed by the staff and the Commission itself and have not been

adopted only after such review and detailed consideration To list each

comment raised would be more confusing than explanatory and they have

therefore not been discussed

Therefore pursuant to sections 3 and 4 ofthe Administrative Procedure

Act 5 U S C 553 and sections 14b and 43 ofthe Shipping Act 1916 46

U S C 813a and 841a Part 538 ofTitle 46 CFR is hereby amended by the

addition of a new section 538 4

46 CFR 538 4

19 F M C
8 FEDERAL MARITIME COMMISSION

Effective date This amendment shall become effective 30 days a

the date of publication in the Federal Register

By the Commission

SEAL S FRANCIS C HURNEY

Secretary

19 F 
FEDERAL MARITIME COMMISSION

INFORMAL DoCKET No 319 1

ROHM AND HAAS COMPANY

v

VENEZUELAN LiNE

NOTICE OF DETERMINATION NOT TO REVIEW

July 2 1975

Notice is hereby given that the Commission determined not to review

the decision ofthe Settlement Officer in this proceeding served June 17

1975

By the Commission

SEAL S FRANCIS C HURNEY

Secretary

19 F M C 9
FEDERAL MARITIME COMMISSION

INFORMAL DOCKET No 319 1

ROHM AND HAAS COMPANY

v

VENEZUELAN LINE

Reparation Awarded

DECISION OF CAREY R BRADY SETILEMENT OFFICER

J

Complainant seeks reparation in the amotiht of 357 40 from respo

ent claiming a freight overcharge on a shipment from New York N

York to Puerto Cabello Venezuela carried aboard respondent s ves

LA GUAIRA a bill of lading dated February 23 1973 The shipm

consisted of 31 pallets said to contain 620 bags ofsynthetic resin paralo

The gross weight of the shipment was 27 725 lbs and measured 1 

cubic feet The shipment was rated on the basis of 50 per 40 cu

feet which was the applicable rate for Resins Synthetic N O S 

other packing 2actual value not over 300 per freight ton according 

Item No 495 of the respondent s tariff in effect at that time 3

T

charges were assessed in the amount of 1654 94 which included a 2 

measurement ton rate discount pallet allowance plus surcharge 

packing charge The shipment according to complainant should h

been rated on the basis of 100 50 per 2 000 lbs the applicable rate 

Resins Synthetic viz N O S in bulk in bags Actual value over 

but not over 1 000 per 2 000 lbs Class rate 1 W 4In additi

complainant alleged the shipment was entitled to two allowances 

prepalletized shipments the first on the weight of the shipment and 

second on the rate as provided in Items 26fand 26i of the responde

tariff

I Both parties havina conscnted to the informal procedure of Rule 19aof the Commission Rules ofPractic

Procedure 46 CPR 502 301 this decision shall be final unless the Commission elects to review it within 15 day

the date of service thereof

1 The other packing ispacking other than that described on the lin below the senerie heading of Resins Syn

The packina described on the line below Resins Synthetic is In bulk in baas in bllis in cartOns or in fiberdr

1 U S Atlantic andOulf Venezuela and Netherlands AntiUes Conference Freiaht Tariff FMC No 2 S B 

II 16th Rev Page 12

Ibid ItemNo 1000 4th Rev Page 122A and Item No 999 5thRev Paae 68

10 19 F 
ROHM HAAS CO v VENEZUELAN LINE 11

Respondent denied the claim solely on the provisions oftariff Item No

11 which requires that claims be rued within six months after the date of

shipment The Commission has ruled that a claim fIled within two years

from the date the cause ofaction arose must be considered on its merits 5

The bill oflading is dated February 23 1973 and the claim was filed with

the carrier in November 1973 and with the Commission on March 14

1974 The claim has been filed within the two year statutory limit and

thus will be treated on the merits

Respondent does not challenge any ofthe contentions ofthe complain

ant in fact by letter dated September 30 1974 respondent so stated and

in addition pointed out that had the refund been requested within the six

month period provided for in the tariff there is no question that it would

have been honored

While the Commission has ruled that a rule similar to the one on which

respondent is denying relief cannot be used to defeat a claim properly

ftled with the Commission the complainant nevertheless has a heavy

burden of proof once the shipment has left the custody of the carrier 6

The two rates in question are both rated under Resins Synthetic

N D S The 50 per 40 cubic ft commodity rate requires that the

shipment be in packing other than in bulk in bags in bags in cartons or

in fiber drums actual value not over 300 per freight ton The Class 1 W

rate 100 50 per 2 000 Ibs requires the shipment to be packed in bulk

in bags actual value over 650 but not over 1 000 per 2 000 Ibs The

bill of lading and supporting shipping documentation clearly show the

synthetic resins to be packed in bags as required by tariff Item No 1000

In addition by mathematical computation from the value and weights

given on the bill of lading and the commercial invoice the value of the

shipment per 2 000 Ibs can be readily determined The supporting

documentation shows 3 pallets of the synthetic resins weighed 3 225 Ibs

with a value of 1 590 and 28 pallets of synthetic resins weighed 24 500

Ibs with a value of 8 064 Dividing the 3 225 Ibs and 24 500 Ibs by

2 000 Ibs converts the shipment into weight tons of 16125 tons and 12 25

tons respectively Dividing the stated values by the calculated weight

tons 1 590 by 16125 and 8 064 by 12 25 the actual value of the

shipment per 2 000 Ibs is determined to be 986 05 and 658 29

respectively Clearly within the value range of over 650 but not over

1 000 per 2 000 Ibs as prescribed by the Qass lW rate of 100 50

Therefore the shipment should be assessed at that rate

In regard to the allowances ofprepalletized shipments the relevant tariff

items provide in pertinent part as follows

Item 26 1

When cargo is freighted on a weight basis the actual weight of the pallet shall be

deducted but not in excess of 10 of the gross weight of the cargo and pallet

5 Colgate Palmolive Company v United Fruit Company Informal Docket No 115 1 1970

6 Ibid

19 F MC
12 FEDERAL MARITIME COMMISSION

Item 26 i

Provided prepalletized cargo complies in all respects with the rules set forth herein 

carriers will allow a discount of 2 50 per ton weight or measurement on the 

basis as cargo is being freighted

The respondent does not dispute that the cargo was properly pallet

and complied with all the rules set forth in Item 26 The respondent s 

of lading clearly shows the weight ofthe 31 pallets to be 63 Ibs eac

does the complainants supporting shipping documents Therefore 

found that the complainant has furnished the necessary information at 

time of shipment to detennine the weight of the pallets as required 

Items 26 tand i and has otherwise met the requirements of Item 

Hence complainant is entitled to a pallet weight allowance of 1 953 

63 Ibs x 31 pallets and a rate discount of 2 50 per 2 000 Ibs

Complainant having met his burden of proof reparation is awarde

the amount of 357 40 the difference betWeen the charges assesse

1 654 94 and the correct charges of 1297 54 25 772 Ibs at 100 50 

2 000 Ibs less 2 50 rate discount plus surcharge and packing charge

8 CAREY R BRADY

Settlement Office

19 F 
19 F MC 13

TITLE 46SHIPPING

Chapter IV Federal Maritime Commission

SUBCHAPTER A GENERAL PROVISIONS

GENERAL ORDER NO 33 DOCKET NO 726

July 3 1975

Part 506Regulations to Adjust or Meet Conditions Unfavorable to

Shipping in the Foreign Trade ofthe United States

General Order No 33 was published by the Commission on November

1 1974 and was to become effective on November 31 1974 However

since General Order No 33 prompted numerous requests to delay the

effective date and extend the time for filing petitions for reconsideration

the Commission on November 21 1974 stayed the effective date ofthe

rule and invited interested parties to file their views and arguments

regarding the reconsideration thereof

Comments on reconsideration have been submitted by or on behalf of

a number and variety of interested parties including Hearing Counsel

The Commission has carefully considered the position of all the parties

and the final rules promulgated herein have been drafted with the parties

comments and arguments in mind The bulk of the comments submitted

concern themselves with matters which have been argued before the

Commission in this proceeding before and which have already been fully

considered and properly disposed of by the Commission We will not

address ourselves to those matters further We are limiting our discussion

here to those comments and arguments which have prompted changes in

the fmal rules promulgated herein A section by section discussion of

these changes is therefore appropriate

Section 506 1 Purpose

The word may has been substituted for will in the last sentence of

this section to make it clear that Commission action under these section

19 regulations is discretionary

506 2 Scope

This section was likewise revised to indicate the discretion of the

Commission in invoking these regulations A change was also made in the
14 FEDERAL MARITIME COMMISSION

wording to make this section consistent with the wording ofthe Merc

Marine Act 1920

506 3 Findings Conditions unfavorable to shipping in the foreign t

ofthe United States

Paragraph c of this section was amended to indicate that 

Commission was not concerned with mere differences in treatment to 

vessels in the foreign trade ofthe United States but is concerned with 

effect those differences and treatments have upon the foreign trade o

United States One party wished the Commission to add to this se

and other sections explicit provisions relating to the use ofrebates in 

foreign trade Since rebating is covered in section 18bX3 of the Ship

Act 1916 and may be covered under the general terms of t

regulations the Commission does not think it necessary to make 

such amendment The wording of the first sentence of this section 

been changed to make it clear that these regulations are to apply to 

acts of foreign governments or of foreign owners operators agents 

masters

506 4 Petitionsfor section 19 relief General Who may file

The wording ofthis sectil n has been changed to indicate tha

Commission is not in any way limiting the application ofthis sectio

specifically naming some ofthe persons who may file petitions

506 8 1nitial action to meet apparent conditions unfavorable Resol

through diplomatic channels

This section was changed to give foreign countries notice tha

Commission will notify the Secretary of State when conditions unfav

ble to shipping in the foreign trade of the United States apparently 

and that it may request that he seek resolution of the matter thro

diplomatic channels

506 9 Actions to meet conditions unfavorable to shipping in the for

trade ofthe United States

Commentators to this section asserted that tariff suspension would 

be a lawful exercise ofsection 19 powers While it is true that sec

18 b 4 and 5 set out the circumstances when the Commission 

suspend tariffs under the Shipping Act 1916 the powers of 

Commission under section 19 ofthe Merchant Marine Act of 1920 

much broader Therefore this section remains unchanged

506 11 Production of information

Paragraphs b and c of this section were changed to make it 

that the Commission was not restricting the scope ofinformation t

produced by listing some of the types of information which cou

ordered to be produced

19 F 
REGULATIONSUNFAVORABLE TOSHIPPING 15

506 12 Production ofinformation Failure to produce

Objection was directed to section 506 12 because it required the

Commission to find conditions unfavorable to shipping in the foreign trade

ofthe United States when there was a failure to produce any information

ordered by the Commission to be produced under section 506 11 There

was an apparent conflict with the wording of this section and the

explanation which was given to it in the preamble to the regulations

published on November 1 1974 Inthe preamble the Commission stated

that this section would not necessarily apply to situations where there

was abona fide effort to comply This explanation was in conflict with

the clear wording of this section Many parties asserted that the word

will should be changed to may Such a change has been in order to

make this section consistent with the intent of the Commission This

section has also been amended so that appropriate findings offact may be

made when there is a failure to produce as well as the option of a deemed

admission

Other nonsubstantive changes were made to these final rules to

conform with the amendments discussed herein This discussion has not

dealt with those comments which we viewed as being either irrelevant or

immaterial to the matters at issue

As a final matter we would point out for the edification of all

concerned and lest there be any misunderstanding that the rule

promulgated herein is not to be construed in any way whatsoever as a

substitute vehicle by which agreements approved by the Commission

under Section 15 ofthe Shipping Act 1916 might be contested Likewise

the new rule is not intended in any way to replace modify or limit the

traditional criteria considered in connection with applications under

section 15

Therefore pursuant to the authority of section 19 lb ofthe Merchant

Marine Act 1920 46 U S C 876 lb section 4 ofthe Administrative

Procedure Act 5 U S C 553 sections 21 and 43 of the Shipping Act

1916 46 U S C 820 841 a and Title V ofthe Independent Offices

Appropriation Act of 1952 31 U S C 483 a and Reorganization Plan

No 7 of 1961 75 stat 840 Part 506 ofTitle 46 CFR is hereby revised

Effective date The provisions ofthis Part 506 will become effective 30

days after publication in the Federal Register

By the Commission

SEAL S FRANCIS C HURNEY

Secretary

Thetext of the amendment appears in 46 CFR 506

19 F M C
FEDERAL MARITIME COMMISSION

SPECIAL DoCKET No 470

AIRLEX INDUSTRIES

RELIABLE CARGO SHIPPING NC

v

LYKES BROS SS CO INC

Authority to refund a portion of freight charges denied

REPORT

October 14 1975

By THE COMMISSION Helen Delich Bentley Chairman Clare

Morse Vice Chairman Ashton C Barrett James V Day Com

sioners

Lykes Bros Steamship Co Inc Lykes applied for permissio

refund aportion ofthe freight charJes collected on a shipment desc

in the bill of lading as Industrial Cooling Towers carried by Lykes 

Baltimore to Haifa Israel under bill of lading dated December 2 1

Lykes collected 17 703 33 in freight charJes and is seeking permis

to refund 4 764 70 thereof Lykes asserts there was an error in 

description of the shipment Lykes maintains that had it known the 

nature of the cargo it would have fded a rate lower than the rate it 

for this particular shipment

The Presiding Officer issued aninitia1 decision denying the applica

on the ground that Lykes error was not an error in atariff ofa cleric

administrative nature or an error due to an inadvertent failure to til

intended rate as contemplated in P L90298 which amended se

18bX3 of the Shipping Act 1916 the Act

Complainant excepted to the denial of the application

We concur in the Presiding Officer s denial of Lykes applica

However our reason for denying the application is simply stated 

Lykes failed to comply with a specific statutory prerequisite U

section 18b 3 ofthe Act the Commission may in certain circumstan

In view ofourdisposition of this case weneed not discuss Comphunant s ltJument on exceptions

16 19 F 
AIRLEX SHIPPING AlC v LYKES BROS 17

at its discretion and for good cause permit a common carrier by water in

foreign commerce to refund or waive collection of a

portion of freight

charges

Provided That the common carrier has prior to applying for authority to

make a refund filed a new tariff with the Federal Maritime Commission which sets forth

the rate on which such refund or waiver would be based

And providedfurther That application for refund or waiver must be filed with the

Commission within one hundred and eighty days from the date of shipment 46 U S C

817 b 3

Respondent has not prior to applying for permission to refund a

portion offreight charges filed with the Commission a tariff setting forth

the rate upon which the refund would be based The application must

therefore be denied Oppenheimer International Corp v Moore Mc

Cormack Lines Inc 15 F M C 49 1971 Since more than 180 days

have elapsed from the date ofshipment it is now too late for the carrier

to file a new tariff and thereafter refile the application No relief

therefore can be granted under the special docket procedure set forth

in section 18 b 3 of the Act as implemented by Rule 6 b of the

Commission s Rules ofPractice and Procedure 46 CFR 502 92 a

This does not preclude however Complainant s fIling a complaint

under section 22 of the Act alleging the violation ofany section of the

Act such as sections 16 or 17 and asking reparation for any injury caused

by such alleged violation

SEAL S FRANCIS C HURNEY

Secretary

19 F M C
FEDERAL MARITIME COMMISSION

SPECIAL DOCKET No 470

AIRLEX INDUSTRIES

RELIABLE CARGO SIPPING NC

v

LYKES BROS SIS CO INC

Application denied

INITIAL DECISION OF JOHN E COGRAVE ADMINISTRATI

LAW JUDGE

By application filed March 12 1975 Lykes Bros Steamship Co 

requests authority to refund a portion of the freight charges applied 

shipment of Industrial Cooling Towers weighing 56 832 pounds 

measuring 6 572 cubic feet carried per bill oflading dated Decemb

1974 on Lykes vessel Margaret Lykes from Baltimore to Haifa Is

The consignor seeking a breakbulk rate on an American carrier for 

particular shipment requested Lykes to file a 107 75 40 eft rate fo

Conditioning Machinery Lykes accordingly filed the rate under Sp

Permission procedure 2

After filing and after the cargo was loaded an

route it was discovered that the lading was Industrial Cooling Tow

and not Air Conditioning Machinery Although the lading was descr

as Industrial Cooling Towers nevertheless the basis for the rate cha

was Machinery Air Conditioning The lower rate sought to be applie

that for Industrial Cooling Towers allegedly 78 50 W M

3

Section 18b 3 ofthe Shipping Act 1916 46 USC 817 as amende

Public Law 90298 and as further implemented by Rule 6 b Spe

Docket Applications Rules of Practice and Procedure 46 CFR 502 9

the law sought to be invoked Briefly it provides

I This decision became the decision of the Commission October 14 1975

2

Lykes Bros Steamship Co Inc Gulf South AtlanticNorth Spain Portuaucsc Canary Islands Tarif

FMC 63 Oriainal Paae 43 effective date November 26 1974

3 The application is Impetfect in this reprd because the new tariff which sets forth the rate on which such 

would be based has not been flied as required prior to application In view ofthe disposition of this proc

however such infirmity is inconsequential Nevertheless it is necessary if aformal complaint is filed seeking r

the overchalie by way of an award ofreparation

18 19 F 
AIRLEXSHIPPING NC v LYKES BROS 19

The Commission may in its discretion and for good cause shown permit a

common carrier by water in the foreign commerce of the United States to refund a

portion of the freight charges collected from a shipper or waive the collection of a

portion of the charges from a shipper where it appears that there is an error in a

tariffof a clerical or administrative nature or an errordue to an inadvertence in failing to

file a new tariff and that such refund or waiver will not result in discrimination among

shippers Furthermore prior to applying for such authority the carrier must have filed

a new tariff which sets forth the rate on which such refund or waiver would be based

The application for refund must be filed with the Commission within one hundred and

eighty days from the date of shipment Finally the carrier must agree that if permission

is granted an appropriate notice will be published in its tariff or such other steps taken

as may be required to give notice of the rate on which such refund or waiver would be

based

The legislative history of Public Law 90298 elaborates on the rationale

that caniers would be authorized to make voluntary refunds or authorized

to waive the collection of a portion oftheir freight charges for bona fide

mistake The nature ofthat mistake is particularly described 4

Section l8b appears to prohibit the Commission from authorizing relief where

through bona fide mistake on the part of the carrier the shipper is charged more than he

understands the rate to be For example a carrier after advising a

shipper that he

intends to file a reduced rate and thereafter fails to file the reduced rate with the Federal

Maritime Commission must charge the higher rate

Another example would be where a reissued tariffpage contains a

typographical error

changing the rate for example republishing a rate in error as 73 per ton rather than

continuing it on the page as 37 per ton In such a situation under section l8 b 3 of the

Shipping Act a carrier can charge only the published rate and the Commission cannot

permit an adjustment in the intended rate

The Senate ReportS states in the Purpose ofthe Bill

Voluntary refunds to shippers and waiver of the collection of a portion of the freight

charges are authorized where it appears that there is an error in a tariff of a clerical

nature or where through inadvertence there has been a failure to file a tariff reflecting

the intended rate

Applied to the facts it appears that Lykes has relied upon an

inapplicable section of the Shipping Act for its remedy Public Law 90

298 amending section l8b 3 of the Shipping Act is concerned with

mistakes made by common caniers by water in the foreign commerce of

the United States The application requests the carrier be allowed to

charge a lower rate for the arcane reason that this is the rate which

Lykes would have theretofore filed had the true nature ofthe commodity

to be shipped been known at the time offiling The canier applied the

rate for Air Conditioning Machinery which it is alleged was not the

correct rate as the cargo actually shipped was Industrial Cooling Towers

On the other hand the consignor requested a lower rate for something

otherthan it actually intended to ship Whatever the canier s error may

have been it was not an error in a tariff of a clerical or administrative

4

House Report No 920 November 14 1967 fa accompany H R 9437 onShipping Act 1916 Authorized Refund

of Certain Freight Charges Statement of Purpose and Need forthe Bill to Amend Provisions of the Shipping Act

1916 toAuthorize the Federal Maritime Commission to Permit aCarrier toRefund aPortion afthe Freight Charges

5 Senate Report No 1078 April 5 1968To accompany HR 9437 onShipping Act 9 6 Authorized Refund of

Certain Freight Charges

19 F MC
20 FEDERAL MARITIME COMMISSION

nature or an error due to inadvertence in failing to tile a new tariff 

the exemption in Public Law 90298 contemplates

Where the mistake is other than that stipulated by Public Law 90

then the remedy lies in a formal complaint seeking reparation un

section 22 of the Shipping Act perhaps using the shortened proced

contemplated by Subpart K of the Commission s Rules of Practice 

Procedure 46 CPR 502 181 Oaims for reparation based on misclas

cation may be proved by evidence of what was actually shipped e

though the actual shipment may be other than that described on the b

lading 6

Accordingly the application of Lykes Bros Steamship Co Inc 

authority to refund a portion ofthe freight charges on a shipmen

Industrial Cooling Towers must be denied without prejudice to the t

of a formal complaint seeking return of the overcharge by way o

award ofreparation subject to the caveat in footnote three

S JOHN E COORAVE

Administrative Law Judg

WASHINOTON D C

June 3 1975

6 Docket No 742 Merck Sharp Dohme v Flota Mereonte Grancolomblana FM C 

1626 197S citina Informal Docket No 283 1 Western Publishing Company Incorporated v Hapa Lloyd 

F M C SRIL1972

19 F 
19 F MC 21

FEDERAL MARITIME COMMISSION

SPECIAL DOCKET No 469

PERKINSGOODWIN CO INC

v

LYKES BROS STEAMSHIP CO INC

Authority to waive collection of a portion of freight charges denied

REPORT

OCTOBER 14 1975

By THE COMMISSION Helen Delich Bentley Chairman Clarence

Morse Vice Chairman Ashton C Barrett James V Day Commis

sioners

This proceeding is before the Commission on exceptions filed by

Complainant Perkins Goodwin Co Inc to the Initial Decision served

June 6 1975 denying Lykes Bros Steamship Co Inc Lykes permis

sion to waive collection of a portion ofthe freight charges assessed on a

shipment of 894 244 pounds or 37 700 cubic feet of paperboard carried

from New Orleans to Mombasa East Mrica under bills oflading dated

September 12 1974

Lykes collected 53 040 87 in freight charges Claiming that it had made

a technical error in the quotation ofthe applicable rate Lykes requested

permission to waive collection of 34 656 48 of the freight charges

assessed on the shipment

The Presiding Officer issued an initial decision denying the application

on the ground that Lykes error wasnot an error in atariff ofaclerical or

administrative nature or an error due to an inadvertent failure to fIle an

intended rate as contemplated in P L90298 which amended section

18b 3 ofthe Shipping Act 1916 the Act

Complainant excepted to the denial ofthe application

We concur in the Presiding Officer s denial of Lykes application

However our reason for denying the application is simply stated that

Lykes failed to comply with a specific statutory prerequisite Under

In view of ourdisposition of this case we need not discuss Complainant sarguments on exceptions
22 FEDERAL MARITIME COMMISSION

section 18b 3 ofthe Act the Commission may in certain circumstan

at its discretion and for good cause permit a common carrier by wate

foreign commerce to refund or waive collection of aportion of fre

charges

Provided That the common carrier has prior to applying for authori

make a refund filed a new tariff with the Federal Maritime Commission which sets 

the rate on which such refund or waiver would be based

And provided further that application for refund or waiver must be filed with 

Commission within one hundred and eighty days from the date of shipment 46 D 

817 b 3

Respondent has not prior to applying for permission to waive collec

of a portion of freight charges filed with the Commission a tariff se

forth the rate upon which the waiver would be based The applica

must therefore be denied Oppenheimer International Corp v Mo

McCormack Lines Inc 15 F M C 49 1971 Since more than 180 

have elapsed from the date ofshipment it is now too late for the ca

to me a new tariff and thereafter reme the application No re

therefore can be granted under the special docket procedure set f

in section 18 b 3 of the Act as implemented by Rule 6 b of 

Commission s Rules ofPractice and Procedure 46 CPR 502 92 a

This does not preclude however Complainant s filing a comp

under section 22 ofthe Act alleging the violation of any section o

Act such as sections 16 or 17 and asking reparation for any injury ca

by such alleged violation

SEAL S FRANCIS C HURNEY

Secretar

19 F 
19 F M C 23

FEDERAL MARITIME COMMISSION

SPECIAL DOCKET No 469

PERKINSGOODWIN CO INC

v

LYKES BROS STEAMSHIP CO INC

Application denied

INITIAL DECISION OF JOHN E COGRAVE ADMINISTRATIVE

LAW JUDGE

By application fIled March 6 1975 Lykes Bros Steamship Co Inc

requests authority to waive collection ofa portion of the freight charges

applied to a shipment of374 rolls ofpaperboard weighing 894 244 pounds

and measuring 32 700 cubic feet carried per bill oflading dated September

12 1974 on Lykes vessel Christopher Lykes from New Orleans to

Mombasa East Africa When the shipment was booked on June 28 1974

a rate of 100 75 2240 pounds was quoted 2 However at the time of

shipment the applicable rate effective August 15 1974 was 7850 WI

M

3

Accordingly the shipment was rated on a measurement basis which

resulted in a higher charge than if it had been rated on the weight basis

set forth in the earlier tariff ofrates

Section 18b 3 ofthe Shipping Act 1916 46 USC 817 as amended by

Public Law 90298 and as further implemented by Rule 6 b Special

Docket Applications Rules ofPractice and Procedure 46 CFR 502 92 is

the law sought to be invoked Briefly it provides

The Commission may in its discretion and for good cause shown permit a

common carrier by water in the foreign commerce of the United States to refund a

portion of the freight charges collected from a shipper or waive the collection of a

portion of the charges from a shipper where it appears that there is an error in a

tariffof a clerical or administrative nature or an error due to an inadvertence in failing to

ftle a new tariffand that such refund or waiver will not result in discrimination among

shippers Furthermore prior to applying for such authority the carrier must have ftled

a new tariff which sets forth the rate on which such refund or waiver would be based

I

This decision became the decision of the Commission October 14 1975

1 South and East Africa Conference South Bound Freight Tariff No I FMC No 2 Fifth Revised Page 161

Cancelling Fourth Revised Page 161 Bffective Date May 15 1974 Item No 430

South and East Africa Conference South Bound Freight Tariff No 1 FMC No 2 SixthRevised Page 161

Cancelling Fifth Revised Page 161 Effective Date July 19 1974 Item No 430
24 FEDERAL MARITIME COMMISSION

The application for refund must be filed with the COlI mission within one hundred 

eighty days from the date of shipment Finally the camer must agree that if permiss

is granted an appropriate notice will be published in its tariff or such other steps ta

as may be required to give notice of the rate on which such refund orwaiver would 

based

Applied to the facts it appears that these requirements have not be

met Whatever the carrier s error may have been it was not an error i

tariff of a clerical or administrative nature or an error due to inadverte

in failing to file a new tariff that the exemption in Public Law 902

contemplates Misquotation ofrates is not a ground for relief thereunde

Since the exemption embodied in Public Law 90298 is inapplicable th

the rule in Louisville N R R Co v MaxweUS by direction ofCuna

obtains

Ignorance of rates is not an excusefor paying or charlling either less or more t

the rate ftled This rule is undeniably strict and it obviously may work hardship in s

cases but it embodies the policy which has been adopted by Congress in the regula

of interstate commerce in order to prevent unjust discrimination

Accordingly the application of Lykes Bros Steamship Co Inc 

authority to waive collection of a portion of the freight charges on 

shipment of374 rolls ofpaperboard must be denied

S JOHN E COGRAVB

Administrative Law Judge

WASHINGTON D C

June 6

1975

Special Docket No 462 Commodity Credit Corp v Delta Steamship Lines Inc F M

C

14 

1201 1974

231U S 94 97 1915

6

U S Nav Co v Cunard S S Co 284 U S 474 l932

19 F M
19 F M C 25

TITLE 46SHIPPING

Chapter IV Federal Maritime Commission

SUBCHAPTER BREGULATIONS AFFECTING MARITIME

CARRIERS AND RELATED ACTIVITIES

DOCKET NO 7241 GENERAL ORDER 35

November 4 1975

Part 55I Truck Detention at the Port ofNew York

By Notice of Proposed Rulemaking published in the Federal Register

on August 23 1972 the Commission served notice that it intended to

promulgate certain rules and regulations to implement an equitable

solution to the delays in the handling and interchange offreight between

ocean and motor carriers experienced at the Port of New York

Comments from interested parties were solicited These proposed rules

are intended to supersede the truck detention rules promulgated by the

Commission in Docket No 1153 Truck and Lighter Loading and

Unloading Practices 12 F M C 166 1 9 Following publication and in

response to a petition filed by Middle Atlantic Conference the Commis

sion issued an Amended Notice of Proposed Rulemaking providing for

filing of responses to comments Eighteen comments were submitted in

this proceeding by or on behalf of a wide range ofinterested parties

Replies to these comments have been filed by Hearing Counsel and II

answers to Hearing Counsel s replies have also been submitted Subse

quent to the submission ofthese answers Hearing Counsel petitioned the

Commission to take testimony limited to the factual issues surrounding

section 5512 a i section B la which precludes prelodging ofdeliv

ery orders and dock receipts at marine terminal facilities at the Port of

New York on the grounds that there appeared to be disputes of fact

concerning the present practice ofprelodging documents operational and

procedural problems caused by such prelodging and acceptable alterna

tives to the prelodging rule The Commission noting that with the

exception ofthose comments filed pertaining to the prelodging rule it had

The provisions promulgated herein have been renumbered to conform to established Commission numbering

system and Federal Regisler procedures We have made reference as exhibited in brackets to the corresponding

section as originally proposed
26 FEDERAL MARITIME COMMISSION

sufficient information to promulgate a fmal rule granted Hearing Co

sels request and directed that the Administrative Law Judge issue 

recommended decision thereon

Administrative Law Judge Charles E Morgan issued his Initial Decis

on the prelodging issue to which exceptions and replies thereto werefIle

The positions ofthe various parties on the prelodging ofdelivery ord

and dock receipt are discussed herein Also because of the many a

varied revisions incorporated into our fmal rule we have discussed bel

certain other portions of the rule and the comments submitted w

respect thereto Our fInal rules promulgated herein have been drafted w

careful consideration given the parties Comments and arguments 

specifIcally discussed or reflected herein have been nevertheless cons

ered and found not relevant nor material

Section 551 1b section A2 defInes a terminal operator One comm

tator urges us not to exclude from that definition marine termi

facilities operated or controlled by the Department of Defense We f

such a request to be inconsistent both with the provisions of46 C

533 3 and with the policy ofavoiding conflict between agencies of 

U S government which might result from an attempt by one such age

to regulate the activities ofanother However in order to make clear 

scope of these regulations we have limited the applicability of 

terminal operator defInition to the purposes ofthisPart

While no specifIc comments were directed to section 551 1c sect

A3 which identifIes the type of entities which will be subject to 

tariffs of terminal operators we have for the sake of clarity a

consistent with the suggestion of Hearing Counsel amended sect

551 1c by inserting the word including between the terms term

operators and steamship companies acting as terminal operator

Section 551 1d section A4 which identifIes the types ofpersons w

shall be entitled to receive remuneration in accordance with 

provisions ofthis Rule has been amended to clarify who is to ultimat

benefIt from charges collected pursuant to these rules

Several parties commented on section 551 1g section A7 which s

forth the conditions under which a terminal operator would not 

assessed a penalty under these rules if receipt or delivery of cargo

is prevented or delayed In addition to strikes work stoppage a

several unusual weather conditions we are asked to include acts 

God fifes serious accidents work slowdowns and cong

tion in anticipation of a strike of longshoremen or following the termi

tion of such a strike One party who opposes this suggestion sees 

reason why the terminal operator should be excused from complian

with the rules and therefore rather than expanding the propos

exceptions would limit the existing exception to those instances where 

strike or work stoppage is not the result of a violation of 

collective bargaining agreement between the terminal operator and 

employees

19 F M 
TRUCK DETENTION PORT OFN Y

While we sympathize with those parties who want to add congestion

and work slowdown to the list of exceptions we are nevertheless in

full agreement with the position of Hearing Counsel that terminal

operators cannot absolve themselves of all of their responsibilities under

this rule The objective behind this provision is to incorporate the

distinction previously drawn by the Commission between work slow

downs and insufficient equipment which tends to delay operations and

strikes work stoppages or unusual weather conditions or other such

causes which terminate operations The former is the responsibility ofthe

terminal operator the latter is beyond his control relieving him of

detention payments See Truck and Lighter Loading and Unloading

Practices supra at 170 notes 170 Thus since it is our intention that

terminal operators be free from liability for situations over which they

have no control we have expanded section 551l gto include acts of

God fires and serious accidents as causes absolving the terminal

operator The question of whether or not a particular condition is so

severe as to exonerate the person against whom a claim is made is the

subject of section 551 10 section AlO

Section 551 1h section AS sets out other conditions under which a

terminal operator will not be liable for delay One commentator suggests

that this section be amended to make it clear that the existing trade

practice whereby the terminal operator is required to sort separate

shipments on a single bill oflading by marks will continue to be permitted

In response thereto another party points out that this section does not

prohibit receipt ordelivery of cargo by marks and numbers or any other

service requiring the sorting of cargo other than by bill oflading at the

request of the shipper consignee or motor carrier but merely excludes

such shipments from the coverage ofthe proposed rule The purpose of

section 551 1h is to provide that the shipper importer will be responsible

for delays where the terminal operator is required to sort or separate

shipments by marks Additionally and since as was pointed out by one

ofthe parties terminal operators are required as part oftheir operations

to segregate incomingoutgoing shipments by bills of lading section

551 1h contemplates that as to a single motor carrier loadingunloading

multiple LTL shipments time for purposes of this rule shall not be

computed separately for the loadingunloading ofeach shipment as urged

by one of the parties but rather shall accrue during the entire time the

vehicle is being loadedunloaded This however should not be confused

with section 5512 a 2 section B I b dealing with several vehicles

picking up delivering multiple shipments on asingle delivery order dock

receipt where time shall be computed separately for each vehicle loaded

unloaded on an open delivery order or dock receipt Finally section

551 l h has been amended to reflect Hearing Counsel s suggestion that

terminal operators not be held liable for delays caused by U S govern

ment regulations

We find merit in one party s observation that if procedures on the

19 F M C

27
28 FEDERAL MARITIME COMMISSION

docks are to be sped up it must be realized that delay is incurred 

motor carriers with regard to empty as well as stuffed containe

Consequently we have modified section SS1 1i section A9 by t

addition ofthe following sentence For purposes ofthisPart containe

shall include empty as well as stuffed containers

Section SS1 1k section A 11 establishes procedures to be follow

by terminal operators who elect to deliver breakbulk cargo to mo

carriers prior to full discharge and is not concerned as one of t

commentators believes with situations involving the stripping of conta

erized cargo Moreover this section does not require but merely perm

the terminal operator to effect delivery before the vessel is discharge

Because section SS14 i section D9 makes it the responsibility of t

consignee or his agent motor carrier to determine when a

cargo 

available at nonappointment piers and section SS1 3b section C2 w

not allow appointments unless the cargo is properly available the termi

operator has to advise the motor carrier only when the cargo is 

available For example until breakbulkshipments have been stripp

from the container there is nothing which obligates the terminal opera

to make delivery as soon as the vessel discharged its unstripp

containers

Another party suggests that because the documents in the possess

of the terminal operator do not always show the identity of the mo

carrier that will pick up the cargo language should be added to sect

SS1 1k requiring the terminal operator to make a reasonable effort 

ascertain the party to receive such notice and effect the same W

question the practical necessity of such a revision since it is o

reasonable to presume that the terminal operator would in the interest 

sound business practice make all reasonable efforts to contact t

appropriate person in order to have cargo removed from the pier prior 

full discharge Common sense would likewise dictate that if this pers

cannot be ascertained no notification would be issued Nevertheless 

our finalrule we have substituted the consignee or its designated age

for motor carrier as the person to be notified by the terminal opera

Lastly we agree with the suggestion ofone commentator that in orde

avoid any question as to whether in fact authority was or was not giv

section SS1 1k should be modified to require that the terminal opera

employee authorizing the delivery of cargo prior to the vessel being fu

discharged be identified

Section SS1 11 section A 12 in effect allows the terminal opera

the option of selecting the system under which it will operate One pa

is of the opinion that the terminal operator will opt more often for 

nonappointment system where detention time begins to run from the ti

validated on the gate pass as provided in SS1 6b In this regard it 

argued that this section should be amended to operate in harmony w

ICC tariffs by deleting the nonappointment and combination procedu

and keeping only the appointment system wherein truck detention ti

19 F M 
TRUCK DETENTION PORTOFN Y

begins when the motor carrier arrives at the gate We cannot agree To

implement such a suggestion would in our opinion deprive the terminal

operator of the prerogative to institute a procedure that would best

implement the objectives ofthe proposed rules The proposed rules are

geared toward the expeditious loading unloading of cargo which of

necessity entails a smooth procedure between the terminal operator and

motor carriers and are not concerned with the relationship between motor

carrier and shipper Our final rule however reflects the suggestion of

two ofthe parties that section 551 11 be modified to require that any

change in the procedures at a given pier should only be made on thirty

30 days notice and upon the ftling of an appropriate tariff amendment

effecting such change

Section 5512 a l

section BI a as originally proposed prohibited

the prelodging of delivery orders and dock receipts Upon review ofthe

record in this proceeding we remain convinced that prelodging ofdelivery

orders causes not only delay and congestion but also sets the stage for

what could become serious security problems at the Port As concerns

the former we fmd merit on one party s observation that an incomplete

prelodged delivery order causes not only delay to the motor carrier

concerned while the receiving clerk perfects the delivery order or prepares

a new one but also hinders the progress ofthe other trucks who have the

proper documentation but cannot proceed until the initial problem has

been resolved

Some commentators argue that not only will prelodging not unnecessar

ily impede the free movement of import cargo but a prohibition of

prelodging will result in additional expenses for shippers and consignees

using the Port In support thereof it is contended that the prelodging of

delivery orders is necessary because ofthe five day limit on free time on

imports With fast container service and slow mails it is submitted that

the customhouse broker is occasionally delayed in processing the import

especially if the goods arrive in several containers to the point where free

time is about to expire and therefore must telephone the pickup order to

the motor carrier and lodge the delivery order at the pier if the trucker is

to get his goods before his free time expires Also it is argued that by

prelodging the delivery order the clerk can verify in advance of the

arrival ofthe motor carrier that the freight has been paid and the original

bill of lading has been delivered to the ocean carrier a procedure that

allegedly can cut down on delays Whatever the merits of these

arguments the fact remains as the Administrative Law Judge found that

when a trucker does not have in his possession a full and complete

delivery order upon arrival at the pier delay in fact occurs The

movement of cargo from the piers is appreciably slowed down while the

terminal personnel are straightening out the problems created by an

incomplete or lost prelodged delivery order One of the purposes ofthis

proposed rule is to better defme the responsibilities ofall parties involved

19 F M C

29
30 FEDERAL MARITIME COMMISSION

at the Port for the expeditious interchange of cargo We believe 

prohibition on prelodging delivery orders is consistent with such purpos

Except to the extent the Administrative Law Judge recommended t

a 15 fee be levied for the handling of each prelodged dock rece

discussed in detail infra we agree with his findings as they relate to 

practice ofprelodging such documents Exceptions taken to the Admin

trative Law Judge s conclusion that the prelodging ofdock receipts do

not cause any significant truck detention at the Port reiterate 

arguments supporting the prohibition ofthe prelodging ofdelivery orde

the essence ofwhich is based on allegations ofport congestion and de

in service It is their position that it would be just as easy to hire aspec

messenger to deliver the dock receipt to the truck terminals within 

Port area as it is to deliver them to piers We disagree Such a proced

would be expensive for the shipper since the messenger would more of

than not just wait around truck terminals to meet motor carrie

Moreover and considering the traffic problem in and around the city 

would be most impractical to meet the motor carrier and or gyp

truckers who has no truck terminal at a predetermined place In a

event there has been presented ample evidence that delay at the Por

not due primarily from the prelodging ofdock receipts which as a ma

of record occurs only with a small percentage of export cargo 

instead is due to the prelodging ofdelivery orders

Finally there are those situations where prelodging of the dock rece

is the only practical solution if there is to be a prompt receipt of 

export cargo in order that the motor carrier can unload as soon a

arrives at the piers For instance and as observed by the Administrat

Law Judge when the exporter wished to take advantage of infrequ

sailings by utilizing overnight shipments i

e shipments which leave 

point of origin the night before and arrive at the docks the follow

morning the forwarder of necessity must prelodge the dock receip

the marine terminal in lieu ofdelivering it to a truck terminal Simila

the prelodgipg ofdock receipts at the pier is more desirable than to h

to decide as to which of at least two carriers involved with long h

shipments will be the recipient of the dock receipt particularly si

truckers swap tractors and trailers and may go directly to the pie

to a local delivery agent for pier delivery

Additional support for the prelodging ofdock receipts derives from 

Administrative Law Judge s fmding that exporters frequently are u

ware ofexactly when goods will be ready for transportation to the Por

New York This means that the forwarder is unable to obtain the 

and con numbers of the motor carrier transporting the goods until 

last minute and it is only at this time that the forwarder is able to begi

estimate the transit time from the inland point to the docks Moreov

and because terminal facilities are subject to the handling ofthe exces

amounts of importexport shipments and labor problems there are tim

19 F M 
TRUCK DETENTION PORT OF N Y 31

when the fOlwarder will not know until just before arrival of the vessel

the specific pierfor delivery

We also find considerable merit in the Administrative Law Judge s

observations that prohibiting prelodging of dock receipts would 1

disrupt pre reserved shipping space since in many instances the ocean

carrier transporting the goods will insist on knowing in advance the size

and amount ofthe shipment it has booked and 2 be unwise because

it could lead to the misuse ofblank dock receipts which would have to be

left at inland points if no prelodging is permitted As long as the

prelodging practice is not abused we believe it will be to the advantage of

the users ofthe Port to continue its use Inconclusion therefore while

we do not deny that it would be more beneficial for the trucker to have

the dock receipt in his hand when he arrives at the pier the practicalities

involved in the export of goods require under certain situations

prelodging ofdock receipts

The Administrative Law Judge also recommended a 15 service charge

for prelodging noting that since the time and expense involved in

handling prelodged dock receipts was for the convenience of the

forwarder orexporter the cost of such service should be borne by them

and not by all who use the marine terminal operators service in the form

ofhigher stevedoring rates We do not agree We agree with the position

taken by those parties who oppose this 15 assessment fee on the ground

that it will work only as a penalty by unreasonably burdening the shipper

who is trying to export his product as quickly and cheaply as possible

Further such a fee could well drive the small inland shipper out of

business since he would not be able to absorb a 15 charge in his selling

price of exported goods without running the risk ofpricing his product

out ofthe competitive market As a result a service charge might under

the circumstances give rise to an unreasonable preference in favor of

large volume exporters who obviously could absorb such a charge Such

acharge could also cause prospective exporters to avoid the Port as well

as present exporters to divert their shipments to other less expensive

ports all to the fmancial disadvantage ofthe Port

For the aforementioned reasons we have modified the fmal version of

section 5512 a 1 to reflect a prohibition of the prelodging of delivery

orders but to allow the continuance ofthe practice ofprelodging dock

receipts without any service fee

We have further modified section 5512 a 1 to permit time stamps and

notations on gate passes and other arrival documents to be duplicated on

the trucker s copy of the delivery order or dock receipt instead of on a

blank paper as originally proposed The existence of a blank piece of

paper is just another document that would be susceptible to being lost or

stolen We see no reason to further complicate the paperwork involved

Moreover and as one party points out the time stamp on a copy ofthe

dock receipt or delivery order retained by the trucker would be helpful in

the processing offuture claims

19 F M C
32 FEDERAL MARITIME COMMISSION

Section 5512 a 2 section BI b pertains to amotor carrier s use 

the open delivery order dock receipt One party suggests that to allow 

motor carrier to continue the established and accepted practice 

presenting open documents on less than truckload LTL shipments w

compound the problem ofcargo security at breakbulk terminals W

disagree Quite the contrary by permitting a terminal operatorto estab

his own safeguards for the handling ofLTL shipments whic he wo

do by filing the appropriate procedures in his tariff security would 

feel be improved This conclusion is based on the fact that ea

procedure for physically handling cargo across the platform will necess

i1y take into account security considerations peculiar to that breakb

terminal facility In our final rules we have adopted Hearing Couns

suggestioQ that the terminal operator be required to establish procedu

by which the motor carrier subsequent to the receipt or delivery of 

initial load would have to exhibit satisfactory authorization before pick

up or delivering the remaining truckloads or shipments The subst

tion of this language for the word cargo as originally proposed w

alleviate any confusion as to what the motor carrier has authority 

pickup or deliver

Several parties commented on section 551 2b section B2 which s

forth the information to be included within a dock receipt Comme

addressed to this provision range from suggesting that the dock recei

requirements be in exact conformity with the U S Standard Master 

urging that the terminal operator be allowed complete discretion 

determine the form or content of the dock receipt We cannot accede 

either suggestion

While we are not opposed to a dock receipt in the form of the U 

Standard Master the party making such suggestion is not clear as 

whether its contents will only include that as required by section 551 

ofour rules or would supplement the existing information already pres

on the U S Master Standard Further any suggested change in t

section that would dilute our requirements such as one party s propo

that terminal operators be allowed to impose their own documentat

requirements would destroy the effectiveness ofthe rules by undermin

our objective of standardizing documentation throughout the Port 

another commentator aptly pointed out the laxity and arbitrariness 

documentation procedures have been among the major causes of tr

delays and disputes between motor carriers and terminal operato

Consequently in the interest of standardization and giving due regard 

allowing terminal operators some flexibility section SS12 b has be

revised to provide a terminal operator the discretion to vary the forma

a document while requiring him to embody information therein to 

applicable portwide Inorder that the dock receipt will reflect all pertin

information necessary to expedite the movement of cargo we ha

revised the fmal section 551 2b to include certain substantive changes 

19 F M
TRUCK DETENTION PORT OFN Y 33

suggested by the parties which we believe would help further to eliminate

haphazard documentation

Section 5512 c section B3 as originally proposed required the use

ofaparticular delivery order form containing certain specific information

At the outset we would point out that all concerned would benefit from

a standardized delivery order form since it would reduce paperwork and

simplify the processing of such documents However with the introduc

tion ofCustoms new form II RC450 both our proposed standardized

form and another party s proposed replacement which would be aligned

to the U S Standard Master have become incompatible with the purpose

ofthe truck detention rules Le requiring the motor carrier to have in his

possession documents encompassing the information necessary to quickly

gain access to the piers for the delivery or pickup of cargo Without

substantial modification or at worst separate preparation ofthe afore

mentioned forms it would become impossible for either ofthe forms to

conform to the changes affected by this new Customs form

Nevertheless the consensus of the parties hereto is that all that is

needed for the proper delivery of cargo is a document containing

information sufficientto properly identify the shipment to all parties

concerned and to authorize its delivery We agree The use of such a

document will not compromise the needs ofthe motor carriers terminal

operators ocean carriers and others engaged in the interchange of cargo

at the Port of New York Therefore for reasons of security simplicity

and expedition delivery orders to be used need only contain the

information outlined in section 5512 c herein

We have incorporated into our final rule suggestions regarding infor

mation required to be in the delivery order which would not have an

adverse effect on cargo security and the control of cargo The remaining

comments have been found to be ofminimal value towards the adoption

of a practical and useful delivery order Lastly we would explain that the

term address of the terminal as used in section 5512 c 2 section

B3b refers to the terminal designation Le Berth No Port Elizabeth

and not the street address

Because of the similarity of originally proposed sections B5 and B6

they will be discussed together The combined effect ofthese two sections

is to allow the terminal operator to refuse to complete or correct the

documents necessary to effect the pickup or delivery of cargo Three

parties object to granting the terminal operator this option arguing that

the terminal operator would abuse his discretion to the extent of

arbitrarily turning away the motor carrier Therefore we are asked that

both provisions be modified to require the terminal operator to complete

incomplete or correct deficient documents with the charge for such

service shifted to the shipper in lieu of the motor carrier as presently

required by section 5517 c section F3 of our rules

In reply Hearing Counsel point out that I the efficacy of our truck

detention rules is predicated upon the working relationship between motor

19 F M C
34 FEDERAL MARITIME COMMISSION

carriers and tenninal operators not the shipper and tenninal operat

and 2 any economic hardship that may befall the motor carrier effect

by the terminal operator is adirect result of its own action Obviously 

the motor carrier does not request such services from the termin

operator he will have to return to the pier after the documents a

corrected or completed More important we consider the procedure 

outlined in sections B5 and B6 as the fastest method of correcti

inaccurate andor incomplete documents which as all parties agree ha

been a continual source of delay congestion and confusion at the Po

In response to a suggestion advanced by Hearing Counsel we ha

consolidated the language of sections B5 and B6 into one sectio

designated section 5512 e and redesignated proposed sections B7 and 

as sections 551 2 f

and g respectively

Section 5512 f section B7 requires that a tenninal operator provid

written statement to the motor carrier explaining the fonner s reason 

rejecting documents The purpose of this requirement is not to cre

additional paperwork as suggested by one party but rather to elimin

disputes andor misunderstandings and allow the parties concerned 

document delay and thereby attribute fault

Section 551 2g section B8 as originally proposed required that a

authorization for the delivery of cargo from one location to another 

certain specific enumerated circumstances must have the written appro

ofthe ocean carrier involved This section further required that any de

occasioned thereby be excluded from computation ofpenalty time Up

review of certain ofthe comments we agree with Hearing Counsel t

since this section affects only the relationship between steamship com

nies and terminal operators the final determination as to whet

authorization should be oral orwritten should be left to the discretion 

the parties concerned We are not persuaded by the argument of one 

the parties that this will put the tenninal operator at a decided disadv

tage where the steamship company Claims the delivery of cargo was 

authorized

We do however find merit with one commentator s argument t

because any delays caused by the changes described in this section 

matters both within the control of and for the benefit of the steams

company or tenninal operator depending on the circumstances neit

should be absolved from liability The shipping public should not 

penalized because either ofthe persons in issue elect to make achange 

their operations without adequate opportunity to correct documents 

reflect the change

In view of the above section 551 2g has been revised to delete 

in writing requirement and to provide that the delay occasioned 

certain circumstances shall be chargeable to the party responsible for s

change

Sections 5513 5514 and 5515 sections C D and E generally 

forth the various procedures to be employed at a tenninal under 

19 F M 
TRUCK DETENTION PORT OF N Y 35

appointment system nonappointment system and acombination ofboth

Here it should be pointed out as a general matter that while the Port

Adjudicator is authorized to settle disputes concerning specific claims

submitted pursuant to this Part this will in no way oust the Commission

ofjurisdiction under section 17 ofthe Act

We have modified section 551 3 a section Cl b to require the

terminal operator to identify the terminal operator employee granting the

appointment in addition to listing the information already required by this

section In case of disputes such additional information will make it

easier for a person requesting an appointment to substantiate that an

appointment was granted

Section 5513 b section C2 relates under what circumstances the

terminal operator shall grant an appointment In response to the com

ments of two of the parties we have modified this section to make it

clear that the term freight release means the notification by the

steamship company to the terminal operator that conditions precedent to

the release ofthe cargo have been satisfied

As originally proposed section 551 3c I section C3 a

required

motor carriers to arrive 15 minutes prior to his scheduled appointment

Certain commentators argued that such a time requirement does nothing

to enhance efficiency particularly when service is provided at a predeter

mined time We agree Since under our rules the motor carrier will be

required to have in his possession the necessary documentation to gain

access to the piers prior to receiving a gate pass the deletion of such a

time requirement would be consistent with the purpose ofavoiding delay

Consequently we have amended our final rules to provide that a motor

carrier need only arrive on time to proceed directly for pickup or delivery

of cargo

Section 5513 d section C4 as proposed establishes when the

computation of time begins at an appointment terminal but excludes

therefrom delays caused by the actioninaction ofthe Bureau ofCustoms

or other governmental agency Because ofCustoms refusal to time stamp

or otherwise document the length of time consumed by Customs

clearance ofdocuments we concur with certain parties that the original

section 551 3d should be revised as suggested by Hearing Counsel By

separately setting out when the gate pass for either a dock receipt or

delivery order will be time stamped we are able to avoid the problems

incurred by the procedures of Customs Thus while a gate pass for a

dock receipt wilI be stamped immediately by terminal personnel the

stamping ofthe gate pass for adelivery order will not be effected until the

motor carrier has proceeded through Customs

We have also incorporated into our final rules a new section 5516

section F Computation of Time In effect this new section wilI

accomplish the same objectives as proposed section C4 that is to

establish a fixed point for the computation of time which takes into

19 F M C
36 FEDERAL MARITIME COMMISSION

1

I

consideration delays as to which the terminal operator can demonst

that he was not responsible

Section 5514 a section 01 requires that service periods be est

lished for each business day at a terminal operating on a non appointm

system One party proposed that this section should also include 

requirement that the terminal operator publish in its tariff the d

capacity of each terminal facility and the number of vehicles to 

scheduled in each service period We do not agree The purpose beh

this section is to grant the terminal operator flexibility in determin

capacity which can change from day to day depending on numer

factors To adopt the revision suggested would we feel stifle any ef

that this section would have in alleviating congestion at the P

Accordingly we have adopted section 01 as proposed and redesignate

section 5514a

Sections 5514c and d establish the procedure for the issuance 

time stamped gate pass which will institute free time for the motor ca

in delivering or picking up cargo Before discussing specific objecti

hereto we would point out that the dock receiptdelivery order its

constitutes the basis for the issuance of the gate pass which is me

being used as an internal control measure Therefore to clarify 

misunderstanding it should be pointed out that the dock receiptdeliv

order is checked for form and authenticity prior to and not after 

issuance of the gate pass However admission to the pier will no

conditioned upon the examination of the substantive contents of 

document Possession ofthe document is sufficient

In commenting one party suggests that the validation time contro

entry to the pier for motor truckers with dock receipts delivery ord

include not only the time stamp on the gate pass but also the t

entered in the terminal operator s security log as is presently being d

at this partfs terminal Ineffect we are asked to require motor carr

upon receiving their time stamped gate pass to proceed to the deliv

receiving clerk s office for the purpose of being time recorded in 

terminal operator s security log The benefit of such aprocedure we 

told is that it will discourage the motor carrier from taking a break 

route from one point to another We see little merit in this propo

additional requirement To permit aterminal operator to record a diffe

time in its own records for the commencement offree time is contrar

the very purpose of our validation and entry procedures under which 

validation time on the gate pass constitutes the official time for 

commencement of free time

Comments were also directed to certain procedures of section 551

section 04 This section in pertinent part provides that Custo

processing would be initiated immediately upon admission to the term

facility and that a Customs time stamp would be issued at the comple

of such processing Thus the time between the validation time on 

19 F 
TRUCK DETENTION PORT OFN Y 37

gate pass and the time stamp ofCustoms would be excluded from the

time allowances provided for loading without penalty For various

reasons the substance of which need not be discussed Customs has

informed us that it will not issue time stamps Because Customs

clearance is an integral and necessary step in the delivery ofimports any

detention rule must be compatible with the procedures of Customs

Therefore we have adopted in our fmal rules Hearing Counsel s revision

ofsections 5514 c and d These new provisions not only eliminate the

requirement that Customs time stamp documents but also simplify the

procedure by allowing the motor carrier upon the validation of his gate

pass on arrival at the pier to proceed directly to Customs for the

processing of his papers Thereafter the motor carrier s papers are

presented to the delivery clerk ofthe terminal operator for the stamping

of the gate pass at which point time for purposes of detention

commences Under the procedure for validation and computation oftime

in section 5516 section Fl the time consumed 1 in obtaining Customs

clearance for delivery orders and 2 between the issuance of the time

stamped gate pass and the subsequent time stamping thereon by the

receiving clerk for dock receipts is excluded from the time for detention

purposes

Further Hearing Counsel s substitutions are consistent with the pur

pose ofthe original sections 5514c and d ie placing the responsibility

on the shipper and motor carrier for preparation and presentation of

correct documentation As presently worded sections 5514 c and d

will stop the current practice ofmotor carriers being denied entry to the

piers because ofimproper documentation

Section 5514 e section D5 allows the motor carrier to elect to receive

apreference slip entitling the motor carrier to service on the next business

day within 30 minutes after issuance of a gate pass One party alleges that

this procedure would be susceptible to abuse by the motor carriers We

do not agree This section is intended to prevent favoritism toward certain

motor carriers by terminal operators by assuring that all motor carriers

will be treated equally As pointed out by another commentator

preference slips are 1 an integral part ofthe time slot or service period

procedures which recognizes that every pier has a maximum capacity

and 2 they encourage orderly scheduling of nonappointment vehicles

In adopting section 5514 e we point out that security problems will

not be aggravated since the vehicle arriving for service under a preference

slip must still possess a delivery order dock receipt

Section 5514 tsection 06 permits the terminal operator to turn away

carriers when the capacity of a terminal facility has been reached but not

before issuing these carriers preference slips for service on the next

business day This section will alleviate the problem of motor carriers

being turned away without service after having waited in line for several

hours

One party asks that we delete section 5514 t

in its entirety urging that

19 F M C
38 FEDERAL MARITIME COMMISSION

i

I

since all motor carriers have received notice that the cargo is ready ev

vehicle which arrives at the pier should be served We disagree W

the fear of abuse of discretion by the terminal operator may have so

theoretical merit the practicalities of the situation dictate that term

operators will want cargo removed from their facilities as rapidly 

possible Therefore it is doubtful that vehicles will be turned aw

capriciously if service of those vehicles is feasible Moreover a 

which would require a facility to exceed its capacity would no

workable

Once the terminal has decided to turn away the motor carrier wi

preference slip there is nothing in the rules that requires the term

operator to reconsider his decision Therefore a motor carrier can

insist on being admitted and serviced to completion This situation sh

allay the fears of one party who was concerned as to who would pay 

the overtime incurred if a motor carrier could successfully insist 

completed service

Additionally to complement the requirements of sections 5512 

and 5516 we have adopted as part ofour final rules Hearing Coun

proposed modification to the last sentence ofsection 5514t

to wit

The preference slip shall be attached to the gate pass when said gate pass is is

and all notations recorded on the preference slip shall be duplicated on the m

carrier s copy of the delivery order or dock receipt

Section 551 7 a section GI as originally proposed assessed a 

penalty against a terminal operator for refusing service to a motor ca

possessing complete documentation An unjustified refusal to ser

motor carrier results in confusion at the pier loss of valuable time to 

motor carrier and a loss of revenue for everyone concerned Co

quently the terminal operator must be given the incentive to minimiz

avoid such confusion Having reviewed the comments we conclude 

the avoidance of this confusion can best be achieved by increasing 

penalty from 15 to 30 rather than by introducing a sliding sca

penalties up to 60 as suggested by one party This rule does 

contemplate that penalties be compensatory but rather that the ch

will encourage accuracy and efficiency Accordingly our final r

provide a 30 penalty for denial ofservice due to the fault of the term

operator

Section 551 7b section 02 assesses a 15 penalty against the m

carrier for failing to meet an appointment We have rejected one pa

suggestion that this section be amended to provide that amotor carri

excused from any penalty for such failure if it is due to the reason

provided in section 551 1g To do as this party urges would only c

endless dispute over the cause of the missed appointment If the pur

ofthese rules is to be achieved the motor carrier must act responsib

its dealings on the pier

However we do fmd merit in another party s observation that se

i

19 F 
TRUCK DETENTION PORTOFN Y 39

551 7b should take into consideration the situation in which the motor

carrier fails to meet an appointment and the terminal operator has

furnished special equipment at the pier Accordingly we have added a

second sentence to section 5517 b which reads If pursuant to

section 551 3b a motor carrier is advised that special equipment will be

required and the motor carrier fails to meet said appointment the motor

carrier shall be subject to a charge of 30 We conclude that the 30

penalty is sufficient incentive for the motor carrier to keep its appoint

ment

Section 5517 c section G3 requires the terminal operator to charge

the motor carrier a 15 penalty for completing or correcting deficient

documents Eight parties commented on this section Three parties argue

this penalty is unreasonably high and unwarranted unless every steamship

company terminal operator and exporter importer is obligated to pay

penalties for every mistake or clerical error made It is further suggested

that the 15 penalty will create an extremely unhealthy climate between

the affected parties because the motor carrier does not prepare the

documentation and disputes over minor corrections will be encouraged

An additional argument urges that since this fee will be passed on the

result will be to discourage use ofthe Port

Hearing Counsel defend the 15 as an appropriate charge encouraging

more care in the preparation ofthe pertinent documents We agree

Notwithstanding fears expressed by certain parties regarding possible

abuse ofthese penalty provisions sound business practices would dictate

wise use ofdiscretion before assessing the 15 penalty

Section 5517 d section G4 as proposed stated that if a motor carrier

seeks and gets a schedule appointment prior to issuance of a freight

release ofthe subject cargo the motor carrier will be penalized 15 Upon

review of the comments we concur that the proper party to be assessed

the penalty is the terminal operator As certain parties pointed out the

freight release involves communication only between the steamship

company and the terminal operator Thereafter the terminal operator

then notifies the broker that the goods are ready for pickup and the

broker in turn calls the motor carrier to come and collect the cargo

Hence the motor carrier does not know whether a freight release has

been issued or not unless he is so informed by the terminal operator

Consequently we do not believe that the motor carrier should be

penalized for seeking a schedule appointment since it is unlikely that he

would make a request for a schedule appointment unless the terminal

operator had advised him through the broker that the freight release had

been issued and the cargo was available

We agree with Hearing Counsel that a 30 penalty in lieu of 15 as

proposed is justified in view oftime lost by the motor carrier when an

error is made in notification

Therefore we have revised section 5517 d to provide for a 30 penalty

assessed against the terminal operator

19 F M C
40 FEDERAL MARITIME COMMISSION

Section 5517 e section OS as proposed provides for the assessm

of a 15 penalty against the tenninal operator for wrongfully advising 

motor carner that cargo is ready and available While four parties ar

that a 15 penalty is inadequate with one suggesting that it be increa

to 65 afifth party contends that any increase in penalty would tend 

slow down the movement of cargo by encouraging overzealous verif

tion and reverification of simple facts We cannot agree with the f

party Considering that the purpose ofthis section is to deter errone

notiftcation of available cargo and that generally considerable relianc

placed upon the tenninal operator s word we agree that an increas

penalty is appropriate Consequently the penalty provided in sec

5517 e has been increased to 30

It has also been suggested that this section require written verifica

that notift ation was made to facilitate motor carriers proof 

notiftcation was given Such a requirement in our opinion is 

unnecessary burden on the terminal operator Itwould not expe

movement of cargo but would merely reenforce any claims by m

carriers Additionally the fact that it is a costly operation for a m

carrier to make a second trip to the piers creates a reasona

presumption that a motor carner would not arnve at the piers witho

prior notiftcation to do so

Section 5517 t section 06 outlines the time allowances applicabl

containers handled as a single unit and to noncontainerized cargo u

an appointmentJnonappointment system Two parties argue that 

allowances prescribed in this section should confonn to those establis

by the ICC Not to do so they urge will only serve to confuse ship

and to create unnecessary complications in billing for and collection 

detention charges Hearing Counsel argue that the ICC detention 

provisions serve different objectives than those ofthis proposed rule 

agree

The ICC rules pennit reimbursement to the motor carner for all de

at marine tenninal facilities for which the motor carner is not respons

However this reimbursement comes to the motor carrier from 

principal who pays the charges Our rules which establish penalties 

unreasonable delays for which the tenninal operator is responsible 

designed to have the responsible tenninal operator pay for the deten

ofthe motor carner The key to our rule is the relationship ofthe tru

to the terminal operator and not ofthe trucker to its principal

Further we are persuaded that certain beneftts will override 

confusion that may occur from having two divergent detention char

With the time stamped gate pass the trucker will be able accurate

compute the amount owed him by his principal Further that amou

subject to be offset in an amount equal to the detention charges colle

from the tenninal operator This arrangement may also have the effe

encouraging importers exporters to use the Port Accordingly we 

incorporated section 5517 t

as proposed into our fmal rule

19 F 
TRUCKDETENTION PORT OFN Y 41

Section 5517 h I section G8 a as proposed assesses a 65 penalty

against the terminal operator who refuses service to a motor carrier

holding an appointment when the refusal is due to a lack of manpower

Under this section it is no excuse as noted by one party that the

terminal operator did not anticipate the needs of a particular cargo We

consider such a predicament to be preventable by foresight on the part of

the terminal operator and not a situation beyond his control Implicit in

this section is the obligation ofthe terminal operator to complete loading

unloading the motor carrier admitted to the terminal facility A part of

that obligation is the responsibility of the terminal operator to foresee

labor problems which would tend to delay operations

Additionally because this section is designed to act as an inducement

for orderly and efficient scheduling of motor carriers we agree with

Hearing Counsel that the penalty should be reduced to 30 A 30 penalty

is consistent with other penalty sections ofthis Part Therefore we have

adopted section 5517 hl

as modified by the reduced penalty

Comments on section 5517 h 2 were directed only to that portion

which relieves the terminal operator of the 65 penalty if he refuses to

service a nonappointment vehicle as a result of labor s refusal to work

overtime It is argued that because the terminal operator is responsible

for its labor it should not be absolved from liability Hearing Counsel

reply that a refusal under the aforementioned circumstances is equivalent

to a work stoppage and under the theory of section 551 1

g

section A7

the terminal operator should be relieved ofany liability for the actions of

labor under the circumstances We agree

Distinguishing this section from section 5517 h lwherein the terminal

operator is liable for labor s refusal to work overtime we would point out

that aterminal operator has the time to anticipate the services that can be

rendered with reference to motor carriers holding appointments while not

so with nonappointments Accordingly we have adopted as part of our

final rule section 5517 h 2 as proposed except that for the same

reasoning as employed in section 5517 h i

supra we have reduced the

penalty to 30

Section 5518 section H in general sets out the procedure for the

submission of claims for penalties Upon review ofthe comments we

find that many of the suggestions and rationale have considerable merit

Consequently in the fmal rule section 5518 has been revised to be more

responsive to these constructive comments This generally conforms to

Hearing Counsel s proposal with certain minor modifications of our own

We are in total agreement with those parties who submit that claim

forms as originally proposed are unnecessary For purposes of this rule

all that is necessary is a

copy ofthe dock receiptdelivery order with its

accompanying documentation supported by a brief explanation of the

facts giving rise to the claim and the dollar amount of such claim In

accordance with section 5512 a I the necessary information will be

19 F M C
42 FEDERAL MARITIME COMMISSION

duplicated on a copy ofthe appropriate document which the motor ca

will always have in his possession

While we agree with the basis ofHearing Counsel s proposed exten

of filing claims from 15 days to 60 days we believe that a45 day pe

would be more reasonable A 45 day period is quite enough tim

discourage any possible laxity in preparation for filing a claim and at 

same time will not prejudice the parties concerned Further we a

with the suggestion of one party that all periods of 15 days as propo

by Hearing Counsel should be expanded to 20 days so as to be m

realistic and to increase the likelihood ofcompliance

One party noted that the original proposed section H did not cove

situations where steamship companies are responsible for delays 

trucks The example cited is the premature issuance of a freight rele

resulting in the motor carrier being notified that the shipments 

available when in fact they are not We are told that the term

operator might under the circumstances reject a claim on the ground 

the delay was caused by the steamship company In order to cure 

deficiency we have amended section 5518 e I section H5 a to inc

the following language or otherwise denies a claim on the gro

that the delay was caused by the steamship company

Therefore pursuant to section 4 ofthe Administrative Procedure 

5 D S C 553 and the Commission s authority under sections 17 an

ofthe Shipping Act 1916 46 D S C 816 84la Title 46 CFR is he

amended

Effective date These rules and regulations shall become effective 

days after publication in the Federal Register

By order ofthe Federal Maritime Commission

SEAL S FRANCIS C HURNEY

Secretary

The text oftheamendment is reprinted in 46 CFR Part 551

19 F M
FEDERAL MARITIME COMMISSION

No 7414

POSSIBLE VIOLATIONS OF SECTION 18 a OF THE SHIPPING ACT 1916

AND SECTION 2 OF THE INTERCOASTAL SHIPPING ACT ARISING FROM

CHARGING HIGHER RATES THAN SPECIFIED BY CURRENT TARIFF

NOTICE OF ADOPTION OF INITIAL DECISION

November 6 1975

No exceptions having been taken to the initial decision in this

proceeding and the Commission having determined not to review same

notice is hereby given that the initial decision became the decision of the

Commission on November 6 1975

In accordance with the conclusions reached in the initial decision and

adopted hereby it is ordered that Tariff FMC F No 1 of respondent

Hawaii Freight Lines Inc is cancelled

By the Commission

SEAL S FRANCIS C HURNEY

Secretary

19 F M C 43
FEDERAL MARITIME COMMISSION

No7414

POSSIBLE VIOLATIONS OF SECTION 18 a OF THE SHIPPING ACT 19

AND SECTION 2 OF THE INTERCOASTAL SHIPPING ACT ARISING FR

CHARGING HIGHER RATES THAN SPECIFIED BY CURRENT TARIFF

Adopted November 6 1975

Respondent Hawaii Freight Lines Inc HFL found to have offered a transpor

service between San Francisco and Los Angeles California and Hawaii durin

period commencing onor about June 27 1968 and ending in early 1974 and to 

offered such service as a nonvessel operating common carrier NVOCC subj

the provisions of the Shipping Act 1916 and the Intercoastal Shipping Act 

One such as HFL who held out to the general public to carry goods for hire so 

constitute a common carrier is not a shipper s agent although he may not o

operate transportation equipment

One who operates as a common carrier wiD have liability for loss or damaae to 

carried imposed upon him by law by virtue of his occupation and mere disclaim

liability can have no bearing on the determination of his common carrier statu

A common carrier is such by what he does and how he operates and not by 

designations he applies to himself

HFL found to have violated section 18 a of the Shipping Act 1916 and section 2 

Intercoastal Shipping Act 1933 by charging rates higher than those specified 

tariffon file with the Federal MaritimeCommission

Since HFL has refused to respond to an order of the Commission to furnish inform

pursuant to section 21 of the Shipping Act 1916 and has furthermore c

operations HFL s tariffis canceled

William H Dodd for respondent Hawaii Freight Lines Inc

Donald J Brunner and Joseph B Slunt as Hearing Counsel

INITIAL DECISION OF NORMAN D KLINE ADMINISTRAT

LAW JUDGE 1

This proceeding was instituted by the Commission by means 

Order to Show Cause served April 18 1974 In this Orde

Commission stated that respondent Hawaii Freight Lines Inc H

had filed a tariff with the Commission on June 27 1968 as anonv

operating common carrier NVOCC operating between San Franc

California and other West Coast ports to Hawaii The Order re

furthermore that this tariff specified a rate for mixed freight FAK o

1This decision became the decision of the Commission November 6 197 5

44 19 F 
CHARGING HIGHER RATES THAN TARIFF 45

per cubic foot and also contained aclause Item 200 Provision 4 limiting

HFL s liability to damage occurring while cargo was in its personal

possession and disclaiming liability for losses incurred during ocean

transport unless the vessel was owned or demise chartered by HFL

Although the Commission notified HFL that Provision 4 was inconsist

ent with its legal obligations as a common carrier and requested that an

appropriate amendment be submitted the Order stated that HFL did not

submit such an amendment Furthermore on or about December I 1971

according to the Order HFL began charging shippers anFAK rate of 78

per cubic foot without having submitted a revised tariff to the Commission

and upon inquiry by the Commission HLF stated that it was not a

common carrier but rather a shipper s agent which could freely adjust its

rates without filing tariffs with either this Commission or the Interstate

Commerce Commission LC C despite the fact that the LCC had found

HFL to be a common carrier under Part IV of the Interstate Commerce

Act as to certain of its operations not under consideration here 2

After

the decision ofthe IC C the Commission stated that HFL continued its

operations by utilizing the underlying services of Matson Navigation

Company Matson

Since it appeared to the Commission that HFL washolding itself out as

an NVOCC issuing through bills oflading in its own name appearing on

bills of lading issued by water carriers operating under the jurisdiction of

the Commission as both shipper and consignee and not as agent soliciting

business as an NVOCC etc the Commission ordered HFL to show

cause why it should not be found in violation of section 18 a of the

Shipping Act 1916 the Act and section 2 ofthe Intercoastal Shipping

Act 1933 by charging higher rates than thos specified in its tariff In

addition to the foregoing however the Commission ordered an extensive

examination into the operations of HFL from December 1 1971 to

establish whether HFL was an NVOCC subject to the cited provisions of

law and to determine with particularly whether HFL had in fact violated

these laws

On October 23 1974 the Commission ordered this proceeding to be

enlarged to determine what if any sanctions should be applied to HFL

l Star Forwarders Inc v Hawaii Freight Unes Inc Docket No FFC33 Decision and Order served October

14 1970 unreported In the cited case the I C C had found that HFL had been operating as a freight forwarder

under part IV of the Interstate Commerce Act i e as acommon carrier as to certain of its operations in which it

directlyemployed motor carriers certificated under Part 11 of theAct Some time after that decision HFL discontim ted

this type of service and at least in the San Francisco area utilized the services of Matson Navigation Company under

Matson s tariffon file with this Commission Under the decision in IML SeaTransit Ud v United States 343 F

Supp 32 N D Calif 1972 affirmed 409 U S 1002 1972 rehearing denied 409U S 1118 1973 HFLs utilization

ofan FMC regulated serice renders HFL an NVOCC subject to FMCjurisdiction In the Los Angeles area HFL did

not restrict its operations to FMC regulated tariffservices and on occasion HFL itself did provide pickup service

Therefore some portion of HFL s Los Angeles services constituted those of aPart IV freight forwarder not an

NVOCC IMLSeatransit cited above at p 42 Although there is no evidence in the record as to HFLs operations

at the Hawaiian end of its service its tariffshows that HFL maintained a

terminal there and on request furnished

delivery service to consignees According to the court in Hawaiian Express Service Inc v Pacific HawailaA

Terminals Inc 492 F 2d 865 867 9th Cir 1974 however the use of motor carriers in Hawaii would not conver

HFL from an NVOCC into a Part IV Freight Forwarder

I

19 F M C
46 FEDERAL MARITIME COMMISSION

Because of HFL s failure to respond to an order of the Commis

issued under section 21 ofthe Act on February 1 1973 3

Shortly after the commencement of this proceeding counsel for 

advised that HFL terminated its operations and was preparing to liqu

the company Counsel advised furthermore that HFL would coopera

bring the proceeding to a conclusion 4

In view ofthe circumstance

evidentiary hearing was not necessary Hearing Counsel introd

evidence into the record without objection and partially on the basis 

stipulation to certain facts The evidence consists essentially of 

deemed admitted under Rule 12 h 46 CFR 502 208 a the stipula

letters to HFL s shippers by Hearing Counsel with responses statem

ofCommission field investigators HFL freight bills and manifests b

lading issued by Matson and tariff pages of HFL Matson United S

Lines and Seatrain Lines California See Motions to Admit Evid

and Close the Record Granted June 30 1975 This body of evid

supports the following fmdings of fact as proposed by Hearing Cou

References are to the exhibits and tariffpages or items

FINDINGS OF FACT

1 From June 27 1968 when its tariff fIled with the Federal Mar

Commission until early 1974 Hawaii Freight Lines was engaged i

business of arranging for the transportation of cargo by water from th

S West Coast to Hawaii Ex 1 Para 1 Ex 2 B through 2 I Aus 

12

2 During the above period of time HFL would receive va

shipments from shippers consolidate such shipments into contai

arrange for the ocean transportation and ultimate delivery to the cons

in Hawaii Ex 1 Para 2 Ex 2 B Ans 9 and 12 Ex 3

3 During the above period of time HFL solicited cargo in its 

name by means ofdirect advertising and use of sales personnel E

Para 3 Ex 2 B through 2 I Ans 1 and 2

J HFL had been lnctuded as one of 51 NVOCC s which had ftled tariffs with the Commission as to w

Commission was seekins information rCllardlna current operations in Docket No 73 56 Non Vessel Op

Common Carriers I the DomesticOffshore Trades Rather than cancel HFL 8 tariffin that proceedina forfa

respond the Commission transferred di8posith nof this matter to the present proceeding Docket No 7356 

above Order ofDJscontJnuance Octobor 23 J974

l Althouah copnsel for HFL ha rued no objections in this proceedina he allO indicated puzzlement 8S to 

proceedina should continue Despite my notice to the parties thata

joint motion to discontinue seemed appr

no such motion was filed See CanceUation of PrehelUina Conference and Special Procedural Notice May 1

Absent objection and considering the views of Heartna Counsel that continuance of theproceeding would 

usefuJ purpose I

snmted HearinJ CoumeJs motion to admit evidence close the record and permit briefina 

HFL s financial predicament I am aware that its tariff has not yet been canceled Theoretically ifviolations are 

shipVCrs usingHFL services have a

riaht tofaJe complaints seekina reparation Furthermore the Commiss

issued decisions in previous easel for procedentiaJ value despite the apparent mootncss of the cases involve

e g Ra es HongKong Udted S ates Trade JJ F M C J68 J73 1967 AmericanExport Isbrafldtsen Line

J4 F M C 82 90 910 Therefore despite HFL s demise its previous denial of common carrier sta

diliclaimer of common carrier liability raise sianificant issues whose resolution should have precedential val

regard to other companies operatina in asimilar fasmon

19 F 
CHARGING HIGHER RATES THAN TARIFF 47

4 During the above period of time HFL accepted liability for loss or

damage to cargo entrusted to it for transportation to Hawaii and in fact

did pay claims presented by various shippers Ex I Para 4 Ex 2 B

through 2 I Ans 6

5 HFL made no oral representations to its shippers ofits intention to

disclaim liability for loss andor damage to cargo Ex 1 Para 5 Ex 2 B

through 2 I Ans 7

6 HFL s still effective tariff on file with the FMC has continuously

specified a rate from the U S West Coast to Hawaii of 72 per cubic

foot Ex 1 Para 6 HFL Tariff FMC F No 1 Original Page 38

7 During the above period of time HFL charged shippers varying

amounts ranging from 72 to 91 per cubic foot for transportation of

FAK to Hawaii from the U S West Coast Ex 1 Para 1 Ex 2 B

through 2 I Ans 10 Ex 4 Para 2

8 During the above period of time HFL selected the underlying

carriers to be utilized for the water portion ofthe transportation to Hawaii

and at no time did any shipper have a voice in that selection Ex 1 Para

8 Ex 2 B through 2 I Ans 14

9 HFL s Tariff FMC F No 1 contained a bill oflading provision

which appears to disclaim HFLs liability for loss or damage to cargoes

incurred during ocean transportation if the vessel utilized is not owned or

demise chartered by HFL HFL Tariff FMCF No 1 Provision 4 Item

200 However as shown by the responses to a questionnaire contained

in Ex 2 B through 2 I most of HFL s shippers were not aware ofthe

existence of HFL s Tariff and they had not been informed that HFL was

not liable for its shipments while they were not in HFL s possession Ex

2 B through 2 I Ans 6 In fact HFL s shippers did consider HFL liable

for its shipments Ex 2 B through 2 I Ans 6

10 Starting in October 1970 according to Mr Kesley MacMeekin the

Manager of HFL s San Francisco Office HFL would not arrange for the

pick up or delivery of shipments to HFL Mr MacMeekin advised the

Commission s District Investigator James A Glugoski that when he

received an inquiry for a shipment to be consolidated he advised the

customer that HFL is only a consolidator and cannot legally arrange for

the pick up ofthe shipment He informed the customer that the customer

could arrange for trucking by any motor carrier or its could use Jim s

Trucking Co Jim s at whose terminal HFL is located He would then

give the customer the telephone number ofJim s Trucking Co Jim s was

HFL s San Francisco agent for stuffing containers Ex 3 Para 2

11 Mr James Stewart Operator of Jim s advised District Investigator

Glugoski that Jim s acted as HFL s agent only with respect to stuffing

and loading containers but not with respect to any pick up and delivery

19 F MC
48 FEDERAL MARITIME COMMISSION

1

orhauling offull or empty containers to the carrier s container yard 

advised that when Mr MacMeekin was away from the office he o

employees would answer HFL s

telephone 8247049 He stated that 

MacMeekin had ordered him not to arrange for pick up of cargo w

speaking to shippers on HFL s

telephone His orders were to tell 

caller that HFL could not pick up the shipments but that the caller c

provide his own trucker or telephone Jim s at another number on 

same premises 863 1735 He advised that this was done to avoid b

classified by the Interstate Commerce Commission as an unlicensed 

IVInterstate Commerce Commission Freight Forwarder He advised 

many times the caller would then call the number of Jim s and he o

employee would then arrange for pick up service Ex 3 Para 2

12 Mr Patrick Breslin Terminal Manager Shipper Imperial Inc 

Shippers ncinal Express Inc confirmed with District Investig

James A Glugoski that his company is an agent of Matson Naviga

Company Matson and acts as its motor carrier ofcontainers in the 

Francisco Bay Area He stated that he dispatched drivers to HFL at 

Loomis Street San Francisco to pick up full containers and leave em

containers He stated that HFL and or Jim s do not haul any 

containers from HFL s terminal to Matson s container yard He sho

dispatch records and truck driver s logs to substantiate his statement 

all trucking is performed by his company He said that Jim s may h

picked up a few empty containers from the container yard Ex 3 P

4

13 HFL s manifests for the period from February 1973 to April 

show that except for one instance HFL utilized Matson as the unde

ocean carrier for all its shipments from San Francisco during this p

Ex 4C Pages 1 through 233

14 HFL s shipments via Matson were carried pursuant to Matson 

water tariff on file with the Federal Maritime Commission This 

provides for port zone pick up and delivery service and the servi

performed by a motor carrier acting as Matson s agent Ex 4 Pa

Ex 4 B Pages 1 through 52 original pages 26 through 31 first rev

page 32 original page 33 and fIrSt revised page 146 ofMatson Westb

Container Freight Tariff No 14B FMCF No 146 original page

through 36 and first revised page 186 ofMatson Westbound Cont

Freight Tariff No 14C FMCF No 150

15 From Los Angeles HFL also regularly utilized Seatrain L

California Seatrain and United States Lines Inc U S L vessels 

4 D Pages 1

through 242 Ex 4 Para 4 Seatrain s Container Fr

Tariffdid not provide pick up service for FAK shipments at Los An

Seatrain Lines California Freight Tariff No i A FMCF No 4 or

pages 22 and 46 U S Ls Freight TariffNo I FMCF No 53 pro

for pick up service for FAK shipments from both the San Francisco 

1

I

1

19 F 
CHARGING HIGHER RATES THAN TARIFF 49

Los Angeles areas Note 6 second revised page 20 original page 9 flfst

revised page 10 original pages 11 through 18 first revised page 19

original page A 19 ofU S LFreight TariffNo 1 FMCF No 53

16 HFL s Tariff provided for delivery of cargo to HFL s terminal in

Hawaii or for an additional charge delivery to consignee s premises if

requested HFL TariffFMC F No 1 Items 300 and 330

17 On February 1 1973 the Commission issued an order pursuant to

section 21 of the Shipping Act 1916 46 USC 820 requiring HFL to

complete and return a questionnaire attached to the order Ex 2A Para

3

18 HFL niether applied to the order nor responded to the question

naire The section 21 Order specifically warned the parties to which it

was directed that a failure to furnish the information requested would

result in the institution of a proceeding to determine whether their tariff

should be cancelled as aresult oftheir failure to respond Ex 2A Para

5

19 As a result of HFL s failure to answer the questionnaire or

otherwise respond to the section 21 Order an Order to Show Cause was

issued by the Commission directed to HFL However HFL still failed to

reply to the questionnaire or comply with the section 21 Order Ex 2A

Para 6

20 HFL is no longer actively engaged in any business activity and

does not intend to resume any activity in the future The corporation is

presently in the process of declaring bankruptcy pursuant to its being

dissolved Ex 2 Para I HFL has no objection to the cancellation ofits

tariff Ex 2 Para 2

DISCUSSION AND CONCLUSIONS

The three ultimate issues for decision in this proceeding are 1 Do the

operations ofHFL shown on the record demonstrate that HFL s status

was that of an NVOCC subject to the provisions of the Shipping Act

1916 the Act and the Intercoastal Shipping Act 1933 the 1933 Act 2

If so did HFL violate section 18 a of the Act and section 2 ofthe 1933

Act by charging higher rates than those specified in its tariff fIled with the

Commission 3 Should any sanctions be applied to HFL because of

HFL s failure to respond to an order issued by the Commission pursuant

to section 21 ofthe Act

The difficulty of this case is not in deciding the latter two issues The

record demonstrates as Hearing Counsel have shown that HFL charged

varying rates ranging from 72 to 91 per cubic foot while in business

commencing on or about June 27 1968 to early 1974 despite having a

tariff on file with the Commission which specified an FAK freight all

kinds rate of 72 per cubic foot for transportation of goods from West

19 F MC
50 FEDERAL MARITIME COMMISSION

Coast ports to Hawaii The refusal to respond to the section 21 Ord

similarly a fact which is undisputed and the sanction to be applie

clear ie cancellation of the tariff Non Vessel Operating Comm

Carriers in the Domestic Offshore Trades Docket No 73 56 Orde

Show Cause September 7 1973 5

The more difficult problem i

determine whether HFL s status under the law was that ofan NVO

despite contentions that it acted merely as shipper s agent and discla

liability for loss or damage incurred during ocean transportation if 

vessel utilized was not owned or demise chartered by HFL For 

following reasons Ifind that HFL did act as an NVOCC fully subje

the shipping acts cited above rather than as shipper s agent and tha

disclaimer of liability had no effect as a matter oflaw on its status 

common carrier

Although neither section 1 of the Act nor section 5 of the 1933 

defines the term common carrier 6

it has long been held that this 

means the common carrier at common law See TariffFiling Pract

Etc of Containerships Inc 9 F M C 56 62 1965 and numerous c

cited therein There are several versions ofthe common law defmition 

essentially the same such as the following

I

I

I

one who by a course of conduct holds himself out to accept goods from whom

offered to the extent of his ability to carry Tariff Filing Practices Etc ofConta

ships Inc cited above at page 62

one who undertakes for hire to transport the goods of those who may choo

employ him Agreement No 7620 2 U S MC 749 752 1945

one who undertakes for hire to transport the goods of those who may choo

employ him from place to place He is in general bound to take the goods of al

offer unless his complement for the trip is full or the goods be of such a kind as 

liable to extraordinary danger or such as he is unaccustomed to convey The Nia

v Cordes 62 U S 7 22 858

The essentIal characteristics of the common carrier at common law are that he 

himself out to the world as such thlit he undertakes generally and for all pe

indifferently to carry goods for hire Philip R Consolo v Grace Line Inc 4 F 

293 300 1953

The determination of common carrier status can be made by refer

to a number ofindicia e

g variety ofcargo carried number of shipp

type of solicitation regularity of service port coverage responsib

toward the cargo issuance of bills oflading etc TariffFiling Pract

etc of Containerships Inc cited above at p

65 Itis not necess

however that a carrier s operations encompass everyone of th

9 factors As the Commission stated

J

i

S The Commission s

reaulations also require the cancellation of HFL s tariff because it has ceased operatio

CFR531181I

6

Section J of tho Act merely d fJnes common carrier by watel in interstate commerce 8S a

common 

enlaled in the transportation by waterof pas8onlors orproperty on the hllh seas orthe Great Lakes on 

routes from port to pQrt between one State and any otber State ISection ofthe 1933 Act merely r

section I of the 1916 Act Sianiflcantly in the lelisladve history to the J916 Act thero is adJscussJon ofthe dis

between a

common carrier and tramp vessel in which reference is made to thocommon law deftnition ofc

carrierquoted In The NioNOIO v Cordel 62 U S 7 22 1858 quoted In thebody ofthls decision below Hea

H R 14337 before the Committee 00 the Merchant Marine and Fisherles House of Represeotatives 64th Co

S April 13 1916 pp 1011 194

19 F 
CHARGING HIGHER RATES THAN TARIFF

The absence of one or more of these factors does not render the carrier noncommon

and common carriers may partake of some or all of these enumerated characteristics in

varying combinations d p 65

The fact that a carrier such as HFL does not itself own or operate

transportation equipment does not destroy its common carrier status The

Commission has for some time recognized the so called NVOCC a

common carrier publishing atariff and offering atransportation service to

the shipping public who neither owns nor operates vessels or motor

vehicles Bernard Ulmann Company Inc v Porto Rican Express

Company 3 F MB 771 775 1952 Determination of Common Carrier

Status 6 F M B 245 251 52 25657 1961 Puget Sound Tug Barge

v Foss Launch and Tug Co 7 F M C 43 49 1962 General Order 4

46 CFR 51O 21 d For purposes of tariff filing and other laws and

regulations the Commission does not generally distinguish between the

vessel operating and nonvessel operating common carrier Filing of

Through Routes andJoint Rates 11 SRR 574 578 1970 Determination

of Common Carrier Status cited above at pp 252 25657 1

This of course is not the first case before this Commission in which a

respondent carrier has contended that it is not subject to regulation by the

Commission on one ground or another usually purporting to show that

the carrier is not acommon carrier Sometimes the carrier contended that

its service was conducted pursuant to special contracts with shippers or

that it did not solicit or advertise or publish sailing schedules or that it

assumed no common carrier liabilities or that its service was limited to a

small portion ofthe general public or that it was a non profit business

etc See TariffFiling Practices Etc ofContainerships Inc cited above

Investigation of Tariff Filing Practices 7 F M C 305 1962 The

Commission has uniformly rejected these contentions in order that the

beneficial and remedial purposes inherent in tarifffiling and other provi

sions ofthe laws it administers will not be circumvented In this regard

the Commission has stated

Clommon carrier however is not a rigid and unyielding dictionary definition but

a

regulatory concept sufficiently flexible to accommodate itself to efforts to secure the

benefits of common carrier status while remaining free to operate independent of

common carriers burdens Tariff Filing Practices Etc of Containerships Inc cited

above at p 65

One of the purposes of the Shipping and Intercoastal Acts was to remedy various

discriminatory practices prevalent in the shipping industry concerning establishment and

maintenance of rates and fares The acts however limit the Commission s regulatory

jurisdiction in this matter to common carriers In order to effectuate the remedies

intended by the enactment of a regulatory statute such as these it is necessary to allow

flexible and liberal interpretation of the statute In this respect the court in case citation

1

Similarly both the Interstate Commerce Commission and Civil Aeronautics Board have for years dealt witb

express companies and forwarders as common carriers See discussion on this point in 2 U S Code

Congressional Service 81st Congr 2d Sess relating to enactment ofan amendment to Part IV of the Interstate

Commerce Act by Public Law 8181 pp 422223

19 F MC

51
52 FEDERAL MARITIME COMMISSION

j

1

omitted stated In determining the truenature of the transportation it is nece

to have in mind the purpose of the Act the Interstate Commerce Act In add

the court should have in mind the fact that this legislation is remedial and shou

liberally interpreted to effect its evident purpose and tbat exemption from tbe oper

of the act should be limited to effect the remedy intended Tariff Filing Practices 

ofContainerships Inc cited above at p

69

HFL s contentions that it acted merely as a shipper s agent 

assumed no liability for loss or damage while goods were in the cus

ofthe underlying ocean vessel must be evaluated in the above conte

If one thing can be clearly established it is that it is not acarrier s 

declarations that determine its status under the law but rather ho

operates In Transportation U S Pacific Coast and Hawaii 3 U S M

190 196 19S0 the Commission stated

Noris a holding out as a common carrier nell8tived as Mills contends it is by the 

that the printed terms and conditions of the common carrier form of bill of lading w

he used were crossed outand the shipments covered by separate contracts Com

carriers are such by virtue oftheir occupation notby vmue ofthe responsibilities u

which they rest Case citations omitted Emphasis added

InInvestigation ofTariffFiling Practices cited above the Commis

stated

If it means that the carrier has notsouaht or willingly assumed common ca

obligations this while true is of no aid to the carrier Common carrier status 

obligations are results of a carrier s operations not Its desires 7 F MC at p

Emphasis added

Again in TariffFiling Practices Etc ofContainerships Inc c

above the Commission stated

In Bernard Ulmann Co Inc v Porto Rican Express Co 3 F M B 771 775 

the Commission aptly stated that a carrier s status Is determined by the nature 

service offered to the public and 1I0t upon Its own declarations A close look 

activities is necessary 9 F MC at p

64 Emphuis added

Finally in United States v California 297 U S 17S 181 1936 

Supreme Court stated

whether a

transportation agency is a common carrier depends notupon its corp

character or declared purposes but upon what it d

es

See also Terminal Taxicab Co v Dist of Columbia 241 U S 

254 1916 United States v Brooklyn Terminal 249 U S 296 1919

Similarly the Interstate Commerce Commission determines the st

ofthe carriers it regulates on the basis of those cwers operations 

the carriers self descriptions or self designations See Yankee Shipp

Agent Inc Investigation 326 IC C 328 1966 Barre Granite As

Inc Freight ForwarderApplication 26S J C C 637 639 1949

HFL hiS fUod no brief and J not proa ntly makJna thOle contentJoDJ However accordlnJ to the Ordor 

initiated tN proceedil18t tholecontentions wore made wbile HFL wasBoUvely enpaed inbUlinel1 upon inqu

the Commllsion s staff As explained earlier resolution ofi

lues railed by such contentions will have prece

value in case other companies are operatina in similaf falbion

t

The atatement in theBerl1ard U1mlmn Co case actually appeals on pp 77 77 aa followa

But wedeem that respondent a 8tatUI depends upon th natqre ottbe service oftered to the pubUc and not up

own declarationa Citing Bank ofKentuclcy v Adams Expresa Co 93 U S 174 180 1816

19 F 
CHARGING HIGHER RATES THAN TARIFF 53

It is readily apparent from a review ofthe record that HFL conducted

itself as a common carrier and not as a shipper s agent HFL solicited

cargo in its own name by means ofadvertising and use of sales personnel

and provided a transportation service for an indefinite multitude of

shippers utilizing the underlying services ofwater carriers After surren

dering their cargo to HFL furthermore the shippers exercised no further

control in the selection ofthese underlying carriers Even though HFL s

tariff contained a disclaimer of liability furthermore HFL made no oral

disclaimer to shippers and in fact did pay claims presented by various

shippers It is evident that HFL was offering to the general public a

coordinated transportation service including consolidation at its terminals

transportation by water and distribution to consignees in Hawaii and

that the shippers utilizing HFL s service had no authority to alter the

service 10 The contention that HFL acted merely as shipper s agent is

therefore totally without substance That such an operation is that ofa

common carrier has been recognized for many years in the most closely

analogous situation in transportation Le the freight forwarder regulated

under Part IV ofthe Interstate Commerce Act 49 U S C 1001 et seq In

Chicago Etc R Co v Acme Fast Freight 336 U S 465 484 485

1949 the Supreme Court discussed the difference between the forwar

der who merely booked or dispatched cargo and the forwarder who

operated like HFL Le engaged essentially to deliver less than carload

lots safely at ultimate destination while employing underlying equipment

operating carriers in the fulfillment ofthis service The former type was

recognized as a mere shipper s agent but the latter was held to be a

common carrier with common carrier liability The Interstate Commerce

Commission has not hesitated in finding the latter type operator to be a

common carrier pursuant to section 402 a 5 of the Freight Forwarder

Act 49 U S C l002 a 5 See Yankee Shippers Agent Inc Investiga

tion cited above Barre Granite Assn Inc Freight ForwarderApplica

tion cited above Star Forwarders Inc et af v Hawaii Freight Lines

Inc et al cited above Universal Transcontinental Corp F F Applica

tion 260 IC C 521 52223 1945

HFL s contention that disclaimer ofliability in its tariff orbill oflading

signifies that its service was not that of common carriage is similarly

without substance The fact is that HFL did honor some claims and

shippers were not aware ofthe disclaimer But even if HFL had fully

implemented the disclaimer provision in its tariff this fact alone has no

legal significance in determining HFL s carrier status Several of the

previous cases discussed also stand for the proposition that one holding

himself out to perform atransportation service in the mannerofHFL will

have liability imposed upon him by law by virtue of such an occupation

10 Indeed HFLs tariffspecifically states

Carrier does not agree to transport shipments on any particular vessel nor in time forany particular market HFL

Inc Tariff FMC F No I

Item 90

19 F MC
54 FEDERAL MARITIME COMMISSION

and this Commission has shown itself alert to counteract effort

secure the benefits of common carrier status while remaining fre

operate independent of common carriers burdens TariffFiling P

tices Etc ofContainerships Inc cited above at p65

In Yankee Shippers Agent Inc Investigation cited above 

Interstate Commerce Commission stated

Regardless of its Yankee s avowed disclaimer of responsibility for the safe tran

tation of property under its control as a freight forwarder its service is held out t

performed for the genera public and damage claims are handled by Yankee There

it must be held to have assumed all the burdens incidental to the complete transport

service which it proffers Case citation omitted Disclaiming responsibility doe

change this fundamental fact nor permit Yankee to escape regulation Univ

Transcontinental

Corp

P P Application 260 I C C 521 522523 326 IC C a

333 34

InHopke Freight ForwarderApplication 285 IC C 61 64 1951 

Interstate Commerce Commission similarly stated

In case citation omitted we found that if a service in all other respects that 

freight forwarder is held out to and performed for the general public the pe

providing such service must be held to have assumed the burdens incident the

among which the responsibility to the shipper for the safe transportation of its prop

As Hopke s service is held out to and performed for the lIenera public we find th

is responsible to shippers for the transportation of their property

For similar holdings see also R T C Term Corp Freight Forwa

Application 265 IC C 641 643 1949 Universal Transcontinental C

F F Application cited above 260 IC C at p 523 Modern Interm

TrajCorp Investigation 344 IC C 557 570 1973

Similarly in Transportation U S Pacific Coast and Hawaii c

above this Commission found a carrier to be engaged in common carr

despite its attempts to expunge the terms and conditions ofthe comm

carrier bill oflading in favor of special contracts This fact did not nu

the finding that the carrier had in other respects demonstrated that he 

holding himself out to transport goods for such as choose to em

him 3 U S M C at pp 196 197

InThe City ofDunkirk 10 F 2d 609 S D N Y 1925 the Court fo

the carrier to be a common carrier with common carrier liability for s

delivery and damage on a shipment of cocoanut oil despite a spe

exculpatory provision in the bill oflading The Court stated

I see no ground whatever for holding on the evidence that the vessel was other th

common carrier The City of Dunkirk was a general ship taking cargo at va

points from various shippers and issuing biDs of lading to the several shippers 

2d at p611

As we have seen above the Commission has stated that the absenc

any partiCular factor usually associated with common carriage does 

render a carrier noncommon TariffFiling Practices Etc ofConta

ships Inc cited above at p

65 InBerhard Ulmann Co Inc v P

Rican Express Co cited above the Commission quoted with approv

definition derived from a standard treatise on carriers which set forth 

19 F 
CHARGING HIGHER RATES THAN TARIFF 55

characteristics which define the common carrier not one of which was

the assumption of liability forloss or damage ld p 776 11

The reason why assumption of liability need not be included in any

definition of common carriage reduced to its essence as can be seen from

the previous cases discussed is that once a person holds himself out

generally to carry for hire for whomsoever wishes to employ him he has

undertaken the occupation of a common carrier and liability will be

imposed upon him as a matter of law So strict is this doctrine that a

common carrier s liability has been likened to that of an insurer In

Liverpool Steam Co v Phenix Ins Co 129 U S 397 1889 the

Supreme Court explained this ancient doctrine

By the settled law in the absence of some valid agreement to the contrary the owner

of a general ship carrying goods for hire whether employed in internal in coastal or in

foreign commerce is a common carrier with all the liability of an insurer against all

losses except only such two irresistible causes as the act of God and public enemies

129 U S at p437

The fundamental principle upon which the law of common carriers was established

was to secure the utmost care and diligence in the performance of their duties That end

was effected in regard to goods by charging the common carrier as an insurer and in

regard to passengers by exacting the highest degree of carefulness and diligence A

carrierwho stipnlates not to be bound to the exercise of care and diligence seeks to put

off the essential duties of his employment Id at p

440 12

The exact delineations of common carrier liability and permissible

limitations ofliability may have undergone some refmernent since the

Liverpool case was decided but the principle that he who acts as a

common carrier is subjected to liability by virtue of his occupation is still

valid In a modem case the Supreme Court reiterated the basic doctrine

enunciated in Liverpool as follows

If on the other hand the shipment has been entrusted to a forwarder of the second

typeLe one who contracted to deliver the goods to the consignees at rates set by

itself the forwarder was subjected to common carrier liability for loss or damage

whether it or an underlying carrier had been at fault The fact that the forwarder did not

own the carriers whose services it utilized was held to be immaterial Its undertaking

was to deliver the shipment safely at the destination Common carrier liability was the

penalty for failure offulfilment ofthat undertaking Chicago etc R Co v Acme Fast

Freight cited above 336 U S at p 485 Emphasis added

IIThe definition is contained in Hutchinson on Carriers 3d Ed vol 1 sec 48 as faUaws

1 He must be engaged in the business of carrying goods for others as a

public employment and must hold himself

out as ready to engage in the transportation of goods for persons generally as abusiness and not as a

casual

occupation 2 He must undertake tocarry goods of the kind towhich bis business is confined 3 He must undertake

to carryby the methods by which his business isconducted and Over his established road 4 The transportation must

be for hire 5 An action must lie against him if he refuses without sufficient reason to carry such goods for those

who arewilling tocomply with his terms

11 In anotber early case the Court similarly emphasized

the common Jaw subjects the common carrier to insurance of the goods carried And if by special agreement the

carrier isexempted front responsibilities it does not follow that the employment is changed When a

cwrier

has a

regularly established business for carrying all orcertain articles it isa

common carrier and aspecial

contract about its responsibiUty does Dot divest it of the character

RailroadCompany v Lockwood 84 U S 357 37677 1873

19 F MC
56 FEDERAL MARITIME COMMISSION

For the foregoing reasons Ifind that HFL has operated as a 

vessel operating common carrier NVOCC between San Francisco 

to some extent Los Angeles California and Hawaii subject to 

provisions of the Shipping and Intercoastal Shipping Acts I 

furthermore that HFL s operations fit the definition set forth by 

Commission in Determination ofCommon Carrier Status cited abo

F M B at p256 1961 where the Commission stated

We conclude that a person or business association may be classified as a co

carrier by water who holds himself out by the establishment and maintenance of 

by advertisement and solicitation and otherwise to provide transportation for h

water in interstate or foreign commerce as defined in the Shipping Act 1916 as

responsibility or has liability imposed by law for the safe transportation of the shipm

and arranges in his own name with underlying water carriers for the performan

such transportation whether or not controlling the means by which such transpo

is effected is a common carrier by water as defined in the Shipping Act 1916 13

ULTIMATE CONCLUSIONS

From on or about June 27 1968 to early 1974 respondent HFL of

to the general public a coordinated transportation service between 

Francisco and Los Angeles California and Hawaii employing 

services of vessel operating carriers pursuant to tariffs tiled with 

Commission As such HFL was operating as an NVOCC subject t

provisions of section l8 a of the Shipping Act 1916 and section 2 o

Intercoastal Shipping Act 1933 and not merely as the agent ofship

HFL did accept liability for loss or damage to cargo and paid c

although aprovision in its tariff disclaimed liability while goods we

the custody of ocean camers Even had HFL refused to accept liab

however such a disclaimer is a legal nullity since the law imposes lia

on one operating a common carrier service

At various times during the above period of time HFL violate

cited provisions oflaw by charging rates higher than those specified 

tariff on file with the Commission

Since HFL has refused to respond to an order ofthe Commissio

information duly issued pursuant to section 21 ofthe Shipping Act 

l Unlike the Part V Freiaht Forwanler fOauJatod by the I CC the NVOCC Is not defined by thestatute 

it is a concept that haa srown in case law first inthe Bernhard Ulmann Co Inc CBSC cited above and 

Determination of Common Carrier Slatus cited ahove As discussed prevlously aenerally there is no dis

between the NVOCC and the vellscl operatina camer for reaulatory purposes Aaain as discusaed previou

Commission has held that common carrier definitions should not be riaid and unyieldina and acarrier maybe 

even if some of the usual characterlsticlI of common carrJalc are absent Tarifl FiJng Pract ices 

Containerships Inc cited above at p 65 Iaaree with Hearinl CouDsel that certain lanauaae in Determin

Common CarrIer SJatus cited above isconfusina since it seems to luueltthat an NVOCC musteither 

liability orhave liability imposed by the courts althoulh the Commislion also stated that the assum

attempted assumption of liability should not be the sole test of common carrier by water status Id p

discussed above there is no need to wait forcourts to lmpoae lJabilJty on one who performs aservice such as 

since liability has lona since been imposed by the courts on one who otters this typo of service

19 F 
CHARGING HIGHER RATES THAN TARIFF

and has furthermore ceased operations its tariff should be and hereby is

canceled

WASHINGTON D C

October 16 1975

8 NORMAN D KLINE

Administrative Law Judge

19 F M C

57
FEDERAL MARITIME COMMISSION

INFORMAL DOCKET No 327 1

KONWAL Co INC

v

ORIENT OVERSEAS CONTAINER LINE

PARTIAL ADOPTION OF DECISION

November 12 1975

By THE COMMISSION Helen Delich Bentley Chairman Clare

Morse Vice Chairman Ashton C Barrett and James V D

Commissioners

Konwal Co Inc Konwal filed its complaint before the Commis

alleging improper charges by Orient Overseas Container Line OO

and seeking reparation ofthe alleged improper charge By consent o

parties the case was heard under Subpart S ofthe Commission s Ru1e

Practice and Procedure as an informal adjudication ofa small claim

Settlement Officer Juan E Pine issued his decision awarding repara

Thereafter the Commission timely issued notice ofits intention to re

the proceeding

FACTS

The claim here involved arose from the shipment by Konwal of 

cargoes on vessels of OOCL from Hong Kong to San Franci

California San Francisco was the specified port ofdischarge in eac

the pertinent bills of lading Notwithstanding the specifications of 

Francisco as the port ofdischarge each of the cargoes was in 

discharged at Oakland California OOCL then arranged in each cas

have the cargoes transported by truck from Oakland to San Franc

and then to the point specified by the consignee The charges for 

truck transportation from Oakland to San Francisco were apparently 

by Konwal who now seeks repayment for those charges

Konwal alleges that in so arranging truck transport OOCL was a

58 19 F 
KONWALCO v ORIENT OVERSEAS LINE

under Rule 28 of the applicable tariff Rule 28 which Konwal claims

controls this situation provides

If the carrier discharges cargo at a discharge port other than the port of discharge

named in the biD of lading the carrier may arrange at its option to move the shipment

from actual port of discharge as follows to the port of destination stated in the biD of

lading alternatively the carrier may forward the cargo direct to a point designated by

the consignee provided the consignee pays the cost which the consignee normally

would have incurred to move the cargo to such point had the cargo been discharged at

the port of destination stated on the biD of lading

Konwal alleges that under this rule if the carrier elects to arrange

transportation from the actual port ofdischarge to the port ofdischarge

specified in the bill of lading the shipper consignee is responsible for

payment only ofdrayage charges within San FranciscoLe trucking

charges for transportation of cargo from the port ofSan Francisco to a

point specified by the consignee

OOCL denied Konwal s claim on the basis that it had been their policy

which allegedly had been made clear to all consignees that equalization

is not payable inasmuch as San Francisco Oakland andor Alameda are

Bay Port areas Therefore implicitly OOCL claims that tariff Rule 28 is

not applicable and the consignee is responsible for the payment of any

trucking charges involved OOCL apparently equates the trucking charges

from Oakland to San Francisco with drayage rates within San Francisco

itself

In his decision Settlement Officer Pine did not specifically discuss the

defense raised by OOCL Rather he awarded reparation on the basis of

Rule 28 itself Mr Pine found Rule 28 to be discretionary and an

ambiguous tariff provision Settlement Officer Pine found that Rule 28 as

a discretionary rule could not be relied upon by a carrier to defeat a claim

raised under it citing our decisions in Abbott Laboratories v Alcoa

Steamship Co Informal Docket No 321 1 served April 8 1975 and

P P G Industries Inc v Royal Netherlands Steamship Co Informal

Docket No 290 1served April 8 1975 Mr Pine also found Rule 28 to

be inherently ambiguous which therefore must be construed against the

carrier who prepared the rule citing U S v Hellenic Lines Ltd 14

F MC 255 1971 Attempted use ofRule 28 by OOCL was concluded

to be in violation of section 18b 3 ofthe Shipping Act 1916 as allowing

OOCL to receive a greater compensation for the transportation of

property than that specified in the tariff and thereafter failing to remit any

portion ofthe overcharge So concluding Settlement Officer Pine awarded

reparation

DISCUSSION AND CONCLUSIONS

We have reviewed this proceeding and concur in the award of

reparation granted by Settlement Officer Pine However we do not agree

8008 Kong Eastbound Pacific Coast Tariff No I FMCl

19 F MC

59
60 FEDERAL MARITIME COMMISSION

that determination of this claim should be founded on the reason

adopted by Mr Pine regarding the discretionary nature of Rule 28 and 

ambiguity he found in the rule

Notwithstanding the claimed policy of OOCL that Oakland and 

Francisco are the same port for equalization purposes we consider th

to be two separate ports to which the provisions of Rule 28 apply In

case ofeach cargo OOCL discharged it at Oakland The port ofdischa

specified in the bill oflading was San Francisco It is clear therefore 

OaCL had discharged its cargo at a discharge port other than 

specified in the bill of lading The carrier then had only two law

options Both of these options were provided by Rule 28 Under its te

the carrier could

1 move the cargo to the port ofdischarge specified in the bi

lading or

2 forward the cargo direct to a point designated by the consig

i

From the record the carrier apparently availed itself of both opt

with respect to the various shipments It is our conclusion that ha

elected to act under RuJe 28 the carrier became bound by the provis

thereof The rule states without ambiguity and without any discre

vested in the carrier that the carrier may arrange ground transporta

as he did here provided the consignee pays the cost of drayage from 

port ofdischarge specified in the bill of lading to the point designate

the consignee In short once the carrier has elected to aiTiulge gro

transportation when it discharges cargo ata port other than that spec

in the bill oflading the consignee pays only the amount which it w

have cost him to arrange transportation from the proper port to apoin

destination

We find no discretionary quality in the rule with regard to the collec

of trucking charges That collection is allthatis at issue here We tak

position as to the discretion vested in the carrier regarding whether o

he decides to arrange transportation at all That issue does not here a

Further we think this Rule 28 to be clear as to who bears 

responsibility for gro 1nd transportation charges We hold that the ca

is responsible for the cost of transportation from the actual po

discharge to the port ofdischarge specified in the illl of lading unde

clear terms of its own tariff We therefore concur in the lwar

reparation in the amount of 363 87 granted by Settlement Officer 

and adopt his decision to that extent

1

SEAL S FRANCIS C HURNEY

Secretar

19 F 
FEDERAL MARITIME COMMISSION

INFORMAL DOCKET No 327 1

KONWAL Co INC

v

ORIENT OVERSEAS CONTAINER LINE

Reparation awarded

Decision of Juan E Pine Settlement Officer

Konwal Co Inc KONWAL claims 380 37 as reparation from Orient

Overseas Container Line OOCL for equalization with respect to eight

different shipments of such varied commodities as plastic toys plastic

containers rattan sticks plastic flowers mirrors and plastic dolls

transported from National Mercantile Hong Kong to KONWAL the bills

ofladings for which indicate that San Francisco California is the port of

discharge The truck movements U E P Transports from OOCL s port

of delivery at Oakland to the consignee at San Francisco took place on

April 6 April 26 July 20 August 16 October 2 October 19 November

5 and November 28 1973 The claims were filed with the Commission

on February 26 1975 within two years from the date the cause ofaction

arose and must be considered on their merits as ruled by the Commission

in Colgate Palmolive Company v United Fruit Company Informal

Docket No 115 1 served September 30 1970

The equalization claims are based on the excess ofthe trucking rates

from Oakland to San Francisco 2

paid by KONWAL over the drayage

rates within San Francisco The rates are published in California Public

Utility Commission Tariffs Nos 2 and 19 respectively

OOCL s Hong Kong Eastbound Pacific Coast Tariff No 1 FMC l

contains rates from Honk Kong to United States Pacific Coast Ports

however no ports are specifically named therein

KONWAL s claim is based on Rule 28 of OOCL s tariff which

provides

I Both parties having consented to the informal procedure ofRule 19 a

of the Commission sRules of Practice and

Procedure 46 CPR 502 301 304 this decision will be final unless the Commission elects toreview it within 15 days

from the date of service thereof

2 KONW AL has submitted freight bills coveringthe truck movement of the subject shipments from aOeL in

Oakland to KONWAL in San Francisco

19 F M C 61
62 FEDERAL MARITIME COMMISSION

If the carrier discharges cargo at a discharge port other than the port of disch

named in the biII of lading the carrier may arrange at its option to move the ship

from actual port of discharge as follows

To the port of destination stated in the biII of lading alternatively the carrie

forward the cargo direct to a point designated by the consignee provided the cons

pays the costs which the consignee normally would have incurred to move the car

such point had the cargo been discharged at the port of destination stated on the b

lading Underscoring provided

The above is a discretionary rule InInfonnal Docket No 321 1 se

April 8 1975 Abott Laboratories v Alcoa Steamship Company 

Commission indicated that it believed that the discretionary nature 

tariff provision Rule 11 being considered therein rendered it unenfor

ble Rule 11 provided

Claims by shippers for adjustment of freight charges will be considered only 

submitted in writing to the carrier within six months of date of shipment Adjustme

freight based on alleged error in description may be declined unless applicati

submitted in writing sufficiently in advance to permit verification of description b

the cargo leaves the carrier s possession Underscoring provided

The Commission also stated that in its order on remand in Infor

Docket No 290 1 served May 16 1974P P G Industries Inc 

Royal Netherlands Steamship Co we discussed at length the us

the word may in a rule similar to that relied upon by Alcoa Rule 

above and stated that such a discretionary rule was in effect no 

at all The Commission further stated that it would not in the fut

pennit carrier reliance upon rules which allow for discretion in a carr

consideration or denial of claims that such rules will not in an

themselves be pennitted to defeat a claim for overcharges This l

follows the strict tariffadherence mandate set by the Commission in K

Foods v Moore McCormack Lines Inc in Docket No 7344 se

March 26 1974

Rule 28 ofOOCL s tariffis also ambiguous Where atariffis ambigu

or doubtful it should be construed against the carrier who prepared 

Subsequent to a letter ofAugust 22 1974 from the Commission s 

that the above equalization rule was not specific OOCL tiled 

Revised Page 3S to the subject tariff with a published effective dat

October 1 1974 which amended Rule 28 by substituting the langu

shall arrange at its expense for may arrange at its option By 

modifying the rule OOCL has now clarified that it shall equalize un

the conditions as cited in revised Rule 28

San Francisco is indicated as the port of discharge on all ofthe sub

OOCL bills oflading Had OOCL diSCharged the cargo at San Francis

KONWAL would have had to pay only the drayage rate from poin

rest on the dock to its place ofbusiness in San Francisco As indica

above if KONWAL s claims are settled as tiled KONWAL wil

3 UnitedStales of America v Hellenic Lines Umlted 14 F M C 260 1971 See also PlIter BraW Associates 

v Prudential Lines Ltd 8 F M C 37 1964

19 F 
KONWAL CO v ORIENTOVERSEAS LINE

paying only the drayage rate from point ofrest on the dock to its place of

business in San Francisco

aaCL indicates in its tariff that it serves United States Pacific Coast

Ports The subject eight shipments were accepted by aaCL with San

Francisco indicated as the port of discharge on the covering bills of

lading as requested by the shipper National Mercantile during a six

month period Hong Kong Export Lines Ltd agent for aaCL prepared

and issued the bills oflading

As aaCL s agent accepted the subject bills of lading showing San

Francisco as the port of discharge and aaCL holds out in its tariff to

serve United States Pacific Coast ports it can not utilize the then

discretionary equalization rule to discharge at another port accepting no

responsibility for the added transportation costs incurred by the receiver

Based on the foregoing below are the computations in KaNWAL s

claim for equalization reparation by aaCL

Local

Claim Freight Equalization Weight Rate Transportation

Bill Charges

Date

K4l1 42473 Oakland to S F 13 153 103 135 48

surcharge 340

138 88

S F to S F 13 153 67 88 13

Equalization uuu u

50 75

K4l2 5 473 Oakland to S F 7 544 as 1 03 103 00

10 000 surcharge 340

160 40

S F to S F 7 544 67 50 54

Equalization uu 55 86

K4l3 7 2073 Oakland to S F uuu3 702 as 143 7150

5 000 surcharge 340

S F to S F

74 90

3 702 as 77 30 80

4 000

Equalization u u u u 44 10

K4l4 S23 73 Oakland to S F 2 830 as 120 60 00

5 000 surcharge 2 50

62 50

S F to S F 2 830 82 23 21

Equalization 39 29

K4l5 10 9 73 Oakland to S F 1 787 3 11 55 58

surcharge 150

57 08

19 F M C

63
64 FEDERAL MARITIME COMMISSION

S F to S F 1 787 as 79 15 80

2 000

Equalization 41

One containerfreight equalization 16 50

K06 11 673 Oakland to S F 1 933 as 150 75 00

5 000 surcharge 150

76 50

S F to S F 1 993 as 1 03 20 60

2 000

Equalization 55 

K07 11 2173 Oakland to S F 1 075 3 90 42 89

surcharge 1 50

44 39

S F to S F 1 075 44 39

18 03

Equalization

26 

K08 1019 73 Oakland to S F 2 638 as 150 75 00

5 000 surcharge 2 50

77 50

S F to S F 2 638 103 27 17

Equalization nnnnn 50 

From the foregoing OOCL is in violation of Section IIl b 3 of 

Shipping Act 1916 for receiving a different compensation for 

transportation ofproperty or any service in connection therewith than 

rates and charges specified in its tariffs by its failure to remit in 

manner any portion of the rates or charges so specified in accorda

with its tariff Therefore KONWAL is awarded reparations of 36

with interest at the rate ofsix percent per annum if not paid withi

days of the date hereof Reparation is denied with respect to the alle

16 50 allowance to cover the one container load movement as provi

for same is not made in OOCL s tariff and any reparation thereon w

result in the violation ofSection 18b 3 ofthe Shipping Act 1916

S JUAN E PINE

Settlement Office

4

Alleaedly the policy of OOCL with respect to full container loads beina delivered to San Francisco is t

16 50 allowance per container to the consianee to cover the approximate cost ofrctumina the empty conta

OOeL termin in Oakland Reparation ot 16 50 isdenied 8S thotariffcontains no such allowance and paym

such allowance would violate Section 18b of the Shlppina Act 1916 KONWAL has qreed to cancel the 

claim

19 F 
19 F M C 65

FEDERAL MARITIME COMMISSION

SPECIAL DOCKET No 472

COMMODITY CREDIT CORPORATION

v

SURINAM NAVIGATION COMPANY LTD

NOTICE OF ADOPTION OF INITIAL DECISION AND ORDER

PERMITTING WAIVER OF CHARGES

December 9 1975

Notice is hereby given that the Commission on December 9 1975

determined to adopt the initial decision in this proceeding subject to the

following clarifications

Whereas the initial decision broadly states that there was an error due

to inadvertence in failing to file the new rates therefore waiver of

collection of a portion of the freight may be allowed it is silent on

whether all other statutory requirements prerequisite to the grant of a

waiver had been met

Section 18 b 3 of the Shipping Act 1916 the Act empowers the

Commission in certain circumstances in its discretion and for good cause

to permit a carrier by water in foreign commerce to refund aportion or

waive collection ofaportion offreight charges provided

That the common carrier has prior to applying for authority to make a refund

filed a new tariff with the Commission which sets forth the rate on which such

refund or waiver would be based Providedfurther That the carrier agree that if

permission is granted by the Commission an appropriate notice will be published in

the tariff or such other steps taken as the Commission may require which gives

notice of the rate on which said refund orwaiver would be based and additional refunds

or waivers as appropriate shall be made with respect to other shipments And

provided further That application for refund or waiver must be filed with the

Commission within one hundred eighty days from the date of shipment

These provisions are not ofadiscretionary procedural nature In order

for the Commission to be vested with the authority to grant refunds or

waivers it must fIrst ascertain that all the requirements set forth in section

18 b 3 ofthe Act have been complied with

The record here shows that the on board bill of lading covering the

shipment of soybean salad oil is dated January 8 1975 that the on board
66 FEDERAL MARITIME COMMISSION

bill oflading covering the shipment of com meal is dated January 9 

and that the application wasfiled on May 19 1975 within 180 days o

dates ofshipment Prior to applying for a waiver the applicant filed 

April 2 1975 anew tariff setting forth the rates sought to be applied 

also affirmed that it would charge the same rate to Churchworld Se

whose shipment of salad oil moved at the same time and on the 

vessel as Commodity Credit Corporation s cargo

Therefore notwithstanding the lack of specific fmdings to that effe

the initial decision we are satisfied that applicant has complied with 

statutory requirements of section 18b 3 ofthe Act and for that re

adopt the initial decision

It is Ordered That applicant is authorized to waive collectio

860 55 ofthe charges previously assessed Commodity Credit Corpor

for shipments described in Special Docket No 472

It is Further Ordered That applicant shall publish promptly i

appropriate tariffthe following notice

Notice is hereby given as required by the decision of the Federal Ma

Commission in Special Docket No 472 that effective January 8 1975 for purpos

refund or waiver of freight charges on any shipments which may have been sh

during the period from January 8 1975 through April 2 1975 from the Tampa F

BrownsviDe Texas range to Haiti the rate on Soybean salad oil is 63 50 W a

Corn meal 4150 W subject to all applicable rules regulations tenns and cond

of said rates and this tariff

Itis Further Ordered That waiver of the charges shall be effectu

within 30 days of service of this notice and applicant shall within 

days thereafter notify the Commission of the date and manne

effectuating the waiver or refund made pursuant to this Order inclu

but not limited to the waiver or refund to Churchworld Service

By the Commission

SEAL S FRANCIS C HURNEY

Secreta

19 F 
19 F M C 67

FEDERAL MARITIME COMMISSION

SPECIAL DOCKET No 472

COMMODITY CREDIT CORPORATION

v

SURINAM NAVIGATION COMPANY LTD

Waiver of collection of a portion of charges permitted

INITIAL DECISION OF JOHN E COGRAVE ADMINISTRATIVE

LAW JUDGE I

By application fIled May 19 1975 Surinam Navigation Company Ltd

Surinam has applied for permission to waive collection ofa portion of

the freight on a double shipment from New Orleans to PortAu Prince

Haiti carried on respondent s vessel M V Suriname under bill oflading

dated January 9 1975 The shipment consisted of 1 509 447 pounds

754 7235 short tons of corn meal and 141 094 pounds 705470 short

tons ofsoybean salad oil Both shipments were booked October 24 1974

for lifting December 15 18 1974 At the time of the booking negotiation

the carrier advised Commodity Credit Corporation CCC that it intended

to file a general rate increase effective December 9 1974 On the basis of

this advice CCC and Surinam negotiated rates of4150 per short ton for

cornmeal and 6350 per short ton for soybean salad oil both rates to be

all inclusive On November 6 1974 Surinam fIled a general rate increase

ofabout 12 to be effectiv December 9 1974 Surinam failed to fIle the

negotiated rates and also failed to file the negotiated rates in the new

tariffs effective December 9 1974 Accordingly the corn meal was rated

on the basis of 4250 per short ton and the soybean salad oil was rated

on the basis of 65 00 per short ton The freight for the corn meal was

32 075 75 The freight for the soybean salad oil was 4 585 56 The

freight actually collected for the corn meal was 31 32103 The freight

actually collected for the soybean oil was 479 73 Permission is sought

to waive collection of 754 72 in the case ofthe corn meal and 105 83 in

the case ofthe soybean salad oil for a total of 860 55

Section 18b 3 ofthe Shipping Act 1916 46 USC 817 as amended by

1 This decision became the decision of the Commission December 9 1975
68 FEDERAL MARITIME COMMISSION

Public Law 90298 and as further implemented by Rule 6 b Sp

Docket Applications Rules of Practice and Procedure 46 CPR 502 9

the law sought to be invoked Briefly it provides

The Commission may in its discretion and for good cause shown per

common carrier by water in the foreign commerce of the United States to ref

portion of the freight charges collected from a shipper or waive the collection 

portion of the charges from a shipper where it appears that there is an erro

tariffof a clerical or administrative nature or an error due to aninadvertence in fai

file a new tariff and that such refund orwaiver will not result in discrimination a

shippers Furthermore prior to applying for such authority the carrier must have 

a new tariff which sets forth the rate on which such refund or waiver would be b

The application for refund must be filed with the Commission within one hundre

eighty days from the date of shipment Finally the carrier must agree that if perm

is granted an appropriate notice will be published in it tariff or such other steps 

as may be required to give notice of the rate on which such refund or waiver wo

based

The legislative history ofthe amendment to section 18 ofthe Ship

Act Public Law 90298 2specifies that carriers are authorized to 

voluntary refunds and waive the collection of a portion of their fr

charges for good cause such as bona fide mistake The nature o

mistake was particularly described

Section l8 b appears to prohibit the Commission from authorizing relief w

through bona fide mistake on the part of the carrier the shipper is charged more th

understood the rate to be For example a carrier after advising a shipper that he i

to file a reduced rate and thereafter fails to file the reduced rate with the F

Maritime Commission mustcharge the shipperunder the aforementioned circums

the higher rates

The Senate Report 3

states the Purpose ofthe Bill

Voluntary refunds to shippers and waiver of the collection of a portion of 

charges are authorized where it appears that there is an error in a tariff of a c

nature or where through inadvertence there has been a failure to file a tariffref

an intended rate

Applied to the facts it is found that there was an error d

inadvertence in failing to file the new rates Therefore waiver ofcolle

of a portion of the freight may be allowed Accordingly respon

Surinam Navigation Company Ltd is hereby allowed to waive colle

of 860 55 which represents the total of the overcharge A noti

waiver shall be published in Surinam s tariff

S JOHN E COGRAVE

Administrative Law Jud

WASHINGTON D C

November 12 1975

1 House Report No 920 November 14 1967 To accompany H R 9473 on Shipping Act 916 Authorize

of CertainFreight Charges Statement ofPurpose and Needfor the Bill 10 Amend Provisions ofthe Ship

916 toAuthorize the Federal Maritime Commission toPermit a

Carrier toRefund aPortion o

theFreight 

l Senate Report No 1018 April 1968 To accompany H R 9473 on Shipping Act 1916 AuthorizedR

Certain Freight Charges under Purpose of theBill

19 
19 F MC

69

FEDERAL MARITIME COMMISSION

DOCKET No 75 35

AGREEMENT Nos T 1685 AS AMENDED AND T 1685 6 BETWEEN THE

CITY OF ANCHORAGE AND SEA LAND SERVICE INC AND AGREEMENT

No T 3130 BETWEEN THE CITY OF ANCHORAGE AND TOTEM OCEAN

TRAILER EXPRESS INC

Agreement No T 1685 as amended through T 1685 5 is disapproved effective February

5 1976 unless the parties to that Agreement prior to that date file with the Federal

Maritime Commission an amendment to Article I a as prescribed herein

Upon submission of the required amendment the remaining provisions of Agreement

No T 1685 will continue as presently approved

Peter J Nickles and John Michael Clear for the City of Anchorage

respondent

Gerald A Malia and Edward A McDermott Jr for Sea Land

Service Inc respondent

Stanley O Sher and David C Shonka for Totem Ocean Trailer

Express Inc respondent

James E Wesner for Tesoro Alaskan Petroleum Company protestant

Alan F Wohlstetter and Edward A Ryan for Coastal Barge Lines

Inc protestant

Donald J Brunner and Joseph B Slunt Hearing Counsel

INTERIM REPORT

January 30 1976

By THE COMMISSION Karl E Bakke Chairman Clarence Morse Vice

Chairman Ashton C Barrett Bob Casey James V Day Commis

sioners

By Order ofInvestigation and Hearing dated September 15 1975 the

Commission instituted this proceeding to determine 1 whether Terminal

Agreement No T 3130 between Totem Ocean Trailer Express Inc

Totem and the City of Anchorage Alaska Anchorage and Terminal

Agreement Nos T 1685 and T 1685 6 between Sea Land Service Inc

Sea Land and Anchorage are unjustly discriminatory or unfair as

1

In view ofthe urgent need for Commission action on this matterprior to February 1 1976 an Order was issued on

January 30 1976 This Report explains the basis for the Order which is attached and made apart hereof
70 FEDERAL MARITIME COMMISSION

between carriers shippers exporters or importers or operate t

detriment ofthe commerce of the United States or are contrary t

public interest or are otherwise in violation ofthe Shipping Act 191

whether said agreements should be approved disapproved or mo

pursuant to section IS and 3 whether section 15 has been violate

Totem andor Anchorage by the construction offacilities provided 

Agreement No T 3130 prior to the approval of said agreement b

Commission

The Commission s Order ofInvestigation named Anchorage Sea 

and Totem as Respondents Standard Oil Company ofCalifornia We

Operations Inc Standard Coastal Barge Lines Inc Coastal P

Sound Tug and Barge Co Puget Tesoro Alaskan Petroleum Corpor

Tesoro and Shell Oil Company Shell were made Petitioners i

proceeding 2Hearing Counsel also participated in the proceeding

An evidentiary hearing was held in Washington in early Decem

1975 These hearings consumed 11 days and produced 117 docume

exhibits and a transcript running to 1770 pages

During the course of the hearings a problem arose which ultim

resulted in the Interim Initial Decision now before us on except

Briefly stated Sea Land s present agreement with Anchorage Agree

No T 1685 as amended grants itpreferential berthing rights fo

vessels at Terminal 1 commencing February I 1976 When a Sea 

vessel is berthed at Terminal 1 Totem s vessel the Great Land w

precluded from berthing at the same facility and will instead be req

to berth at Terminals 2 and 3 which provide the only alternative ber

location 3Totem claimed during the hearing that its vessel could n

safely berthed at Terminals 2 and 3 during severe winter icing cond

and that for that reason it would not call at Anchorage until impr

weather conditions made it possible to utilize the alternative loc

without risk This concern for the safety of Totem s vessel at Termin

and 3 prompted the need for expeditious action and the interim procee

which followed

Thus despite the expeditious manner in which the hearings 

pursued it became evident that in view of necessary briefing req

ments it would not be possible for the matter to be submitted t

Commission in time for it to render a decision on all the issue

February 1 1976 It was determined therefore that an interim decisi

the Commission on or before February 1 1976 might be possible whe

all of the rights ofthe parties might be preserved service at Ancho

not jeopardized and the public interest served until such time a

2 Standard on subsequently withdrew its protest and was dismissed from theproceeding ShelJ on did not 

participate in thehearini

j Sea Land has been offerlna common carrier service to the Port of Anchorai since 1964 Currently th

has fOUT vessels inregular service in theAnchorage trade

Totem inaugurated service between Seattle and AnchOfll8e in September 1975 The carrier currently op

single roll onroll off vessel in direct compedtlon with Sea Land All service to the Port is presently on a

ftr

first served basis

19 F 
AGREEMENT NOS T I685 T I685 6 T 3130 71

Commission rendered a final decision To this end the Administrative

Law Judge requested that the parties fue proposed findings and conclu

sions addressed to the issue ofwhether temporary or conditional approval

should be given to Agreement No T 1685 igranting Sea Land preferen

tial berthing rights at Terminal 2 for a sufficient period of time to enable

the Commission to further consider whether such approval should be

continued modified orwithdrawn

Since Agreement T 1685 iprovides for a shift of Sea Land s berth

from Terminal Ito Terminal 2 it was felt that the proposal for temporary

conditional approval ofT 1685 iwould make it possible to berth Totem s

vessel at Terminal Iuntil such time as the Commission decides the major

issues raised herein

In his Interim Initial Decision served December 29 1975 Administra

tive Law Judge Stanley M Levy concluded that

I Temporary approval ofT 1685 ifor 90 days is in the public interest

and would serve a serious transportation need

2 Approval is on condition that during cement offloading operations

Sea Land will berth in a manner not to interfere with such operations

and

3 IfSea Land does not accept the temporary and conditional approval

of preferential berthing rights at Terminal 2 previously approved prefer

ential berthing rights for Sea Land at Terminal Iare rescinded

Exceptions to this Interim Initial Decision were filed by Sea Land and

Tesoro Replies to Exceptions were submitted by Anchorage Hearing

Counsel and Totem Requests for oral argument were denied

AGREEMENTS AND FACILITIES

Agreement No T 1685 5 is the current agreement under which Sea

Land serves Anchorage The agreement provides for Sea Land enjoying

preferential berthing rights at Terminal I for 104 calls per agreement year

February IJanuary 31

At the present time Sea Land is calling at the Port under the same

conditions as Totem ie on a first come first served basis Sea Land

having allegedly utilized its 104 preference calls for the agreement year

1975 However effective February I 1976 Sea Land will resume its

preference at Terminal Iand at its current rate of 3 calls per week will

effectively utilize Terminal I most ofthe time

Agreement No T 1685 iplaced at issue in this proceeding would

shift Sea Land s preferential berthing rights to Terminal 2 Sea Land s

preferential calls would also be increased from 104 to 156 calls per year

According to Sea Land Terminal 2 affords certain advantages over

Terminal Idue to its wider apron improved traffic pattern and the near

proximity ofits supervisory office Sea Land believes that it can achieve

substantial cost reductions by operating at Terminal 2 in contrast to

Terminal In order to achieve these cost reductions however Sea Land

19 F M C
72 FEDERAL MARITIME COMMISSION

i

J

is of the view that certain modifications should be made to Agree

No T 1685 6 These modifications are before Judge Levy i

proceeding

Agreement No T 3130 between Totem and Anchorage would 

alia grant Totem preferential berthing rights at Terminal 1 an

petroleum terminal for 52 calls per year

The reasoning behind these various relocations at the port lies 

physical layout of the facilities at Anchorage Anchorage s port fac

consist of a single linear pier approximately 2200 feet in length di

into 31 2 cargo terminals The petroleum facility at the southern end 

pier ald Terminal 1 adjoining it both have petroleum heade

accommodate carriers transporting oil products Terminal Iis 600 

long Terminal 2 is 610 feet long and only one half of Termina

completed Terminal 3 s current length is 366 feet 4

At Terminal 

width of the apron is 47 feet At Terminal 2 the width is 69 feet

Totem s vessel the Great Land has an overall length of 790 

Because of its length the Great Land cannot berth at either Term

or Terminal 2 without some overlap onto the adjoining facil

Agreement No T 3130 will allow the Great Land to berth at Term

and extend onto the petroleum terminal POL terminal withou

infringement ofTermina12 Because ofthe design and length ofthe G

Land unique problems are presented in mooring the vessel at Term

2 and 3 The great length ofthe vessel requires that it be moored w

stem flush with the end of Terminal 3 This results in a900 angle o

mooring lines between the vessel and the dock which increases 

tension on the line Normal berthing practice would be to use a line 

mooring dolphin or similar device approximately 1400 northw

However at this time this does not appear to be possible at Ancho

Prior to the tiling of Agreement No T 3130 and in anticipatio

service to Anchorage Totem constructed with the Port s appr

permanent trestles at the POL Terminal I site which would enabl

Great Land to utilize three offloading ramps at that facility Becau

limited facilities at Terminal 2 only one ramp can be utilized to of

the Great Land

j

I

INTERIM PROCEEDING

1 Position OfThe Parties Before The Administrative Law Judge

In the proceedings before the Administrative Law Judge all the pa

with the exception of Sea Land favored some form of tempo

approval of Agreement No T 1685 6

Totem and the other parties tiling briefs focused primarily on the 

of whether it would be safe for the Great Land to berth at Termin

and 3 during periods of severe icing Totem explained that the mo

4

Termina 3 is prescntly in the process of beiDa lengthened an additional 325 feet 8 inches with com

SCheduled for October 1976

19 F 
AGREEMENT NOS T 1685 T 1685 6 T 3130 73

problems are magnified during the winter months when ice conditions

prevail because the ice exerts great pressure on the flat stem of the

vessel especially during ebb tides As a result Totem pointed out that

there is the possibility that the ice and winter winds could cause the

Great Land to become unmoored with the resultant risk ofcatastrophic

damage In view ofthis potential danger Totem has advised that it would

not utilize Terminals 2 and 3 during severe icing conditions

Sea Land on the other hand saw no crisis during the severe winter

months which would preclude Totem from utilizing Terminals 2 and 3 and

was of the opinion that Totem s mooring problems with the Great Land

could be resolved without significant modification to the vessel Also

Sea Land opposed any temporary approval ofAgreement No T 1685 6

until the Commission resolves all of the issues raised by that agreement

According to Sea Land Anchorage has since the commencement ofthis

proceeding announced new interpretations oflanguage appearing in both

the existing preferential agreement and the proposed amendment thereto

which conflict with the historical interpretation by the parties and

therefore create ambiguities in these agreements and the consequent need

for clarification

Ifcertain modifications and clarifications are made in the agreement as

requested by Sea Land it would go along with conditional approval of

Agreement No T 168S iSea Land s counter proposals eight in number

are elaborate and involve a far reaching amendment to Agreement No T

168S ias now submitted

The City of Anchorage Hearing Counsel and Tesoro all generally

supported temporary approval ofAgreement T 168S iAll three parties also recommended that if Sea Land refused to go along with conditional

approval at this time the Commission should suspend Sea Land s

preferential berthing rights under T 168S S

2 Interim Initial Decision

Administrative Law Judge Levy concluded that temporary approval of

Agreement T 168S i

for 90 days is in the public interest and would serve

a serious transportation need F M C v Svenska Amerika Line 390 U S

238 1 8 In this regard he found that continuing Sea Land s preferential

berthing rights at Terminal I subsequent to February I 1976 would

effectively preclude Totem from operating at Terminal I and that

requiring Totem to utilize Terminals 2 and 3 would result in severe

economic disadvantages to Totem in view of the great reduction in off

loading efficiency at the latter facility

Judge Levy found conflicting evidence on the issue ofwhether Totem s

vessel could safely be berthed at Terminals 2 and 3 during heavy icing

periods However Judge Levy found it unnecessary to resolve this issue

in his decision explaining that whether the vessel is in danger by ice

need lot be determined since other considerations of public interest

19 F M C
74 FEDERAL MARITIME COMMISSION

warrant a result which do not preclude berthing of the Great La

POLTerminal 1

The other considerations cited were the reduction in off lo

efficiency at Tenninal 2 Thus he found that

Absent other overriding considerations the requiring of less efficient operation

more efficient operations are possible mustresult in poor service and would n

the public interest

Judge Levy considered Sea Land s elaborate counter propos

irrelevant to the present interim decision requirements explainin

the issues raised by the counter proposals could properly be cons

by the Commission in its final resolution of the proceeding 

consideration of whether to grant temporary approval of Agreeme

1685 6 as submitted would not ultimately materially or substan

affect the rights ofany party including Sea Land

In order to accommodate Coastal s

S

bulk cement barge unlo

operations at Terminal 2 Judge Levy conditioned approval onSea L

agreeing that during such time as bulk cement off loading oper

require barge utilization of facilities at Tenninal 2 it would not int

with such cement operations

Finally Judge Levy held that in the event that Sea Land should 

to accept such temporary and conditional approval ofAgreement N

1685 6

approval of Agreement No T 1685 as amended wou

rescinded

3 Exceptions and Replies

Sea Land filed lengthy exceptions to the Interim Initial Decis

Judge Levy However it did advise that it would if the Commiss

ordered accept the 9Oday approval of its Agreement No T 168 

the understanding that certain modifications to that Agreement 

imperative

Briefly stated Sea Land excepts to the initial decision on the gr

that 1 The decision is contrary to the Commission s order to exp

and it p udges issues which have yet to be briefed 2 It falsely ac

Sea Land of not cooperating whereas in reality Sea Land asserts 

has submitted three proposals two of which were allegedly t

ignored for resolution ofthe subject problem 3 The Administ

Law Judge erroneously failed to find that there is no crisis or 

conditions which would prevent the Great Land from adequately m

at Terminals 2 and 3 during February and March 4 The decis

incorrect in fmding that Sea Land would occupy the berth virtually 

ofthe time Sea Land contending that the evidence shows that the c

would occupy Berth 1 only about 50 ofthe time 5 The fmding 

decision that subsequent to February 1 1976 Totem s only berthin

S

Coastal docs not operate to Anchoraie durlna the severe winter months but does resume service on 

April 1 The l ement barge canonly utilizeTerminal 2 because the cement headers are located at Terminal 2

19 
AGREEMENT NOS T I685 T 168 T 3130

at Anchorage will be Terminals 2 and 3 which Totem claims is unsafe

and inefficient is erroneous because it is not supported by the evidence

6 The interim decision erroneously failed to find that Sea Land s

decision to agree to move to Terminal 2 was based on several factors

including Anchorage s commitment to lease Sea Land lot 3 A and to

make available transit area B 7 The decision contains an incorrect

finding that Sea Land has completed its 104 preferential calls and 8

The Interim Initial Decision is in error to the extent it fmds that unless

T 1685 6is conditionally approved Sea Land will be able to bar its only

major competitor from berthing and thus retain its monopoly over general

waterborne cargo into the Port ofAnchorage

In its brief in support ofits exceptions Sea Land reiterates many ofthe

arguments previously made by the parties concerning conditional approval of Agreement No T 1685 6 However the major thrust of Sea Land s

contentions is directed at the fmdings ofthe Administrative Law Judge

regarding the relative efficiency of Totem s operation between the POL

Terminal I

facility and Terminal 2

Sea Land also argues that the construction by Totem oftrestles at the

POL Terminal 1 location is one of the issues to be determined in the

proceeding and that until there is a decision as to whether the

construction of such trestles constitutes a violation of section 15 Totem

should not be rewarded by artificially increasing its ability to utilize

that trestle system by calling at Terminal 1

Tesoro while initially supporting some form of temporary approval

now urges that the Interim Initial Decision be rejected because it has no

foundation in the record is contrary to the evidence contradicts the

rationale stated for temporary approval and seriously prejudices the

parties rights to afair hearing In the alternative Tesoro submits that if

the Commission determines to grant temporary approval ofT 1685 6 it

should do so solely on the safety issue as briefed by the parties and not

on the grounds stated in the Interim Initial Decision Moreover it would

limit such temporary approval to 60 days commencing February 1 1976

Tesoro further objects to the Interim Initial Decision on the same

grounds cited by Sea Land namely that while the supposed need for

temporary approval revolved around the possibility that Totem would be

unable to use Terminals 2 and 3 during certain months because of the

possibility of severe icing Judge Levy expressly declined to rule on the

safety issue but instead based his decision on other grounds

Tesoro challenges Judge Levy s conclusion that Totem will be unable

to continue in service at Anchorage unless Sea Land is moved to

Terminal 2 According to Tesoro this conclusion assumes a fmding not

made by Judge Levy in his decision ie that the Great Land could not

berth at Terminals 2 and 3 during the 9O day period in question In this

regard Tesoro points out that Judge Levy had an opportunity to base his

decision on the one factor which would have precluded Totem from

utilizing Terminals 2 and 3 namely the severe weather conditions but

19 F M C

75
76 FEDERAL MARITIME COMMISSION

expressly declined to do so on the grounds that it was unneces

Absent a

rmding that Totem could not utilize Terminals 2 and 3 Te

submits that there is no justification for the conclusion that Totem w

be unable to continue in service

Tesoro next attacks Judge Levy s

finding ofrelative efficiency bet

POL Terminal I and Terminal 2 Tesoro argues that the record i

proceeding actually contradicts the finding that Totem s operatio

Terminal 2 are less efficient than at Terminal 1 In support of 

contention Tesoro points out that the record shows that during the p

Totem has called at Anchorage on a fllst come flrst served basis its 

off loading time was accomplished at the less efficient Terminal 2

The 9Oday time period for interim approval Hi also subjected to s

criticism by Tesoro on the basis that no explanation is provided i

opinion as to why the 90 day period was selected If as Judge L

concludes the Great Land must be berthed at POLTerminal 1 in 

to promote efficiency and to preserve its position as a competitor in 

trade Tesoro questions why the publiC interest ceases on May 1 

While Tesoro believes that this period was arrived at because ofTot

claim that it could not berth at Terminal 2 during the winter mo

Tesoro questions its soundness in fact since the safety problem wa

considered by the Administrative Law Judge and the public int

considerations chosen as a basis for his decision bear no rational rel

to the period selected to measure the relief granted

Finally Tesoro argues that the Interim Initial Decision violates 

parties rights to afair hearing by prejudging the ultimate issues t

decided in the hearing citing as an example Judge Levy s fmding 

Totem is more efficient at POL Terminal 1

While initially favoring temporary approval of Agreement No T 

6 as a safety matter if there was a genuine risk to the Great L

Tesoro now takes no position as to whether this finding should be m

However Tesoro urges that the safety problem if it exists at all ca

be found to extend beyond the period when heavy ice conditions 

reasonably be expected to be present at Anchorage

Anchorage finds no merit in the exceptions and reasons that 

Land s heated opposition to approval of its own agreement is th

believes it will be able to impair Totem s ability to compete if it can 

the approval ofits own agreement 6

With respect to exceptions raised by Tesoro Anchorage argues 

they amount to no more than a claim that because it Tes

misunderstood the scope of the interim approval issue the Law J

therefore impermissably sic made findings of fact which Tesoro 

not consider directly relevant Anchorage states that the parties did 

the efficiency issue and the Law Judge s

findings respecting 

Sea Land fiJe da Motion to Strike tbj lan uaae and cortaJn other araument containod in Anchs 

Since our decision herein does not stand or fall on the specific lanauaao and allUm nta objected to by Sea La

motion is denied

19 F 
AGREEMENT NOS T 1685 T 1685 6 T 3130 77

improved efficiency at POL Terminal I are alone sufficient to justify

interim approval Anchorage also urges rejection of Tesoro s request for

6Oday approval citing support in the record for 90 days

Hearing Counsel agrees with the exceptions insofar as they find that

the Interim Initial Decision should not have been based on the question of

the relative efficiencies of Totem s various berthing options However

Hearing Counsel submits that the fact that the record does demonstrate

that Totem has elected not to risk docking at Terminals 2 and 3 during

severe winter ice conditions is sufficient to find that Sea Land s

preferential agreement may force Totem out of the trade for several

months This fmding in turn justifies a temporary approval ofAgreement

No T 1685 6for 90 days

Totem is ofthe opinion that the interim decision is supportable on the

grounds that the public interest warrants transferring Sea Land to the site

where its operations are most efficient also that Totem should not be

forced to take the risk ofberthing at Terminals 2 and 3 during periods of

severe icing Thus Totem believes that since the interim decision enables

Totem to remain in the trade through the winter it serves the public

interest and should be affirmed

Totem asserts that Tesoro s objections relate to the rationale as

opposed to the results of the decision On this point Totem takes the

position that since Judge Levy ruled that the parties do not waive

any arguments they have previously made nor is such non objection to be

deemed in any way prejudicial to their rights otherwise Tesoro should

not be concerned over the grounds ofthe decision when it agrees with

the result

As an alternative basis for the decision Totem supports Tesoro s

argument that the Commission grant approval ofAgreement No T 1685

6 solely on the safety issue as briefed by the parties Totem finds

adequate support in the record for such afmding

Finally Totem disputes Tesoro s argument that only a 6O day approval

of the agreement is required According to Totem the ice season in

Alaska extends through the third week in April and a 9Oday approval

would eliminate the possibility that the parties would have to return to the

Commission for an extension ofapproval

DISCUSSION AND CONCLUSIONS

The record is quite clear that the catalyst for the interim decision was

a statement made by Mr William B Maling President ofTotem during

the course of the hearing to the effect that Totem s vessel the Great

Land could not be safely berthed at Terminals 2 and 3 during conditions

of severe icing The resumption ofpreferential berthing rights ofSea Land

at Terminal I coupled with the use ofthe POL facility by other carriers

would preclude Totem from effectively utilizing any berth at Anchorage

during the period that it was unsafe to berth at Terminals 2 and 3

19 F M C
78 FEDERAL MARITIME COMMISSION

This problem precipitated several discussions among counsel and J

Levy culminating in a proposal by Anchorage and Totem that int

approval be given to Agreement No T l685 so that Terminal 1 w

be available to Totem on a non preferential basis All parties with 

exception of Sea Land agreed to the proposal and it was detennine

submit briefs on this limited issue to be ftled on an accelerated sche

so that an interim decision could be rendered prior to February 1 

Unfortunately Judge Levy in his Interim Initial Decision decline

reach adetermination on the safety issue and instead based his app

ofAgreement No T 1685 6on the relative efficiencies of POLTen

1 and Terminals 2 and 3 as applied to Totem s operations As such 

decision is based on issues that were not properly noticed by 

Administrative Law Judge and thus not fully briefed by the parties 

ignores the one central issue which gave rise to the problem and on w

the parties had concentrated their arguments In so doing the Pres

Officer erred

Judge Levy s rationale in support of his decision is somewhat co

ing Striking at what he considered to be the heart of the prob

presented in this interim proceedIng Judge Levy stated

Unless the berthing provision of Sea Land s present preferential agreem

suspended orAgreement No T 1685 6is conditionally approved for an interim p

Sea Land will be able to bar its only major competition from berthing and thus w

able to retain its monopoly over general waterborne cargo into the Port of Ancho

Unanswered however is the question of how the relative efficie

ofPOLTenninall and Tenninals 2 and 3 would enable Sea Land to 

its only major competition

While it is true that POL Terminal 1 is more desirable to To

because ofthe three offloading ramps there is no evidence in the re

to indicate that absent severe icing conditions continued us

Terminals 2 and 3 by Totem during interim period would drive the ca

from the trade The only sound basis for Judge Levy s unexpla

observation would be that severe icing conditions at Tenninals 2 a

would actually preclude Totem from utilizing that berth In that e

Sea Land s preferential use of Tenninal 1 would lend credence to 

statement The safety issue was not however decided by Judge Lev

We agree with Tesoro s argument that the 9Oday period of temp

approval bears little relation to the basis upon which the Administr

Law Judge decided the case Presumably Judge Levy is anticipat

final decision by the Commission within 90 days However if

decision should not be forthcoming the parties would have to requ

further extension of the approval Assuming the validity of Judge Le

finding with respect to the carrier s relative efficiencies at the Ancho

facilities as a basis for his decision it would appear to have been 

logical to approve Agreement No T 1685 6 until such time as 

Commission rendered its final decision Certainly under Judge Le

rationale the public interest consideration would not necessarily exp

19 F 
AGREEMENT NOS T I685 T 1685 6 T 3130

90 days While a finding that limited approval based on the safety factor

and the 2 to 3 month winter period is consistent with the record Judge

Levy s basis for limited approval lacks any foundation in the record and

must be rejected

Our decision herein is not meant to imply that the findings ofJudge

Levy with respect to operating efficiencies at Anchorage are necessarily

erroneous We have not reached adetermination as to that issue simply

because we believe that the interim proceeding is not the proper forum

for a resolution ofthis particular matter As we see it the need for an

interim decision arose because of a

very specific problem ie the

question ofsafety to Totem s vessel the Great Land if it was required

to utilize Terminals 2 and 3 during periods of severe icing We have

confined our discussion and decision solely to that limited issue to ensure

that the contentions positions defenses and rights of each and every

party with respect to other matters still pending before the Administrative

Law Judge are not prejudiced

Judge Levy declined to reach adecision on the safety issue ostensibly

because there were other considerations of the public interest which

warranted the utilization ofPOL Terminal I by Totem Perhaps a more

significant reason was the conflicting evidence whether the Great Land

can be safely berthed at Terminal 23 during the heavy icing period We

can sympathize with Judge Levy on this point The testimony is

conflicting as to whether icing conditions at Anchorage will become so

severe as to preclude the Great Land from berthing at Terminals 2 and 3

However severe icing does occur at Anchorage and there is the real

possibility that the Great Land could be damaged because ofthe mooring

situation and the weather conditions Totem has indicated in the record

that it will not berth at Terminals 2 and 3 during severe icing conditions

because ofthe risk to the vessel and her crew IfTotem cannot use POL

Terminal 1 even on a first come first served basis it may be forced to

leave the trade at least on a temporary basis

While there exists a legitimate dispute over whether the Great Land

could in fact safely berth at Terminals 2 and 3 during periods of severe

icing in Totem s estimation the risk ofdamage to its vessel and injury to

its crew is so real that it has served notice ofits intention not to berth at

Terminals 2 and 3 under such conditions Based on all the available

evidence before us we fmd that Totem s refusal to use Terminals 2 and 3

under such conditions is reasonable and based in good faith on a fear of

injury to the vessel and her crew As a result Totem s assertion that it

would leave the trade rather than serve Anchorage under these conditions

is not an idle threat but a

responsible business decision which must be

taken seriously

From every indication at this time the continuation ofTotem s service

to Anchorage is in the public interest and should be maintained if

possible The design of Totem s vessel enables her to carry outsized

cargoes which Sea Land cannot accommodate Shippers have apparently

19 F M C

79
80 FEDERAL MARITIME COMMISSION

recognized the benefits offered by Totem s service as evidence

Great Land s initial heavy load factors Thus Totem s operatio

Anchorage provides a new flexible service and the benefits of com

tion as well as increased revenues to Anchorage Judge Levy consid

Totem s contribution to the trade recognized this public interest f

and in fact used it as the basis for his decision

We believe that a decision substantially in conformity with J

Levy s could be rendered on the record but based solely on the s

issue This alternative however would place Sea Land in the positio

accepting approval of Agreement No T 1685 6 on conditions wh

has indicated are not satisfactory to it at this time In any event w

not believe that we can properly determine the merits of these cond

inasmuch as the parties did not fully brief this aspect of the cas

purposes of the Interim Initial Decision In addition this matter is 

pending before the Administrative Law Judge and weare relucta

take any action which could be construed as prejudging ultimate is

Approval of Agreement No T 1685 6 as originally submitted to 

Commission would also allegedly present a number of problems for 

Land and could adversely affect Sea Land s operations at Termin

For example Sea Land contends that approval evenon an interim b

of Agreement No T 1685 6 without providing for an adequate bac

area to Terminals 2 and 3 could increase congestion and ineffici

which would translate into increased costs Also under an appr

preference at Terminal 2 Sea Land would be locked into using 

facility on a full time basis even though Totem would call atTermi

only about once a week Sea Land contends that to require it to 

Terminal 2 even when Totem is not at Terminall will impair Sea La

operating efficiency without any countervailing enhancement in 

efficiency ofTotem

Sea Land s arguments in this regard are persuasive Accordingly 

our opinion that approval of Agreement No T 168S 6at this time c

create more problems than it will solve and is UMecessary since 

viable alternatives are available

It is our opinion that the continued use ofTerminal 1 by Sea Lan

a preferential basis is contrary to the public interest in violation of se

15 Shipping Act 1916 in that there is areal possibility that it will 

to effectively preclude Totem from offering a competitive common ca

service to the Port during periods of severe icing conditions There

Agreement No T 1685 as amended through T 1685 5 will be d

proved effective February 5 1976 unless the parties to that agreem

prior to that date file with the Federal Maritime Commission 

amendment to Article l a of the Agreement the preferential bert

rights clause inserting at the end thereof the following clause

provided however that effective February 5 1976 such preferential berthing 

shall notapply during the months of February March and April 1976

19 F 
AGREEMENT NOS T 1685 T 1685 6 T 3130 81

Disapproval ofSea Land s preferential berthing rights during the winter

months will place all parties serving Anchorage on a tirst come tirst

served basis This will maintain the status quo under which Sea Land and

Totem are presently calling at Anchorage and the record does not

disclose that either carrier has suffered severe economic disadvantage

under such an arrangement While in the long run a preferential berthing

arrangement may prove to be more economically viable service to

Anchorage on a non preferential basis for the interim period would not

appear to significantly affect the operations ofeither carrier

A number of parties including Hearing Counsel Tesoro Anchorage

and Totem had recommended that the Commission suspend Agreement

No T 1685 pending the outcome ofthe proceeding if Sea Land refused

to accept temporary approval of Agreement No T 1685 6 This alterna

tive of suspension is not open to the Commission under section 15

Pacific Coast European Conference Payment of Brokerage 5 F M B

65 69 1956

However as proposed herein the parties themselves may modify the

agreement so as to suspend the effectiveness of Sea Land s preferential

berthing rights during the months ofFebruary March and April of 1976

In the event the parties file the prescribed amendment to Article lea the

remaining provisions of Agreement No T 1685 would continue as

presently approved Failure to file such an amendment will of necessity

result in disapproval ofthe complete agreement inasmuch as Article lea

is included therein

Our disposition ofthe matter in this manner is not only consistent with

the record in this proceeding and in conformance with the law but is the

least disruptive to the parties involved and avoids the problem encoun

tered by Judge Levy of possibly prejudging ultimate issues in the

proceeding Moreover it will enable all parties to serve Anchorage on

equal terms pending the outcome ofthe proceeding

One fmal point should be mentioned On January 19 and January 27

1976 Sea Land ftIed Petitions to Reopen pursuant to Rule 13j

46 CFR

502 230 d for the purpose ofreceiving additional and current evidence

on the actual use during the winter ice season ofTerminals 2 and 3 by

Totem Responses were filed in opposition by Anchorage and Totem

Tesoro ftIed a response supporting Sea Land s petitions Generally the

arguments pro and con relate to Totem s ability to utilize Terminals 2

and 3 during the months of November December and January and the

possible implication this might have with respect to Totem s use of that

facility in February March and April

We fmd that Totem s present ability to utilize Terminals 2 and 3 bears

little relevance to its ability to call at the facility in the severe winter

months of February and March This is the very basis of our decision

namely the real possibility of severe icing and Totem s reasonable fear

of injury to vessel and crew which warrant Totem s refusal to call at

Terminals 2 and 3 Neither we nor anyone else can predict whether

19 F M C
82 FEDERAL MARITIME COMMISSION

such conditions will occur Sea Land s submittal can provide no evide

to alter our conclusion and the petitions are therefore denied

SEAL S FRANCIS C HURNEY

Secretar

19 F 
19 F MC 83

FEDERAL MARITIME COMMISSION

DOCKET No 75 35

AGREEMENT Nos T 1685 AS AMENDED AND T 1685 6 BETWEEN THE

CITY OF ANCHORAGE AND SEA LAND SERVICE INC AND AGREEMENT

No T 3130 BETWEEN THE CITY OF ANCHORAGE AND TOTEM OCEAN

TRAILER EXPRESS INC

ORDER

This proceeding is before the Federal Maritime Commission on

exceptions to the Interim Initial Decision of Administrative Law Judge

Levy wherein he found that

1 Temporary approval of Agreement T 1685 6for 90 days is in the

public interest and would serve a serious transportation need

2 Approval is on condition that during cement off loading operations

Sea Land will berth in a manner not to interfere with such

operations

3 IfSea Land does not accept the temporary and conditional approval

ofpreferential berthing rights at Terminal 2 then previously approved

preferential berthing rights for Sea Land at Terminal 1 are rescinded

We have reviewed Judge Levy s decision and the various exceptions

and responses filed in connection therewith and in view ofthe urgent

need for Commission action on this matter prior to February 1 1976 we

are issuing this Order at this time to be followed by our Report fully

explaining its basis within afew days

THEREFORE for reasons to be fully enumerated in our Report

IT IS ORDERED That the Interim Initial Decision of Administrative

Law Judge Levy is hereby reversed on the grounds that the decision was

based on issues not fully briefed by the parties and that it ignored the

one central issue which gave rise to the need for interim action

IT IS FURTHER ORDERED That because Sea Land Service Inc s

preferential berthing right at Terminal 1 at the Port of Anchorage is

contrary to the public interest in violation of section 15 ofthe Shipping

Act 1916 in that there is a real possibility that it will serve to effectively

This Order is made without prejudice to the contentions positions defenses and rights of each and all of the

parties hereto in the matters pending before the Administrative Law ludge
84 FEDERAL MARITIME COMMISSION

preclude Totem Ocean Trailer Express Service Inc from offerin

competitive common carrier service to the Port during periods of se

icing conditions Agreement No T I685 as amended through T 16

is hereby disapproved effective February 5 1976 unless the partie

that Agreement prior to that date file with the Federal Mari

Commission an amendment to Article la thereof inserting after the 

sentence the following clause

provided however that effective February S 1976 such preferential berthing 

shall not apply during the months of February March and April 1976

IT IS FURTHER ORDERED That Sea Land s Petition to Reopen 

denied

By the Commission

SEAL S FRANCIS C HURNEY

Secreta

19 F 
FEDERAL MARITIME COMMISSION

INFORMAL DOCKET No 338 1

UNION CARBIDE INTER AMERICA INC

v

VENEZUELAN LINE

COMPANIA ANONIMA VENEZOLANA DE NAVEGACION

NOTICE OF DETERMINATION NOT TO REVIEW

February 10 1976

Notice is hereby given that the Commission on February 10 1976

determined not to review the decision of the Settlement Officer in this

proceeding served January 30 1976

By the Commission

SEAL S FRANCIS C HURNEY

Secretary

19 F M C 85
FEDERAL MARITIME COMMISSION

INFORMAL DOCKET No 338 1

UNION CARBIDE INTER AMERICA INC

v

VENEZUELAN LINE

COMPANIA ANONIMA VENE2DLANA DE NAVEGACION

Reparation Awarded

DECISION OF WALDO R PUTNAM SETTLEMENT OFFICE

By complaint filed November 14 1975 Union Carbide Inter Ame

Inc complainant alleges that Venezuelan Line carrier assessed o

freight charges on two separate shipments which were in excess oft

lawfully applicable at the time ofthe transportation While the comp

ant does not specifically allege a violation ofthe Shipping Act 1916 

presumed to be section 18b 3

The carrier denied the involved claims solely on the basis ofRul

United States Atlantic Gulf Venezuela and Netherlands Confere

Tariff No 2 S B VEN ll which time bars claims for acljustments 

received y

the carrier within six months from the sailing date o

vessel

In support of its claims the claimant furnished copies of its cl

Nos 1954 and 2002 accompanied by corresponding copies ofthe bi

lading commercial invoices export declarations and relevant corresp

ence

Claim No 1954 involves a shipment of 73 fibre drums of Synt

Resin Polyethylene from New York toPuerto Cabello on March 15 

which was assessed total transportation charges of 1 622 06 

shipment weighed 23 214 pounds contained 852 cubic feet and ha

actual value of 6 460 50 between 500 and 700 per 2000 pounds 

shipment was rated as 852 cubic feet at 68 25 per 40 cubic feet 2

w

I

Both parties havina consented tothe informal procedure ot Rule 19 46 CPR 02 301 304 a8 amend

decision will be final unless theCommission elects to review Itwithin 15 days from the date of service thereo

68 25 was theapplicable WM ratefor Resin Synthetic Viz N D S In other packina actual value over 

not ovet 500 per freight ton

86 19 F 
UNION CARBIDE INTER AMERICA v VENEZUELAN LINE 87

produced ocean freight revenue of 1453 73 plus accessorial charges

assessed on a per cubic foot basis 168 33

Item 495 of the aforementioned Conference tariff provides a specific

rate on Resins Synthetic in bags or fiber drums Viz Polyethylene

actual value over 500 but not over 700 per 2000 pounds Rating the

shipment under this specific tariff provision would have produced ocean

freight revenue of 809 59 plus accessorial charges assessed on aweight

basis 92 72 Accordingly the complainant was overcharged on this

particular shipment in the amount of 719 75 1 622 06 less 902 31

Claim No 2002 involves apalletized shipment of440 bags ofSynthetic

Resin Polyethylene from New York to La Guaira on August 16 1974

which was assessed total transportation charges of 1 084 56 The

shipment weighed 22 440 pounds net contained 571 cubic feet and had

an actual value of 7 480 00 between 500 and 700 per 2000 pounds

The shipment was rated as 571 cubic feet at 69 75 per 40 cubic feet3

which produced ocean revenue of 995 68 less pallet discount of 35 67

plus accessorial charges assessed on a per cubic foot basis 124 55 This

shipment also should have moved under the specific rate in Item 495

discussed above When rated on aweight basis the shipment produces

ocean revenue of 782 60 less pallet discount of 28 05 plus accessorial

charges of 100 72 Accordingly the complainant was overcharged on

this shipment in the amount of 229 29 1 084 56 less 855 27

The involved claims were denied by the carrier solely in accordance

with its published tariff provisions which read in pertinent part that

claims by shippers for adjustment offreight charges will be considered

only when submitted in writing to the carrier within six months ofdate of

shipment The merits of the claims were not an issue in the denial

thereof The carrier however in responding to the served complaint not

only admitted that the shipments were incorrectly rated but requested

that aruling in favor ofthe complainant be issued

The Commission in Informal Docket No 115 1 Colgate Palmolive

Company v United Fruit Company reiterated what is specifically stated

in Proposed Rules Time Limit on Filing Overcharge Claims 12 F MC

298 308 1 9 that

once a claim has fmally been denied by a carrier the shipper may still seek and in

a

proper case recover reparation before the Commission at any time within 2 years of

the alleged iJUury and this is true whether the claim has been denied on the merits or on

the basis of a time limitation rule

Section 18 b 3 of the Shipping Act 1916 makes it unlawful for a

carrier to charge demand collect or receive agreater compensation than

the rates or charges which are specified in its tariff

The filing of a timely complaint with this Commission effectively

overrides any tariff technicality under which an overcharge claim legally

3 69 75 was the applicable WM rate for Resin Synthetic Viz N DS in other packing actual value over 500 but

not over 700 perfreight ton

19 F M C
88 FEDERAL MARITIME COMMISSION

may be denied by awater carrier subject to ourjurisdiction during th

year statutory period for recovering reparation set forth in section 2

the Shipping Act 1916 A proper case for the recovery of repara

having been made a refund in the amount of 949 04 is due the claim

and it is so ordered

8 WALDO R PUTNAM

Settlement Office

19 F
FEDERAL MARITIME COMMISSION

SPECIAL DOCKET No 473

HOMASOTE Co

v

UNITED STATES LINES INC

NOTICE OF ADOPTION OF INITIAL DECISION

February 17 1976

The initial decision in this proceeding was served January 19 1976 and

no exceptions have been filed Notice is hereby given that the Commis

sion has determined to adopt the initial decision subject to the qualifica

tions discussed herein

The initial decision makes several references to the fact that applicant

is seeking a waiver ofcharges in this proceeding Any such references

in the initial decision should be to refund of charges inasmuch as

payment has already been made

While relief under special docket procedures is denied herein our

review of the application and pertinent tariff matters discloses that

Homasote Co may have been charged a rate other than that which was

applicable The application states the applicable rate for advertising

material was 143 75 WM Our review ofthe tariff indicates that the rate

for such commodity in fact was 108 75 WM

Attention is called to the Commission s formal complaint procedures

46 CPR 505 62 and informal docket procedures for claims of 5 000 or

less 46 CFR 502 301 et seq under which a claim for reparation on

overcharges of ocean freight may be filed within two years from the date

acause of action accrues

By the Commission

SEAL S FRANCIS C HURNEY

Secretary

19 F M C 89
FEDERAL MARITIME COMMISSION

SPECIAL DOCKET No 473

HOMASOTE Co

V

UNITED STATES LINES INC

Adopted February 17 1976

Application for pennission to waive collection of a portion of the freight charges 

INITIAL DECISION OF JOHN E COGRAVE ADMINISTRATI

LAW JUDGE 1

By application filed June 16 1975 United States Lines USL 

applied for permission to waive collection of a portion of the freight 

shipment of advertising material carried under bill of lading dated M

29 1975 on the American Ace from Baltimore to Hamburg Fed

Republic of Germany The rate applicable at the time of shipme

alleged to be Item 890 0001001 Advertising Matter including Sam

and Metal Display Stands N E S Packed 143 75 WM 2

resulting 

charge of 6 748 57 The application states

This appears to have been an unfortunate situation where both Consignor an

forwarder shipped this cargo without first checking the rate It would appear tha

carrier s rate clerk applied the correct rate in effect at the time of shipment How

had Consignor or his forwarder applied to the Conference for relief for a special ra

30 days the Conference would have at least given the benefit of Item 89000

minimum rate of 50 50 WM This especially in view of the extremely low value o

shipment

The aggregate freight charges sought to be refunded are 4 377 77

Section 18b 3 ofthe Shipping Act 1916 46 USC 817 as amende

Public Law 90298 and as further implemented by Rule 6b Spe

Docket Applications Rules ofPractice and procedure 46 CFR 502 9

the law sought to be invoked Briefly it provides

I This decision became thli decision of the Commission on February 17 1976

1 North Atlantic CONTINENTAL Frelaht Conference Tariff No 29 FMS 4 10th Rev Paac 258 Effectiv

February 9 1975

90 19 F M
HOMASOTE CO v U S LINES 91

The Commission may in its discretion and for good cause shown permit a

common carrier by water in the foreign commerce of the United States to refund a

portion of the freight charges collected from a shipper or waive the collection of a

portion of the charges from a shipper where it appears that there is an error in a

tariffof a clerical or administrative nature or an error due to an inadvertence in failing to

file a new tariff and that such refund or waiver will not result in discrimination among

shippers Furthermore prior to applying for such authority the carrier must have filed

a new tariff which sets forth the rate on which such refund or waiver would be based

The application for refund must be filed with the Commission within one hundred and

eighty days from the date of shipment Finally the carrier must agree that if permission

is granted an appropriate notice will be published in its tariff or such other steps taken

as may be required to give notice of the rate on which such refund or waiver would be

based

The legislative history ofthe amendment to section 18 of the Shipping

Act Public Law 90298 3

specifies that carriers are authorized to make

voluntary refunds and waive the collection of a portion of their freight

charges for good cause such as bona fide mistake The nature of the

mistake was particularly described

Section 18 b appears to prohibit the Commission from authorizing relief where

through bona fide mistake on the part of the carrier the shipper is charged more than he

understood the rate to be For example a carrier after advising a shipperthat he intends

to file a reduced rate and thereafter fails to file the reduced rate with the Federal

Maritime Commission must charge the shipper under the aforementioned circumstances

the higher rates

The Senate Report4 states the Purpose ofthe Bill

Voluntary refunds to shippers and waiver of the collection of a portion of freight

charges are authorized where it appears that there is an error in a tariff of a clerical

nature or where through inadvertence there has been a failure to file a tariff reflecting

an intended rate

As observed before refund or waiver of collection of a portion of the

freight is permitted where there is an error in a tariff ofa clerical or

administrative nature or an error due to an inadvertence in failing to file a

new tariff Misinterpretation of a tariff is not subject to rectification

under P L 90298 Commodity Credit Corporation v Delta Steamship

Lines Inc 14 SRR 1207 1974 The failure ofthe consignor or forwarder

to check a rate prior to shipment is not the kind of circumstance for

which section 18 b 3 affords relief Moreover if the 11th revision of

Page 258 Effective April 7 1975 is taken as a new tariff fIled prior to

applying for authority to waive collection of a portion of the freight

charges it fails to set forth the rate on which such waiver would be

based

Inthe absence ofexemptive authority the Commission may not permit

deviations from the rates on file Accordingly waiver of collection of

undercharges may not be granted and authorizations of refunds of

House Report No 920 November 14 1967 To accompany H R 9473 onShipping Act 1916 AufhorizedRefund

of Cerla nFreight Charges Slatemelof Purpose and Needfor the Bill 10 Amend Provisions of the Shipping Act

1916 toAuthori4e the FederalMaritime Commission to permit a

Carrier to Refund aPortion of the Freight Charges

Senate lleport No 1073 April S 1968 To accompany H R9473 on Shipping Act 1916 AuthorizedRefund of

CertainFreight Charges under Purpose ofthe Bill

19 F M C
92 FEDERAL MARITIME COMMISSION

overcharges are unnecessary

5 The application for permission to w

collection of a portion ofthe freight must therefore be denied

S JOHN E COORAVE

Administrative Law Judg

WASHINGTON D C

January 19

1976

Mueller v Peralta Shipping Corp 8P M C 361 1965 and Tilton Texttlt Corp v Tlrai Linel Ltd 9 

145 1965 See a1 0Lou svllle N R R Co v Maxwell Z37 U S 94 1915

19 F 
19 F MC 93

FEDERAL MARITIME COMMISSION

SPECIAL DOCKET No 467

UNION ENGINEERING KUWAIT

v

IRAN EXPRESS LINE

NOTICE OF ADOPfION OF INITIAL DECISION

February 12 1976

The Commission by notice served February 12 1976 declared its

intention to review the initial decision ofthe Administrative Law Judge in

this proceeding Upon review of the record in this proceeding the

Commission has now determined that the decision of the Administrative

Law Judge is proper and well founded Accordingly notice is hereby

given that the initial decision became the decision ofthe Commission of

February 18 1976

By the Commission

SEAL S FRANCIS C HURNEY

Secretary
FEDERAL MARITIME COMMISSION

SPECIAL DOCKET No 467

UNION ENGINEERING KUWAIT

v

IRAN EXPRESS LINES

Adopted February 12 1976

Application to waive collection of a portion of the freight charges denied

INITIAL DECISION OF JOHN E COGRAVE ADMINISTRAT

LAW JUDGE 1

By pplication dated February 21 1975 Iran Express Lines IEL 

applied for permission to waive collection of a portion of the freight 

shipment ofroad building machinery under bill oflading dated Dece

11 1974 IEL carried this shipment on the M V Philippine Pres

Garcia from New York to Kuwait The rate charged was lump 

17 500 00 The rate applicable at the time of shipment was Item 

150 00 WMplus 48 25 per 2240 pounds heavy lift z which would 

resulted in Ei charge of 18 485 54 Permission is therefore request

waive collection of the excess of 985 54 As grounds for the waive

application offers only the statement Misfiling due to clerical erro

supporting documents attached The supporting documents are cop

the bills of lading copies of manifest correction sheets copies of inv

setting forth docking charges and acopy of one page from the tariff 

and regulations ofIEL The shipment was described on the two b

lading as soil stabilizing machines and spare parts On December 23 

IEL filed a new rate on which the waiver would be based 3Inste

road building machinery or soil stabilizing machines and spare part

lump sum rate would be for Motorgraders

Section 18b 3 ofthe Shipping Act 1916 46 USC 817 as amend

Public Law 90298 and as further implemented by Rule 6 b Sp

I

This decision beclUOc the decision of the Commission February 12 1976

2 Iran Express LinesF M C No 1 Page 6 First Revised Paae S A Etfecdve Date 8120174 Correction 7

1 Iran Express LinesF M C No 1 MOTORORADERS About 7 MlTORS and 12 urons each one shi

receiver one port ofloading one port ofdischariC including all surcharges Lumpsum 17 500 00

94 19 F 
UNION ENGINEERING KUWAIT v IRAN EXPRESS LINE 95

Docket Applications Rules ofPractice and procedure 46 CFR 502 92 is

the law sought to be invoked Briefly it provides

The Commission may in its discretion and for good cause shown permit a

common carrier by water in the foreign commerce of the United States to refund a

portion of the freight charges collected from a shipper or waive the collection of a

portion of the charges from a shipper where it appears that there is an error in a

tariffof a clerical or administrative nature or an error due to an inadvertence in failing to

file a new tariff and that such refund orwaiver will not result in discrimination among

shippers Furthermore prior to applying for such authority the carrier must have filed

a new tariffwhich sets forth the rate on which such refund or waiver would be based

The application for refund must be filed with the Commission within one hundred and

eighty days from the date of shipment Finally the carrier must agree that if permission

is granted an appropriate notice will be published in its tariff or such other steps taken

as may be required to give notice of the rate on which such refund or waiver would be

based

The legislative history of the amendment to section 18 ofthe Shipping

Act Public Law 90298 4

specifies that carriers are authorized to make

voluntary refunds and waive the collection of a portion of their freight

charges for good cause such as bona fide mistake The nature of the

mistake was particularly described

Section 18 b appears to prohibit the Commission from authorizing relief where

through bona fidemistake onthe part of the carrier the shipper is charged more than he

understood the rate to be For example a carrierafter advising a shipperthat he intends

to file a reduced rate and thereafter fails to file the reduced rate with the Federal

Maritime Commission must charge the shipper under the aforementioned circumstances

the higher rates

The Senate ReportS states the Purpose ofthe Bill

Voluntary refunds to shippers and waiver of the collection of a portion of freight

charges are authorized where it appears that there is an error in a tariff of a clerical

nature or where through inadvertence there has been a failure to file a tariff reflecting

an intended rate

On the record presented adetermination cannot be made As observed

before refund or waiver of collection of a portion of the freight is

permitted where there is an error in atariff of a clerical oradministrative

nature or an error due to an inadvertence in failing to me anew tariff

The statement Misftling due to clerical error All supporting documents

attached is in no way explanatory of the character ofthe error The

supporting documents do not achieve their intended purpose because

they do not reveal what the clerical error was

Iffreight charges are to be waived on the basis ofthis conclusory

statement the applicant for waiver becomes the arbiter of what consti

tutes clerical error afunction reserved to the Commission by the statute

Since the exemptive clause is not applicable to the situation presented

House Report No 920 November 14 196 7 To accompany H R 9473 on Shipping Act 1916 AuthorizedRefund

of Certain Freight Charges Statement of Purpose and Need for the Bill toAmend Provisions of theShipping Act

1916 toAuthorize the FederalMaritime Commission to Permit aCarrier to Refund a

Portion ofthe Freight Charges

5 SenateReport No 1078 April S 1968 To accompany HR 9473 on Shipping Act 1916 Authorized Refund of

CertainFreight Charges under Purpose of theBill

19 F M C
96 FEDERAL MARITIME COMMISSION

then the general role ofMueller v Peralta Shipping Corp 8 F M C 

1965 and Tilton Textile Corp v Thai Unes Ltd 9 F M C 145 

is dispositive of this application In the absence of exemptive auth

the Commission may not permit deviations from the rates on 

Accordingly waivers of collections ofundercharges may not be gr

and authorizations ofrefunds are unnecessary The law forbids the fo

and directs the latter The application to waive collection of a porti

the freight charges is therefore denied

WASHINGTON D C

January 9

1976

S JOHN E COGRAVE

Administrative Law Jud

19 F 
19 F MC 97

FEDERAL MARITIME COMMISSION

No 75 54

UNION CARBIDE INTER AMERICA INC

v

VENEZUELAN LINE

COMPANIA ANONIMA VENElOLANA DE NAVEGACION

NOTICE OF ADOPTION OF INITIAL DECISION

February 18 1976

No exceptions having been taken to the initial decision of the

Administrative Law Judge in this proceeding and the Commission having

determined not to review same notice is hereby given that the initial

decision became the decision of the Commission on February 18 1976

By the Commission

SEAL S FRANCIS C HURNEY

Secretary
FEDERAL MARITIME COMMISSION

No 7554

UNION CARBIDE INTER AMERICA INCORPORATED

v

VENEZUELAN LINE

COMPANIA ANONIMA VENEZOLANA DE NAVEGACION

Adopted February 18 1976

Reparation awarded in the amount of 4 42158

Carrier incorrectly rated shipment

Section 18 b 3 of the Shipping Act 1916 makes it unlawful for a carrier to c

collect or receive a greater compensation than the rates which are specifie

staff

Appearances

Warren Wytzka Manager liner Services for complainant

G E McNamara Traffic Representative for respondent

INITIAL DECISION OF STANLEY M LEVY ADMINISTRAT

LAW JUDGE 1

Complainant shipper seeks reparation in the amount of 421 

claiming respondent carrier overcharged in that amount by wron

assessing a shipment of polyethylene synthetic resin in violation ofs

18b 3 ofthe Shipping Act 1916

Complainant requested and respondent has agreed that the proce

be conducted pursuant to the shortened procedure provided in Rule 

the Commission s Rules of Practice and Procedure 46 CFR 502 18

The shipment was classified by the carrier as Synthetic Resin N 

in other packing Actual value over 700 00 per freight tonPursu

item 495 tariff no 11 of the United States Atlantic and Gulf Vene

and Netherlands Conference 27th revised page 62 the respo

chatged a total of 7 630 60

Complainant contends the shipment should have been describ

Fibre Drums Polyethylene Synthetic Resin value over 700 00 b

over 1 000 00 per 2 000 lbs As such it should have been rated at 

1

This decision became the decision of the Commission Febmary 18 1976

98 19 F 
UNION CARBIDE INTER AMERICA v VENEZUELAN LINE 99

per 2 000 lbs rather than lllOO per 40 cubic feet and the proper charge

should have been only 3 209 02

Complainant sought recovery ofthe difference from the carrier but the

claim was rejected solely on the basis that the tariffs rule 11 barred

claims for overcharge filed more than six months from the date of

shipment

Both the Union Carbide Invoice No 8606882 and the Venezuelan

Line Bill of Lading No 62 dated October 25 1974 read 220 FIBER

DRUMS POLYETHYLENE SYNTHETIC RESIN These documents

clearly specify that the commodity wasPolyethylene Synthetic Resin and

that it was shipped in drums The governing or applicable Venezuelan

Tariff No 11 cited above has a specific provision for RESINS

SYNTHETIC POLYETHYLENE in fiber drums actual value over

700 00 but not over 1 000 00 per 2 000 lbs at 83 75 per 2 000 lbs The

respondent had knowledge from the Bill of Lading that the shipment was

made in drums The respondent erred in selecting the Synthetic Resin

N O S in other packing at a higher rate for the actual material shipped

Inits answer to the complaint respondent admits that the claim filed by

the complainant is correct and that the Bill of Lading was rated in error

The merits are established here by the attested facts given above which

clearly show and afftrm that an error did exist that an overcharge was

inadvertently made and that this is a fully valid and supported claim

Complainant s claim was originally denied by respondent on the basis

that it was time barred under the Conference rule However the

Commission has repeatedly held that in an action such as this which is

brought under the Shipping Act 1916 a claim arising from overcharge

cannot be barred from a determination on the merits by aConference

rule if as here the claim is filed with the Commission within two years

ofits accrual Hence the actual description ofthe shipment as it appears

now ofrecord governs the determination ofthe issue

This claim has been filed within two years and consequently must be

considered on its merits Section 18 b 3 of the Shipping Act 1916

makes it unlawful for a carrier to charge demand collect or receive a

greater compensation than the rates which are specified in its tariff

Accordingly on the basis of the foregoing reparation in the amount of

421 58 is awarded complainant Respondent shall pay such amount

within thirty days ofthis decision and failing that interest shall accrue at

the prevailing rate per annum

S STANLEY M LEVY

Administrative Law Judge

WASHINGTON D C

January 22

1976

19 F M C
FEDERAL MARITIME COMMISSION

INFORMAL DoCKET No 330 I

CUMMINS ENGINE CO INC

v

UNITED STATES LINES INC

March 3 1976

Reparation granted

I

I

DECISION OF CAREY E BRADY SETILEMENT OFFICE

Cummins Engine Company Inc claims 55108 as reparation 

United States Lines Inc USL for alleged overcharges on 

shiPments which moved on USLs vessels during March 1973 Th

shipment moved on USLs bill of lading No 631 7301 dated Mar

1973 from Yokahama Japan to New York aboard the American Li

The second shipment moved on USL s bill of lading No 631 7304 

March 3 1973 from Yokohama Japan to New York aboar

American Archer

The first and second shipments were described on each respectiv

of lading as 50 Cases Connecting Rod Assembly The Bure

Customs Special Customs Invoice Form 5515 and the shIpper s in

both described the respective cargoes as 50 Cases Connectin

Assembly Bureau of Customs Consumption Entry Form 7501 des

the cargoes as 50 Cases Diesel Engine Parts

Respondent rated the shipments on the basis of 67 25 per 2 000 

which was the applicable ratefor Automobile Bus and Truck Part

Other Parts according to 532025 of the respondent s tariff in ef

that time 2

Total charges on the first shipment were assessed 

amount of 568 06 which included currency surcharges and CFS c

Total charges were assessed on the second shipment in the amo

458 39 which included aCY discount of 5

The third shipment was described on the bill of lading as 36 Pkg

1

I

Both parties hiwina consented to the lnfonnal proeedure ofrule 19 of the commission Rulos of Pr

Procedure 46 CFR 502 3014 this decision will be final unlesl the Commission elects to review it with

from the date of service thereof

2

Japan Atlantic Gulf laht Conference Tariff No 34 FMC3 14th Revised Pale No 234

100 19 F 
CUMMINS ENGINE CO v U S LINES 101

engine component sets Bureau of Customs Special Customs Invoice

Form 5515 described the cargo as 36 Pkgs K engine component sets

The shipper s invoice and packing list described the cargo as 36 Pkgs

K engine component sets and details the commodities to be Head

Assembly Gear Cover Camshafts Cylinder Block and Crankshaft

Bureau ofCustoms Consumption Entry Form 7501 described the cargo as

36 Pkgs Diesel Engine Parts

Respondent rated the shipment on the same basis as the first two

shipments resulting in total charges being assessed in the amount of

1 5783 including a 5 CY discount

Complainant contends that the respondent misclassified the shipments

and should have applied the rate of 530 per 2 000 Ibs the rate for

Automobile Bus and Truck Parts viz Cylinder Block Assemblies with

or without Crankshafts as per Item 53207

3

Such aclassification would

have saved the complainant a combined total of 55108 on all shipments

Complainant argues in support of its position that the Cylinder Block

Assemblies description is broad enough and ambiguous enough to cover

any type of a part that goes into or is attached to a cylinder block

Further that description is published without quaIification other than with

or without crankshafts

Respondent maintains that in classifying the cargo it relied on the

description on the three bills oflading namely Connecting Rod Assem

bly and K engine component sets respectively Respondent further

states that it is regretted that the shipper did not identify his shipments

for what they actually were namely parts for engine block assembly

As far as we here are concerned we have no objection to this rate being

granted but unfortunately we feel the fmal decision because ofthe actual

description placed on the bills of lading may rest with the Conference

Headquarters in Tokyo The record indicates the Conference does not

interpret the cargo shipped to fall in the category of cylinder block

assemblies

The test the Commission applies on claims of reparation involving

alleged error ofa commodity tariff classification is what the complainant

can prove based on all the evidence as to what was actually shipped

even if the actual shipment differed from the bill oflading description 4

However the complainant has a heavy burden ofproof oncethe shipment

has left the custody ofthe carrier 5

From the documentation of record it is clear the commodities actually

shipped were unquestionably parts for engines ie connecting rod

assembly head assembly gear cover camshaft cylinder block and

crankshaft The Conference tariff discloses no specific commodity rate

Ibid

4 Western Publishing Company Incorporated v Hapag Lloyd A G informal docket No 283 1 Commission Order

served May 4 1972

5

Colgate palmolive Co v United Fruit

Co

informal docket No 115 1 Commission Order served September 30

1970

19 F M C
I

I

I

I

102 FEDERAL MARITIME COMMISSION

for connecting rod assembly head assembly gear cover or cam

Cylinder blocks and crankshafts are named in the disputed tariff 

53207

Complainant s contention that the commodities shipped are parts 

cylinder block assembly appears to be areasonable one

Webster s Third New International Dictionary ofthe English Lang

Unabridged 1964 defines an assembly as

Sa the act or process of building up a complete unit as a motor vehicle usin

already in themselves finished manufacture products b a collection of pa

assembled as to form a complete machine structure or unit of a machine

Webster s New World Dictionary College Edition 1968 de

assembly as

4 a fitting together of parts to make a whole as in making automobiles 

the parts to be thus fitted together

From the above definitions of an assembly it can reasonab

concluded that cylinder block assemblies include those parts of an e

that go into or are attached to the cylinder block to make up th

product which can be reasonably considered directly related t

construction ofan engine An exploded view of an engine readily s

a connecting rod gear cover and camshaft go into or are di

attached to the cylinder block

Tariff Item No 5320 07 is not at all specific as to what comp

parts constitute a cylinder block assembly aside from indicating 

assembly may be with or without crankshafts Such a description 

unclear that reasonable men could differ on its application Whe

ambiguity does exist then the tariff must be construed in such am

so as to resolve such ambiguity in favor ofthe shipper 6

In addition the Commission has long recognized that tariff 

should be interpreted reasonably In National Cable and Metal C

American Hawaii S S Co 2 U S M C 471 1941 the Commis

predecessor stated

In interpreting a tariff the terms used must be taken in the sense in which th

generally understood and accepted commercially and neither carriers nor sh

should be permitted to urge for their own purposes a strained and unn

construction Tariffs are to be interpreted according to the reasonable construc

their language neither to the intent of the framers nor the practice of the 

controls for the shipper cannot be charged with knowledlle of such intent o

carrier s canons of instruction A proper test is whether the article may be reas

identified by the tariff description underlining supplied

Since connecting rod assembly head assembly gear cove

camshaft are not specifically excluded by Item 53207 it can on

concluded that they reasonably fall within the general descript

cylinder block assemblies and should have been so rated A prope

6United Nations Children Fund v Blue Sea Line U FMC206 209 1912

7

Alao lee lohns Manville Products Corporation 13 FMC 194 1970 and Bulkley Dunton Overseas S A 

Star Shipping Corp8 FMC 131 140 1964

19 
CUMMINS ENGINE CO v U S LINES 103

for the recovery ofreparation having been made on the three shipments

a refund in the amount of 551 08 is due to the complainant and it is so ordered

8 CAREY R BRADY

Settlement Officer

19 F M C
FEDERAL MARITIME COMMISSION

No 75 17

INDEPENDENT OCEAN FREIGHT FORWARDER LICENSE CLETO

HERNANDEZ R dbaPAN INTER

NOTICE OF ADOPTION OF INITIAL DECISION

AND

ORDER REVOKING LICENSE

March 4 1976

No exceptions having been taken to the initial decision o

Administrative Law Judge in this proceeding and the Commission h

determined not to review same notice is hereby given that the 

decision became the decision ofthe Commission on March 4 1976

IT IS ORDERED That Independent Ocean Freight Forwarder L

No 1108 issued to and now held by Cleto Hernandez R dbaPan 

is hereby revoked pursuant to Section 44 d of the Shipping Act 

and Sections 51O 9a d and e ofCommission General Order 4

IT IS FURTHER ORDERED That this Notice and Order be pub

in the Federal Register

By the Commission

SEAL S FRANCIS C HURNEY

Secreta

104 19 F 
19 F MC 105

FEDERAL MARITIME COMMISSION

No 7517

INDEPENDENT OCEAN FREIGHT FORWARDER LICENSE CLETO

HERNANDEZ R db aPAN INTER

Adopted March 4 1976

License revoked

Employment by a shipper precludes qualification as an independent ocean freight

forwarder

Failure to promptly remit sums due a principal is a violation of fiduciary relationship

and demonstrates lack of financial responsibility

Failure to pay overocean freight charges due a common carrier by water demonstrates

a lack of financial responsibility

The shipping public is entitled to rely upon the responsibility and integrity as well as the

technical ability of a freight forwarder Failure to meet such standard is basis for

revocation of a license as a freight forwarder

Fred Brady for respondent

Donald J Brunner and William J Cooley for Hearing Counsel

INITIAL DECISION OF STANLEY M LEVY ADMINISTRATIVE

LAW JUDGE

By an Order ofInvestigation and Hearing issued on May 16 1975 the

Federal Maritime Commission initiated this proceeding for the purpose of

determining whether Cleto Hernandez R continues to qualify as an

independent ocean freight fOlwarder pursuant to sections I and 44 of the

Shipping Act 1916 and 510 2 a and 510 9 d of the Commission s

General Order 4 In addition the Commission ordered a finding whether

the failure to timely remit monies due to a principal in the amount of

4 475 is a violation of section 51O 23 tIf was further ordered that a

finding be made whether the licensee maintains all records and books of

account in accordance with section 510 23 k

Hearings were held September 23 1975 in New York New York

FINDINGS OF FACT

I Cleto Hernandez R d b a Pan Inter is the holder of a license No

FMC II08 issued and effective January 27 1966 by the Federal Maritime

Commission to operate as an Independent Ocean Freight Forwarder

I

This decision became the decision of the Commi sion March 4 1976
106 FEDERAL MARITIME COMMISSION

2 He conducts the business from his home business office loca

267 West 89th Street New York City has no employees but does 

his adult sons as associates and his son Robert does incidental 

involved in the conduct ofthe business

3 The hours of Pan Inter are daily from 7 00 a m to 8 15 a m 

after 4 30 pm and on week ends when required

4 Cleto Hernandez R has been employed by Continenta

Company CCC since April 7 1969 CCC is a publicly owned corpo

engaged in the business ofcontainer manufacturing and ships some 

products by oceangoing common carriers

5 CCC is a publicly owned corporation with more than four m

outstanding shares Nine shares are owned by Cleto Hernandez R

6 Mr Hernandez s duties and title are Billing Supervisor He 

vises two employees and is charged with the preparation ofinvoices 

domestic and foreign analysis reports and statistical distribut

reports for inter company use He works at CCC from Monday th

Friday between the hours of 8 30 am and 4 30 p

m

7 CCC does not employ Pan Inter nor Cleto Hernandez R to d

freight forwarding has not referred any business to Pan Inter no

Pan Inter perform any service with companies related by busines

CCC

8 CCC employs at least five licensed freight forwarders inc

Schenkers International Forwarders American Union Transport Fo

ing Meadows Wye Co Alonso Shipping Co and Seaport Sh

Co

9 Respondent does not use the office space secretary or facili

CCC to conduct Pan Inter business Nor does he maintain any Pa

supplies or stationery at CCC

10 CCC and Pan Inter clients both ship to some of the 

destinations Santo Domingo for example but do not otherwise s

the same vessels or to the same ports or to the same agents

11 Pan Inter in 1972 performed freight forwarding services 

shipments in 1973 for 43 shipmellts in 1974 for 23 shipments N

these shipments were for the account ofCCC

12 Pan Inter sustained operating losses during four consecutive 

Nel Ope

Receipts Loss

a 1970 n n hmm

n n 1030 52 961

b 1971 m n n

mm 722 75 1019 

c 1972 n

n n n n n nn 731 89 1 108 

d 1973 n

n n n n

nn

n n 1 25100 766 

13 On or about April 16 1974 Pan Inter prepared the sh

documentation and Sales Invoice for a shipment of export good

Brizel Leather Company Brizel in New York City to Fab

Sombreros Tropicales Lara in Venezuela

19 
CLETO HERNANDEZ R D B A PAN INTER 107

14 The shipment sailed on or about May 31 1974

15 The Sales Invoice identified four charges in addition to the cost of

the goods viz inland freight to pier and handling 48 95 ocean

freight 243 93 insurance 82 20 documentation and handling 35 25

and cost of goods 4 475

16 When the four prepllid charges of 410 93 are added to the cost of

the goods 4 475 the total is 4885 93

17 Pan Inter sent the bill oflading and invoices to the Banco de

Venezuela which remitted the total amount of 4 885 93 to Pan Inter

directly at the office address of267 West 89th Street

18 Cleto Hernandez R had the responsibility to retain only the amount

of advanced expenses 410 93 and remit the remainder 475 to

Brizel

19 The amount of 4 783 83 was deposited in the Banker s Trust

Company account 10054 715 on June 16 1974 being ajoint account of

Cleto Hernandez R andor Hilma de Hernandez where it was commin

gled with the personal funds of Cleto Hernandez R

20 The difference between 4 885 93 received and 4 783 83 deposited

102 10 was used for some unexplained purpose

21 In the transaction relating to the Brizel shipment the deposited

amount of 4 783 received and deposited on June 19 1974 was depleted

to a 37 64 balance onOctober 17 1974 before repayments began

22 The money received on behalf of Brizel had been used for other

freight and personal expenses

23 The deposit of4783 83 was the second largest amount ofmoney

placed into Mr Hernandez s account during the year 1974

24 Pan Inter had used only the bank account at Banker s Trust

Company 10054715 for all receipts and disbursements relating to

forwarding services during the years 1972 1973 and 1974

25 This account was also used for personal buriness in addition to

Pan Inter until a Federal Maritime Commission investigator advised

separate accounts

26 After some months had passed and upon inquiry from Brizel as to

the monies due them on November 18 1974 Plm Inter offered to pay the

full amount owing to the company by providing seven checks drawn

upon Banker s Trust Company account 10054715 the flTst ofwhich

was payable on November 27 1974

27 The other six checks plus an additional check sent the next day

were paid through March 1975 and satisfied the debt in full

28 Licensee has an outstanding debt to Sea Land Service Inc Sea

Land acommon cartier by water

29 Sea Land obtained a default judgment against Cleto Hernandez R

tla Plm Inter Freight on February 21 1975 in the amount of 2 946 1 1Of

this amount 2668 61 was the sum originally owed 180 00 is interest

thereon from November 21 1973 and 9750 costs

19 F MC
108 FEDERAL MARITIME COMMISSION

30 Of the sums due Sea Land the outstanding balance was 2 2

ofthe date ofhearing September 23 1975

DISCUSSION

For several reasons all ofwhich are set forth in detail hereafte

license ofCleto Hernandez R dbaPan Inter must be revoked

The license must be revoked because Cleto Hernandez R is no lo

an independent ocean freight forwarder On OctoberS 1965 at the 

ofhis application for alicense respondent asserted that he was fa

with the Shipping Act of 1916 and all pertinent Acts and rules 

regulations pertaining to the operations and practices of licenled inde

ent ocean freight forwarders and that he was not associated in 

way with a shipper consignee purchaser or seller of shipmen

foreign countries In addition that After be4lg licensed Ido not i

to engage in any business other than ocean freightforwarding

The license under consideration in this proceeding was issued Ja

27 1966 and Mr Hernandez R did not become an employee of 

until April 7 1969 He did not report his employment to the Comm

although he did amend his application information to show a chan

address Respondent therefore asserts that his statements were true 

made and hence cannot be const Ued as such falsification wllich w

support and warrant revocation of the license Further he argues 

is a clear distinction between being engaged in business and 

employed It is respondent s position that there is no relatio

between his functioning as an independent ocean freight forwarde

his employment at CCC

Section Iof the Shipping Act 1916 states that

An independent ocean freillht forwarder is a person carryillllon the busin

forwarding for a consideration who is not a shipper or consianee or a seller orpu

of shipments to foreign countries nor has any beneficial interest therein nordire

indirectly controls or is controlled by such shipper or consignee orby any person 

such a beneficial interest

The language ofthe statute is clear and unambiguous A licensed 

freight forwarder must be independent He cannot be one who is d

or indirectly controlled by a

shipper The Commission has consis

and unequivocally held that one who is employed by a shipper 

independent within the meaning and requirements of the statute 

therefore cannot be licensed or continue to hold a licenileas a

f

forwarder See License No 790 NorthAmerican Van Lines 14F 

215 1971 In North American Van Lines the Commission exa

intensively and extensively the legislative history of Public Law 87 

87th Congress section 44 Shipping Act 1916 46 U S C 84lb 7

522 which authorized the licensing of freight forwarders by the F

Maritime Commission Itconcluded that All the legislative history 

out clearly that exceptions to the clear and unambiguous language 

19 
CLETO HERNANDEZ R D B A PAN INTER 109

statute were to be excluded and the inherent prohibition vis avis control

is absolute and we have so held in numerous proceedings Ibid 221

Nor can any weight be given to the proposition that the licensee having

no shipper connection at the time of licensing has a

right to its

continuation when a subsequent connection is no more than being

employed in a non forwarding capacity by a shipper The Commission in

North American Van Lines squarely ruled that It is immaterial that such

control arises after a license is issued rather than prior to the application

therefor Shipper control negates the Commission s authority not

only to issue a license in the first instance but to allow it to continue

regardless ofany condition that the licensee may propose Ibid 222

Congress has explicitly removed discretion from the Commission when

shipper connection is found so the requirement of independence cannot

be applied liberally Speed Freight Inc 14 F MC 1 9 The Commission

is precluded from issuing a license unless it affirmatively finds that the

applicant is or will be an independent ocean freight forwarder Frt Fwd

Licouis Applebaum 8 F MC 306 Whenever a shipper connection is

found to exist that relationship alone is sufficient to revoke a license

notwithstanding any other merits or demerits of the particular forwarder

involved Speed Freight Inc supra

There is no provision in Public Law 87 254 exempting from the ban

on licensing shipper controlled forwarders who do not forward shipments

for their shipper employer Application for Freight Forwarding

License 9 F M C 72 75 1965

It is clear that the Congress intended to eliminate the evil of potential

abuse Although the situation of Mr Hernandez appears to be more

remote than the shipper connection found in some other cases an

important public policy denies an independent forwarder the right to

remain employed by an exporter regardless ofthe degree or Utcrements

of connection That is why the Commission has rigidly adhered to the

statutory prohibition In this case there can be no contrary holding

In addition to the statutory prohibition there are other cogent reasons

for revoking the license ofPan Inter

When applying for a license Mr Hernandez advised the Commission

I am financially fit to qualify for a license because I am solvent and have sufficient

funds to engage in the business of ocean freight forwarding It is to be noted that no

large sums are required by way of investment or outlays since shippers or others

interested advance freight charges and other expenses enabling me to operate without

large cash reserves I do have available sufficient cash funds to operate adequately

The Commission in Dixie Forwarding Co Inc Application for

License 8 F M C 109 118 1964 synthesized the issue which this

proceeding presents when it said

The business integrity of one who occupies the position of freight forwarder should be

above reproach and he should clearly demonstrate a complete aWareness of and a

willingness to accept the responsibilities that the preferred position imposes Graves has

shown an almost total lack of both As the House Committee on Merchant Marine and

19 F M C
110 FEDERAL MARITIME COMMISSION

I

Fisheries pointed out The intention of the licensing provision section 44 

have every person finn or corporation who holds himself out as a forwarder to be 

cOmpetent and qualified to act in the fiduciary relationship which such bus

necessitates Thus the philosophy of section 44 is such that the shipping public s

be entitled to rely upon the responsibility and integrity as well as the technical abi

a freight forwarder The record here however demonstrates that members o

shippins publ ic who do business with Graves do so at their own risk We ca

conscientiously license such an applicant and thereby suggest to the shipping comm

that we have probed his conduct iUld found him fully competent and qualified 

in a fiduciary capacity

In the language of Dixie Forwarding The record here dem

strates that members of the shipping public who do business 

Hernandez do so at their own risk rrhe Commission cannot cons

tiously continue to license such as he and thereby suggest to 

sliipping community that it has probed his conduct and found him 

competent and qualified to continue to act in a fiduciary capacity

The Brizel Leather Company provides a clear example of the bus

practices ofMr Hernandez

It is an undisputed fact that Mr Hernandez failed to remit m

owing to a shipper and entrusted to him by a consignee until more 

five months after it was due and owing That he ultimately paid 

accoun is only to say that he did no more than that which was req

and then only when placed under pressure to do so

As a single incident and standing alone it might be viewed as 

oversight A falling through the crack so to speak However o

relevant facts as revealed by the evidence of this proceeding demonst

a course ofconduct of a different kind

It is not reasonable to believe that the failure to remit was 

oversight and that the oversight was not discovered until inquir

Brizel in November 1974 or that Cleto Hernandez R was unaware 

the total received was substantially in excess of the amount to be ret

by Pan Inter

Itis more reasonable to believe that Cleto Hernandez R had know

ofthe 4 475 owing to Brizel Leather Company from the time wh

was received until finally repaid The evidence to support su

conclusion is that the deposit of 4 783 83 was the second largest am

ofmoney placed into the Pan Inter account during the year 1974 

Hernandez R checked the monthly balances between June and No

ber Pan Inter only had 23 shipments during 1974 and would normal

prepay any ocean freight for acustomer if the amount was more tha

3 thousand dollars since it did not have the resources to do so analy

account 10054715 at the time of the deposit of the Brizel fund

June 19 1974 reveals that the balance therein was only 56106 Wi

deposit the balance was 5 344 89 thereafter the balance in that ac

steadily declined to 1 815 80 until August 7 1974 when acredit 

of 2 105 21 increased the balance to 3 578 05 whereupon the ba

19 
CLETO HERNANDEZ R D B A PAN INTER 111

again steadily declined to a low of 37 64 on October 17 1974 and rising

to a high of 1252 29 on November 27 1974

It is thus apparent the licensee did not between the time ofreceipt of

the Brizel funds in June and the inquiry by Brizel in November have

sufficient funds to remit the monies licensee received by it for the account

ofBrizel The evidence is overwhelming that the funds were used

primarily for Mr Hernandez s personal requirements

The failure of licensee to pay Sea Land for ocean freight is another

case oflicensee s

inability to properly carry out its duties and obligations

asafr mfu

The phrase tit willing and able properly to carry on the business of

fo arding as set forth in section 44b ofthe Shipping Act 1916 means

that afo arder is unfit and unable to perform his duties when he uses

funds entrusted to him for uses not so intended or fails to pay bills

incurred in connection with his freight forwarding activities Aetna

FoWarding Co Inc Revocation of License 8 F M C 545 551 1 5

These stan s pertain not only to complete independence the ability

to pay bills and properly use funds entrusted to him by others but it also

means that a forwarder must act with the highest degree of business

responsibility and integrity License Application Guy G Sorrentino 15

F MC 130 134 1972

The financial irresponsibility revealed by the record in this proceeding

is incompatible with the fiduciary relationship which such business

necessitates

Under any of the standards applicable to the requirements of fit

willing and able to be licensed as an independent ocean freight fo arder

Mr Hernandez must be deemed to have failed

CONCLUSIONS

For the reasons stated hereinabove the Independent Ocean Freight

Fo arder Ucensee Cleto Hernandez R dbaPan Inter is found to be

in violation of section 44 b ofthe Shipping Act 1916 46 USC 801 and

841 b and of sections 510 23 t

and k of General Order 4 and that he

does not continue to qualify for alicense as an independent ocean freight

fo arder pursuant to sections 1 and 44b ofthe Shipping Act 1916 and

sections 51O 2a and 51O 9d of General Order 4

ORDERED License No FMC 1I08 is revoked pursuant to section

44d ofthe Shipping Act 1916 46 USC 841 b and sections 51O 9a d

and e of the Commission s General Order 4

S STANLEY M LEVY

Administrative Law Judge

WASHINGTON D C

February 0 976

19 FM C
FEDERAL MARITIME COMMISSION

DOCKET No 7354

WINDJAMMER CRUISES INC AND WINDJAMMER CRUISES LTD

ADOPrION OF INITIAL DECI ION

March 30 1976

This proceeding was instituted to determine whether Windjam

Cruises Inc Wincljammer violated sections 2 and 3 of Public Law 

777 by embarking passengers on the Flying Cloud and the Yankee T

at U S ports and arranging offering advertising or providing passa

those vessels without having first complied with the financial respo

ity requirements of that statute

In his Initial Decision Administrative Law Judge Seymour Gl

concluded that while Wincljammer had violated section 3 of Public 

89777 and section 540 3 of the Commission s

implementing regula

46 C F R 540 3 in arranging and providing passage on the Flying C

for persons embarking at Mayaquez Puerto Rico without h

complied with the fmancial responsibility requirements there wa

proven any violation of section 2 of Public Law 89 77 since Win

mer was neither the owner or charterer of the vessels involved

No exceptions were flied to the Initial Decision Upon review o

entire record we conclude that the Administrative Law Judge s

fi

and conclusions were proper and well founded Accordingly we h

adopt the Initial Decision acopy of which is attached and make it 

hereof

One collateral matter raised in the Initial Decision requires addi

discussion Inthe ordering portion of his recommended decision 

Glanzer referred to theComtl1lssion for appropriate action the m

of the conduct of Mr Tarantino couhsel for Windjammer durin

course of the proceeding Upon careful consideration of the matte

find that the facts of record relating to Mr Tarantino s behavior 

proceeding below do not warrant or necessitate any type of discip

action or admonishment

Nevertheless we should like to tae this opportunity to state tha

Commission expects attorneys and other persons practicing before 

observe the same code ofconduct and standard of diligence as wou

112 19 F 
WINDJAMMER CRUISES INC LTD 113

required of them in a court of law The Commission s quasi judicial character must be recognized and respected not

but more

solely for its own sake importantly to assure that the basic procedural and substantive rights ofparty litigants be properly protected and represented By the Commission

Attachment

SEAL S FRANCIS C HURNEY

Secretary

19 F M C
FEDERAL MARITIME COMMISSION

No 7354

WINDJAMMER CRUISES INC

AND

WINDJAMMER CRUISES LTD

Adopted March 30 1976

Respondent found to have violated Section 3 of Public Law 89777 46 U S C 

and General Order 20 46 CPR 540 3

Investigations of violations of Section 2 of Public Law 89777 46 U S C 817

General Order 20 46 CPR 540 22 dismissed

Arthur E Tarantino and David Goldman for respondents 1

Donald J Brunner for Hearing Counsel

INITIAL DECISION OF SEYMOUR GLANZER

ADMINISTRATIVE LAW JUDGE2

By Order of Investigation and Hearing issued August 24 1973 

Federal Maritime Commission initiated this proceeding to deter

whether Windjammer Cruises Inc andor Windjammer Cruises 

doing business as Wincljammer Cruises violated

Section 2 Public Law 89777 by embarking passengers or having emb

passengers at United States ports without having complied with the financial res

bility requirements of Section 2 of Public Law 89777 andor

2 Section 3 Public Law 89 777 by arranginl offering advertising or pro

passage orhaving arranged offered advertised orprovided passage on a vessel w

having complied with the financial responsibility requirements of Section 3 of 

Law 89777 and or

3 Sections 540 3 andor 540 22 Federal Maritime Commission General Order 

C F R 540 3 and 540 22 promulgated to implement Sections 2 and 3 of Public La

777

by embarking passengers on the Flying Cloud at Mayaguez Puerto 

on or about December 18 1972 and by embarking a passenger o

Yankee Trader at Miami Beach Florida on or about February 16 

The hearing was held April 17 1975 at Miami Florida

I Mr Goldman appeared atthe hearing His request to withdraw as counsel for respondents was granted 

of June 30 1975

II This decision became thedecision of the Commission Marth 30 1976

114 19 F 
WINDJAMMER CRUISES INC LTD 115

Legislative Background to Public Law 89 7773

In 1966 in the light ofthen recent incidents involving either cancellation

of scheduled cruises with passengers being left at the pier without

recourse to recovertheir passage money which had been paid in advance

or accidents at sea in which death and injury resulted to passengers

coupled with a significant and substantial increase in the burgeoning

ocean cruise business the Congress saw fit to enact legislation which

among other things was designed to accomplish the dual purpose of

preventing financial loss and hardship to the American traveling public

who after payment ofcruise passage money became stranded by the

abandonment or cancellation of a cruise and ofproviding assurance of

financial responsibility to pay judgments for personal ury or death to

passengers

4

Public Law 89 777 and Implementing Regulations

As pertinent Section 2 of the ActS provides

a Each owneror charterer of an American or foreign vessel having berth or

stateroom accommodations for fifty or more passengers and embarking passengers at

United States ports shall establish under regulations prescribed by the Federal Maritime

Commission his financial responsibility to meet any liability he may incur for death or

injury to passengers or other persons on voyages to or from United States ports

d Tbe Federal Maritime Commission is authorized to prescribe such regulations as

may be necessary to carry outthe provisions of this section The provisions of the

Shipping Act 1916 shall apply to proceedings conducted by the Commission under this

section

The applicable provisions ofSection 3 ofthe Act6 are

a No person in the United States shan arrange offer advertise or provide passage

on a vessel having berth or stateroom accommodations for fifty or more passengers and

which is to embark passengers at United States ports without there first having been

filed with the Federal Maritime Commission such information as the Commission may

deem necessary to establish the financial responsibility of the person arranging offering

advertising orproviding such transportation or in lieu thereof a copy of a bond or other

security in such form as the Commission by rule or regulation may require and accept

for indemnification of passengers for nonperformance of the transportation

d Tbe Federal Maritime Commission is authorized to prescribe such regulations as

may be necessary to carry out the provisions of this section The provisions of this

chapter sball apply with respect to proceedings conducted by the Commission under this

section

Pursuant to the authorization of Sections 2 and 3 ofPublic Law 89777

the Commission promulgated regulations in General Order 201 to carry

out the regulatory scheme contemplated by the Congress The provisions

of those regulations cited in the Commission s Order ofInvestigation and

3

80 Stat 1356 1357

tH R Rep No 1089 89th Cong 1st Sess 23 1965

46 U SC I SI1 d

46 U SC I SI1 e

132 F R 3987 Mar II 1967 46 CFR Part 540

19 F MC
116 FEDERAL MARmME COMMISSION

Hearing are 46 CPR 540 3 and 540 22 Section 540 3 which ap

in Subpart A of Part 540 provides

No person in the United Stales may lIIIge offer alvertise or provi le Pllssag

vessel unless a Certificate Performance has been issued 10 or covers such perso

Section 540 22 which appears in Subpart B of Part 540 provides

No vessel shall embark passenllers unless a Certificate Casualty has been iss

or covers the owneror charterer of such vessel

The definitions of the words and terms used in 540 3 and 5

appear in the applicable portionll of Subpartll A B but for the 

discussed below only the deftnitiotls in Subpart A

s

shall be referre

Those and other pertinent definitions are as follows

a Person includes individuals corporations partnerships associations and 

legal entities existing under or authorized by the laws of the United Stales orany 

thereof or the District of Columbia the Commonwealth of Puerto Rico the 

Islands orany territory or possession of the United States or the laws of any f

country

b Vessel means any commercial vessel having berth or stateroom accom

tions for 50 or more passengers and embarkinll passengersllt U S ports

d United Stales includesl 1e Commonwealth of Puerto Rico the Virain Isla

any territory orpossession of the United States

e Berth or stateroom accommodations or passenger accommodations in

all temporary and all permanent passenger sleeping facUlties

tCertificate Performance means a Certificate of Financial Responsibil

Indemnification of Passengers for Nonperformance of Transportation issued pursu

this subpart

g Passenger means any person who is to embark on a vessel at any U S po

who has paid any amount for a ticket contract ntitllng him 10 water transportatio

Preliminary Matters

This proceeding was originally assigned for hearing and initial dec

to Administrative Law Juclge John Marshall who participated 

prehearing matters and by Notice issued March 12 1975 set the m

for hearing in Miami on April 17 1975 Judge Marshall was unab

attend the hearing and Iwas substituted as presiding Judge On Apr

1975 the proceeding was reassigned tomefor all purposes

Pertinent PreHearing Matters

Priorto the hearing Hearing Counsel served aRequest for 

upon Arthur E Tarantino who had entered his appearance as atto

for respondent Wincljammer Cruises Inc on August 28 1973 Am

other things Hearing Counsel sought to ascertain the truth o

following items

IThat the Yankee Trader is a vessel operated by Windjammer Cruises In

46 CFR I

540 2

Exhibit I

19 F
WINDJAMMER CRUISES INC LTD 117

Florida corporation P O Box 120 Miami Beach Florida 33139 Windjammer Cruises

Ltd a

subsidiary of Windjammer International Corp Nassau Bahamas WCIIWCL

2 That the Yankee Trader has berth or stateroom accommodations which include all

temporary and all permanent passenger sleeping facilities for more than fifty 50

persons

7 That the vessel Flying Cloud is operated by WCICL

8 That the Flying Cloud has berth or stateroom accommodations which includes all

temporary and all permanent passenger sleeping facilities for more than fifty 50

persons

10 That on or about December 18 1972 the following passengers boarded the Flying

Cloud at Mayaguez Puerto Rico and were thence transported thereon to the waters of

the Dominican Republic where the Flying Cloud became encumbered upon an

unidentified submerged object or growth or was otherwise rendered inoperative Please

answer the following individually

There followed a list of 29 individual names

IIThat WCICL advertises various cruises in the United States

12 That none of the vessels chartered owned andor operated by WCICL holds

certificates issued by the Federal Maritime Commission under its General Order 20 46

C FR 540

Accompanied by aCertificate of Service signed by Mr Tarantino and

dated October 30 1973 respondent s Reply To Request For Admissions 10

was submitted That document was signed by Mr Tarantino as attorney

for respondent and subscribed and sworn to by Mr Tarantino before a

Notary Public for the District of Columbia on October 29 1973 Later

there was submitted a Certificate ofRespondents Reply To Request For

Admissions II signed by Captain Mike Burke president of respondent

and stating that he carefully read the Respondent s Reply To Request For

Admissions and that the admissions and statements made therein were

true This Certificate was subscribed and sworn to before a Notary Public

in and for Dade County Florida on December 7 1973

The following answers to the above numbered items of the Request for

Admissions were made in the Respondent s Reply

ITrue

2 True

7 True

8 True

10 True There followed a

lengthy explanation of details

II Not accurate Additional information was supplied

12 True Again a

lengthy explanation was furnished

Respondents Reply to Request for Admissions concluded with the

suggestion In view of the admissions made and evidence presented

no hearing would appear necessary Hearing Counsel countered this

proposal by moving for a hearing Over respondent s objection Judge

Marshall noticed the matters for hearing at Washington D C However

at respondent s counsel s request Judge Marshall rescheduled and

relocated the hearing for Miami The administrative record discloses that

this came about after Hearing Counsel indicated its intention to exarmne

1ll Exhibit 2

11 Exhibit 3

19 F M C
118 FEDERAL MARITIME COMMISSION

Captain Burke as its witness 12 and respondent s counsel renewe

earlier request for asite and time convenient to officers and employee

respondent 13

The Hearing Procedural Matters

Ordinarily it is unnecessary to recount the procedpral progressio

events which occur at ahearing Here however because of the app

disdainful attitude to the processes of this Commission displaye

respondent and Mr Tarantino it would be inappropriate to omit refer

thereto

The hearing was called for 10 00 am April l7 1975 Present a

hour were Hearing Counsel and the official reporter

14 While He

Counsel under instructions from me was telephoning to determine 

respondent had not appeared at10 00 a m a gentleman entered 

identified himself as Chuck Werner with Windjammer Cruises 1 

Werner stated that Mr Tarantino would not attend the hearing a

that he was under the impression that Mr Tarantino had already info

me of his reasons for not being present IS About 10 30 a m 

Hearing Counsel returned to the hearing room the hearing was open

From statements made by Mr Werner not under oath several 

things became evident Mr Werner was not an official of responden

wasnot authorized by respondent or Mr Tarantino to appear genera

to testify IS He was there simply to present a paper containing sugg

findings and conclusions prepared by Mr Tarantino 19 Captain B

who knew that the hearing was taking place would not attend 10

Mr Werner also stated that it was he who worked closely with 

Tarantino in the preparation of the admissions that were adopte

Captain Burke Ii but Iwould not permit him to take the stand to t

because he was not represented by counsel Although this protect

not necessarily to be accorded a witness under subpoena i

circumstances ofan investigation into possible violation oflaw 

concerned about the fairness of compelling this witness to testify w

allowing him time for discussion with or representation by a 

advisor 22 Before recessing at 10 50 a m a subpoena was is

ordering the attendance of Captain Burke at 2 00 p

m that day

During the recess that ensued I

spoke to Mr Tarantino by telep

Among other things he informed me that the day before the hear

It Letter dated March 3 197 from HCariDI Counsel to Judie Marshall

IIRespondent s Reply to Hearinl CoQllle1 1 Motion for earinl dated February 14 197 5 and res

counsel s letterdated March 12 1975 to Judge ManhaJl

14 Transcript hereafter Tr

t p 3

IIld

UId

OTr p 4

ISTf pp 6 9 10

ItTr pp 5 9 13 18

2 0

Tr pp 7

11 Tr pp 8 16

uTr p 16

19 
WINDJAMMER CRUISES INC LTD 119

telephoned the Chief Judge to explain that he would not attend the

hearing but that a local attorney would appear to represent respondent

He also told me that by letter of April 11th he gave some instructions to

respondent advising that an appearance be made at the hearing and that

if the client acted in accordance with his letter it might not be necessary

to have any counsel appear Iadvised Mr Tarantino that if either Mr

Werner or Captain Burke appeared at 2 00 p

m and he wished either or

both to testify and be cross examined in accordance with his letter s

instructions Iwanted a telegram from him to that effect unless of

course they were accompanied by counsel to represent them at 2 00

p m

3

The subpoena was not served but at 2 00 p m Captain Burke

appeared with local counsel David Goldman and voluntarily took the

stand He was the only witness to be called during the proceeding

Testimony of Captain Burke

Against the background of Respondents Reply to Request for Admis

sions admitting some but denying other facts necessary for adetermina

tion ofthe issues under investigation together with respondent s oft

asserted belief that no hearing would be necessary because of such

Reply Hearing Counsel proceeded to examine Captain Burke

Captain Burke admitted that the signature which appears on the

Certification of Respondents Reply to Request for Admissions is his

signature But he had no recollection ofhaving seen that document or

the underlying document to which it pertains ie Respondents Reply

to Request for Admissions 7

Thereupon Captain Burke recanted two critical admissions concerning

operation of the vessels Flying Cloud and Yankee Trader which

previously both he and Mr Tarantino had sworn were true In response

to questions posed by Hearing Counsel Captain Burke stated that

Admissions Nos I and 7 are and were not true It will be recalled that

Respondents Reply to Request for Admissions unequivocally stated that

Flying Cloud and Yankee Trader are vessels operated by Windjammer

Cruises Inc Windjammer Cruises Ltd He testified that Yankee Trader

2S Tr pp 1920 At 11 02 am April I Mr Tarantino sent the following Mailgram tome Re Docket NO 7J

54 Unfortunately I cannot attend hearing have aslipped disc Mr Werner respondents operations assistant fully

qualified to appear respond to questions and present statement on behalf of respondent Advised Chief Judge John

Cosgrove sic Wednesday April 16 regrets

14 The investigation was initiated punuant to Section 22 of the Shipping Act 1916 46 U SC ij 821 as well as

Sections 2 and 3 of Public Law 897n The second paragraph of Section 22 empowers the Commission on its own

motion to investigate any violation of the Shipping Act 1916 The second sentence of both Sections 2d and 3 d

expressly authorizes the useof all the provisions of the Shipping Act 1916 including the investigative powers of

Section 22 with respect to proceedings conducted by the Commission under this section

n

Prehearing Conference October 5 1973 Tr p 3 Motion for Determinationof Findings served January 2S

1975 Respondent s Reply toHearing Counsel s Motion for Hearing served February 14 1975 seealso Tr pp 5 IS

16 Tr p 33

uId

28 Tr pp 6970 76

19 F M C
120 FEDERAL MARITIME COMMISSION

was owned and operated by aPanamanian Company named Hyd

pher and that Flying Cloud was owned and operated by an

Panamanian company Flying CloudS A

2s In response to my que

asking him if he had told Mr Tarantino to tell Hearing COlJns

Windjammer Cruises either Inc or Ltd operated vessels during 

through the fll St half of 1973 heanswered Idon tremember so

Captain Burke attempted to explain away his Certification 

admissions by stating that he is frequently away from the office t

delegates duties to others who prepare documents for him which he 

not always read but which he discusses and signs 31 Althoug

Certification states that he carefully read the admissions and alb

did not explicitly testify that he had not read the admissions it m

concluded that he wished the inference to be drawn that he had no

the underlyill8 document at the time of certification Needless to sa

explanation neither mitigates nor justifies Captain Burke s egre

conduct rather it shows a

supercilious disregard for his obligation 

law

In furtherance of the showing that WindjammerCruises Inc S2 d

own operate or charter any vessel during the time pcriod 

investigation Captain Burke testified that this entity is a bookin

travel agent licensed under the laws of Florida sS Inthat role Windja

Cruises Inc entered into a written agency agreenient with Flying 

S A

34 whereby it agrees to do all things necessary In order 

tickets for cruises on the vessel SIV Flying Cloud that it shall adv

and in all manner exploit said cruises that it shall provide office per

and machinery for the sales of such cruise tickets 3

In considera

this undertaking Windjammer Cruises Inc is to receive twent

percent of the gross sales of all tickets sold for c ruilies on ttle F

Cloud by Windjammer Cruises Inc or its authorized sub ase

Windjammer Cruises Inc does advertise the availability of cruises 

Flying Cloud and upon request makes availllble brochures conc

such crWses S7 Upon receipt of a deposit Windjammer Cruises 

issues a ticket which on its face shows that the issuer is the bo

agent for ihe Flying Cloud s8

1

j

U Tr pp 4041

U

Tr pp 100101 But seePrehearinl Conference Tr p 3 wherein Mr Tarantino stated Now I ha

the operation and I have seen IQmcof the advertilina and I am y acquainted with k and am acqua

Captain Burk k

operation so MoIlon orDolOrmlnatinn fFlndlJll atp ItallJll In 

motion Respondent advises that on OclOber 29 J97J ithad submitted in rolponae to Heartna COUl ll sR

Admissions sufttcient clear unequivocal replies supported by the bolt avail to documtntR evidence wh

Admitted that Respondent had embarked plBnnaen on the Flin Cloud

Tr pp 33 99100

3J Windjammer Cruises Ltd a

corporation cbaner in NUlau Bahamas about 1960 became defunct 

b ginning of 1972 and p rformed no bUllnfunction darithotlmo rind r Inv tlpllon Tr p 36

33Tr p 36

34 Tr p 51 52

3B Bxhibit 8

31 Id Cf testimony ofCsptJUn Burke in Which he stated thecommiasion to be fifteen 15 percent Tr p 

37 Tr p

59 Exhibit 2 Attachments A B and C

3a Tr p S8S9 Exhibit 9

19 
WINDJAMMER CRUISES INC LTD 121

In all material respects the relationship between Windjammer Cruises

Inc and Hydrographer owner and operator of Yankee Trader is

substantially identical to the agency relationship between Windjammer

Cruises Inc and Flying Cloud S A39

Both Flying Cloud and Yankee Trader have berth and stateroom

accommodations which includes all temporary and all permanent passen

ger sleeping facilities for more than fifty 50 persons

40 Neither vessel

holds a certificate issued by the Federal Maritime Commission under

General Order 20 and from this fact it may be inferred that there was not

filed with the Commission information necessary to establish financial

responsibility or other security in lieu thereof for indemnification of

passengers for nonperformance oftransportation 41

The Flying Cloud and Yankee Trader do not schedule calls at United

States ports to embark passengers Windjammer Cruises Inc does not

advertise that the cruises will embark passengers at United States portS 42

On one occasion on or about February 16 1973 Yankee Trader put

into Miami Florida where a person named Patricia Adams was boarded

on the vessel Hearing Counsel contended she was a passenger Captain

Burke testified she was a member of the crew

43 The Yankee Trader left

Miami on a shakedown cruise with Ms Adams aboard The vessel with

Ms Adams continued to Freeport where the passengers for the particular

cruise were embarked 44 The evidence adduced concerning her status

whether as passenger or crew member falls on both sides ofthe fence

But in view of uncontradicted testimony by Captain Burke that s he

had an obligation to perform certain duties aboard ship 45 it must be

concluded that Hearing Counsel did not sustain its burden ofpersuasion

that she was a passenger In any event Hearing Counsel has abandoned

the allegation of the Order of Investigation and Hearing concerning the

Yankee Trader 46

The incident involving the Flying Cloud presents a different picture

On the way to Roadtown Tortola British Virgin Islands to embark

passengers for a cruise that vessel became disabled and put into

Mayaguez Puerto Rico for repairs 41 Some ofthe passengers had already

assembled at Tortola others admittedly 29 and perhaps as many as

50were at San Juan Puerto Rico ready to emplane to meet the vessel

at Tortola 49 The San Juan group became irate at the delay Captain

Burke in his capacity as president ofWindjammer Cruises Inc found it

39 Tr p

49 Exhibits 6 9

oTr pp 7071 7677 Exhibits 1 2 items 2 and 8 Exhibit 2 Auchmeata

41

46 CFR Part 540 Tr p 84 Exhibih 1 2 item 12 in addition official notice is taken that an examination of the

Commission srecords would reveal that no such information orsecurifY was tiled with the Commission and tha no

such Certi6cate was issued

n

Tr 8485 151 Exhibit 2 item II and Attachments A B and C

43 Tr pp 115 136 154 156

HTr p155

4

Trp 154

46 Opening Brief of Hearing Counsel p 2

41 Exhibit 2 Tr pp 7880

u

Id Trpp 140 142 152 154

19 F M C
i

122 FEDERALMARITIME COMMISSION

expedient to send the latter group to Mayaguez and at the same 

direct the captain of the Flying Cloud to embark the passengers 

The vessel s captain accepted this direction because it was the 

procedure to board passengers at Captain Burke s command 49 

embarking the passengers at Mayaguez on December 18 1972 the 

Cloud departed on its cruise but ran aground off the coast 

Dominican Republic The latter oc urrence caused premature termi

ofthe cruise o

Captain Burke stresses that the act of embarking passeng

Mayaguez was for the convenience ofthe passengers and not that 

owners

61 This may well be But it is inescapable that Captain Burk

acted in self interest Windjammer Cruises Incs commissions 

dependent upon the cruise taking place If the prospective Passenge

eschewed the cruise in dissatisfaction over the events the commi

already received would have to be returned and the commis

otherwise due it from Flying Cloud S A would become null and v

1

DISCUSSION AND CONCLUSIONS

In view of the foregoing all of which constitute my findings off

well as some conclusions the fOllowing additional conclusions are d

Inasmuch as neither respondent Windjammer Cruises Inc nor 

jammer Cruises Ltd was the owner operator or charterer of any 

vessels named in the Order ofInvestigation and Hearing during the 

covered by such order the provisions of Section 2 of Public Law 

and 46 CPR 540 22 can have no application to respondent s activi

this investigation Further the preponderance of the evidence indic

was reasonable to believe that Ms Adams Was a member of the c

the Yankee Trader when she boarded that vessel at Miami on or 

February 16 1973 Thus insofar as that matter is involved in this in

Ifind that there was no violation by either respondent of Sectio

Public Law 89mor of46 CFR 540 3

In boarding passengers for acruise on the Flying Cloud at Maya

Puerto RicQ on December 18 1972 Windjammer Cruises Inc vi

both Section 3 ofPublic Law 89777 and 46 CPR 540 3 in that it 

the United States arrange offer provide and sell passage 

passengers on a vessel having berth or stateroom accommodatio

fifty or more passengers embarking passengers at a United States 

without there first having been tiled with the Commission such inf

tion as the Commission deemed necessary to establish the fin

responsibility of Windjammer Cruises Inc or other security for ind

fication ofpassengers for nonperformance of transportation and w

1

49 Id

Mild

Tr pp 153154

U

Tr pp 81 82

19 
WINDJAMMER CRUISES INC LTD 123

there being in force and effect aCertificate Performance issued to or

covering Windjammer Cruises Inc

In Respondent s Reply Brief submitted and served by Mr Tarantino

Windjammer Cruises Inc admits that the Flying Cloud did embark

passengers at Mayaguez but contends that because the plan ofoperation

sailing schedules and promotional literature for the cruises sold by

respondent did not contemplate embarkation of passengers at United

States ports this isolated incident did not require the issuance of a

Certificate under Public Law 89777 Curiously and most incredibly in

the light ofCaptain Burke s testimony and exhibits in support thereof

this Brief perpetuates the illusory representations set forth in Respond

ent s Reply to Request for Admissions that the respondent operated

cruise vessels during the period under investigation 53

Respondent s position is unfounded The law makes no exception for

single occurrences and this is as it should be if the cruise oriented public

is to be given the effective protection which the sense of the Congress

intended Nothing in the legislative history or in the clear language ofthe

statute would indicate that the Congress intended otherwise The mandate

is that before passage he arranged offered advertised or provided that

the person so doing shallfirst make the necessary filing required by the

Commission to establish financial responsibility 54 This requirement the

respondent did not fulfIll although its president appears to have had

actual knowledge ofthe existence ofthe statute going back to the time of

its enactment 55

It is noted that the issuance of a cease and desist order is not explicitly

required to be considered as appropriate remedial action in this proceeding

under the terms of the Order of Investigation and Hearing Hearing

Counsel has not urged that a cease and desist order be entered However

the proceeding was instituted under Section 22 ofthe Shipping Act 1916

which specifies that the Commission may make such order as it deems

proper Assuming but not deciding that silence in that Order does not

bar the issuance ofacease and desist order 56 nevertheless Ifind that the

30 proven violations ofSection 3 of Public Law 8977757 werenot ofa

continuing nature and there has been no showing that a practice of

violation is likely to continue Moreover the evidence discloses voluntary

cessation of the proscribed conduct without compulsion ofenforcement

proceedings at least eight months before the investigation was initiated

Inthese drcumstances a cease and desist order a remedy traditionally

fashioned to discontinue ongoing violations or to forestall future viola

tions would be unwarranted

C

53 Respondent s Reply Brief pp 2 3 Although Captain Burke testified that the admissions erroneously showed

that the cruise of theFlying Cloud was to commence at 81 Johns Antigua Island whereas in fact it was tostart at

Tartola the Brief continues to refer to 81 Johns as the starting point

i4WallStreet Cruises Inc 15 F M C 140 142143 1972

n

Tr 157 159

S But cr Attorney General s Manual on the Administrative Procedure Act 46 1947

1 Under Section 3 d of Public Law 89711 46 V S C 817e d the act of violation itself is treated as a

single

offense and each passage sold constitutes aseparate offense

19 F M C
124 FEDERAL MARITIME COMMISSION

ORDER

1 The investigation of violations of Section 2 Public Law 8

alleged in the Order of Investigation and Hearing is dismissed

2 The investigation of violations of 46 CPR 540 22 alleged i

Orderof Investigation and HeariDg is dismissed

3 The respondent Wincljammer Cruises Inc violated Section 

Public Law 89777 and 46 CPR 540 3 on December 18 197

arranging offering providing and selling passage to 29 passengers 

embarked on the Flying Cloud at Mayaguez Puerto Rico without h

complied with the financial responsibility requirements of that statute 

that regulation

4 The matter of the conduct of Arthur E Tarantino an attorn

law engaged in practice before this Commission is referred to 

Commission for appropriate action

S SIlYMO R GLANZER

Administrative Law Jud

WASHINGTON D C

March 8 976

19 P 
FEDERAL MARITIME COMMISSION

INFORMAL DoCKET No 337 1

UNION CARBIDE INTER AMERICA INC

v

VENEZUELAN LINE

COMPANIA ANONIMA VENEZOLANA DE NAVEGACION

NOTICE OF DETERMINATION NOT TO REVIEW

April 13 1976

Notice is hereby given that the Commission on April 13 1976

determined not to review the decision of the Settlement Officer in this

proceeding served April 7 1976

By the Commission

SEAL S FRANCIS C HURNEY

Secretary

19 F MC 125
FEDERAL MARITIME COMMISSION

INFORMAL DoCKET No 337 1

UNION CARBIDE INTER AMERICA INC

v

VENEZUELAN LINE

COMPANIA ANONIMA VENEZOLANA DE NAVEGACION

Reparation Awarded

DECISION OF CAREY R BRADY SETILEMENT OFFICE

Complainant seeks reparation in the amount of 484 70 from res

ent claiming a freight overcharge on a srnpment from Houston Tex

Puerto Cabello Venezuela carried aboard respondent s vessel ME

on February 28 1974 pursuant to the terms ofthe United States At

and Gulf Venezuela and Netherlands Antilles Conference Freight 

F M C No 2 S B Ven IIThe bill of lading and the export decla

both described the cargo srnpped as 200 Drums Vinyl Acetate 

omer weigrnng 94 000 pounds and measuring 2 142 cubic fee

srnpment was rated as 2 142 cubic feet at 68 00 per 40 cubic feet 

produced charges of 3 968 70 plus accessorial charges Compla

maintains the shipment should have been rated on the basis of 68 

2 000 pounds the applicable rate for Vinyl Acetate Monomer 

rate 7W 2

Respondent denied the Claim solely on the provisions of Tarif

No 11 which requires that claims be fIled within six months aft

date of srnpment The Commission has ruled that a claim fIled witrn

years from the date the cause of action arose must be considered 

merits 3The srnpment moved on February 28 1974 and the claim 

filed with the carrier in February 1975 and with the Commissio

November 11 1975 The claim has been filed within the two 

statutory limit and thus will be treated on the merits

While the Commission has ruled that a rule similar to the one on 

1 Both parties having consented to the informal procedure of Rule 19 46 CPR 502 301 304 as ame

decision will be final unless the Commission elects to review it within 15 days from the date ofservice ther

2 Tariff Item No 1000 15th Rev Page 10 and Item No 999 Group I 6th Rev Page 68

3

Colgate Palmolive Company v

United Fruit Company Informal Docket No 115 1970

126 19 F 
UNION CARBIDE INTER AMERICA v VENEZUELAN LINE 127

respondent is denying relief cannot be used to defeat aclaim properly

filed with the Commission the complainant nevertheless has a heavy

burden of proof once the shipment has left the custody of the carrier 4

Respondent does not challenge any of the contentions ofthe complain

ant in fact by letter dated December II 1975 respondent stated that the

claim filed by the complainant is found to be correct Obviously the bill

oflading was rated in error and it is requested that aruling in favor ofthe

complainant be issued

Item 999 of the tariff specifically provides a rate on Acetates Vinyl

Monomer at Class 7 onweight with no provision made for assessment on

ameasurement basis The bill oflading and supporting shipping documen

tation clearly show the cargo shipped to be Vinyl Acetate Monomer

Complainant having met his burden ofproof reparation is awarded in

the amount of 484 70 the difference between the charges assessed of

3 968 70 and the correct charges of 3484 00 94 000 Ibs at 68 00 per

2 000 Ibs plus accessorial charges

5 CAREY R BRADY

Settlement Officer

4

Ibid

19 F MC
I

FEDERAL MARITIME COMMISSION

DocKET No 7552

CITIES SERVICE INTERNATIONAL INC

V

THE LYKES BROS STEAMSt tIP CO INC

NOTICE OF ADOPTION OF INITIAL DECISION

April 22 1976

No exceptions having been taken to the initial decision of the Pre

Judge in this proceeding served March 31 1976 and the Commi

having determined not to review same notice is hereby given tha

decision became the decision of the Commission on April 22 1976

By the Commission

SEAL S FRANCIS C HURNEY

Secreta

ViceChainnan Morse dissendna views attached

128 19 F 
FEDERAL MARITIME COMMISSION

No 7552

CITIES SERVICE INTERNATIONAL INC

v

THE LYKES BROS STEAMSHIP CO INC

AdoptedApril 22 1976

Non contract rates found inapplicable reparation awarded on basis of contract rates

Gerald E Bone for the complainant

David W Gunther for the respondent

INITIAL DECISION OF CHARLES E MORGAN

ADMINISTRATIVE LAW JUDGEI

The shortened procedure was followed By complaint fded November

17 1975 the complainant alleges that it was charged inapplicable non

contract tarifl rates rather than the applicable contract rates on certain

shipments of aluminum stearate oil well drilling compounds and oil well

cement bill of lading dated August 19 1974 from New Orleans

Louisiana to Matarani Peru also on certain shipments of steel pipe oil

well equipment and auotmobile trucks three bills oflading dated August

8 1974 from Houston Texas to Matarani and also on ashipment ofoil

well equipment bill of lading dated August 6 1974 from Houston to

Matarani The complainant also alleges that it was charged the inapplica

ble non contract tarifl rate on a shipment of knocked down steel tanks

rather than the applicable contract rate on iron or steel tank material bill

oflading dated August 5 1974 from Houston to Matarani

The respondent agrees that the total charges collected on all of the

above shipments were 126 378 75 that the applicable charges totalled

106 074 30 and that the complainant was overcharged a total of

20 304 45

The shipper and consignee ofthe above shipments shown in the bills

oflading as Peru Cities Service Inc had not been listed as afully owned

subsidiary of the complainant Cities Service International Inc and

1 This decision will become the decision of the Commission in the absence of exceptions thereto or review thereof

by the Commission Rule 13 g

Rules of Practice and Procedure 46 CPR 502 227

19 F M 129
130 FEDERAL MARITIME COMMISSION

therefore the respondent did not charge the contract rate availa

contract signers such as the complainant Furthermore the bills of

failed to contain the appropriate proprietary clauses The compla

advised the respondent on July 28 1975 that Peru Cities Service 

a fully owned subsididary and that the cargo in issue was propr

cargo In view of the six months claim rule in the conference s ta

complainant was advised by the respondent to file the present com

In addition to the overcharges of 20 304 45 the complainan

reasonable interest for the interim period in which complainant alle

has suffered loss of use ofthe overCharge funds Such interest her

denied inasmuch as the complainant caused its own problem i

respect by its failure to make the proper certifications regardin

proprietary nature ofthe cargo whereas the respondent charged w

had to charge on the basis of the facts then known to the respo

It is concluded and found that the complainant was overch

20 304 45 and reparation in that amount is awarded The responde

make such payment to the complainant within thirty days

S CHARLEsE MORGAN

Administrative Law Jud

WASHINGTON D C

March 31 1976

I

J

Vice Chairman Clarence Morse dissenting Ivote to review

The lriitial Decision is inaccurate as to the facts

On prepaid bill of lading New Orlean atarani dated Augu

1974 t1e shipper and consignee is Peru Cities Service Inc O

remaining prepaid bills oflading the shipper is Cities Service mterna

Inc and the consignee isleru Cities Service Inc

None of the bills oflad gcontain the Industrial Contract prop

use certification

Cities Service International Inc is signatory to the Merc

FreightUlg Agreement but Peru Cities Service mc is notidentifie

related compapy Cities Service Internatio lal Inc is signatory a

the Industrial COltraCt Rate Agreement

Peru Cities Service Inc is not signatory to either the Merc

Freighting Agreement or the mdustrial Contract Rate Agreeinent

Hence it would appel X that under BIL 3 identified lve th

rate would be the lawful rate because Peru Cities Service mc is 

1 a signatory to either rate agreement Merchant s Freighting Agre

or Industrial Contract Rate Agreement rior 2 named as ar

company on Cities Service International Inc Merchant s Fre

Agreement

As to B L 3 discussed above Cities Service International 

violated its obligations under section 1 b of its Merchants Fre

1

I

19 
CITIES SERVICE INT LINC v LYKES BROS 131

Agreement with the Atlantic GulfWest Coast of South America

Conference applicable here That section states that the merchant

signatory warrants and represents that the list ofrelated companies is

true and complete and that he will promptly notify the Carriers in

writing ofany future changes in the list Neither the shipper nor the

Conference being permitted to alter the contract without Commission

permission see section 17 ofthe contract both are bound by its terms as

part ofthe Conference Tariff Consequently the contract rate may not be

offered to or collected by aConference member from a shipper not

subject to the contract Further Peru Cities Service Inc not being party

to the Industrial Contract rates under it are not applicable and omission

ofthe proprietary use certification on the bill oflading is immaterial

As to the remaining bills oflading the only fault is the lack ofthe

proprietary use certification The Conference Tariff at 7th Revised Page

218 effective April I 1974 provides that All Bills of Lading shall be

claused with proprietary use certification emphasis added To permit a

subsequent refund based upon the shipper s failure to include that clause

would be to permit the carrier to deviate from its tariff

Reparations as claimed and as authorized by the Administrative Law

Judge are therefore incorrect

19 F MC
FEDERAL MARITIME COMMISSION

DOCKET No 7431

INDEPENDENT OCEAN FRilIGHT FORWARDER ApPLICATION

LESCO PACKING CO INC

Application for freight forwarder licen e denied on grounds that applicant is 

view of long history of statutory and regulatory violations

Perry Gary Fish for Applicant

Donald J Brunner and C Jonathan Benner as Hearing Counse

REPORT

May 21 1976

By THE COMMISSION Karl E Bakke Chairman Clarence Morse 

Chairman Ashton C Barrett and James V Day Commission

The Commission instituted this proceeding to determine whether 

Packing Co Inc Lesco is fit to properly carry on the busin

ocean freight forwarding and to confonn to the provisions ofsectio

the Shipping Act 1916 46 D S C 841b and whether its applicat

an independent ocean freight forwarder license application sho

granted

The Initial Decision of Administrative Law Judge William B

Harris Presiding Officer concluded that Lesco s license appli

should be denied Exceptions to the Initial Decision were filed b

Hearing Counsel and Lesco and oral argument was heard b

Commission Although we agree with and adopt the Presiding O

ultimate conclusion we have for the sake of both clarity and acc

found it necessary to issue our own findings and conclusions in sup

this fmal result

BACKGROUND AND FINDINGS OF FACT

Lesco is a New York corporation whose sole stockholder and 

executive officer since June 30 1971 has heen Irving Bethell M

Lesco s present business is connected with export packing and ha

Commissloner Bob Casey not participatina

132 19 
LESCO PACKING CO INC 133

air freight shipments I

During the 20 years prior to filing the instant

application Mr Bethell was involved in the following incidents

I

In 1959 Mr Betheil and other principals of the Aristo Shipping Company Inc

pleaded guilty in the U S District Court Southern District of New York to a charge of

conspiring to violate the Bills of Lading Act 49 U S C 81 124 A sentence of a year

and a day was imposed on Mr Betheil and suspended

2 On June 9 1964 the grandfather rights of S C Forwarding Corp FMB

Registration No 1414 were revoked and the ocean freight forwarding application of

International American Forwarding Corp IAFC was denied on the grounds that Irving

Betheil I

knowingly and willfully made false statements on IAFC s application for an

independent ocean freight forwarder license in violation of 18 U S C 1001 and 2

knowingly and willfully carried on the business of ocean freight forwarding by falsely

obtaining grandfather rights during the period August 1962 through December 1962 in

violation of section 44 a Shipping Act 1916 46 U S C 84Ib Irving Betheil was

president and sole stockholder of S C Forwarding Corp at the time its grandfather

rights were revoked He was also president and 50 percent owner of International

American Forwarding Corp and managed its daily operations at the time its license

application was denied

3 In 1964 the Department of Commerce denied export privileges to a concern of

which Mr Betheil was president This denial was based on export control law violations

arising out of the improper export of strategic electronics equipment and the false

description of other commodities

4 Mr Betheil was one of several parties to a formal Commission proceeding

involving a licensed freight forwarder and an applicant for a freight forwarder license

The Commission found that the parties had engaged in a course of conduct during 1969

and 1970 which was intended to enable Mr Betheil to engage in ocean freight forwarding

without a license in violation of section 44 The license of the freight forwarder was

revoked and the applicant was denied a license F MC Docket No 7147 16 F M C

256 1973

The prehearing conference originally scheduled in connection with the

instant proceeding was cancelled by the Presiding Officer at Lesco s

request 2

In lieu thereof Lesco was directed to submit certain basic

prehearing type information 3 When Mr Betheil failed to respond in the

time prescribed the Presiding Officer wrote Lesco specifically inquiring

about its plans for legal representation On October 17 1974 a standard

warning Notice was issued advising Lesco of the possible penalties for

noncompliance Lesco then replied by stating that its inaction was

inadvertent and it would henceforth cooperate with the Commission s

representatives Lesco subsequently admitted as true Hearing Coun

sels

request for Admission ofFacts and Genuiness of Documents which

included a detailed statement describing the statutory and regulatory

violations referred to above

Mr Betheil arrived 12 minutes late for the evidentiary hearing held in

this proceeding and then without either an attorney or any witnesses 4

1

Leseodoes not possess an air forwarder s license from the Civil Aeronautics Board

2 AU of Lesco s transactions with the Commission were conducted by Mr Bethell personally until March 4 1975

when counsel fdedanotice of appearance in the case By this time the hearing had been completed Leseo s motion

for anew hearing based on the absence ofcounsel was denied by Order served June 20 1975

3

This information included the name and address of Leseo s lawyer the admission of facts and documents which

would avoid unnecessary proof the number ofwitnesses and their proposed testimony the suggested date and place

of hearing and other matters designed to aid in the disposition of this proceeding

Lesco neverreplied to Hearing Counsels

request for the names and addressed of the witnesses it intended to call

19 F M C
134 FEDERAL MARITIME COMMISSION

Later that morning Lesco produced three chamcter witnesses 

operator ofamessenser service who had known Mr Bethell for II 

of 12 to 15 years 2 the secretary of Mr BetheU s social lodge wh

known him for 32 yoars and 3 a lawyer who had known Mr Beth

about 20 years AU three witnesses testified favorably concernin

Bethell s personal honesty and truthfulness but were uninforme

cerning his reputation in the business community did not know 

who had professlonlll dealings with Mr Bethell and had only 

business contacts with Mr Bethell themselves

Hearing Counsel conceded that Mr Bethell possessed both the 

and willingness to perform as an independent ocean freight forward

argued for denial of Loseo s license application because Mr Be

past violations oflaw lmd administrative regulations represent a co

conduct which raise serious doubts as to his present fitness to ope

alicensed forwarder

Mr Bethell replied that his mistakes were things of the past 

paid for his actions over and over again and bas changed his m

life He contended that a

refusal to license Lesco would se

purpose except to deprive Mr Bethell of his livelihood because 

freight forwarding is the only business he really knows 6

In denying Lesco s license application the Presiding Officer con

that

1While the matter of past violatlllns is germane to the question of fitness al

singularly determinative thereof tlloy are evidence in the record of past law v

by the applicant which supports rOMonable doubt about the applicant s good c

and fitness for licensing as an indell ndent ocean frelaht forwarder

2 On the whole record a reasol1ll1 lle man could fairly find that there Were su

doubts about the applicant s good Qlll lacter fitness and respect for the rlahts o

and for the laws of the regulatory oOmlllissions and of the nation

3 Under the circumstances of this llllse the applicant lias failed to meet his b

proof as to his fitness properly to cl lY

on the business of forwarding under se

of the Act Footnote omitted

4 The application should be deniQi

Conclusions two through fQUf were based not only on the evide

past law violations by applicant and doubts about Mr Bethell s 

to avoid the sort of indiscretions which have plagued his operatio

the past 16 years but also on Lesco s disregard for what the P

S The Presidina Officer was unimpressed wit Mr BetbeU s character witntuollnpart au e they te

as to their personal knowledJO of Mr Bethell ahancter inatead of discullina hi on ral reputation in

frelshtlndu try Althoush tho Initial Declalon I phraaed In 1 whioh could be criticized a ovar

under th clrc m tanc i tho record rev al lUI of tho wit vl I08 upport for 

800d character Richard Cotoaono testified tlW Mr BetheU was always hon t with him and that Mr B

very hard to do a ood job but admitted ht he had DO tnawledl of what others tboulht of M

truthfuln s or honesty Murray Birnbaok te ft tbat within Mr BotheU anoolation with the Free SO

he was loyal industrious and honest Mr lUmltAck had no bUllDesl contract with Mr Bethell or the o

forwardlq industry In I

neral Jacob S SQltulman statod that Mr BothoD IfjO ed aalnerally lood rep

intearity and honesty except for bla19 9conVIGtloD However Mr SchQlman alto stated be was u

BetbeU s firm was denied export p villl s in 1964 orthat tbe Commi ionfound him to have ope

unlicensed forwarder durlna 19691970

6No evidence was introduced to support this ft8lortlon nor is there reason to believe that an individu

the businessof forward1na cannot Ond employm Rl in related seaments of the ocean freiJht industry

19 
LESCO PACKING CO INC 135

Officer characterized as the necessary processes and necessary

details in this proceeding 7

DISCUSSION AND CONCLUSIONS

Lesco had broadly excepted to the holdings ofthe Initial Decision

denying a forwarding license to applicant and every part thereof

and taken four specific objections as well The Applicant flIst argues that

the Presiding Officer erred in holding that Mr Betheil s inattentiveness to

the necessary details of the instant proceeding is afactor determinative of

his fitness to perform as a licensed ocean freight forwarder 8

Lesco

submits that is it unfair to compare a freight forwarder who is expected

to attend to all the necessary details ofshipping insuring and documenting

of goods with an applicant for a freight forwarder s license proceeding

pro se and conclude that because Mr Betheil had trouble complying

with proper hearing procedure he would have similar difficulty perform

ing the details attendant to freight forwarding services 9

Lesco also objects to the fmding and conclusion that Mr Betheil s past

violations of law and Commission regulations demonstrate a lack of

fitness to receive a forwarder s license On the contrary since Mr

Betheil has fully admitted his past violations and did not seek to hide

what was Lesco claims the record reflects adefmite desire on the part

of the applicant to change his past and the present existence of good

character It asserts that the record in this proceeding considered in its

entirety favors at least a time limited license especially since Mr

Bethell s prior illegal activities were of the type generally termed as

malum prohibitum violations and except for the 196970 incident

when Mr Bethell operated as an unlicensed forwarder occurred over

eleven years ago

Thirdly Lesco contends that the burden of proof should be upon

Hearing Counsel to prove Applicant s unworthiness and finally that

1

The Presiding Officer reasoned that since afreight forwarder isexpected to attend to aU the necessary details of

sbippina iosurina and documentirq of goods

t

Mr BotheU inattentiveness todetail as demonstrated by his conduct

durlna this proceedlll8

exposes afoible in the applicant s

personal characterorbehavior and reflects on his ability to perform as a

licensed independent ocean frelaht forwarder

Specific conduct round to retlect unfavorably on LeKO S ability to carry ouC the duties and responsibilities of an

ocean freight forwarder were Mr BelheU failure to 1 honor Hearing Counsels

request for the names and

addresses of witnesses he intended to call 2timely Ipond ifat aU to various other queries 3 arrive at the

hearing at the appointed time and with bit witnesses and 4 enerally acquaial himselfwith the Commission s Rules

ofPractice and Procedure and comply withthe requirements thereof For example Mr Bethell submitted only three

copies of his reply briefto Heatiq Counsol s openin briefinstead of the 15 copies required by the Commission

Rules

LeKO asserts that this is the real reason for the denialof the license notwithstandina tbe discussion of past

violations Hearin Counsel join Lesco in exceptin to the asscltment of demerits for Lesco s

inattention and

mishandling of various aspects of the Instant proceedioa but support the denial ofLesco sapplication basedupon its

past violations

9

Applicant further argues that Lack of knowledge as to the law governing reputatiOft evidence the giving of

testimony or the production of witnesses I neither material nor relevant to the issue of t1tness under that Act the

sole issue under consideration willingness and ability having been conceded Legal ignorance in the trial of a

matter is certainly unrelated to any past violationsof law and in no way is supportive 01 tbe Presiding Officers

findings

19 F MC
136 FEDERAL MARITIME COMMISSION

section 44 ofthe Shipping Act is unconstitutional to the extent it re

Mr Bethell to prove his fitness to amoral certainty Only Lesco 

exception relating to Mr Betheil s procedural irregularities c

sustained

It is well established that the burden ofproof in a licensing proc

is on the applicant 10 The plain language of section 44 b indica

much by providing that a forwarding license shall only issue 

Commission finds that the applicant meets the statutory criteria an

otherwise such application shall be denied By applying for its 

federal license to operate an an independent ocean freight forw

Lesco requests a change in the status quo The United States Co

Appeals has held that the burden ofproof in administrative proce

falls upen the person who is seeking to change the status 

Commonwealth ofPuerto Rico v Federal Maritime Commissio

F 2d 872 881 D C Cir 1972 Although the Bureau of Hearing C

had the burden of introducing evidence on the question ofLesco s f

the burden ofproof on that question as well as whether alicense 

ultimately issue fell squarely upon Lesco See United Church ofC

Federal Communications Commission supra

The Initial Decision held that Lesco did not meet this burden of 

Lesco s failure to demonstrate its charaCter qualifications or fitne

operate as a freight forwarder must necessarily result in the denia

license application pursuant to section 44 The statute does not 

proof of titness to a moral certainty and section 44 has never b

applied by the Commission II

The record in this case contains evidence ofpoor charaCter on t

ofLesco s sole stockholder and chief executive officer There has 

pattern ofirresponsible action reaching back to 1959 including vio

of the Bills of Lading Act and section 44 ofthe Shipping Act th

recent of which occurred in 1970 The only rebuttal offered by 

Was the passage oftime charaCter testimony from three of Mr B

long time friends and Mr Bethell s own assertion that he had ref

Like the Presiding Officer the Commission is unpersuaded th

evidence sufficiently establishes that positive steps have been ta

assure against the repetition of such incidents

A licensed forwarder must possess read understand and metic

follow the Commission s regulations A forwarder must also acc

complete shipping documents comply with section 16 ofthe S

Act preserve the confidentiality ofany sensitive DUormation rece

its shipper clients and handle large sums of money advanced 

10 U S C 6d United Church ofChllst v FederalCommunications Commission 425 F 2d 3 

DC elr 1969 Towne Services HousdoldGoods Transportation Co v Unlt dStal sj 329 p Supp 8

W O Tex 1971 Quickie Transport Co v UnitedStates 169 F Supp 826 828 0 Minn 19 9 affdp

361 U S 36 l99

1 There is no factual balis for Lesco sassertion that section 44 hold forwarder applicants to an unreas

standard ofproof roaardina fitness Section 44 stateaonly that the Commlslion muat flnd the applican

and able TheCommission has licensed over 1 500 Independent ocean freipt forwarder since 196J and 

than 100 applications on fitness arounds

19 
LESCO PACKING CO INC 137

payment of freight Such a person must not only be honest but must

affirmatively strive to meet the regulatory requirements under which he

operates However Lesco s late arrival at the hearing and its unfamiliarity

with the Commission s Rules of Practice are not matters of decisional

significance in passing upon its fitness under section 44

Lesco had no obligation to secure counsel and that portion of the

Initial Decision which relied upon Lesco s clumsiness in representing

itself pro se was erroneous In order to avoid any suggestion that

irrelevant factors were weighed in our decision to deny Lesco s license

application we expressly find that Lesco lacked the requisite character

qualifications without regard to the manner in which it conducted itself

before the Commission subsequent to August 14 1974 12 Mr Betheil s

past disregard for the shipping laws and the Commission s

regulations

coupled with the absence ofconvincing evidence that positive steps have

been taken to reasonably assure against the repetition of such incidents

is alone sufficient basis for not placing Lesco in the position oftrust and

responsibility enjoyed by licensed freight forwarders Based upon the

entire record before us we find that Lesco is not fit within the

meaning of section 44 to carry on the business offreight forwarding and

will enter an appropriate order denying its present license application 13

SEAL S FRANCIS C HURNEY

Secretary

12 This is not to say however that the Commission cannot orwill not find that an applicant s disregard of or

chronic inattention to official communications of any type reflects adversely upon its willingness and ability to

cooperate with a

federal regulatory scheme

l

ThePresiding Officerexpressed his conclusions in terms of four issues formulated by himselfrather than the two

issues specified in the Commission s August 14 1974 Order of Investigation and Hearing He also failed to make

specific rather than narrative findings of fact These errors were harmless under the circumstances More troublesome

is the Presiding Officer s insistence on using the standards of reasonable doubt reasonable man and

substantial doubt as the basis for finding Lesco unfit to receive a license The Presiding Officer has erroneously

applied the standards of an appellate rather than a trial tribunal The trierof fact is obliged todetermine whether an

applicant is fit or not fit he does not decide whether some reasonable man might entertain substantial doubts

concerning fitness After reviewing the record in this proceeding the Commission unequivocaUy concludes that Lesco

is unfit to be licensed

19 F M C
FEDERAL MARITIME COMMISSION

DOCKET No 7431

INDEPENDENT OCEAN FREIGHT FORWARDER ApPLICATION LES

PACKING CO INC

ORDER

The Commission having fully considered the above matter and 

this date made and entered ofrecord a Report containing its fin

conclusions and decision therein which Report is hereby referred 

made apart hereof

IT IS ORDERED That the license application of Lesco Packin

Inc is hereby denied pursuant to section 44b Shipping Act 191

By the Commission

SEAL S FRANCIS C HURNEY

Secre

i

J

138 19 
19 F MC 139

FEDERAL MARITIME COMMISSION

SPECIAL DoCKET No 474

ANDREW CORPORATION INTERNATIONAL

v

ATLANTIC GULF SERVICE

NOTICE OF ADOPTION OF INITIAL DECISION AND ORDER

PERMITTING REFUND OF CHARGES

May 21 1976

No exceptions having been taken to the initial decision in this

proceeding and the Commission having determined not to review same

notice is hereby given that the initial decision became the decision ofthe

Commission on May 21 1976

Itis Ordered That applicant is authorized to refund 2 960 82 of the

charges previously assessed Andrew Corporation International

It is further Ordered That applicant shall publish promptly in its

appropriate tariff the following notice

Notice is hereby given as required by the decision of the Federal Maritime

Commission in Special Docket 474 that effective May 15 1975 for purposes of refund

orwaiver of freight charges on any shipments which may have been shipped during the

period from May 15 1975 through July 11 1975 the contract service two rate on

Telecommunications Viz Microwave Communication Systems and Equipment is

83 00 WM subject to all applicable rules regulations terms and conditions of said rate

and this tariff

It is further Ordered That refund of the charges shall be effectuated

within 30 days of service of this notice and applicant shall within five

days thereafter notify the Commission of the date and manner of

effectuating the refund

By the Commission

SEAL S FRANCIS C HURNEY

Secretary
1

FEDERAL MARITIME COMMISSION

SPECIAL DoCKET No 474

ANDREW CoRPORATION INTERNATIONAL

v

ATLANTIC GULF SERVICE

Adopted May 21 1976

Application for permission to refund a portion of the freight charlles granted

j

I

INITIAL DECISION OF JOHN E COGRAVE APMINISTRA

LAW JUDQEI

Atlantic Gulf Service AGS has applied for permhtsion to 

2 960 82 to Andrew Corporation International

AGS carried one shipment bearing the tariff description Telecom

cations VIZ Microwave Comrnuirication Systems and EqUipmen

New OdeMs to Glasgow under abill of lading dated June 6 197

shipment weighed 9 9811bs and measured 1 066 cu ft AGS co

aggregate freight charges of 5 172 77 from Andrew on July 21 19

freight charges collected were based uPon theCaI go N O S ratefo

Gulf United Iingdom Tariff No 37 FUC 16 GS now seeks t

a rate 083 00 W M with agaregate freight charges of 2 211 

support ofits application to refund 2 960 82 AGS states

On February IS 1975 GulfUnited Kinlldom Conference ffied a contract ser

rate of 75 00 wm and non contract 88 20 Will plus eneriy surchaflle to be effe

90 days for Telecomlllunicatio1 Equiplllent On May 23 tho onorllY urcharllCl w

into the rate making the contract rate 83 00

Rate was expired on May 15 1975 and through oversillht the rate was not 

for tariff quoting period

Meanwhile on June 6 1975 Atlantic Gulf Service loaded a shipment for 

Corporation International to MIS VASAHOLM At that time the rate had exp

our manifestdepartment applied the Cargo NOS rate to this shipment

On July 11 1975 the error of not extending the rate was noted and the Co

immediately reinstated the rate with the energy surcharge rolled in

Because we feel that the shipper should notbe charlled for this error the pres

request permission to refund to the shipper the difference between the 19

I

This decision became the decision of tho Commission May 21 1976

140 19 
ANDREW CORP INTLv ATLANTIC GULF SERVICE 14

General Cargo rate charged and the 83 00 wm which should have been charged or

2960 82

Section 18 b 3 ofthe Shipping Act 1916 46 USC 817 as amended by

Public Law 90298 and as further implemented by Rule 6 b Special

Docket Applications Rules ofPractice and Procedure 46 CFR 502 92 is

the law sought to be invoked Briefly it provides

The Commission may in its discretion and for good cause shown permit a

common carrier by water in the foreign commerce of the United States to refund a

portion of the freight charges collected from a shipper or waive the collection of a

portion of the charges from a shipper where it appears that there is an error in a

tariff of a clerical or administrative nature or an error due to an inadvertence in failing to

file a new tariff and that such refund or waiver will not result in discrimination among

shippers Furthermore prior to applying for such authority the carrier must have fIled

a new tariffwhich sets forth the rate on which such refund or waiver would be based

The application for refund must be filed with the Commission within one hundred and

eighty days from the date of shipment Finally the carrier must agree that if permission

is granted an appropriate notice will be published in its tariff or such other steps taken

as may be required to give notice of the rate on which such refund or waiver would be

based

The legislative history ofthe amendment to section 18 ofthe Shipping

Act Public Law 90298 2

specifies that carriers are authorized to make

voluntary refumfs and waive the collection of a portion of their freight

charges for good cause such as bona fide mistake The nature of the

mistake was particularly described

Section 18 b appears to prohibit the Commission from authorizing relief where

through bona fide mistake on the part of the carrier the shipper is charged more than he

understood the rate to be For example a carrier after advising a shipperthat he intends

to file a reduced rate and thereafter fails to file the reduced rate with the Federal

Maritime Commission must charge the shipper under the aforementioned circumstances

the higher rates

The Senate Report3 states the Purpose ofthe Bill

Voluntary refunds to shippers and waiver of the collection of a portion of freight

charges are authorized where it appears that there is an error in a tariff of a clerical

nature or where through inadvertence there has been a failure to file a tariff reflecting

an intended rate

The inadvertent failure to extend the contract rate on the commodity in

question would appear to fall within the intended grounds for refund All

the other conditions have also been met Accordingly Atlantic Qulf

2 House Report No 920 November 14 1967 To accompany H R 9473 on Shipping Act 1916 Authorized Refund

of Certain Freight Charges Statement of Purpose and Need for the Bill to Amend Provisions of the Shipping Act

916 toAUlhorire the Federal Maritime Commission to Permit aCarrier to Refund a Portion afthe Freight Charges

l Senate Report No 1078 April S 1968 To accompany H R 9473J on Shipping Act 1916 Authorized Refund of

Certai Freight Charges under Purpose ofthe Bill

19F M C
142 FEDERAL MARITIME COMMISSION

Service is hereby granted permission to refund to Andrew Corpo

International the sum of 2 960 82

S JOHN E COGRAVE

Administrative Law Ju

WASHINGTON D C

April 28 1976

1

19 
19 F MC 143

FEDERAL MARITIME COMMISSION

SPECIAL DOCKET No 471

PHILLIPS PETROLEUM CO

v

PACIFIC WESTBOUND CONFERENCE

NOTICE OF ADOPTION OF INmAL DECISION AND ORDER

PERMIlTING REFUND OF CHARGES

May 27 1976

No exceptions having been taken to the initial decision in this

proceeding and the Commission having determined not to review same

notice is hereby given that the initial decision became the decision ofthe

Commission on May 27 1976

It is Ordered That applicant is authorized to refund 2 079 69 ofthe

charges previously assessed Phillips Petroleum Company

It is further Ordered That applicant shall publish promptly in its

appropriate tariff the following notice

Notice is hereby given as required by the decision of the Federal Maritime

Commission in Special Docket 471 that effective March 2 1975 for purposes of refund

or waiver of freight charges on any shipments which may have been shipped during the

period from March 2 1975 through March II 1975 the contract rate to Hong Kong on

Liquified Petroleum Gas LPG Restricted to On Deck Stowage is 87 75 W M subject

to all applicable rules regulations terms and conditions of said rate and this tariff

It is further Ordered That refund of the charges shall be effectuated

within 30 days of service of this notice and applicant shall within five

days thereafter notify the Commission of the date and manner of

effectuating the refund

By the Commission

SEAL S FRANCIS C HURNEY

Secretary
FEDERAL MARITIME COMMISSION

SPECIAL DoCKET No 471

PHILLlPSI ETROLEUM Co

v

PACIFIC WESTBOUND CONFERENCE

Adopted May 27 1976

Application for permission to refund a portion of the freight charges granted

INITIAL DECISION OF JOHN E COGRAVE ADMINISTR

LAW JUDGE1

The Pacific Westbound Conference PWC has applied for pe

to refund to Phillips Petroleum Company a portion of the freigh

on a shipment of fifty cylinders of Liquified Petroleum Gas 

18 800 pounds and measuring 550 cubic feet Under bill of lad

March 2 1975 the M S Queensville of Barber Blue Sea Line

the shipment from Los Angeles to Hong Kong

The rate applicllble at the time of shipment was 239 00 WM 

pounds or 40 cubic feet based on Item 340 0000 03 Pacific W

Overland Tariff No 6F M C 13 The rate sought to be applied 

W M based on Item 341104 36 Pacific Coast Westbound Lo

No 4F M C 12 The aggregate freight charges collected were 

The aggregate freight charges sought to be applied are 1 206 

requested refund is 2 079 69 In support of the aPplied for perm

refund the monies applicant states

Under the Pacific Westbound Conference Local Tariff 3 FMC s up to 

1975 there was a commodity item 2575 in the tariff readitig PETROLE

LIQUID BUTANE FUEL PRESSURING LIQUID PROPANE at the rat

per 2000 or 40 Cft whichever produces the greater revenue W M Unde

covering Dangerous or Hazardous Cargo there was provision to excep

Dangerous and Hazardous Cargo rate per Item 695 cases in which specific 

rates were provided in individual commodity items orby authorized interpret

tariff index Although the commodity in question Liquified Petroleum Ga

stowed on deck only per Code of Federal Regulations Title 46 this comm

excepted from the Dangerous and Hazardous Cargo rate Item 695 inasmu

I

This decision became the decision ofthe Commission May 27 1976

144 
PHILLIPSPETROLEUM CO v PACIFIC WESTBOUND 145

was a specific commodity rate provided in the individual commodity items i e Item

2575

The shipment in question was an Overland shipment but as there was no specific

commodity rate in the Pacific Westbound Conference Overland Tariff 5 FMC 9 the

rate under the Local Tariff 3 was applicable as it was less than theCargo N O S rate

in the Overland Tariff

The Pacific Westbound Conference Local Tariff 4FMC 12 and the Pacific West

bound Conference Overland Tariff 6 FMC 13 effective January 15 1975 were

completely revised changing from item rates as in the previous editions to rates on the

individual Schedule B Commodity numbers as used on the U S Customs Shipper s

Export Declaration In the revised tariffs a provision for specific rate for Liquified

Petroleum Gas at the same rate of 87 75 W M was overlooked therefore leaving the

only classification for this product under 340 0000 03 at 240 00 in the Local Tariff and

239 00 in the Overland Tariff both W M

Item 341 1040 36 added to Pacific Westbound Conference Local Tariff 4FMC 12

covering Liquified Petroleum Gas LPG restricted to On Deck stowage at 87 75 W M

effective March II 1975

Because Iwas unable from the foregoing to construct the precise

sequence ofevents with any degree ofcertainty Iwrote applicant a letter

in which Iapprised applicant that from the application Iunderstood the

following to have taken place

Prior to January 15 1975 the PWC Local Tariff 3 carried a specific commodity

item 2575 reading Petroleum Gas Liquid Butane Fuel Pressuring Liquid Propane

with a rate of 87 75 per 2000 or 40 Cft whichever produces the greater revenue The

PWC Overland Tariff however carried no such specific commodity rate

A complete revision of both the Local and Overland tariffs was undertaken in order to

change from item rates as in the previous editions to rates on the individual Schedule

B Commodity numbers as used on the U S Customs Shipper s Export Declaration

The revised tariffs became effective January 15 1975 However in the revision the

specific item for Liquified Petroleum Gas at 87 75 was overlooked Presumably only in

the revised Local tariff since it never existed in the overland tariff This oversight

resulted in two items applicable to the shipment in question Item 340 0000 03 at 240 00

W Min the Local tariff and 340 0000 03 at 239 00 W M in the Overland tariff

Item 4 of your application states that the shipment in question was an Overland

shipment but as there was no specific commodity rate in the Overland Tariff 5

the rate under the Local Tariff 3 was applicable as it was less than the cargo NOS

rate in the Overland Tariff Both of these tariffs are the old prerevision tariffs

The shipment moved on bill of lading dated March 2 1975 and moved under the

Overland tariff presumably because it was an overland shipment Yet under item Iof

the application you propose to amend the revised Local tariff by the addition of Item

341 1040 36

I

then proposed two questions I

How does an overland shipment

move or get rated under a local tariff and 2 Since there never was a

specific commodity item for Liquified Petroleum Gas in the overland

tariff how does the revision in the local tariff and its subsequent

amendment constitute grounds for authorizing the requested refund

Applicant replied by way of clarifying the matters set forth in the

application The relevant parts ofthe reply are as follows

Your letter of March 23 concerning Special Docket No 471 Phillips Petroleum

Company vs Pacific Westbound Conference is certainly appreciated You are abso

lutely correct as to the sequence of events outlined in paragraph 3 4 5 and 6 of your

letter

19 F M C
146 FEDERAL MARITIME COMMISSION

Your question of how does an Overland Shipment move under a Local T

answered by the application of Overland Tariff Rule I which we are attach

your ready reference This particular portion of Overland Tariff Rule I has 

existence for quite a few years and basically it states that where there is no 

commodity rate contained in the Overland Tariff but there is a specific commod

found in the Local Tariff and the use of that Local Tariff Rate is lower than th

NOS rate level in the Overland Tariff or on a less specifically described comm

the Overland Tariff the use of the Local rate item may be applied to the O

shipment

When the Conference changed the format of its Tariffs in January 1975 ourp

Local and Overland Tariffs contained several hundred commodity items W

adopted the Schedule B format these several hundred items became several th

items and unfortunately one of the items overlooked to be included in ourTa

Liquified Petroleum Gas

Since it was not the intent of the Conference to increase Shipper s Rates w

tariffformat was changed we immediately put in ourLocal Tariff a specific com

rate item covering the product that Phillips Petroleum Company ships The spec

item was put in ourLocal Tariffjust as it was in ourformer Local Tariff and si

specific rate in the Local Tariff was lower than the less specificalIy de

commodity and the cargo NOS rate items in ourOverland Tariff the Local ra

made to apply

One wonders why it wouldn tbe easier and somewhat less confu

amend both the overland and local tariffs

Section 18b 3 ofthe Shipping Act 1916 46 USC 817 as amen

Public Law 90298 and as further implemented by Rule 6 b S

Docket Applications Rules ofPractice and Procedure 46 CFR 502 

the law sought to be invoked Briefly it provides

The Commission may in its discretion and for good cause shown p

common carrier by water in the foreign commerce of the United States to 

portion of the freight charges colIected from a shipper or waive the collect

portion of the charges from a shipper where it appelUS that there is an e

tariff of a clerical or administrative nature or an errordue to an inadvertence in f

fIle a new tariff and that such refund or waiver will not result in discrimination 

shippers Furthermore prior to applying for such authority the carrier must ha

a new tariff which sets forth the rate on which such refund or waiver would b

The application for refund must be fIled with the Commission within one hund

eighty days from the date of shipment Finally the carrier must aaree that if pe

is granted an appropriate notice will be published in its tariff or such other ste

as may be required to give notice of the rate on which such refund or waiver w

based

The legislative history ofthe amendment to section 18 of the S

Act Public Law 90298 2specifies that carriers are authorized to 

voluntary refunds and waive the collection of a portion of their 

charges for good cause such as bona fide mistake The nature 

mistake was particularly described

Section 18 b appears to prohibit the Commission from authorizing relie

through bona fide mistake on the part of the carrier the shipper is charged more 

understood the rate to be For example a carrier after advising a shipper that he 

1 House Report No 920 November 14 1967Toaccompany H R 9473 onShipping ACI 916 Authori

oj Cerlaln Freight Charges Statement ofPurpose and Needfor the BllllD Amend Provisions ofthe Sh

916 toAuthorize the FederalMaritime Commission to Permit a

Carrier to Refund aPortion a theFreigh

19 
WASHINGTON D C

May 4 1976

S JOHN E COGRAVE

Administrative Law Judge

PHILLIPS PETROLEUM CO v PACIFIC WESTBOUND 147

to file a reduced rate and thereafter fails to file the reduced rate with the Federal

Maritime Commission must charge the shipper under the aforementioned circumstances

the higher rates

The Senate RepOrt 3states the Purpose of the Bill

Voluntary refunds to shippers and waiver of the collection of a portion of freight

charges are authorized where it appears that there is an error in a tariff of a clerical

nature or where through inadvertence there has been a failure to fIle a tariff reflecting

an intended rate

In view of the Overland Tariff Rule I and the obviously inadvertent

error made in changing to Schedule B nomenclature the application

should be granted

It is therefore found that

1 There was atariff filing error due to inadvertence

2 Such refund will not result in discrimination among shippers

3 Prior to applying for authority to refund a portion of the freight

charges PWC filed a new tariff which set forth the rate on which the

refund would be based and

4 The application was f1ed within one hundred and eighty days from

the date of shipment

Accordingly the Pacific Westbound Conference will be permitted to

refund 2 079 69 to the Phillips Petroleum Company

An appropriate notice will be published in the tariff of the Pacific

Westbound Conference

SenateReport No 1078 AprilS 1968 To accompany H R 9473 on Shipping Act 1916 Authorjzed Refund of

Certain Freight Charges under Purpose of theBill

19 F MC
FEDERAL MARITIME COMMISSION

DoCKET No 748

EUROPEAN TRADE SPECIALISTS INC AND KUNZLE TAS

v

PRUDENTIAL GRACE LINES INC AND THE HIPAGE CO IN

Respondent Prodential Grace Lines Inc found not to have violated sections 

of the Shipping Act 1916

Respondent The Hipage Company Inc

found not to have violated sectio

Shipping Act 1916

Issue remanded for further proceedin ls with regard to aIIelled violation of s

of the Shipping Act 1916 by respondent Prudential race Lines Inc

Issue remanded for further proceedinas with reprd to alleged violation of se

respondent The Hipage Company Inc

William LBorden for Complainants

John B King Jr for Respondent Th Hipage Company Inc

John H Purcell for Respondent Prudential Grace Lines Inc

REPORT AND ORDER ON REMAND

May 27 1976

By THE COMMISSION Karl E Bakke Chairman Ashton C B

James V Day Commissioners Clarence Morse Vice C

concurring

PROCEEDINGS

This case arose by complaint ofEuropean Trade Specia

hereinafter European on behalfof itself as shipper and on 

its consignee Kunzle Tasin hereinafter KT alleging vi

sections of the Shipping Act 1916 the Act by Prudent

Prudential and by The Hipage Co Hipage Complainan

fOIwarder The Complainant alleged in summary that Prude

violated sections 16 17 and 18 b of the Act and that Hipage ha

sections 16 and 17 ofthe Act

The claim in this case results from an alleged overcharge by 

Commissioner Bob Casey not particlpatlna

148 
EUROPEAN K T v PRUDENTIAL 149

for freight on a single shipment ofgoods from Norfolk Virginia to Genoa

Italy aboard Prudential s vessel S S LASH ESPANA In essence

Complainants allege that the carrier Prudential misclassified the com

modity which made up the cargo and therefore applied an excessive tariff

rate in violation of section 18 b 3 ofthe Act In the course of this

transaction both the carrier Prudential and the forwarder Hipage are

also alleged to have acted in such a manner as to have violated sections

16 and 17 ofthe Act

Following certain procedural maneuvering involving the amendment of

the Complaint controversy as to proper parties complicated discovery

and disputes related thereto the case came before Chief Administrative

Law Judge Cograve for hearing Judge Cograve thereafter issued his

Initial Decision finding no violations as alleged and dismissing the

complaint Exceptions to his decision and replies thereto were du1y ftled

This proceeding came before the Commission on those exceptions and on

oral argument heard before the Commission

FACTS

The shipper European is a U S exporter based near Cleveland Ohio

its consignee and coomplainant K T is a partnership based in Milan

Italy International Great Lakes Shipping Company also known and cited

here as Lavino ofCleveland was at the time pertinent the agent of

Prudential a common carrier by water subject to the Act Hipage is a

freight forwarder licensed by the Commission with its principal offices in

Norfolk Virginia

In January 1972 a

representative of Lavino met with the President of

European to discuss a shipment ofcertain goods by European from

Norfolk to Genoa At that meeting the two parties viewed both the

commodity to be shipped and certain sales literature regarding the

product This discussion was hald to make a tentative determination of

the nature of the commodity and its likely rating under the appropriate

tariff 2The commodity was a quantity ofdiscs made ofsynthetic material

impregnated with abrasives and designed to be used on industrial or

institutional floors for scrubbing and polishing The trade name of this

commodity was Roto Pads

Notwithstanding the form of the commodity i e pads the Lavino

representative informed European s President that the cargo in question

wou1d be rated as abrasive cloth under Item 0101 ofthe Tariff That

item provides for carriage of

Abrasive s viz

I As aresult in large measure of a confused and confusing theory of the case held by Complainants there are

many irrelevant facts brought out in the transcript briefs discovery and various motions filed by the parties In order

topare these superfluous matters down to aworkable form which is relevant tojusticiable charges under the Shipping

Act we have taken certain editorial licenses No fact material or relevant to the alleged violation of the Act

however has beenomitted

2

The applicable tariffis that of the North Atlantic Mediterranean Freight Conference Tariff No IOFMC 3

19 F M C
150 FEDERAL MARITIME COMMISSION

Cloth NOTin Belt Form orRolls Not Pads Scouring or Materials Therefor

on a weight basis

Following this meeting European selected Prudential as its carri

space was booked upon Prudential s S S LASH ESPANA for tra

in February 1972 The booking was confirmed abooking notice wa

to Hipage selected by Eilropean as its forwarder to Prudential s 

in Norfolk and to Prudential s offices in New York

Hipage received its copy of the booking notice on January 17 

and on January 29 1972 Hipage also received European s Pu

Order and Shipping Instructions This document contains an 

entitled Freight commodity class of goods in which appeare

statement Conference Item 0101 Abrasive Cloth at 122 38 pe

lbs The document also containtld a block entitled descript

goods Here appeared the description Roto Pads Polishing 

bing

Based apparently upon European s Purchase Order and Sh

Instructions Hipage prepared various requisite shipping docum

Among those was the ocean bill of lading on which the carg

described as 92 cartons Roto Pad Abrasive Floor Maintenance P

Upon presentation of this bill of lading to the carrier s agent the 

was rated Cargo NOS resulting in a freight charge of 2 

including a bunker surcharge Under Tariff Item 0101 described 

the freight charges would have totaled 206 25 This sum is app

included in the vastly higher damages figure sought

In April 1972 following shipment and payment by consignees 

transportation Complainants Respondents and their various 

exchanged numerous telephone calls and much correspondence reg

the alleged overcharge The result of this activity was the issua

May 1972 by Prudential s agent ofaNotice of Correction This 

corrected the description of the goods from Roto Pad Abrasive 

Maintenance Pads to Roto Pad Abrasive Floor Cloth em

added with a corresponding change in applicable rates However 

1972 this first Notice of Correction was itself corrected by a 

Notice which re instated the Cargo NOS rate but left the desc

as cloth

The circumstances leading to the issuance of the second Notice 

from clear from the record The Notice itself merely provides

As per telecon with Richard Egloff of Prudential June 12 1972 correction 

cancelled Correction No 23 to revert charges back as per original issuances si

bill of lading

No refund was made at any time

From these basic facts Complainants have constructed their alle

of violations of the Shipping Act by Prudential and Hipaae The 

19 
EUROPEAN K T v PRUDENTIAL 151

actions ofRespondents and the consequent charges against them read in

part as follows

Complainant charges the respondent companies with violations of the Shipping Act

as well as violations of the laws of contract and the laws governing principal and

agent within the context of the Shipping Act as follows

A Respondent Prudential Grace Lines offered to ship the goods under Item

Number 0101

B The complainant accepted and acted in reliance upon the offer of shipment

E Respondent Hipage Company prepared the bill of lading on a pre printed form

furnished by respondent Prudential Grace Lines The goods were described as 92

Cartons Roto Pad Abrasive Floor maintenance Pads notwithstanding complainant s

express instructions that the goods were to be described as Conference Item No 0101

Abrasive Cloth

M The representation of this agent Hipage of the interests of its principal in

arm s length dealings with a third party the carrier resulted in unjust enrichment of

the third party to the extent of more than 13 times as much money as the third

party had agreed to accept

The conduct of respondent Prudential Grace Lines and respondent Hipage Company

is integrally intertwined as respectively principal in mct and agent in fact The result of

theirjoint conduct was to defraud and severely injure complainant

Upon review ofall allegations however it is clear that the gravamen

of these charges is addressed to this Commission in terms of alleged

breach by Respondents of such common law principles as duties ofagent

to principal common law fraud detrimental reliance and unjust enrich

ment Only briefly and obliquely do Complainants address the central

issues ofthe alleged violations of sections 16 17 and 18 ofthe Shipping

Act

As Judge Cograve made quite clear in his Initial Decision this

Commission does not exercise the authority of a court oflaw orofequity

We administer and enforce the requirements ofthe Shipping Act and

related Acts When pleadings come before us in which violations of the

Act are heavily veiled in common law pleadings it becomes difficult to

distill the activities alleged to be in violation ofthe Act from those which

indicate the possible violations of some common law obligation We have

notheless reviewed the entire record in an attempt to identify with some

certainty the particular violations of the Act complained of Thus we

have not ignored the underlying theories of common law wrong but

rather have attempted to pare them down to activities at least colorably

justiciable under the mandates of sections 16 17 and 18 ofthe Shipping

Act 1916

DISCUSSION AND CONCLUSIONS

The Initial Decision in this case addressed the alleged violations against

the forwarder Hipage and the carrier Prudential seriatim In the interest

of clarity we will track that decision and discuss each issue raised on

exception to the decision as it arises insofar as that is possible

Judge Cograve dealt first with the violations of section 16 alleged to

have been perpetrated by Hipage From the rather unclear allegations

19 FM C
152 FEDERAL MARITIME COMMISSION

I

1

contained in Complainants complaint and brief Judge Cograve de

that

complainants first challle Hip with a violation of section 16 which m

unlawful to give any person locality ordescription of traffic an undue or unrea

preference or ad vantage or to subject the same to some unreasonable preju

disadvantage

Complainants assertion of a violation of section 16 is based solely upon the fa

Hipage to clarify the commodity shipped as Tariff Item 0101 It would app

Hipage originally did prepare a bill of lading with that description but that so

probably Lavino as Prudential s agent questioned the description and it was 

to Roto Pad Abrasive Floor Maintenance Pads Thus complainants ullle H1pag

as an agent for the Shipper to faithfully carry out its obligations to its pr

Hipllge also violated section 16 it is alleged because it did notpromptly in

principal European Trade that there was some question as to the proper classific

the goods

Indeciding the issue of section 16 violations by Hipaae Judge C

points out the difficulty which Complainants allegations creat

respect to a claim which is justiciable under section 16 of the 

Apparently Complainants are deterinined that abreach by an agen

duty to his principal constitutes ipso facto a subjecting of a per

locality to unreasonable prejudice or disadvantage or the giving to a

person or locality an undue or unreasonable preference or advanta

rejecting this theory as totally untenable Judge Cograve reasoned

whatever may have been the justiciable derelictions of Hipage ullder other 

of the Act the essence of any violation of section 16 is preference orprejudice t

the advantage ordetriment of a similarly situated other

Complainants repeatedly have sought to support the alleged vio

by Hipage of section 16 by claiming that Hipaae subjected Compl

to undue prejudice ordisadvantage to the advantage of the 3M Co

allegedly a competitOr of Complainants in the abrasive pad bu

Judge Cograve noted that while Complainants repeatedly attemp

show such a preference oradvantage to 3M to the detriment ofEur

they were wholly unable to showthat the alleged competitor ha

shipped any car o whatsoever on Prudential ships much le

commodity involved here or that Hipagehad ever handled any shi

of any sort for 3M While Complainants were able to show th

introduction of Tariff Item 0101 was prompted some years previo

the request of 3M the origin of Item 0101 is as Judge Cograve exp

irrelevant to this particular case Whether or not this rat

instigated by 3M would be of relevance only if it could be shown t

also shipped a similar commodity to that of Complainant a

assessed that rate while Complainants had been assessed ahigher 

Undaunted by their inability to show any competitive relati

between themselves and 3M or any other shipper Complainants 

to circumvent the need for a showi11l of competitive relationship 

Valley Evaporating Co v Grace Lines 14 F M C 16 1970 

proposition that no competitive relationship need exist in orde

19 
EUROPEAN K T v PRUDENTIAL 153

violation of section 16 to be found Judge Cograve discussed this case at

length in his Initial Decision and in our opinion correctly distinguished

that case from the present controversy As Judge Cograve explained the

peculiar facts of the Valley case were such that once the

Conference had established its criteria for retaining commodity rates all

shippers were entitled to equal treatment under those criteria whether or

not there was acompetitive relationship between them Thus in that

case when the conference eliminated a certain commodity rate in

violation ofits own criteria a violation ofsection 16 could be made out

notwithstanding a lack of competitive relationships among or between

shippers

Complainants cite the holding as creating an absolute obligation

doctrine which they seek to have applied here Unfortunately as Judge

Cograve observed

complainants are unclear as to just what absolute obligation Hipage was under As

near as can be determined from a

rambling and confused brief the obligation of Hipage

was to follow the instructions of European trade wherever they may lead Thus a failure

of Hipage to somehow or other see that Lavino and Prudential accepted the classification

of Item 0101 in the view of European constituted a violation of section 16

Unable to accept the allegations of Complainants in this regard Judge

Cograve dismissed the allegation that Hipage had acted in violation of

section 16

Dismissal ofthis allegation is challenged on exception by Complainants

Theirexception is in large measure simply arestatement ofthe arguments

already advanced before the Presiding Officer and properly disposed of

by him

Rather than attempt to paraphrase Complainant s position we feel

compelled to use its own language Complainants allege that

The record shows that Hipage usually represented the interests of the Shipper and

not the interests of the carrier whereas here Hipage represented the interests of the

carrier and not the interests of the shipper by typing the freight rate the carrier wanted

contrary to received and understood shipperinstructions

The heart of the charge is that Hipage was under an absolute obligation to represent

shipper interests rather than carrier interests and to advise and consult with the

shipper hefore implementing an extortionary freight charge wanted by the carrier

Thus complainants take exception to the view of the Initial Decision on Hipage in

relation to section 16 That view is inequitable and contrary to the precedent of the

cases which the Decision cites these cases having ruled that in circumstances

comparable to those obtaining here a competitive relationship need not be shown

Hipage replied to this exception specifically and took strong objection to

the position ofComplainants Hipage submits that

19 F M C
154 FEDERAL MARITIME COMMISSION

In order to violate 16 of the Act 46 V S C 815 it is necessary that Hipag

given an undue or unreasonable preference or advantaae to some person loc

description of traffic or have subjected European Trade Specialists and Kunzel 

to some unreasonable prejudice or disadvantaae As the initial decision ably poi

in order to have a violation of 16 there must be a party preferred and 

prejudiced There was no showing at the hearing that the Hipage Company trea

other shipper differently than it treated Complainants

As to the alleged absolute obligation to the shipper which Compla

alleged and reargued Hipage states

it is unclear as to how Hipage could have prevented the carrier from char

rate that was charged That 16 imposes no such duty to prevent a carrier s ap

of a certain rate on a freight forwarder is clear

Under complainants absolute obligation theory a forwarder would be u

obligation to misdescribe goods if his principal so directed The Administrat

Judge discussed in detail the case of Valley Evaporating Co v Grace Line 14 

16 1970 which is relied on by Complainants to support their absolute obligation 

and succinctly stated why that decision has no application to the present case T

Judge s

interpretation of Valley Evaporating is the correct and Complainant s ex

in this regard are notwell taken

We conclude that Judge Cograve s denial of the absolute oblig

claim under these circumstances and the reasons cited by him are p

What Complainants are in effect alleging under color of section 

a violation by Hipage of its duty to its principal under the princip

common law We have no jurisdiction over such a claim Further 

ofthe opinion that werewe to espouse the sort ofduty allegedly ow

Hipage to its principal compliance by aforwarder with such a duty 

well result in itself in a violation ofthe Shipping Act

The alleged violation by Hipage of section 17 of the Act is as 

Cograve determined two fold First it is alleged that by its inab

secure classification of the cargo under Item 0101 Hipage betray

shipper by misdescribing the commodity Second Complainant co

that Hipage violated its duty to the shipper under section 17 by fa

apprise the shipper of any dispute or discrepancy as to the rate 

applied to the goods Even assuming that these charges const

proper allegation of wrongdoing under the Shipping Act Judge C

was unable to find that the actions of Hipage were violative of sec

As to the first allegation Judge Cograve cited testimony 

transcript showing Lavino s the carrier s agent skepticism as to sh

desired rating the subsequent description ofthe goods as Roto 

and the rating of the cargo as Cargo NOS On this basis he con

that

there is no question even complainllnts admit that the description R

Abrasive Floor Maintenance Pads accurately described the commodity shipp

where then is the uiust and unreasonable practice engaged in by Hipage I 

none

As to the second allegation Judge Cograve found that wh

19 
EUROPEAN K T v

PRUDENTIAL 155

numerous discussions of possible overcharge were held among the parties

some months after shipment at no time was there any complaint made

by European to Hipage regarding the manner in which Hipage had

handled the matter or the efforts made by Hipage to clarify and solve the

disagreement as to freight charges Judge Cograve found that the record

ofthis proceeding simply would not allow him to reach any conclusion on

the issue of whether Hipage had properly informed its shipper prior to

shipment ofthe discrepancy in the applied rate Thus he dismissed the

section 17 charge for failure of Complainants to sustain their burden of

proof As the Presiding Officer himself explained

The record in this case simply will notallow a definitive disposition of this issue Mr

Ballard of Hipage testified that in the ordinary course of business the shipper would

have been contacted and told of the problem However Mr Meade of European Trade

had no recollection of any such call

At this point in the hearing counsel for European Trade requested a continuance for

the taking of depositions of European Trade s secretary The request was opposed I

Judge Cograve denied the request on the ground that far from being surprised by the

testimony of Mr Ballard counsel from European Trade had from the beginning made an

issue of the lack of communication from Hipage The burden of proving its case was

upon European Trade A part of that case was the failure of Hipage to inform European

Trade of the dispute overthe rate when it first arose Counsel for European Trade had

every opportunity to call any witness he chose however he elected not to call Mr

Meade s

secretary However in the interest of fairness I

Judge Cograve allowed

counsel for complainants an opportunity to file with me after his review of the record

a motion for the takmg of depositions This was to allow complainants an opportunity to

establish their surprise on the basis of the record in the case No such motion was filed

Accordingly complainants having failed to prove Hipage had engaged in an unjust or

unreasonable practice in the handling of the shipment in question the charge that

Hipage violated section 17 of the Shipping Act is dismissed

The second allegation also includes tangentially a claim by Complain

ants that the alleged failure to inform its shippers ofdisputes incorporated

other derelictions by Hipage These include as best as we can determine

allegations that Hipage violated section 17 by failing to make an adequate

investigation of Complainants claim following shipment by failing to

conform to its usual routine in such cases and by failing to have

published any sort ofregulations for the handling by Hipage of such

claims All of these alleged derelictions are said by Complainants to

subject them to undue prejudice or disadvantage to the advantage or

benefit of another in violation of section 17 Finally Hipage s alleged

failure to have published its own regulations is claimed to be a violation

ofCommission General Order 4 applicable to freight forwarders

Judge Cograve found no evidence satisfactory to him which would

justify afinding of a violation of section 17 in any ofthe respects alleged

by Complainants Complainants have taken exception to this conclusion

and each finding on which it is based We will address each of these

exceptions separately

Complainants take exception to the failure of the Initial Decision to

address their contention that Hipage violated Commission General Order

19 F M C
156 FEDERAL MARITIME COMMISSION

4 Complainants nowhere specified how General Order 4 may have 

breached but simply allege this conclusory argument We have 

unable to determine on our own how this claim might be supported 

have not been shown a way by Complainants In fact nothing in the 

or in the factual record in this proceeding will support this allega

Certainly and ifthis be the crux of Complainant s charge there 

requirement under section 17 of the Act that forwarders publish 

regulations and procedures Nor has this Commission either in Ge

Order 4 or elsewhere by rule or decision mandated that alicensed fr

forwarder must establish and publish a special body of regulations 

therefore find this exception tobe without merit 3

Additionally Complainants contend that Judge Cograve err

rejecting their argument that Hipage s failure to abide by its ship

instructions constituted an uIliust and unreasonable practice in vio

ofsection 17 ofthe Act Specifically they take issue with the Pre

Officer s conclusion that

There is no question even complainants admit that the description Roto Pad Ab

Floor Maintenance Pads accurately described the commodity shipped

Complainants challenge this finding on thegrouitd that it is irrel

and misleading They urge thatthe important fact here is that

Hipage knew the description the shipper wanted There was a scienter he

Hipage started to carry out the shipper s wish citation omitted emphasis or

Hipage also knew the description the carrier wanted Both descriptions were e

accurate

What did Respondent Hipaae do It elected fO please the carrier

III

This in the opinion of complainants is UJ1 iust and unreasonable and should mo

conscience of the Commission

In reply to this exception Hipage explains its action thus

The only source of this information on which the description was based 

Complainants own shipping documents and sales literature and this description w

something conjured up by Hipaae and Prudential Grape in an effort to def1 lud e

Complainants

The Hipage Company fulfilled its obliaatlon as a forwarder of accurately des

the goods in preparing the bill of lading based oninformation supplied by the s

and by accurately describing the commodity did notenSlllIe in unreasonable pr

within the meaning of section 17 of the Shipping Act

This Commission concurring with Judae Cograve and Hipage 

3

If by this aeneraJ exception Complainants refer to afaUure by Hipap to inform its principal ofany 

overthe shipment inquestion we have incorporated that referenee in our dllculllon of the all led le

violation by Hlpqe We have considered that action to be justiciable under secUon 17 and have Included tha

our order on remand

19 
EUROPEAN K T v PRUDENTIAL 157

that there is no evidence in the record ofany collusion between Hipage

and Prudential Further we agree that Hipage properly described the

cargo as it is required by the Act to do The alleged scienter seems to

us to be irrelevant to a proceeding in which the pivotal issue is simply a

determination ofthe nature ofthe commodity shipped

Complainants further allege error in the implication of the Initial

Decision that Complainants had lodged no complaint with Hipage

regarding the handling ofthis matter of rate classification of the goods

Complainants argue that they did complain to Hipage that Hipage failed

to make an internal investigation of this complaint that Hipage lacked

the capability to make a meaningful investigation because it kept no

record ofthe employees who handled the case and that the Shipping Act

imposes aduty on forwarders to provide areasonable service in response

to complaints which was absent herethat absence being a violation of

section 17 ofthe Act

Since this allegation was not addressed by Hipage we have painstak

ingly reviewed the record ofthis proceeding in this regard and can find no

support for Complainants position As far as may be ascertained from

the record when Complainants brought their problem to Hipage Hipage

did in fact take reasonable steps to intercede on Complainants behalf

with the carrier and the appropriate conference Reduced to its essentials

theis exception only expresses dissatisfaction with Hipage s inability to

induce the carrier or the conference to change its position on the rating

questiorl We fail to see how this makes out a violation of section 17

Finally Complainants take exception to the conclusion of Judge

Cograve that Hipage followed its usual routine in handling the alleged

misclassification insisting that the record shows that in circumstances

such as those prevailing here the usual routine of a forwarder and of

Hipage in particular would be to inform the shipper that the carrier was

objecting to proposed tariffclassification and to obtain additional product

description from the shipper but none ofthis routine did respondent

Hipage carry out

Hipage in its reply insists that the normal procedures were followed

here adding that

This procedure would include examining the relevant shipping documents in an effort

to ascertain a precise description of the goods communication with the shipper if the

steamship company requested additional information in order to properly rate the

cargo and preparation of relevant custom invoices etc Emphasis ours

The record developed with respect to this issue is unclear Whether or

not Hipage was obliged to notify the shipper of any confusion and

whether or not he did so does not appear As a result we are of the

opinion that amplification of the actions or inactions involved must be

addressed at further hearing before a determination may be made with

respect to the alleged violation of section 17 We therefore are

remanding this issue to the Administrative Law Judge for further hearing

19 F M C
158 FEDERAL MARITIME COMMISSION

with respect to Hipage s obligations and the sequence of events d

the relevant times

In this regard Complainants also take exception to a statement 

Initial Decision that while Complainants were invited to file a mot

depose certain witnesses to counter alleged surprise testimony o

by respondents witnesses no such motion was f1led The fac

motion was filed and Judge Cograve ruled against the requested tak

dispositions and denied the motion Complainants never sought re

deration or Commission review of this ruling Since the testimony s

by that motion deals with the activity ofHipage with regard to the a

violation of 17 which issue shall be reheard on remand we are 

opinion that we need not rule on this exception

The issues that remain relate to charges alleged against Prudentia

will discuss these in the order determined by Judge Cograve in his 

Decision

The first issue raised is the alleged violation by Prudential of sect

of the Act Complainants alleged that Prudential discriminated a

persons in that it

a discriminated in fiwor of the 3M Company and against the s

consignee

b discriminated in favor of the 3M Company and against shippers 

Carolina manufacturer

c discriminated in favor of respondent carrier lnd against ocean c

sailing from the Great Lakes and other U S ports

d discriminated in favor ofrespondent carrier and against other c

sailingfrom Norfolk emphasis original

e discriminated in favor of respondent carrier and gainst trans Atla

freight carriersand

I

discriminated in favor of Norfolk forwarders and gainst forwarders 

and at airports

Without going into unnecessary detail it is sufficient to relate her

Judge Cograve found none of these allegations to be supported eith

the record orby the Complainants arguments With regard to the c

under fJ above since Complainants themselves selected Hipage as 

forwarder Judge Cograve found great difficulty in determining 

Prudential could have discriminated in favor of a forwarder 

selection ofwhich it had ito hand As for the issues relating to a

discrimination in favor of 3M Company Judge Cograve again note

absence of any showing that Prudential had ever carried any 3M 

whatsoever much less the same or similar commodity at issue 

which was given the Item 0101 rating for 3M

With respect to the alleged self preference of Prudential Judge Co

cited Anglo Canadian Ship Co Ltd v Mitsui S S Co Ltd 4 F 

535 1955 to show that

the Commission expressly excluded from section 16 the concept of self 

ence Le in this case Pmdential would have had to prefer a carrier other than 

the prejudice of some other carrier gain other than itself

19 
EUROPEAN K T v PRUDENTIAL 159

Judge Cograve therefore dismissed the alleged section 16 violation as to

persons on the ground that Complainants had failed to demonstrate on

the record any preference by Prudential with respect to other carriers air

carners or freight fOIwarders

Complainants also allege violations by Prudential of section 16 with

respect to localities in that Prudential

a discriminated in favor of Minnesota France and Italy where the 3M

Company manufactures abrasive cloth and against North Carolina where shipper s

suppliers manufacture abrasive cloth and

b discriminated in favor of the State of Virginia where Norfolk is located and

against other states where other ports and where airports are located

Addressing these allegations Judge Cograve articulated a failing which

typifies Complainants brief and theory of the case He stated

here again complainants completely misread the law of preference and prejudice

under section 16 the essence of a violation of section 16 is that two similarly situated

interests are treated differently without any justification and except in somewhat special

instances there must be a competitive relationship between those two interests There is

no evidence whatsoever in the record that Prudential ever treated any locality any

differently than it treated the port of Norfolk and the State of Virginia and as already

noted there is no evidence whatsoever that Prudential evercarried any 3M Company

products

But complainants fall back on their reading of Valley Evaporating supra and what

they call the doctrine of absolute obligation

Once again Judge Cograve distinguished the Valley case and concluded

notonly must complainants show that some other interest was preferred to their

prejudice but also that the interest was a competitor The record is devoid of any such

showing Accordingly the charge that respondent Prudential violated section 16 is

dismissed

Judge Cograve then addressed the alleged violations by Prudential of

section 17 of the Act Again he felt compelled to express the allegations

in Complainants own words noting that Complainants alleged that

the false assurances of a tariff rate held out by the carrier s sales agents offend

section 17 in that

a They were unjustly discriminatory in favor of the carrier and in favor of 3M

Company and against the shipper and consignee

b They were unjustly prejudicial sic to the shipper as an exporter as compared

with the 3M Company a foreign competitor in its capacity as a manufacturer of

abrasive cloth in France and Italy

c They were unjust and unreasonable practices reflective of the absence of just

and reasonable regulations and practices

The allegation ofparagraph a above was dismissed summarily by Judge

Cograve for the obvious reason that

As noted a number of times before there is no evidence of record that Prudential ever

carried any 3M Company products much less aboard the same vessel etc as it carried

European Trade s shipment

The allegation ofparagraph b above was interpreted by Judge Cograve

to refer to the portion of section 17 which makes it unlawful for a

19 F MC
160 FEDERAL MARITIME COMMISSION

common carrier by water in the foreign commerce to charge a rate w

is unjustly prejudicial to exporters from the United States as compa

their foreign competitors On this point Judge Cograveexplained th

words ofthe Act contemplate two exporters onerrom the United 

and one a foreign competitor both ofwhom are compeqfor bus

at some third country of destination Since the P1esidingOf6cer 

that such a situation simply was not presented here he dismisse

allegation As he sawit

The charge as framed by complainants is based on competition from 3M Co

plants located in EuropQ France and Italy No water carriaje Ifany 3M pro4ucts 

everalluded to Just how this situati l11 can bring into play the cite4 prohibi

section 17 is not made clear nor is it even discussed It Is indeed typical of the 

manufactured allegations and arguments with which clmplalnanU briefs are r

Accordingly the charge that respondent Prudential was guilty of 

prejudice under section 17 is dismissed

Under section 17 therefore there remained to be disposed of on

allegation that Prudential engaged in anl11 iust and unreasonable pr

in that its agent International Lavino did not inform European 

Lavino s inability to bind Prudential to the rate initially quoted t

Meade by Lavino Citing testimony in the transcript Judge Co

concluded that Lavino s npresentative was not conclusive as to th

applicable and that European s president was thoroughly aware th

experience of the inability of an agent to quote an authoritative 

since the Conference and carriers were the final arbiters ofthe p

rate to be charged Therefore Judge Cograve cOncludedthat

The charge that Prudential through Its agent International Lavin l commi

unjust or unreasonable practice under section 17 Ifthe Act Is dismissed

All of Judge Cograve s conclusions resarding section 16 and sect

have been challensed on exception by Complainants Unfortun

these exceptions do not differentiate between the claims under 

section but rather are lumped together Thus Complainants again 

that Prudential violated section 17 in that it held out assurances th

cargo would be rated under Item No 0101 that Complainant sh

relied on this assurance to their detriment that Pl udentials assur

were not realized when it rated the cargo as Cargo NqS tha

rating made the assurances false and that these faIse assurances 

unjust and unreasonable within tile meaning If section 17 Additio

Complainants reargue that when Prudential saw the description and 

commodity classification described by the shipper as shown i

Purchase Order and Export Shipping Instnictions Prudential s

comply with these desires was unjust and unreasonable in violat

section 17

Clearly Complainants position on exceptions constitutes 1lothins 

than a

reargument ofcontentions made before Judge Cograveand re

by him While the activity sketched by Complainants might conce

show acontract claim at common law based on detrimental relianc

19 
EUROPEAN K T v PRUDENTIAL 161

falls far short ofestablishing a violation of section 17 ofthe Act Thus we

agree with Judge Cograve s disposition of this argument and accordingly

dismiss Complainants exception in the same regard

Additionally we know of no requirement underthe Shipping Act which

obligates the carrier to acquiesce to a particular description of cargo

desired by the shipper particularly when the description desired appears

to be inaccurate The carrier s obligation in general is to rate the goods

accurately according to the descriptions available to him

Finally Complainants contend that

Complainants sought to use a tariff item which their dominant competitor in the

European market for this product the 3M Company had prompted into existence The

3M Company could have used it but complainants were improperly prevented from

using it

The import of the Initial Decision is that absent a competitive relationship

Sections 16 and 17 of the Shipping Act offered parties in the position of complainants no

remedy

The Courts and the Commission did not so hold Port ofSan Diego Valley

Evaporating and New York Foreign Freight cases cited in the Initial Decision

As we have previously stated we find that Judge Cograve has properly

interpreted and distinguished the cases cited and concur in his finding as

to the prerequisite showing under the circumstances of this case of a

competitive relationship in order for the provisions of sections 16 or 17 to

apply Further absent such a

relationship or even with such a relation

ship the allegations that 3M Company prompted into existence Item 0101

and could have used it are irrelevant and misleading

The final allegation by European against Prudential is that Respondent

Prudential violated section 18 b 3 of the Act by classifying the goods

shipped as Cargo NOS The essence of this claim is that while

Prudential was prima facie justified in rating the cargo as it did with

only the bill oflading before it at some later date when other information

became available Prudential was no longer so justified and the cargo

should have been rated under Item 0101 The document on which

Complainants rely most heavily in making this argument appears to be

the Purchase Order and Export Instructions specifically that portion

which instructs the classification ofthe commodity to be under Item 0101

In short Complainants urged that the carrier should have been bound by

the shipper s instructions Judge Cograve concluded and properly so

however that this is not of course the real question under section

18 b 3 That question was and remains whether Item 0101 was the

proper classification under the carrier s tariff

On this issue Judge Cograve correctly noted that complainants are

caught up in an inconsistency On one hand Complainants claim that

19 F M C
I

j

l

I

162 FEDERAL MARITIME COMMISSION

Based on the February 20 Bill of Lading description the shipment was co

classified prima facie as NOS cargo

Based on that infonnation the bill of ladinthey classified the commodity as N

accord with pubHshed tariffs on file with the Commission Their action did not 

the statute rather it implemented the statute

On the other hand Complainants went on to argue that once the c

came into possession offurther information such as the purchase 

and shipping instructions and sales literature it should have classifie

cargo under Item 0101 As Judge Cograve stated however the diff

here is that the description used on the bill of lading can be and 

constructed from those very documents Further the Preside

European testified that the description Roto Pad Abrasive Floor 

tenance Pads accurately described the commodity The only quest

be answered then with regard to the alleged violation of section 18

is whether this commodity should have been rated as Abrasive s 

NOT in Belt form or Rolls NOT Pads Scouring orMaterial there

Judge Cograve concluded that the articles were 1 clearly pads 

than cloth and 2 were scouring pads as so described on Complain

own sales literature Therefore he concluded the carrier wasjustif

not applying the Item 0101 rate and no violation of section 18 b 3 

found

Complainants took exception to the disposition of the tariff clas

tion issue They alleged that

The lellal question not defined ormentioned in the Initial Decision is wh

shipper such as the one here to whom the Item 0101 commodity tariffwas add

could reasonably have understood it to include his product

The issue as framed is in the opinion of this Commission c

erroneous The standard for whether or not acargo is properly ra

only adetermination of what the goods transported actually were 

is no reasonable man standard as applied to torts at common law 

Complainants seem to realize the inadequacy olthis objection 

the Shipping Act since they further argue the merits of the nature 

commodity In this regard Complainants state that in their view eith

trade name description or the commodity name description is acc

Complainants maintain that the commodity description is approp

rated under Tariff Item 0101 while the trade name descript

properly rated under the Cargo N O S rate

Notwithstanding these statements Complainants go on to atta

conclusion of Judge Cograve that the product shipped was scouring 

or material therefor hence properly excluded from the application o

0101 Complainants submit that it was error for the Presiding Offi

focus on shipper sales literature which lauds the value of the remo

See eg Wtrtern Publishing Co Inc v Hapag Lloyd A G 13 S RR 16973 and United States 

Lines

1ne

13 S RR 199 at 203204 1973

19 
EUROPEAN K T vPRUDENTIAL 163

center plug of the discs as an excellent scouring pad for those hard to

get at places and concluded therefrom that the entire pad must be for

scouring since its center clearly the same material was touted as a

scouring material

In challenging this conclusion complainants argue that scouring pads

are of the ilk of S O S pads or Brillo pads to be used on pots and

pans and that the floor maintenance pads at issue here are not scouring

pads Having attempted this distinction between S O S pads and the

roto pads at issue here Complainants lapse into irrelevant argument as to

why Judge Cograve was in error In this connection they claim that since

the shipper could reasonably differentiate between its product and

kitchen scouring pads

It is obvious that a shipper such as this one to whom tariffItem 0101 was addressed

would reasonably have understood the exclusion of scouring material as exclusively

S O S and Brillo and as not excluding his product made of different material and

used for a different purpose

As we have pointed out above with respect to application oftariff

rates under section 18 b 3 the issue is not what rate a reasonable

person could expect to have applied The issue for determination is

simply what the actual nature of the commodity shipped is and whether

or not the proper tariff rate wasapplied to that commodity We are ofthe

opinion that Judge Cograve was completely justified in relying upon the

shipper s own sales literature and samples of the commodity itself in

attempting to determine the true nature ofthe goods Having thus made

this determination as to the nature ofthe goods the next question should

involve the propriety ofthe rate applied to those goods In this regard we

believe the record of this case to be inadequate

Upon review of the Respondent Prudential s applicable tariff it has

come to our attention that on the date of shipment Prudential s tariff

included a rate applicable to Pads Scouring or material therefor

which was 45 75 w m the contract rate or 50 30 w m non contract

rate 5 During the course of the entire proceeding this rate was neither

alluded to nor discussed by any party nor was it raised sua sponte by the

Administrative Law Judge We are unable to understand this lapse

particularly if indeed the commodity shipped was pads scouring or

material therefor as found by Judge Cograve This omission regarding

an apparently applicable tariff rate indicates a continuing confusion as to

the true nature ofthe goods and the properly applicable tariff rate Ifthe

commodity shipped were abrasive floor maintenance pads as described

in tlH bill oflading we still are unable to determine whether or not the

commodity is also pads scouring or material therefor Ifthe latter

item no 1198 would clearly seem to be applicable However ifthe

former that item mayor may not be applicable We are ofthe opinion

that resolution ofthe exact nature ofthe goods shipped and therefore the

1

Item No 1198 19th Rev p 94 No Ad Mediterranean Freight Conf Tariff No IOFMC 3

19 rMC
164 FEDERAL MARITIME COMMISSION

properly applicable rate requires further evidentiary hearing W

remanding this matter to the Administrative Law Judge for f

hearings limited to the issues ofthe true nature ofthe commodity a

tariff mte which must be applied

We have scrutinized each exception with reference to the record 

case and the Initial Decision rendered That some specific exce

have not been individually discussed does not mean that we ha

considered them Some have been subsumed in other exception

some are merely restatements of positions taken previously 

however has been considered by us Where the record permits w

determined those issues as noted in our discussion of exceptions 

Where the record is unclear we have determined that further ev

must be adduced at rehearing and have therefore remanded c

issues Insofar as the record addressed so far in this procee

concerned we conclude for reasons stated above that Judge Cog

findings and conclusions were proper and well founded as to all alle

ofviolations of section 16 of the Shipping Act with respect to the 

and forwarder and section 17 of the Shipping Act with respect 

carrier

However there remain two issues which we are unable to det

on the record ofthis proceeding The allegations of Hipage s der

in failing to notify the shipper ofany disputes as to applicable tari

may not be decided on the unclear record before us We therefore 

determined to remand this issue in order to clarify the record 

regard

Additionally with respect to the alleged violation of 18 b 

Respondent Prudential we have determined to order further hea

order to determine the proper tariff rate to be applied to the 

shipped This determination sould include considemtion of tariff ite

1198 no 0101 the Cargo NOS rate and whatever other rate

properly be considered

Vice Chairman Morse concurring

I concur in the result but in so doing Ifind it unnecessary to concur in the sta

of the 1Ill i0rity that there must be a

competitive relationship proved in this type 

to establish a violation of sections 16 and 17 Shipping Act 1916 Volkswagen

FMC 390 U S 261 280 1968

SEAL S FRANCIS C HURNBY

Secre

19 
19 F MC 165

FEDERAL MARITIME COMMISSION

DOCKET No 748

EUROPEAN TRADE SPECIALISTS INC AND KUNZLE TASIN

v

PRUDENTIAL GRACE LINES INC AND THE HIPAGE CO INC

ORDER ON REMAND

These proceedings having been instituted upon complaint filed under

section 22 of the Shipping Act 1916 and the Commission having this

date made and entered its Report containing its fmdings and conclusions

thereon which Report is made a part hereofby reference

IT IS ORDERED That the issues relating to the alleged dereliction of

Respondent Hipage Company in failing to notify its shipper ofany dispute

as to the applicable tariff rate in violation of section 17 ofthe Shipping

Act 1916 be and hereby are ordered to be remanded for further hearing

consistent with our Report and

IT IS FURTHER ORDERED That the issues relating to the alleged

violation of section 18 b 3 of the Shipping Act 1916 by Respondent

Prudential Grace be and hereby are remanded for further hearings in

order to determine the proper tariff rate to be applied to the cargo at issue

with appropriate considerations being given to tariff items No 1198 No

0101 the Cargo N O S rate or any otherrates which may be properly

considered and

IT IS FURTHER ORDERED That those portions ofthese proceedings

determined in our Report and not remanded by this Order for further

proceedings be and hereby are discontinued

By the Commission

SEAL S FRANCIS C HURNEY

Secretary
FEDERAL MARITIME COMMISSION

INFORMAL DOCKET No 339 0

UNION CARBIDE INTER AMERICA INC

v

VENEZUELAN LINE

NOTICE OF DETERMINATION NOT TO REVIEW

June 2 1976

Notice is hereby given that the Commission on June 2 

determined not to review the decision of the Settlement Officer 

proceeding served May 27 1976

By the Commission

S JOSEPH C POLKlNG

Assistant Secre

166 1
19 F M C 167

FEDERAL MARITIME COMMISSION

INFORMAL DoCKET No 3391

UNION CARBIDE INTER AMERICA INC

v

VENEZUELAN LINE

Reparation denied

DECISION OF JUAN E PINE SEITLEMENT OFFICER1

Union Carbide Inter America Inc complainant claims 79101 as

reparation from Venezuelan Line for an alleged freight overcharge on a

shipment carried from New York New York to Puerto Cabello

Venezuela via the MARACAIBO on Bill of Lading No 61 dated

September 25 1974 While the complainant does not specifically allege a

violation ofthe Shipping Act 1916 it is presumed to be Section 18bX3

The carrier denied the claim solely on the basis ofRule 11 United

States Atlantic GulfVenezuela and Netherlands Antilles Conference

Freight Tariff F M C No 2 which time bars claims for adjustments not

received by the carrier within six months from the sailing date ofthe

vessel 2

The shipment consisted of 22 pallets totalling 880 bags of Synthetic

Resin Polyethylene weighing 46 090 pounds 44 880 pounds net measur

ing 1 360 cubic feet and having an invoice value of 15 950 Venezuelan

Line assessed abill for total freight charges of 2 759 59 which Union

Carbide paid These charges were computed from the above conference

tariff The carrier assessed a Class lW rate from 5th Revised Page 122 A

covering Synthetic Resins N O S in bulk in bags actual value over

650 but not over 1 000 per 2 000 pounds This rate was 116 50 per ton

44 880

of 2 000 pounds assessed on 22 44 short tons which produced

2 000

ocean freight revenue of 2 614 26 plus accessorial charges of 20143

1 Both parties having consented to the informal procedure of Rule 19a

ofthe Commission sRules ofPractice and

Procedure 46 CPR S02 301 304 this decision will be final unless the Commission elects to review it within 15 days

from the date ofservice thereof

I

The Commission has ruled thataclaim filed within two years from the datethe cause of action arose must be

considered on its merits Colgate Palmolive Company vUnited Fruit Company Informal Docket No 115 1 served

September 30 1970 The billof lading here is dated September 25 1974 and the claim was filed November 17 1975
168 FEDERAL MARITIME COMMISSION

assessed on a weight ton basis 3 minus a prepalletized cargo disc

250 per weight ton amounting to 56 10 resulting in total freight c

assessed of 2 759 59

Complainant bases his computations on Item 495 of the abov

which contains a specific rate of 76 25 per ton of 2 000 pou

Resins Synthetic in bags Polyethylene actual value over 500 

over 700 per 2 000 pounds 26th Revised Page 62 In order to d

the actual value ofthe shipment of46 090 pounds the pallet weigh

pallets weighing 55 pounds each totalling 1 120 pounds was sub

therefrom resulting in a weight of44 880 pounds The shipment co

of

44 880

22 44 tons of2 000 pounds The value per ton of 710 

2 000

2 000 pounds is greater than 700 so the claim as submitted is inc

Claimant apparently as the carrier alleges used the gross we

46 090 pounds This resulted in the use of the weight of the pa

computing cargo valuation ie

4

2345 tons of2 000 pou

The invoice value divided by the above results in a va

per ton of 692 12 which decreases the actual value of the carg

weight of the pallets should not be included in the weight of the c

arrive at actual value

The claim for reparation is denied

The carrier responded in this proceeding on December 11 1975 

correct value on the basis of the cargo as freighted should be 710 

ton of 2 000 pounds Iconcur with respect to this higher value p

Item 2 L ofthe suQject tariff provides

Wherever different rates or ratinas accordinll to the value of a comm

provided herein it shall be understood that the value specified inwriting by the 

is the actual value per ton of 40 cubic feet or 2 000 pounds as cargo is freigh

lower basis is available only where the actual value of such commodity does n

the limitation indicated

The carrier further countercharges that the following descript

rate under Item 495 26th Revised Page 62 should apply Sy

Resins N O S in other packing actual value over 500 00 but n

700 00 per freight ton94 75 per ton of 40 cubic feet or 2 000 

whichever is the greater The carrier would compute the charge

the above description as follows

3

The exception to the weitht ton basis is the charae of three cents per packaae asscssed on all 

Venezuelaper tariffItem9 entided ADDITIONAL CHARGES

1
1 224 0 94 75

Bunker Surcharge 4 80 nnnnn nnn

Port Congestion SIC 3 00 n nn n

nn

Less Pallet Discount 2 50 nnn n n nnn

kg charge on 880 bags 311 n nnnn nnnn

Correct Charge n n nnnn

n

As billed n

2 889 35

146 88

9180

7650

26 40

3 087 93

2 759 59

UNION CARBIDE INTER AMERICA v VENEZUELAN LINE 169

Calculating the valuation on the basis of 1 36010 cubic feet less 10 Pallet Allowance

per Item 26 the total cubic feet should be 1 22410 the valuation is 521 24 per cubic feet

and the rateshould have been 94 75 40 eft The correct charges are

Undercharge n

nn n nn nn 328 34

Complainant will be billed for the undercharge shown above

Ido not agree with the carrier s expressed intent in its December 11

1975 rebuttal of the claim to bill for an undercharge on this shipment

Such a billing would be based on the commodity description Synthetic

Resins N O S in other packing

The original commodity description on the Bill ofLading880 bags of

Synthetic Resin Polyethylene is specific as to packing This description is

found on 5th Revised Page 122 ASynthetic Resins N O S in bulk in

bags actual value over 650 but not over 1 000 per 2 000 pounds class

lW 116 50

In United States v Gulf Refining Company 268 US 542 546 1925

it was held that When a commodity shipped is included in more than

one tariff designation that which is more specific will be held applicable

And where two descriptions and tariffs are equally appropriate the

shipper is entitled to have applied the one specifying the lower rate

The latter more specific description also results in lower transportation

costs to the shipper

Under these circumstances any billing over the 2 759 59 paid by

claimant to the carrier would be in violation of Section 18 b 3 ofthe

Shipping Act 1916

The initial charges assessed by the carrier were correct reparation is

denied claimant and any attempt for additional billing on this shipment

by the carrier based on the information in this proceeding would be

contrary to the Shipping Act 1916 as indicated above

S JUAN E PiNE

Settlement Officer

19 F M C
FEDERAL MARITIME COMMISSION

SPECIAL DOCKET 479

THE BUCKEYE CELLULOSE CORPORATION

v

SEA LAND SERVICE INC

NOTICE OF ADOPTION OF INITIAL DECISION AND OR

PERMfITING WAIVER OF CHARGES

June 9 1976

No exceptions having been taken to the initial decision 

proceeding and the Commission having determined not to review 

notice is hereby given that the initial decision became the decision 

Commission on June 9 1976

It is Ordered That applicant is authorized to waive collec

560 00 of the charges previously assessed Buckeye Cellulose Cor

It is further Ordered That applicant shall publish promptl

appropriate tariff the fonowing notice

Notice is hereby given as required by the decision of the Federal 

Commission in Special Docket 479thateffective October 24 1975 for pu

refund or waiver of freight charlles on any shipments which may have been 

during the period from October 24 1975 throullh December IS 1975 the 

Woodpulp Chemical from Charleston South Carolina minimum 20WT per c

is 50 00 W subject to all applicable rules regulations terms and conditions of 

and this tariff

It is further Ordered That waiver ofthe charges shall be effe

within 30 days of service of this notice and applicant shall wit

days thereafter notify the Commission of the date and ma

effectuating the waiver

By the Commission

1

SEAL S FRANCIS C HURNEY

Secr

i

1

170 1
FEDERAL MARTfIME COMMISSION

SPECIAL DOCKET NO 49

THE BUCKEYE CELLULOSE CORPORATION

V

SEA LANDSERVICE INC

Adopted June 9 1976

Applica iongranted

INTfIAL DECISION OF JOIIN E COGRAVE ADMINISTRATIVE

LAW NDGE

Sea Land Service Inc has applied for percnission to waive colleclion

of a portion of the freight charges on a shipment by Buckeye Cellulose

Corporation The shipment was84500 lbs of Woodpulp chemical

which was carried by Sea Land from Charleston South Carolina to

Bazcelona Spain under aSea Landbill oflading dated October 31 1975

The rate applicable at the time was6400per 240 Ibs Sea Land

Freight TariffNo 168 BItem 17850 4th Revised Page 192 Total freight

charges underthe 6400rate were 2581 13The rate soughtto be

applied is 500per240 Ibs which would result in totalfieight chazges

of2021 13Pemussion to waive the collection of 560 00is sought

In order to meet the rates of the competition from South Adantic poRs

to Spanish ports Sea Land ssales representative in St Louis Missouri

and Buckeye negotiated a rate of 500per long ton minimum 20 tons

per container on chemical woodpulp from Chazleston to Barcelona The

negotiations centered around a two containerload shipment which was to

connect with aSea Land sailing scheduled for October 24 1975 The

500rate was accepted and a teletype conSrming that fact and

requesting unmediate publication was sent on October 15 1975 by the

St Louis representative to Sea Land sMediterranean Pricing Division

Actual publicafion

Tariff 168 BFM73

should

which

have

would

been

have

made

made

in Item

the 500

17850

rate

inSea Land s

appGcablb

to Spanish ports However through clerical error the tariff publishing

officer instructed publication to ports in France and Italy instead of

Thii decisioe beceme We decisian ohhe Commission June 9

196

19FMC j71
172 FEDERAL MARITIME COMMISSION

Spanish ports Thus Item 8200 of Tariff 168 Bnot the intende

17850 was amended leaving in effect the 6400 rate from Charle

Barcelona The Buckeye shipment left Charleston on October 3

and since the error had not been discovered the Sea Iandbill o

975 45414 16 was freighted at the 64Q0rate with the re

aggregate charges of2581 13Buckeye however paid the freigh

basis of the promised 500rate total2021 13and this appare

to the discovery of the error The ermr was corrected on Decem

1975 by amending Item 17850 through the filing of 9th Revised P

of Tariff 16BIn urging that the agplicatian be gi anted Sea Lan

that the Erroneous publication of the negotiated rate to ports in 

and Italy instead of ports in Spain was the result entirely ofthe 

mistake on the part ofrespondenYs pricing personnel

Sea Land knows of no other shipments of the commodity for t

involved

Section 18b3ofthe Shipping Act 1916 46 USC 817 as ame

Public Law 90298 and as further implemented by Rule 6b 

Docket Applications Rules of Practice and Procedure 46 CFR 5

4

the law sought to be invoked Briefly it provides

The Commisaion may in its diacretion and for good cause ehown 

common carrier by water in the foreigrt commerce oP the Uniiad Statea to 

portion of the freight charQea collected from a ahipper or waive tha collec

portion of the charges from a

shipper where it appeara that there is an e

tariffof a clerical or adminiatrative nature or an errordue ta an inadvertence in 

file a new tariff and that ach rtLnd or waiver will not reault in diactiminatio

shippers Furthermore prior to aFFlyinQ for suc6 authority the carrier muet hr

a naw tariffwhich sets forth the rate ort which such rofund or waiver would b

The applicsdon for refund mast be ftled with the Commiseion within one hun

eighty daye 8rom tha date of ahipmont Finally Uia cazrier muat aQree thai if pe

is Qrentod ert appmpriafs rtotice avilL6e pu6lished in ite tarl br euch other ate

as may be roquired to giva notice oE tha rato onEvhfch ertch rafaad or waivar 

based

The lsgislative history of1amendment to section 18of tke5

Act Pul licLaw 902482

spec ethat carriere are axthorized E

voluntary refunds and waive the eolleetion of a potion ofiheir 

charges for good cauae svcl as bona Fde mistake The nature 

mistake was particularly describad

Saction 186appeace to prohibi tfia Commiasion Yrom suthQrizing relie

through boafide miataka on the part of tLa caFrier teahigperie oharged moro 

undaretQOd therste to be Fo cxamgle a car Ier atter advieina ashipper th6t he 

to Yle a reduced rate and thereaFfer faila to file tho reducod rate with thc 

Maritima Commission must charge the shipper under tho aforemenUoned circum

tha hiQher rates

The Senate Report3 states the Furpaseofthe Blll

Houce Report No 920 November 14 17Pa accompapyH A947j oaShlpping Act 916 Aurhori

ojCarmin FrelBhr Eharges Seatemeat ojpurpats and Nsed for tho BIU ro AmanQ provlikna af he Sh

916 oAuthorhe rhe Fedeml MaAtlmo Commission opermU aCorder roRq und aPartton ojPoe Frstp

9enate Report No 1078 ApA 18To acqampany HA9Non SFtpPing Ac6 19l6 Aufharlud 

Certaln FrNgh Charges undarPurpose of tleBill

19
BUCKEYE CELLULOSE CORP vSEA LAND 13

Voluntary refunds to shippers and waiver of the collection of a

portion of freight

charges are authorized where it appears that there is an error in a tariff ofa clerical

nature orwhere through inadvertence there has been a failure to file a tariffreflecting

an intended rate

The type of clerical emor here involved is the kind that can be remedied

under section 18b3and the application should be granted

It is therefore found that

1 There was a tariff enor due to inadvertence

2 Granting permission to waive collection of aportion of the freight

charges will not result in discrimination among shippers

3 Prior to applying for permission to refund a portion of the freight

charges Sea Land filed a new taiiffsetting forth the rate upon which the

waiver is to be based and

4 The application was filed within 180 days ofthe date of shipment

Accordingly Sea Land is permitted to waive collection of560 00from

the Buckeye Cellulose Corporation

An appropriate notice will be published in the tariff ofSea Land

S TOHN E COGRAVE

Administrative Law Judge

WASHINGTON DC

May 18 1976

FMC
FEDERAL MARITIME COMMISSION

SPECIAL DOCKET NO 4S

THE GOODYEAR TIRE ceC RUBBER CO

v

DELTA SEAMSHIP LINES INC

NOTICE OF ADOPTTON OF INITIAL DECISION AND ORDER

PERMITTING REFUND OF CHARGES

June 9 976

No exceptions having been taken to the initial decision in this

proceeding and the Commission having determined not to review same

notice is hereby given that the initial decision became the decision of the

Commission on June 9 1976

It is Ordered That appGcant is authorized o refund 1469 60of the

charges previously assessed GoodyearTve Rubber Co

Itis further Ordered That applicant shall publish promptly in its

appropriate tariff he following notice

Noice is hereby given as required by the decision of he Federaf Mari ime

Commission in Special Docket 475 that effective January 1 1976 for purposes of rcfund

orwaiver of freight charges on any shipmen swhich may have been shipped during the

period from Ianuary 1 I976 through January 21 1976 the rate on Coal Tar non

hazardou sis E133 50WMsubject ro all applicable rules regulations terms and

conditions of said rate and this tarill

It is further Ordered That refund of the chazges shall be effectuated

r within 30 days of service ofthis notice and applicant shall within five

days hereafter notify the Commission of the date and manner of

effectuating he refund

By the Commission

SEAL S FxnNC sC Hu weY

Secretary

14 19 FMC
19 F M C

175

FEDERAL MARITIME COMMISSION

SPECIAL DOCKET No 475

THE GooDYEAR TIRE RUBBER CO

v

DELTA STEAMSHIP LINES INC

Adopted June 9 1976

Application for refund granted

INITIAL DECISION OF JOHN E COGRAVE ADMINISTRATIVE

LAW JUDGE1

Delta Steamship lines has made application to refund a portion ofthe

freight charges collected from The Goodyear Tire Rubber Co on a

shipment ofCoal Tar Non hazardous carried aboard the Delta Sud from

Houston Texas to Santos Brazil

The shipment of coal tar which moved under aDelta bill oflading

dated January 9 1976 2

weighed 72 823 pounds and measured 2 672 cubic

feet The aggregate freight charges collected for the shipment were

11 055 40 The basis for the aggregate freight was the Cargo N O S rate

of 155 50 W M found in the Inter American Freight Conference Tariff

Sec A F M C No II

This application requests permission to apply a rate of 133 50 W M

which would result in aggregate freight charges of 9 585 80 and a refund

to Goodyear of 1 469 60 In support of its request for refund applicant

states

COAL TAR Non Hazardous was through Administrative error inadvertently

omitted from ourrevised freight tariffF MC 11 Page No 165 which became effective

January I 1976 The item had been carried in previous tariffs for more than 20 years

On discovery of the omission the description was reinstated in the tariff effective

January 21 1976 as per copy of tariff Correction No 64 attached There are also

attached copies of original Page No 165 reflecting the omission There are also attached

copies of 32nd Revised Page No 172 to ourtariff F MC No 7 reflecting the inclusion

of this item in the previous tariffjust prior to its reissuance copies of the paid freight

bill the ocean bill of lading covering the shipment on which this application is based and

I

Thisdecision became the decision ofthe Commission June 9 1976

t Through error the wrong bill of lading was attached to the application This error was corrected and the proper

bill of lading is now a

part of the record
176 FEDERAL MARITIME COMMISSION

1st Revised Page No 21 to LA F C Tariff F M C No 11 reflecting the 

Surcharge in effect at time the shipment moved

We have verified with all members of the Inter American Freiaht Conference

A they either had no sailing during the period in question or carried no Coal T

Hazardous shipments other than that covered by this application Effective 

1976 there was a general rate increase of approximately 5 5 which account

difference between the rate in effect last Dec 127 00W Mand 133 50 W M

Section 18bX3 of the Shipping Act 1916 46 USC 817 as amen

Public Law 90298 and as further implemented by Rule 6 b 

Docket Applications Rules of Practice and Procedure 46 CPR 50

the law sought to be invoked Briefly it provides

The Commission may in its discretion and for good cause shown 

common carrier by water in the foreian commerce of the United States to 

portion of the freight charges collected from a shipper or waive the collec

portion of the charges from a shipper where it appears that there is an e

tariff of a clerical or administrative nature or an errordue to an inadvertence in 

file a new tariff and that such refund orwaiver will not result in discriminatio

shippers Furthermore prior to applying for such authority the carrier must h

a new tariff which sets forth the rate on which such refund or waiver would b

The application for refund must be tiled with the Commission within one hun

eighty days from the date of shipment

Finally the carrier must agree that if permission is granted an appropriate n

be published in its tariff or such other steps taken as may be required to give 

the rate on which such refund orwaiver would be based

The legislative history ofthe amendment to section 18 of the S

Act Public Law 90298 3specifies that carriers are authorized t

voluntary refunds and waive the collection of a portion of their 

charges for good cause such as bona fide mistake The nature 

mistake was particularly described

Section 18 b appears to prohibit the Commission from authorizinll relie

through bona fide mistake on the part of the carrier the shipper is charged mor

understood the rate to be For example a carrier after advisinll a shipper that h

to file a reduced rate and thereafter fails to file the reduced rate with the 

Maritime Commission must charge the shipper under the aforementioned circu

the higher rates

The Senate Report 4

states the Purpose ofthe Bill

Voluntary refunds to shippers and waiver of the collection of a portion 

charges are authorized where it appears that there is an error in a tariff of 

nature or where through inadvertence there has been a failure to tile a tariff 

an intended rate

The administrative error by which applicant inadvertently omi

Coal Tar item is clearly the kind of relief contemplated under 

18b

It is therefore found that

3 House Report No 920 November 14 1967 Toaccompany H R 9473 onShlppln Act 1916 Autho

of Certain Freight Charges Statement of Purpose and Needfor the Bill to Amend Provisions of the S

19 6 toAuthorize the Federal Maritime Commission to Permit a

Carrier toRefund aPortion ofthe Frei

4 Senate Report No 1078 April S 1968 Toaccompany H R 9473 on Shipping Act 1916 Authorile

Certuin Freight Charges under Purpose o the Bill

1
S JOHN E COGRAVE

Administrative Law Judge

GOODYEAR TIRE RUBBER CO v DELTA LINES 177

I There was an administrative errordue to an inadvertence in failing

to include the specific commodity item Coal Tar Non hazardous in the

reissued tariff

2 Such refund will not result in discrimination among shippers

3 Prior to applying for authority to refund a portion of the freight

charges Delta Steamship Lines Inc filed a new tariff which set forth

the rate on which the refund would be based and

4 The application was filed within one hundred and eighty days from

the date of shipment

Accordingly the Delta Steamship Lines Inc will be permitted to

refund 1 469 60 to the Goodyear Tire Rubber Co

An appropriate notice will be published in the tariff of the Delta

Steamship Lines Inc

WASHINGTON D C

May 13 1976

19 F M C
FEDERAL MARITIME COMMISSION

SPECIAL DoCKET No 477

WYANDOT EXPORTING CO

v

SEA LAND SERVICE lNC

I

NOTICE OF AOOPfION OF INITIAL DECISION AND OR

PERMITTING WAIVER OF CHARGES

June 9 1976

No exceptions having been taken to the initial decision 

proceeding and the Commission having determined not to review 

notice is hereby given that the initial decision became the decision 

Commission on June 9 1976

It is Ordered That applicant is authorized to waive collec

1 36 of the charges previously assessed Wyandot Exporting Co

lt is further Ordered That applicant shall publish promptly 

appropriate tariff the following notice

Notice is hereby given as required by the decision of the Federal M

Commission in Special Docket 477 that effective October IS 1975 for pur

refund or waiver of freight charges on any shipments which may have been 

during the period from October 15 1975 through October 17 1975 the 

Popcorn Raw Off Ear in bags or cases is 64 50 W subject to all applica

regulations tenns and conditions of said rate and this tariff

lt is further Ordered That waiver of the charges shall be effe

within 30 days of service of this notice and applicant shall with

days thereafter notify the Commission of the date and man

effectuating the waiver

By the Commission

SEAL S FRANCIS C HURNEY

Secre

178 1
FEDERAL MARITIME COMMISSION

SPECIAL DOCKET NO 4

WYANDOT EXPORTING CO

v

SEA LAND SERVICE INC

Adopted June 9 1976

AppGcation grented

INITIAL DECISION OF JOI IN E COGRAVE ADMINISTRATNE

LAW JUDGE

Sea Land Service Inc seeks permission to waive collection of a

portion of the freight charges on a shipment Popcom Raw Off Eaz in

bags or cases weighing 4440 lbs which was carried by Sea Land firom

Fli abeth New Jersey to Valencia Spain

From the application it would appeaz that when Sea Land ssales

representative was soliciting the export shipments ofWyandot Exporting

Company he was told on October 9 1975 ofa shipment ready to move

to Valencia Spain Wyandot agrzd to let Sea Land have the shipment if

it met a rate of6450per ton offered Wyandot by a competing carrier

The iate in effect at the tne was7550per ton less 10 percent house to

house discount Sea Land Tariff No 166 FMC 43Item 6480 lth

Revised Page 106

Sea Land snext sailing to Valencia was the SLos Angeles Voyage

11Ethen scheduled to sail fmm Elizabeth on October 14 1975 On

October 9 1475 the sales representative got approval of the 6450rate

by phone from Sea Land sMediterranean Pricing Division The sales

representative requested an effective date of October 13 1975 At130

PMon October 9 1975 the sales representa6ve confirmed by teletype

the phone request and the Mediterranean Pricing Division sagreement to

the 6450rate However the sales representative farled to include in the

message the proposed effective date of October 13 1975 Sea Land

describes whathappened next

TAu deceion beume the decbion o the Commusioe une 9 196

19 FMC 179
IHO FEDERAL MARITIME COMMISSION

Adminietrative oversight by the Pricina Division in fai ingto process prom

requeat for publlcation and 0lina of tho eQroed cate with thia Commisaion and 

failure to recall and attach to it the verbal requaet for effectlve date of Oct

reaulted in delay until hieeday October 14 of Pormal publication inetructiona 

Iand stariffpubliahinQ ocer Not knowiny that the propoaed rate was mea

effective for a sailing acheduled for that esme d4y the tariffpubliehinQ officer 

his normal proceduie by BlinQ the reduced rste to become oective in time for 

sailing then acheduled for OcWber 21 Filin was made on Qctobar 17 1473 by 

to Branch I

Item 6480 on 12th Revised PaQe 06 to TarifP No 166 FMG43

Unaware of the failure to secure the October 13 1975 effecdv

for the 6450 rate Wyandot forwarded the ahipment and it was 

on board the SLos Angeles on October 15 1975 and the ship 

the same day The Sea Landbill of lading covering the shipment fr

at the 7550per ton less 10peroent rate and the aggi egate freight c

of1348 08 were computed on that basis Wyandot however r

lated the charges using the promised 6430rate and paid atotal ch

151 72 The short payment of 196 36 was discovered durin

essing through accounting and rate teview channels and this led 

i

further discovery of the failure to secure the October 13 1975 e

date

J Thus as Sea Land puts it late publication of the reduced r

ton was the result entirely ofSea Land sadministrative fai

promptly process a tariff publication when time was of the e

compounded by a clerical failure to include in the publication instr

the effective date that was spaciflcally desired

No other Special Docket Applisafions htvolving this iate situatio

been led and Sea Land knows of no other shipments of th

commodity during this period from other ahippers

Section 18b3ofthe Slvpping Act 191f 4Cr USC 817 as amen

Public Law 90298 and as further implementcd by RWe 6b 

Docket Applications Rules of Practice nd Procedure 46 CFR 5

9

the law sought to be invoked Briefly it provides

The Commisaion may in its diecrotion and for ood cau e

shown 

common carrier by water in the forei commerce ofthe Unlud States to 

portion of the froi htcharQas collectnd frorti a shigper or walve the collec

portion of the charges from a ahipper wfiere it apgesrs that there ie sn e

tariff of a clerical oradminiatcative natura oranerrordue W an inadvertonce in 

file a new tariff and that euch refund ar waiKer wiil not reault in discrimtnatio

shippera Purthermoro prior to applyma for anCh euthority the car er muet h

a naw tariff which eeta foRh the rataon w6ich auch rotlmd nrwaivar would b

The application for refund muat be filed with the Cummieaion withip one hun

eighty days from tha date of ehipment FinaFly tho carlermust aaroe thaE if pe

is granted an appropriate notice will be publiehesi in its tafForsuch other at

1 as may be requirned to give notice of the rau on which such roPund or weiver 

based

The legislative history ofthe amendment to section IS of the S

1
WYANDOT EXPORTING CO vSEA LAND 1

Act Public Law 90298 specifies that carriers are authorized to make

voluntary refunds and waive the collection of a portion of their freight

charges for good cause such as bona fide mistake The nature ofthe

mistake wasparticulady described

Section 18bappears to prohibit the Commission fmm authorizing relief where

through bona fide mistake on the part of the carrier the shipper is charged more than he

understood the rate to be For example a carrier after advising a shipper that he intends

to file a reduced rate and thereafter fails to file the reduced rate with the Federal

Maritime Commission must charge the shipper under the aforementioned circumstances

the higher rates

The Senate Report3 states the Purpose of the Bill

Voluntary refunds to shippers and waiver of the collection of a portion of freight

charges are authorized where it appears that there is an error in a tariff of a clerical

nature or where through inadvertence there has been a failure to file a tariff reflecting

an intended rate

Qvite obviously the administra6ve and clerical oversight set out above

is ofthe kind contemplated by section 18b3 The application should be

granted

It is therefore found that

1 There was a tariff filing error due to inadvertence

2 The gran6ng ofthe requested waiver will not result in discrimination

among shippers

3 Prior to applying for permission to waive the collection ofa portion

of the freight charges Sea Landfiled a new tariff setting forth the rate

upon which the waiver is to be based and

4 The application was filed within 18Qdays ofthe date ofshipment

Accordingly Sea Land is granted permission to waive the collecdon of

196 36from Wyandot Exporting Company

An appropriate nodce will be published in the tariff ofSea Land

S JOHN E COGRAVE

Administrative Law Judge

VASHINGTON DC

vlay 18 1976

House Report No 920 November 14 1967 fo accompanyHR9473 on ShivP nBAct l96Aurhorized Rejimd

f

Cermin FreigltlCurRes Smlemenf of Purpose and Needjortbe Bilto Amend Provisions of he Shipping Act

96mAutlrori ethe FeAerul Mnrilime Comrnissian nPermil aCarrier roRefund aPorfion ofthe Freight Charges

Senace Report No 1078 April 5 1966To accompenyHR9473 onShivPing Ac4 96AutHorized Refund of

ertuin Freiglr Charges underPnpnse of IheBill

Curiously enough butwi hourelevance to grenting it Wyandot was unaware of the appiication ofSea Landto

vaive collection ofthe moniesSee ktterfrom Wyendot to me dated April 20 1976

FMC
FEDERAL MARTI IMECOMMISSION

DOCKET No 7511

INDEPENDENT OCEAN FREIGHT FORWARDER APPLICATION SEQUOIA

FORWARDERS COMPANY

Applicant for an ocean freight forwarder license found to be independent of shipper o

consignee interests as required by section 1 of the Shipping Act 1916 Application

granted

Robert T Basseches for Applicant

John Robert Ewers and Joseph B Stunt as Hearing Counsel

REPORT

June 16 1976

BY THE COMMISSION Karl E Bakke Chairman Clarence Morse Vice

Chairman Ashton C Barrett Bob Casey and James V Day

Commissioners

This proceeding was instituted by the Commission to determine

whether the common ownership of Sequoia Forwarders Company Se

quoia an applicant for an independent ocean freight forwarder license

and Cal West Produce EnterprisesCal West a produce broker for a

client engaged in the movement ofproduce in the export commerce of the

United States by third parties leaves Sequoia in the position o

independence from shippers as required by section 1 of the Shipping Act

1916 the Act

Hearings were held and Administrative Law Judge William Beasley

application

Harris has

for

issued

a license

an Initial

Applicant

Decision

has

in

filed

which

exceptions

he denied

to

Sequoia s

the Initial

Decision to which Hearing Counsel have replied We heard oral argument

FACTS

The relevant stipulated facts are essentially as follows

Two individuals who equally own Sequoia a partnership established in

Section 1 of the Act defines an indeNtdent ocean freight fotwatder as

a

person carrying on the business of forwarding for a consideration who is not a shipper orconsignee oraselle

orpurchaser of shipments to foreign countries nor has any beneficial interest therein nor directly or indirectly

controls oris controlled by such shipper or consignee or by any person having such a beneficial interest

182 19 FMC
SEQUOIA FORWARDERS CO 183

1974 also equally ownCal West a corporation Cal West acts solely as a

licensed produce broker under the Perishable Agricultural Commodities

Act

time

1930 2

is spent

In

as

such

the

capacity

broker of

approximately

fresh produce

20

for

to 25

American

percent of

Foods

Cal West s

AB

American Foods a Swedish company which purchases produce from

the United States for consumption in Sweden 3Neither Cal West nor

American Foods has any financial or proprietary interest in one another

Except for the price of lettuce produce Cal West generally includes its

brokerage in the agreed sales price and its brokerage fee is not identified

as a separate charge on the invoice Cal West sprincipal American

Foods pays the invoice amount including brokerage directly to the seller

who inturn remits the brokerage fee to Cal West

While Cal West has complete freedom to search out various sellers of

produce to determine what produce are available it has no leeway with

respect to price and quantity on produce that meet the requirements of

American Foods and have subsequently become the subject of negotia

tions betweenCal Westand the American supplier ofproduce These two

requirements are firmly dictated by American Foods through almost daily

communications with Cal Westalthough there is no continuing contract

between them

During the negotiations on contracts for produce the seller is aware

that Cal Westis acting only as abroker for American Foods and not as a

purchaser or seller for Cal West sown orjoint account Accordingly the

seller invoices the purchase price directly to American Foods Cal West

never guarantees the performance of American Foods nor otherwise

shares in the risk ofsale in fact unless specifically agreed Cal West

assumes no responsibility for payment of the seller invoice Further

Cal Westnever advances its own funds for payment of such invoices nor

does it retain any common law or statutory lien or interest in the produce

contracted for 4

In addition to negotiating on behalf of American Foods Cal Westwill

inspect the produce purchased to insure quality and when requested

arrange overland transportation for the produce in American Foods

name from the seller storage area For these services Cal West is paid

the uniform industry brokerage fee of 10 cents for each box ofproduce

subject to the contract Under Department of Agriculture regulations

such brokerage fee is earned by Cal West once awritten confirmation of

sale has been executed whether or not the contract is performed

This statute authorizes produce brokers such as Cal West to be

engaged in the business of negotiating sales and purchases ofany perishable agricultural commodity in interstate

orforeign

Of the dozen

commerce

foreign

foror

consignees

on behalf

for

of

which

the vendor

Cal West

or the

acts

purchaser

as aproduce

respectively

broker only American

7USC

Foods

499 a7

utilizes ocean

transportation in the foreign commerce of the United States

Cal West neverphysically takes possession ofthe produce nor does its name appear on either the invoice covering

the sale of produce except as broker oron the billoflading

19 FMC
184 FEDERAL MARITIME COMMISSION

INITIAL DECISION

In denying Sequoia sapplication for a license the Presiding 

first rejected all arguments of both parties relating to the legislative 

of the freight forwarder legislation and specifically to that portion 

legislative history dealing with the independence requirement of 

1 ofthe Act on the stated grounds that such arguments hav

disposed of by the Zanelli case 5and that therefore any 

consideration discussion or suggestion would cloud rath

clarify the matter

The Presiding Officer next addressed the matter of whether Ap

heKc Sequoia possessed the requisite independence from shippe

ests to qualify it for a freight forwarders license After recit

conflicting positions taken by the parties the Presiding Officer su

concluded that he

agree dwith the position and reasoning of Hearing Counsel and such othe

as given 5in finding that Cal Westis an agent for a consignee and as such C

W

not independent nor will be independent within the meaning of section 

ActrFootnotes Added

POSITION OF THE PARTIES

Sequoia excepts to the denial of its application for a license 

issue with the Presiding Officer sconclusion that Sequoia is no

pendent within the meaning of section I of the Act Its argume

the most part are but recapitulations of arguments advanced be

Presiding Officer

Sequoia first argues that if the Presiding Officer had not igno

legislative history of the freight forwarder law he would n

misinterpreted the court sopinion in Zanelli Sequoia contends t

Hugo Zanelli dibla Hugo ZonelN Co FMC 1974 14SR1266 AFd p

Zanelft v Federal Maritime Commission 524F2d1000 5th Ch 1975

r The other reasons given appearto relate to his collateral findings that1Sequoia has been cond

forwarding operations prior to submitting its present application 2thelicense application was being file

of dissatisfaction with existing West Coast freight forwarding service and 3 Sequoia srequest for a

intended to serve the best interests ofthepublic We agree withHewing Counsel that these findings are 

issue set for hearing and are not related to the decision onthe one issue properly before the Admini

Judge They will accordingly be disregarded as irrelevant

I

In their brief before the Presiding Officer Hearing Counsel took the position Inter alla that Applic

be licensed as an independent ocean freight forwarder because its altar egoCal West acts as apurcha

aconsignee andpurchaser ofshipments moving to foreign countries by oceangoing commolt carriers co

independence requirement of section I of the Act In support of this proposition Hearing Counsel re

court s

opinion in Zunelg wherein it was stated that

an independent ocean freight forwarder cannot hold each alicense If he acts as ashipper agentfor 

sator financier or has obtained abeneficial interest in the goods shipped emphasis theirs

Hearing Counsel viewedthis language uacknowledging acongressional Intent that a forwarder be 

independent and precludingCal West s

activities here

Hearing Counsel also relied on the change in language between theearlier definition of the term fo

fr

forwarder and that finally adopted noting that while the earlier definition would have specifically all

persons including resident buyers and broken to be licensed as foreign freight forwarders t

finally adopted excluded such persons

The reason forthis absolute independence requirement Hearing Counsel explained was became 

intent on not only haltingthe payment ofrebates butoleo defining the rote offorwarders and setting 

industry Hewing Couasel was of theopinion that the licensing of Sequoia underthe circumstances p

would pave the way forpossible rebating and other potential abuses the licensing previsions were intende

1
SEQUOIA FORWARDERS CO 185

the Presiding Officer reviewed the purpose and intent of the freight

forwarder laws he would have realized that the court in Zanelli was

only restating the congressional mandate that only when an applicant fits

within any ofthe statutorily prohibited categories of section 1 is the bar

to licensing absolute Applicant points out that when Congress adopted

the language of section 1 it did so with the express purpose ofprohibiting

the refunding of brokerage to shippers in those situations where there

existed a close ownership or control relationship between the shipper and

the forwarder and was in effect setting forth categories ofrelationships

which in and ofthemselves would remove the independence necessary

to be alicensed freight forwarder Sequoia concludes that since the facts

of record here do not establish Cal West as fitting into any of the

proscribed categories of section 1 it has satisfied the independence

requirement and should be licensed

Hearing Counsel in their reply to exceptions take the position that the

Presiding Officer was correct in denying Sequoia sfreight forwarder

license application In supporting the ultimate determination reached in

the Initial Decision as proper and well founded Hearing Counsel put

forward much the same contentions as they did in the proceeding below

Thus Hearing Counsel argue that the absolute independence require

ment of section 1 is a complete bar to the licensing of brokers or

purchasing agents such asCal West Sequoia This position Hearing

Counsel resubmit is supported not only by the decisions ofthe court and

this Commission in Zanefli but by the legislative history of the freight

forwarder legislation as well

Hearing Counsel again voice their opinion that the relationship

between Cal West and American Foods could lead to the very type of

indirect rebates Congress sought to bar by the legislation Cited as an

example is the possibility that Cal Westcould in consideration of the

ocean freight brokerage which Sequoia would receive as a freight

forwarder on American Foods shipments reduce the fees it earns as a

produce broker and funnel indirect rebates to American Foods Also of

concern to Hearing Counsel is the possibility that Sequoia would aid Cal

West and orAmerican Foods in competing with other purchasers who

give their forwarder business to Sequoia

Hearing Counsel further submit that Sequoia should not be allowed to

minimize the control aspects existing between American Foods and Cal

West gIn this regard Hearing Counsel submit that while in theory Cal

West may refuse to act for American Foods in practice American Foods

has economic control overCal West beyond that conferred by the actual

agency agreement since Cal West is dependent upon American Foods for

s

Sequoia argued that since American Foods has no stock orproprietary interest in Cal West and since Cal West is

not subject to any continuing contractual obligation to American Foods control does not exist in the statutory

sense ofsection 1 of the Act in short Sequoia submits that the direction givenby AmericanFoods toCal West with

respect to price and quantity of produce is not the kind of control which canlead to indirectrebates if Sequoia wen

licensed

19 FMC
186 FEDERAL MARITIME COMMISSION

a major portion ofits income As a result it is inconceivable to H

Counsel that Cal West will not take into consideration the 

brokerage paid to Sequoia in setting its fee to be charged Am

Foods

Finally Hearing Counsel point out that since Department ofAgr

regulations governing produce brokers 7 CFR4627and 4628 

clear that a produce broker acts as an agent for the buyer ofp

it would be impossible for Sequoia not to violate section 51

24c

General Order4 considering the common ownership between it a

West 9

DISCUSSION AND CONCLUSIONS

As the parties here have stipulated the proceeding presents a 

issue Whether Sequoia if granted a license would be an indep

ocean

On the

freight

basis of

forwarder

the record before

as defined in section 1 of the Shipping A

us and for reasons stated belo

our opinion that Sequoia is in fact and in law independent of 

and consignee interests as required by section 1 ofthe Ac

accordingly qualified to be licensed as an ocean freight forwarder 

Commission

The legislative history ofthe bill which ultimately became sectio

the Act makes it clear that Congress established the indepen

requirement for forwarders to prohibit those categories of relatio

which in and ofthemselves could be presumed to give rise to an 

rebate In fact Congress acknowledged that a forwarder could c

nonforwarding activities for shippers consignees and other pe

delineated in section 1 ofthe Act provided that such activities 

affect the forwarder sindependence The Commission itself a

licensed forwarders to perform certain services for their shipp

clien

In support oftheir basic position thatCal West sactivities may 

performed by an independent ocean freight forwarder Hearing C

make much of the fact that while an earlier version of the 

forwarder legislation expressly included among the types of e

allowed to function as freight forwarders resident buyers brokers 

commission merchants the final version did not address these ac

specifically Hearing Counsel view this drafting change as provid

9

510 24c

of General Order 446CPR510 24cprovides that

No licensee shell share directly orindirectly any compensation orfreight forwarding fee withashipper 

seller purchaser ortheir agents whales oremployees nor with any parson or persons advancing th

price of the merchandise or guaranteeing payment therefor norwithany person or persons having benefi

in theshipment

10 The parties have furtherstipulated and we have no balm to disagree that subject to this issue Seq

willing and able properly to carry on the business of forwarding

Bolton Mitchell Inc 15FMC248 1973 Report on Reconsideration 16FMC284 197

rehearing Bolton Mitchell Inc Supplemental Report FMC 1973 14SR17

rehearing Second Supplemental Report FMC 1974 14SR750 Denial of P

Reconsideration FMC 1975 16SR87 Hugo Zanel Co supra at note 

Commission Circular Letter REF DFF 2dated April 29 15which in effect allows forwarders 

resident buyers for foreign consignees provided they acquire no beneficial interest in the goods shipped

19 
SEQUOIA FORWARDERS CO 187

clearest indication ofCongress intention that these activities were no

longer allowed to be performed by forwarders We are not so convinced

The legislative history ofthe freight forwarder amendment fails to

indicate why the earlier approach was abandoned Certainly there is no

evidence that the intent ofthe change in language which Hearing Counsel

views as so significant was to preclude the licensing of the entities listed

in the earlier bill Indeed it is equally as likely that the earlier approach

was rejected in favor of that finally adopted because the Congressional

draftsmen realized the problems inherent in attempting to enumerate a

host ofparticularized activities lest one be omitted that should be

included For whatever reason Congress went from the more specific

listing ofjob titles to a more generic approach to the matter the fact

remains that the change in approach is absolutely inconclusive as an

indication ofthe drafters intent

Hearing Counsel sreliance on the Zanelli decisions as support for its

proposition that Sequoia is not independent within the meaning of

section 1 ofthe Act is equally misplaced Both Hearing Counsel and the

Presiding Officer apparently misinterpret the standard of absolute

independence required by section 1 of the Act and explained in the

Zanelli case The Zanelli case does not stand for the proposition that

every agency or other relationship between a forwarder and an export

shipper is proscribed by the independence requirement of section 1 ofthe

Act The statutory requirement of absolute independence discussed in

Zanelli is absolute only to the extent it absolutely bars the licensing

of any applicant whose activities cause it to be included in one ofthe

prohibited categories of section 1 ofthe Act It is not a standard requiring

an applicant to be absolutely independent of shipper interests as the

Presiding Officer would apparently have it That the section 1 independ

ence requirement does not preclude all relationships between forwarders

on the one hand and shippers and consignees on the other was

specifically made clear by the court in Norman G Jensen vFMC497

F2d1053 CA 8th Cir 1974

In the Jensen case the court reversed the Commission sfindings that

Jensen alicensed forwarder was by virtue ofits connection with ITC

through common ownership and interlocking officers and directors

shipper connected and as a result derived a beneficial interest from

the fee paid ITC for rendering to its slipper clients the following services

1 making arrangements for transportation to the ports 2 preparing

export declarations consular invoices and related documents 3 receiv

ing purchase orders and payment 4 preparing commercial invoices and

inventory reports 5 investigating credit and 6 selecting freight

forwarders

In rejecting the Commission sdetermination that by reason of its

relationship with ITC and ITC sactivities Jensen was shipper con

19 FMC
188 FEDERAL MARITIME COMMISSION

nected and accordingly did not have the requisite independ

required by section 1 ofthe Act the court explained

The conclusion that ITC is shipper connected while possibly accurate dep

on how the term is defined lacks any significance It is undisputed that ITC is con

with its shipper clients because it does render services to them for a fee Any forw

for that matter who renders services to a shipper client will be shipp

connec

This association however would not affect Jensen sstatus as an independent 

freight forwarder under the definition set forth in the Freight Forwarder Law 

assuming atguendo that Jensen controlled or was controlled by ITC Jensen s

for that purpose would be affected only if ITC was a shipper or consignee or a s

purchaser of shipments to foreign countries or had a beneficial interest in 

shipments 497 F2d at 10571

Since neither the language ofsection 1 its legislative history norju

interpretations of that section require that an applicant for aforwa

license be free ofall shipper connections Sequoia is correct in de

the issue here as

not whether Sequoia meets some abstract standard of absolute independ

but rather whether it complies with the requirement of independence as defined 

statute

On this question we concur with Sequoia that it does so comply

The record before us does not indicate that Cal West is eit

shipper consignee seller or a purchaser of export shipm

within the meaning of section 1 of the Act or that it has any bene

interest in such shipments We find no support for Hearing Cous

assertion that Cal West in its role of produce broker is a purch

as that term is commonly understood particularly since Cal West ob

neither a common law nor a statutory lien in the produce purchas

American Foods As regards Hearing Counsel scharacterization o

West as a purchasing agent it should be pointed out as Sequo

noted that where the Commission has found a purchasing age

lack the requisite independence the forwarders involved had acqu

beneficial interest in the export cargo by virtue of their activit

such a

finding cannot be supported here Thus it is the conduct 

particular person or entity involved and not its mere characterizat

a purchasing agent which raises the statutory bar

Further there is no reason to believe that the arrangement bet

Cal West and American Foods is such that American Foods direc

indirectly controls Cal West within the meaning of section 1 of the 

Cal West and American Foods neither have employees in commo

do they own stock or have a proprietary interest in or a corp

connection with one another Clearly the relationship between Ame

Foods and Cal Westis not the type which the Commission has in th

I Bolton Mitchell Inc supra note 11 HugoZanelll Co supra note 11

19 
SEQUOIA FORWARDERS CO 189

found to allow for the granting ofillegal rebates and therefore prohibited

by section I ofthe Act 13

We are also not persuaded by Hearing Counsel s

suggestions that Cal

West in consideration of Sequoia sbrokerage would reduce its fee to

American Foods As Sequoia in its exceptions pointed out this theory

was

supra

specifically

Indisposing

rejected

of the

by

Commission s

the court in Norman G Jensen vFMC

argument that ITC in consider

ation of Jensen sbrokerage would reduce its fee to its shipper clients

the court s

pronouncement which we find equally controlling here was

that

This same rationale would require the finding of a violation of 16 any time a shipper

employs an ocean forwarder because it is more economical than maintaining its own

forwarding staff It would strain the words of the statute too far without furthering any

of the objectives for which the Act was designed to serve to find a violation in this

situation 1497 F2d at 10591

Equally of little consequence is the possibility cited by Hearing

Counsel that Sequoia if licensed would use the confidential information

obtained as a forwarder to the benefit ofCal Westand or American

Foods in competing with Sequoia sother shipper clients That Sequoia

might engage in such activity is wholly speculative and of no probative

value whatever in determining Sequoia spresent independence under

section I of the Act In short what an applicant might do if licensed is

insufficient to justify the denial of a license if that applicant is otherwise

qualified in fact and in law Once licensed however the forwarder is

subject to all the Commission srules and regulations and any unlawful

conduct oractivity can be handled in an appropriate proceeding

Finally Hearing Counsel in support of their contention that Sequoia

cannot be licensed as a forwarder rely in part on the language of section

510 24cof the Commission sRules which in essence prohibits a

forwarder from sharing directly or indirectly any compensation or

forwarding fee with any shipper consignee or their agent affiliates or

employees 14 Hearing Counsel take the position that since Cal Westis

admittedly an agent of a shipper American Foods and since there is

common ownership between Sequoia and Cal West it would be impossi

ble for Sequoia not to violate section 510 24cThus Healing Counsel

argue that if section 510 24cis to be consistent with section 1 ofthe Act

the prohibition against a forwarder being a purchaser also extends to its

acting as an agent ofthe purchaser

Cleto Hernandez R dlbla Pan Inter Freight Forwarder Application Docket No 7517served March 9 1976

License No 790 NorthAmerican Van Lines 14FMC215 1971 Speed Freight Independent Ocean Freight

Forwarder License No 1092 14FMC1 1970 York Shipping FreightForwarder Application 9FMC72 1965

York Shipping Corporation FreightForwarder Application 9FMC72 1965 Del Mar ShippingCo Freight

FonrarderApplication 8FMC493 1965 Wm VCady Freight Fonrarder Application 8FMC352 1964 It

should also be realized that although the business ofAmerican Foods comprises 20 to 25 percent ofCal West s

business American Foods is only one of a

dozen consignees with whom Cal West serves as aproduce broker This

absence of exclusivity while certainly not singularly determinative of Sequoia sindependence is another factor

indicative of the independence ofCal West Sequoia

We shouldpoint outat this juncture that section 510 24cwas not intended toenlarge upon the statutory bars to

licensing in the first instance but rather to govern aforwarder sactivities once he is licensed

19FMC
190 FEDERAL MARITIME COMMISSION

The purpose of section 510 24c

is to prevent illegal rebate

prohibiting alicensed forwarder from sharing any part ofhis revenue 

a shipper or an agent thereof since werehe to do so the shipper wo

effect be receiving a rebate While Cal West may be a special age

American Foods under the Agricultural Commodities Act we d

agree that it necessarily follows that this type of special agency is 

nature which would invoke the prohibition of section 510 24cSe

510 24cis directed at those agency arrangements which give r

direct or indirect rebate to the shipper ie where the agent is cont

by his shipper or consignee principal The arrangement at issue here 

not present the type ofagency to which section 510 24cwas inte

to apply since as we have already determined there is no co

exercised overCal West Sequoia by the shipper American Foods

In conclusion we find that Sequoia is independent within the me

of section 1 ofthe Act and is otherwise fit willing and able to car

the functions of an independent ocean freight forwarder According

application for a forwarders license is hereby granted

An appropriate order will be entered

SEAL S FRANCIS C HuRNEY

Secreta

19 
FEDERAL MARITIME COMMISSION

DOCKET NO 7511

INDEPENDENT OCEAN FREIGHT FORWARDER APPLICATION SEQUOIA

FORWARDERS COMPANY

ORDER

The Commission having fully considered the above matters and having

this date made and entered of record aReport containing its conclusions

and decisions thereon which Report is hereby referred to and made a

part hereof

It is ordered That the application for license of Sequoia Forwarders

Company is hereby granted pursuant to section 44 Shipping Act 1916

By the Commission

SEAL S FRANCIS C HURNEY

Secretary

19 FMC 191
I

1

1

1

FEDERAL MARITIME COMMISSION

DoCKET No 7 73

PoRT OF HOUSTON AUTHORITY

v

LYKES BROS STEAMSHIP CO INC ET AL

Complainant has failed to demonstrate that certain practices at the Ports of Gal

and Corpus Christi related to the handlil1ll of cotton call1oes violate sections 

or 18b 3 of the Shipping Act

F William Colburn for Complainant Port of Houston Authority

Robert Eikel for Respondents Lykes Bros Steamship Co Inc e

Frank C Brooks for Intervenor Nueces County Navigation D

No 1

Carl S Parker for Intervenor Board of Trustee of the Galve

Wharves

REPORT

June 16 1976

By THE COMMISSION Karl E Bakke Chairman Clarence Morse 

Chairman Ashton C Barrett and James V Day Commission

This proceeding was initiated upon the complaint of the Po

Houston Authority Houston 1

against 28 carriers2 serving the int

tional cotton trade from the Texas ports of Houston Corpus Christ

Galveston Respondents The Board of Trustees of the Galve

Wharves Galveston and the Nueces County Navigation District N

Corpus Christi intervened in the proceeding 8

The complaint charges that the Respondents stopped paying ce

Commiasioner Bob Casey not participating I

The Port of Houston Authority is an Bleney of the State of Texas char ed witb promotinl develo

preservln the waterborne commerce of tho Port ofHOUlton

a

Lykes Bros Steamship Co Inc China Merchants Steam Naviption Ltd Zlm Iarael Naviaation C

Orient Overseas Line Inc Nippon YUlon Kai ha Line Ltd Maritime Co of the Philippines Korean 

Corp Chal1lllte T J Harrison Ltd Milaol O S K Linea Ltd Vamashlt oSblntllhon Line Waterman 

Corporation Royal Netherland Steamahlp Line Hoop Line Blue Sea Line Combl Line PoII h 0 Lin

Line eie Maritime Selae Lloyd Royal Kawalakl Kilen Kai ha Line Ltd Adantic Gulf Service Fren

Trans Sea Shlppin Corp Hellenic Linel Ltd Central Gulf Line Inc DAFllA Line Nervion Uno 

Cargo Line Marchelsini Line and Barbor Line

a The Intervenon own and operate port terminal and harbor facilities at Oalveston and Corpua Christ

respectively

192 19 FM
PORT OFHOUSTON AUTHORITYv LYKES BROS 193

heading charges on shipments delivered to Houston after April 1

1973 4but continued to make such payments at Galveston and Corpus

Christi This situation has allegedly caused cotton cargoes to be unfairly

diverted from Houston to the other two ports and is claimed to be unduly

prejudicial to Houston and unreasonably preferential to Galveston and

Corpus Christi within the meaning of sections 16 and 17 of the Shipping

Act 1916 Act Houston also alleged that Respondent s payment of

heading charges at Galveston and Corpus Christi violated section

18 b 3 of the Act which forbids carriers to offer or extend services or

privileges not stated in a duly filed tariff

Administrative Law Judge Stanley M Levy Presiding Officer issued

an Initial Decision finding Respondents selective payment of heading

charges to violate sections 16 17 and 18 of the Act The proceeding is

now before the Commission upon exceptions We have heard oral

argument

FACTS

Cotton shipments at the three Texas ports involved in the instant

controversy are handled in the following manner

Houston

Prior to April I 1973 all export cotton cargo arriving at Houston was

unloaded from overland conveyances by laborers employed and paid by

the Port Authority These laborers placed the cotton in the specified

transit shed space adjacent to the vessels assigned berth and stacked or

headed the bales in the process Shippers located outside of Harris

County Texas paid Houston an unloading charge of 0 77 per bale for

this service Local cotton shippers did not pay any unloading charge

In addition Houston s terminal tariff contained a 0 25 per bale head

ing charge which was payable by the carrier Although not so stated in

Houston s tariff this charge was assessed only against bales arriving from

compresses and warehouses within Harris County Texas

On April 1 1973 the Port ofHouston voluntari1y discontinued its cargo

handling and unloading services These functions were assumed by

private companies operating within the port area which refused to treat

cotton bales differently from other cargoes by differentiating between

local and non local shippers These companies issued tariffs which deleted

heading charges entirely and assessed all cotton shippers or consignees

an unloading chaIge of 0 70 per bale Unloading includes all within

port cargo handling from overland conveyance to the ship s assigned

transit shed as well as initial positioning of the bales within the shed

4 Historically heading meant the act of placing cotton bales on end so they could be readily hoisted aboanl ship

More recently heading has come to refer to all bale handling subsequent to unloading from the conveyance

bringing the bales to the port area This can include transportation toa

transit shed and other within port movements

as wellas stacking pyramiding or heading placing the bales on end the cotton at its destination Heading is used

here in its broader sense

19 F M C
194 FEDERAL MARITIME COMMISSION

i

I

Cotton is thus ordinarily headed placed on end in the transit shed 

cost to the carrier Any further arrangement ofthe bales would b

for by the vessel however

The record does not reveal when custody of export cotton ship

passes to the Respondents at the Port of Houston

Galveston

Cotton received in rail cars is ordered directly to pier on ship s 

and unloaded by port authority employees Galveston s published 

lists an unlOading charge for this service which is paid by the sh

The rail car unloaders place the unloaded bales in a headed o

position and no additional fee is assessed for this service If 

permits the cotton remains where it is unloaded and there is no ne

additional bale handling prior to loading aboard ship When 

limitations or other interests of the carrier require that the un

cotton be rearranged this work is done by laborers known as he

who charge the carrier an hourly rate for their services

Adifferent procedure applies when arail car contains bales with 

than one shipper s mark Such cars require additional segregatio

drayage services and separate segregation and drayage charg

assessed by Galveston against the shipper on all cotton other th

largest lot The largest lot is treated in the same manner as a full c

The odd lots are segregated and if a lot is to be moved to another 

local transfer company is engaged The transfer company loads the 

on dollies pulled by tractors and delivers them to the second pier w

is received by a steamship company clerk and two headers em

by the carrier The headers unload the dollies and the clerk issu

transfer company a

receipt after it is unloaded If an odd lot is 

removed to a

compressor warehouse instead of a pier the tr

company drays it there at the warehouse s expense buHhe ship

still assessed the basic unloading charge and the additional segre

charge

Most cotton delivered by truck arrives at Galveston s Cotton Re

Lot a loadingunloading area located some distancefrom the piers 

it is unloaded by Galveston employees The unloading char

trucks is the same as the charge for1ail cars but also includes d

the cotton from the receiving lotto the ship s berth The shipper pa

unloading charge Odd lot shippers pay an additional segre

charge but not adrayage charge At ship s berth the cotton is met 

carrier s clerk and its headers unloaded and receipted Occas

trucks are allowed to proceed directly to ship s berth where th

unloaded by Galveston labor at the usual unloading charge with

assistance of carrier headers In such instances however th

Cotton Headers Union contract requires the carrier to pay its he

i

I

The transfer company s tractor driver senerally auist8 tbe two headers in unloading the co

apparently not requied to do 80

19 
PORT OF HOUSTON AUTHORITY v LYKES BROS 195

their usual per bale rate even though they do not do the work 6The

carrier issues a receipt for the cotton after it is unloaded

Cotton delivered from local warehouses anives on tractor driven dollies

and proceeds directly to ship s berth It is handled by warehouse labor

with the assistance of the two headers employed by the carrier and

receipted by a steamship company clerk after it is unloaded Galveston

assesses no charges against cotton originating in local warehouses but

the headers receive their usual fee

The record does not reveal when custody ofexport cotton shipments

passes to Respondents at the Port of Galveston although in most cases it

seemingly occurs at approximately the time the canier s clerk issues his

receipt

Corpus Christi

At Corpus Christi export cotton arrives from places outside the port

area by truck and rail car and arrives from local compresses by tractor

drawn dolly

Rail cars stop on tracks adjacent to a warehouse or transit shed which

is in turn adjacent to the vessels berth space The cars are usually

spotted within 200 feet ofthe place or pile from which the bales are

loaded aboard ship Rail cotton is unloaded by laborers employed by a

subcontractor of the Port who also move the bales to the pile and place

them in a headed position The subcontractor is always a stevedore and

usually the same stevedore later employed by the carrier to load the

cotton aboard ship Under present billing practices the stevedore bills the

shipper directly at the rate specified in Corpus Christi s terminal tariff

Unloading includes moving the cotton from the rail car to the pile and

the carrier pays no part of the unloading charge on rail cotton Any

further positioning ofthe bales is at the vessels expense

When export cotton arrives by truck the truck is driven into a

warehouse adjacent to the ship s berth and also unloaded by the Port s

subcontractors Charges for truck unloading are published by Corpus

Christi and are again billed by the stevedore directly to the shipper Once

unloaded truck cotton is moved from a paved driveway within the

warehouse to the pile near ship s tackle and headed placed on end by

the same men who unloaded the truck These men are members of the

local Cotton Headers Union however and their union contract calls for

them to be paid separately for this heading work The stevedore then

bills the carrier directly for such heading services at acurrent rate of

0 2026 per bale Corpus Christi does not hold itself out to perform

heading services either with its own personnel or through subcontrac

The Cotton Headers Union is an affiliate of the International Longshoremens Association In Galveston its

members are pai laset fee of 0 1775 per bale for all cotton unloaded and positioned at ship sberth except in the

case of single mark bales unloaded from rail cars in headed positions Headers are ordinarily employed by

stevedoring companies who subcontract theirlahor to the carriers

19 F MC
196 FEDERAL MARITIME COMMISSION

tors and there is no charge or other reference in its terminal ta

heading trucked cotton

When the cotton arrives from local compresses it is delivere

warehouse adjacent to ship s berth by tractor drawn dollies owned 

compresses and unloaded by laborers called hookmen wh

employed and paid by the compresses for hooking the cotton 

dollies Like cotton unloaded off trucks the hooked bales are 

from the paved driveway to the pile by the same men who un

them and the stevedore separately charges the carrier for this he

service at a rate of 02026 per bale Again Corpus Christi does no

itself out to perform such service and there is no provision in its ta

heading local cotton

The record does not reveal when Respondents assume custo

export cotton shipments at the Port of Corpus Christi

J

INITIAL DECISION

The Presiding Officer considered the crux ofthe controversy to 

ascertainment of how necessary cargo handling expenses are all

between shipper and carrier once export cotton bales are delive

each of the Texas ports involved He found these expenses to be all

differently at Houston Galveston and Corpus Christi At Houst

costs are borne by the shipper At Galveston the burden is sometim

the shipper rail cotton and sometimes divided between shipp

carrier truck and warehouse cotton Shipper and carrier always 

handling expenses at Corpus Christi 7 No evidence was found to s

the Complainant s contention that cotton shipments are being d

from Houston to the other ports because ofRespondents practic

fact the limited data submitted indicated that some 28 000 bales of 

local to Corpus Christi was shipped from Houston during 1973197

Despite the lack of economic ilury to Houston the Presiding 

concluded that Respondents partial payment of cotton headin

penses at Corpus Christi and Galveston but not Houston vi

sections 16 17 and 18 of the Act and ordered Respondents to

Cease paying any of the costs of unloadina handlina or headinacotton bales 

the delivery of the cotton hales to the respondents unless they tirst publish ta

and regulations to that effect equally applicable to all shippers of cotton bales for 

I D at 12

This result was grounded upon the premise that a carrier s paym

different cargo handling costs at different ports necessarily invo

discriminatory absorption ofcosts otherwise chargeable to the ship

However the only support offered for this sweeping proposition 

7

TheCommission finds no evidentiary support forthe Presidins Officer s uniqulvocal determination on 

6 The Presidioa Officer held that

Undertakina a

service orabsorbinl acharKO which is otherwiae charaeable to the shipper Is arebate 

applicable to all shippers equally and set forth In the tariffs of respondents i 80 clearly prohibited by th

Act 1916 as to be beyond dispute 1 0 at 11

19 
PORT OF HOUSTON AUTHORITY v LYKES BROS 197

Commission decisions forbidding terminals from charging wharfage on

non railroad freight and making no such charge on freight tendered by

railroads at the same port Practices of San Francisco Bay Area

Terminals 2 U S M C 588 1941 affd 320 U S 577 1944 Interchange

of Freight at Boston Terminals 2 U S M C 671 1942 and three

decisions forbidding the furnishing offree storage to some shippers at a

given port and not to others using the same port Investigation ofFree

Time Practices Port of San Diego 9 F M C 525 1966 Storage

Charges Under Agreements 6205 and 6215 2 U S M C 48 1939 and

Storage of Import Property 1 U S M C 676 1937

Absent from the Initial Decision is any indication of whether the

Respondents control the practices in question that Respondents accept

delivery or obtain custody ofexport cotton bales at the same time and in

the same manner at each port or that cotton heading expenses are

costs which may properly be charged only to a shipper Neither is there

a finding that the differences in handling cotton at Galveston Corpus

Christi and Houston actually affect the shipper s cost in exporting cotton

POSITION OF THE PARTIES

Both Galveston and Corpus Christi filed Exceptions to the Initial

Decision Replies to Exceptions were submited by Houston The argu

ments ofthe respective parties are described below

Galveston

Galveston excepts to the finding that the facts at issue are

virtually without dispute for it claims the Presiding Officer has

misconstrued the evidence in a manner which led him to several

inaccurate conclusions

One significant factual error was the determination that delivery of

cotton to carriers at Galveston and Corpus Christi was found to be

completed at the time the steamship line s clerk tallied the cotton bales

and gave a

receipt for them Galveston contends that the concept of

completed delivery is crucial to the case and that it is simply not

true that delivery is determined by the issuance ofa

cargo receipt

custody can and does pass from shipper to carrier regardless of whether

the cargo has been receipted

Galveston also excepts to the conclusion that 1 Respondents treat

export cotton bales differently at Galveston and Corpus Christi than at

Houston and 2 this difference in treatment violates sections 16 17 and

18 Galveston claims the Presiding Officer s finding that there is an

economic burden on the bale of cotton to place it in the transit shed and

that economic burden at Houston is borne entirely by the shipper

ID at 8 is inaccurate and contrary to certain testimony which indicated

that once cotton is unloaded at Houston any subsequent handling is

19 F M C
198 FEDERAL MARITIME COMMISSION

I

paid for by the carriers Galveston is convinced that this is precise

situation that prevails at its port and at Corpus Christithe shippe

the unloading fee and the carrier pays for any subsequent hand

heading The carrier alone makes the decision to rearrange or p

cotton which has been unloaded based upon the amount of cargo 

lifted and the amount of space available

Galveston concedes that the three ports have different unloa

charges and that their cotton handling practices differ to some exte

argues that these differences are minor and without diversionary 

Galveston further states that even if the differences were found t

some anti competitive effect they are based solely upon local 

practices and port conditions and are therefore justifiable und

Shipping Act Only undue or unreasonable preferences are condem

law Intercoastal Investigation 1 D S S B B 400 444 1935 a

mere publication ofdifferent charges does not ipso facto imply unr

ableness

Moreover Galveston contends that since it was Houston and n

other ports which altered its historic practices it rings strangely 

for Houston to now claim that the very differences it voluntari1y c

constitute illegal discrimination

Galveston s final argument is that Houston has the burden of p

this proceeding and has utterly failed to demonstrate why the diffe

in handling cotton bales at the three ports are uqjustly discrimina

materially affect the cost oftransporting cotton

Corpus Christi

Corpus Christi s objections are similar to Galveston s Esse

Corpus Christi claims that the Initial Decision erroneously describ

point at which cotton is delivered to ocean carriers at its port An 

contradiction in the Initial Decision s

findings is recited as evidence 

Presiding Officer s misunderstanding of the facts 1o Several j

decisions are then cited to support the proposition that goo

delivered to acarrier when they pass from the custody and poss

of the shipper into the custody and possession ofthe carrier 

decisions hold that delivery is a factual question which does not 

depend upon the issuance or nonissuance of receipts or bills of la

such documents are considered to be but partial evidence of 

delivery occurs Corpus Christi contends that the record clearly in

that the Respondents have custody and possession of export cotto

from the instant they are unloaded from trucks and dollies11

on the 

9

The testimony was that of Mr C B Bullock General Manqer Operations Port of Houston Authori

10 The inconsistency is that at paao 7 delivery is deemed to be completed at the time thebales have 

and the clerk has aiven a

receipt while at pqe 11 it is stated that the Respondents occasionally accep

atthe point ofunloadioll rather than in place

11 Corpus Chrilti points out that the aUcaed absorption of headina cbiUllos only occurs in the case o

local warehouse cotton rail cotton is su ected only to an unloadins charaeat all three ports

19 
PORT OF HOUSTON AUTHORITY v LYKES BROS 199

shed floor and the heading charge is assessed only for work performed

after delivery is completed

The Initial Decision would in the opinion of Corpus Christi require

Corpus Christi cotton shippers to assume the obligation and expense of

handling the cotton bales after they have been delivered to and are in the

possession of the carrier it is the carrier not the shipper that desires to

move or arrange the cotton once it is unloaded and it is the carrier that

benefits from any such subsequent handling Corpus Christi therefore

concludes that it is perfectly proper for the carrier to bear the expense of

heading the bales

Houston

Houston s Reply to Exceptions supports the findings and conclusions

of the Presiding Officer and stresses the fact that Houston shippers pay

all costs ofunloading handling and heading cotton bales into the ship s

transit shed regardless ofoverlarild transportation methods while at

Corpus Christi and Galveston the cost of heading is borne by the

vessel in some instance The cargo delivery cases cited by Corpus Christi

have no relevance to the instant proceeding because eventhough they

necessarily turned upon the point where complete delivery was made

the issue before the court was the risk ofloss not the application of the

Shipping Act According to Houston the facts show disparate cotton

handling practices at the three ports and the mere existence of this

disparity violates the Act

DISCUSSION AND CONCLUSIONS

The record below is far from clear but sufficiently describes cotton

handling practices at Houston Galveston and Corpus Christi to indicate

that the complained of variations do not violate sections 16 and 17 ofthe

Act It has long been established that not all preferences or advantages

offered by carriers are condemned by law but only those that are undue

or unreasonable violate the Shipping Act Delaware River PortAuthority

v Transamerican Trailer Transport Inc F MC 14 S R R 1468

1975 affd 527 F 2d 1386 D C Cir 1976 Lake Charles Harbor and

Terminal District v Port of Beaumont Navigation District 12 F M C

244 1 9 Investigation of Overland and OCP Rates and Absorptions

12 F M C 184 1969 affd Port of New York Authority v Federal

Maritime Commission 429 F 2d 663 669670 5th Cir 1970 Stockton

Port District v Pacific Westbound Conference 9 F M C 12 1

5 affd

369 F 2d 380 9th Cir 1966 cert den 386 U S 1031 1967 Intercoastal

Investigation 1 U S S B B 400 1935 Moreover the existence ofunjust

discrimination or prejudice must be demonstrated by substantial proof

Philadelphia Ocean Traffic Bureau v Export S S Corporation 1

19 F MC
200 FEDERAL MARITIME COMMISSION

U S B B 538 541 1936 Lake Charles Harbor and Terminal Dist

Portof Beaumont Navigation District supra at 248 12

Applying these principles to the case before us we find no basis 

detennination that Respondents are selectively absorbing costs at G

ton and Corpus Christi which should be paid by their shippers 

otherwise unfairly discriminating against the Port of Houston Hou

argument that the heading charges paid by Respondents are no

operational costs customarily associated with vessel loading and in

in ocean freight rates without itemization is without support in the r

Nor does the evidence support the Presiding Officer s conclusion th

delivery ofexport cotton bales to the Respondents at Galvesto

Corpus Christi is completed only after the challenged heading se

are perfonned Not only are the facts concerning the time at which 

receipts are issued insufficient to support a precise finding on that p

but existing case law unequivocally provides that the question of de

is not decided entirely by the presence or absence of a

cargo re

E

g

Mackey v United States 197 F 2d 241 243 2d Cir 

Stromeyer Arpe v American Lines S S Corp 97 F 2d 360 3

Cir 1938 We know of no Shipping Act authority which hold

completion ofdelivery is the sole criterion for allocating cargo ha

expenses between shipper and carrier and a flat policy which mak

validity of a given division of such expenses depend upon the mo

carrier chooses to issue a

cargo receipt strikes us as arbitrary 

extreme

We are not prepared to decide on the record before us wheth

particular party must bear the heading fees on truck and local ware

cotton unloaded at Galveston and Corpus Christi We do howeve

that Houston has failed to establish why its 1973 decision author

unifonn cotton unloading fee which includes positioning bales 

transit shed should necessitate a change in Galveston s and C

Christi s pre existing cotton handling practices The burden of pro

section 22 complaint proceeding is always upon the complainant 

the burden is not met the complaint must be denied

Inasmuch as Houston has completely failed to demonstrate th

Respondents payment oflocal heading charges has ilured or u

affected any person Houston s section 16 and section 17 allegatio

as a matter oflaw The Shipping Act does not require all carriers 

ports to offer identical services or engage in the same prac

Competition and innovation are encouraged Local differences are p

12 In Philadelphia Ocean TrajJ1c Bureau supra the Commission stated

As aaeneral rule there must be adefinite showina that the difference in rates complained of is undue an

that it actually operates to the real disadvantaae of the complainants In order to do this acomplainant m

the specific effect of the r81es on the flow of the traffic cQncemed and on themarketini of the commoditie

and todisclose an existing and effective competitive relation between the pr udiced and preferred shippe

or commodities

13 No information at all was provided concemina cotton receipting practices at Houston or rail cotton d

Galveston andCorpus Christi

19 
SEAL S FRANCIS C HURNEY

Secretary

PORT OF HOUSTON AUTHORITY v LYKES BROS 201

ted up to the point they unfairly injure shippers ports or other persons

protected by the Act

Finally Houston has not established whether shippers or carriers

primarily benefit from any particular aspect ofcotton handling at

Galveston or Corpus Christi No one other than the Respondents has

been identified as having a duty to pay for heading and there is no

indication that this practice materially affects the aggregate cost of

shipping cotton at the various ports involved Cotton handling practices at

Galveston and Corpus Christi appear to be grounded upon local labor and

geographical considerations oflong standing and the gravamen of the

instant section 18 b 3 dispute lies not with the Respondent carriers

tariffs but with those of the three Port Authoritiesthese tariffs do not

specifically identify those instances when unloading charges paid by

the shipper include heading at ship s berth and when they do not

While the Port Authority tariffs are beyond the scope of the present

record we strongly recommend that clarifying amendments be made to

reflect the actual unloading and heading practices followed by each port

All ofthese circumstances compel us to conclude that there is no basis

for fmding Respondents to have violated section 18 b 3 of the Act by

failing to file tariffs which state when the basic ocean freight rate will

include heading charges

Respondents actions have not been shown to violate any section ofthe

Shipping Act 1916 Accordingly the Initial Decision in this proceeding is

reversed and the complaint ofthe Port of Houston Authority is denied

An appropriate order will be issued

19 F M C
j

FEDERAL MARITIME COMMISSION

DoCKET No 7373

PORT OF HOUSTON AUTHORITY

V

LYKES BROS STEAMSHIP CO INC ET AL

ORDER

The above captioned complaint having been duly heard a

Commission having this day made and entered areport stating its 

and conclusions thereon which report is hereby expressly incor

herein

IT IS ORDERED That the complaint ofthe Port ofHouston Au

is DENffiD

By the Commission

1

1

SEAL S FRANCIS C HURNEY

Secre

1

I

202 1
TITLE 46SHIPPING

Chapter IV Federal Maritime Commission

Subchapter BRegulations Affecting Maritime Carriers and Related

Activities

DOCKET NO 734 TARIFF CIRCULAR 3 GENERAL ORDER 13

Part 531 Filing ofFreight and Passenger Rates Fares and Charges in

the Domestic Offshore Trade Publication and Posting

Part 536Filing ofTariffs by Common Carriers y Water in the Foreign

Commerce ofthe United States and by Conferences of Such Carriers

GRANT OF SPECIAL PERMISSION AND WAIVER OF TARIFF

FILING REQUIREMENTS

June 29 1976

This proceeding was originally instituted in February 6 1973 to provide

an exemption pursuant to section 35 ofthe Shipping Act 1916 from the

Commission s tariff filing requirements to nonvessel operating common

carriers by water NVOCCs engaged exclusively in providing transpor

tation for used household goods and personal effects where there is also

a domestic movement within the United States In lieu of the tariff filing

requirements of section 2 ofthe Intercoastal Shipping Act 1933 46

U S C 844 and sections 18 a and b ofthe Shipping Act 1916 46

U S C 817 817 b the proposed rule would have required the submis

sion ofa semiannual report covering inter alia the number ofhousehold

goods shipments the number of complaints concerning rates or service

received and settled during the period and the names of ocean carriers

utilized

Respondents1Who had originally sought the exemption subsequently

moved for discontinuance of the proceeding on the grounds that the

suQject exemption was unnecessary After advising that the preponder

ance of the househol igoods shipments handled by them is Government

Bill ofLading traffic for which they have thousands ofworld wide single

1

Household Goods Carriers Bureau Household GoodsForwarders Association of America Inc Bekins Van

Lines Co Bekins Moving and Storage Company of California Bekins Moving and Storage Company of Hawaii

North American Van Lines Inc United Foreign Shipping Co United Overseas Inc and United Van Lines Inc

19 F M C 203
204 FEDERAL MARITIME COMMISSION

1

factor rates on electronic key punch cards Respondents requeste

they be allowed to work out with the Commission s staff

a means of compliance which would not require achange from rate fi

electronic key punch cards to manual filinas and which would also temper the 

upon the Commission as well as Respondents arising from the filing w

Commission of several hundreds of thousands of rates

On July 7 1975 the Commission issued its Order on Rev

Discontinuance wherein it determined that the proceeding 

remain open and be used as the vehicle whereby any alternative pl

be publicly presented to the Commission or apProval

After discussions between Respondents and members of the Co

sion s staff the Household Goods Forwarders Association of Am

Inc HGFAA subtnitted a proposed tariff which does not fully c

with the tarifffUing format ofGenerarOrder 13 but whichthe Comm

is asked to accept The proposed tariff contains identical military 

tender rules regulations rates and charges includ jilg the th

government bill ofladilli computer printout rates by cwer code 

now filed with the Department of Defense POD tcigether 

specification of the port to port portion of the applicable through ra

addition to requesting the Commission to waive the tariff format r

ments of General Order 13 HGFAA also asks special perm

pursuantto section 18b

to me supplements andlorrevised pages 

than statutory notice but not less than one day s notice

On April 2 1976 the Commission issued a Notice of Intent to a

the nonstandard tariff format of HGFAA and to grant a con

authority under its special permission P9WClrs to relieve HGFA

from the statutory 30 days noticerequircment of section 18b Ho

before approving awaiver of the involved Wiff filing requiremen

Commission solicited comments as to

Whether compliance with section 18 b 2 is ne essary in the above l

circumstan es to fulfill any valid reiUlatory purpose and whether waiver of 

requirements will orwill notsubstantially ilJlpalreffectlve relulatlon by the Com

be unjustly discriminatory or be detrimentaltCl commerce

Only the Household GOOdll Carriers Bureau HHGCB rClponded 

the Commission s Notice Essentially HH3CB s position 

HGFAA s proposed method for complying with the Commission 

fdiog format is no morethan a

dupli tionofeffort that will notjus

added financial burden incurred by the NVOCC s of houSehold go

this regard HHGCBpoints out that exccpt for that part of the pr

tariffwhich lists the port toportportioIlDfthe sinsJe actor tes 

points in the US and overseas countries the remainder of the in

tion therein is currently available to the publil sinceit already is 

with the DOD 2

Moreover HHGCB contends that HGFAA s proposed tariff is 

j

i

I

i

I

t HHOCB is orthe opinion that In any event tbe port taport rate Is meanlnaleu to the aeneralsbi

since tbe rate applies to shipments solely for thelIBe of DOD

19 
FREIGHT TARIFF FILING 205

tore since there exists pending legislation S 2023 which in effect would

exempt NVOCC s of military household goods from the tariff filing

requirements of section l8 b ofthe Act HHGCB therefore urges that the

Commission delay its action in this proceeding until afinal determina

tion is made on the pending legislation Additionally HHGCB suggests

that if the bill should fail there be a reopening of discussions between

the Commission s staff and Respondents for the purpose ofestablishing a

less costly and less redundant filing procedure applicable to all NVOCC s

of household goods

HHGCB s comments are generally unresponsive to the Commission s

April 2 notice and to the extent they suggest delaying the action

proposed in that notice are unacceptable

HHGCB s arguments of redundancy and excessive cost are not

persuasive when it is considered that all the remaining NVOCC s are in

favor ofthe Commission s proposed action In fact it wasthe NVOCC s

in the first instance who suggested what the Commission now proposes

More important section l8 b ofthe Shipping Act 1916 requires that

carriers conferences in foreign commerce file with the Commission rates

and charges for transportation to and from the United States ports and

foreign ports between all points on its route and on any through route

which has been established emphasis added Thus the requirement

clearly applies not only to port to port traffic but to through routes as

well Therefore and until exempted pursuant to section 35 ofthe Act

the law requires the filing of through rates with the Commission

notwithstanding that such rates are also on fIle with another agency

Further HHGCB s suggestion that the Commission delay its action

with respect to its waiver proposal until at least final action on the

pending legislation must also be rejected The Commission should not

abrogate its responsibilities in anticipation ofwhat Congress might do If

the legislation becomes law it will be an eas y matter to amend the

Commission tariff filing regulations to conform to the Congressional

action In the interim it is important that the Commission take some

action in this area of cargo movement

Finally it is our opinion that the granting ofour proposed waiver ofthe

filing requirements will not substantially impair effective regulation by the

Commission be unjustly discriminatory or be detrimental to commerce

3

In fact we believe that a granting of awaiver under the circumstances

presented here will reduce an unnecessary burden on both the Commis

sion and NVOCC s Not only is competition not afactor here since DOD

is the only shipper of military household goods but also since DOD

participates in the setting of the rates it knows immediately when rates

will become effective The acceptance of a computer read out should also

enable the Commission to more effectively regulate the activities ofthese

3 We would emphasize however that our action applies only to 000 shipments Thus NVOCC s who move

nonmiitary household goods must still comply with the Commission s notice and format requirements of sections 2

and l8a and b ofthe 1933 and 1916Acts respectively and TarifTCircular No 3 and General Order 13

19 F MC
J

i

206 FEDERAL MARITIME COMMISSION

1

NVOCC s since it will now be given infonnation that previous

considered too difficult to provide in the standard fonn required

Accordingly

IT IS ORDERED That pursuant to section 4 Administrative 

dure Act 5 U S C 553 section 2 of the Intercoastal Shipping Ac

46 U S C 844 and sections 18a and b 22 and 43 ofthe Shippin

1916 46 U S C 817 817 b 821 841 a Parts 531 and 536 of T

C F R are herebyamended

Effective Date The special pennission and waiver herein grante

become effective upon publication in the Federal Register

By the Commission

SEAL S FRANCIS C HURNEY

Secre

i

I

10 The text of the amendment is reprinted in 46 C P R 53127 and 536 17

1
19 F MC 207

FEDERAL MARITIME COMMISSION

DOCKET No 7512

CRESTLlNE SUPPLY CORPORATION

v

THE CONCORDIA LINE AND BOISE GRIFFIN STEAMSHIP CO INC

Carrier properly rated goods in question as synthetic sheets and tapes and applied

proper tariff classifications

Leon T Knauer for Complainant

Stanley O Sher Terrence D Jones and John R Attanasio for

Respondent

REPORT

July 1 1976

By THE COMMISSION Karl E Bakke Chairman Clarence Morse Vice

Chairman Ashton C Barrett Bob Casey and James V Day

Commissioners

I PROCEEDING

This proceeding was initiated upon the complaint of Crestline Supply

Corp Crestline against Concordia Line Concordia and Boise Griffin

Steamship Co Inc Boise alleging that Concordia overcharged Crest

line for a shipment of synthetic rubber from New York New York to

Benghazi Libya in violation of section 18 b 3 ofthe Shipping Act 1916

Act Crestline seeks 15 868 40 in reparation the amount ofthe

alleged overcharge

Administrative Law Judge William Beasley Harris Presiding Officer

issued an Initial Decision denying the complaint Crestline filed Excep

tions and a Reply to Exceptions was filed by Concordia

I Section 18b 3 provides in pertinent part that

No common carrier by water in foreign commerce shall charge ordemand or collect orreceive agreater orless

or different compensation for the transportation of property orfor any service in connection therewith than the rates

and charges which acespecified in its tariffs on file with the Commission and duly published and in effect at the

time
j

208 FEDERAL MARITIME COMMISSION

II BACKGROUND INFORMATION

Crestline is a Utah corporation engaged in the business of des

supplying and installing water control and conservation structures t

the world

Concordia is a common carrier by water regularly engaged 

transportation ofgeneral cargo in the foreign commerce ofthe 

States It is also a member of the North Atlantic Mediterranean 

Conference and its rates are governed by that organization s tariff 

acted as general agent for Concordia with respect to the di

shipment but is neither a common carrier by water nor an other 

suQject to the Shipping Act 2

The goods in question were butyl or synthetic rubber pr

purchased by Crestline from the Carlisle Tire and Rubber Co

Carlisle for shipment to Libya where they would be further fab

prior to being used in a water conservation project undertaken 

Government of Libya The goods were shipped under Concordia s 

Lading No 1065 dated September 27 1975 which contain

following data

No of

Packages

102

1

2

Description of Packages and Goods Gross Weigh

M

47

Rolls Butyl Rubber Sheet8 u u uu u 134 640Ibs

Pallet Rubber Tapes uuuu

uu u 1 068Ibs

Pallets Rubber Cement 0 degrees uuu 1 298 Ibs

Prior to shipment Crestline conversed with an ocean freight fo

and with Carlisle concerning transportation charges and was un

impression that the freight rate would approximate 10 000 No rate

listed on the bill of lading issued to Crestline Concordia subse

rated the Butyl Rubber Sheets as Rubber Sheeting N O S 

Item 1454 North Atlantic Mediterranean Freight Conference 

Tariff No IOFMC 3 The Rubber Tapes were rated as R

Goods N O S pursuant to Item 1450 ofthe same tariff Both cla

tions were chosen on the theory that the goods were articles m

tured from synthetic rubber and not entitled to the rate for unfab

synthetic rubber 3 On this basis Crestline was assessed freight cha

1

1

2 Boise did not reply to Crestline s

allegations orparticipate lRthe instant pl QQeedina in any manner

J

The North Atlantic Mediterranean Preiaht Conference Freiaht Tariff No 10FMC3 effective Au 

contains only the followina tariff classifications for rubber commodities

Rubber viz

I

Bands 14480

2 Crude orRaw 1446

3 Foam Slab orBlanks 1448

4 Oloves 1449

5 Ooods N D S 1480

6 Heels Soles Includina Crepe l4SI

7 Hose 1482

8 Reclaimed orShoddy in Compr sed Sheets orSlabs Not Scrap Rubber 14 3

9 Sheeting N D S 1454

10 Synthetic Not Articles or Materials manufactured therefrom 14

II Threads camelback

1
CRESTLINE SUPPLY CORP v CONCORDIA LINE 209

the sum of 24 244 24 which it duly paid 4 Crestline was not aware ofthe

commodity classifications employed by Concordia or the total freight due

until after its goods were on the high seas

The complaint asserts that Crestline was entitled to have its goods

classified under TariffItem No 1455 Rubber Synthetic Not Goods or

Articles Manufactured Therefrom Had this Item been applied the

parties stipulated that the charges would have been 9 278 87 or

15 868 40 less than Crestline actually paid 5

The Initial Decision held that the rubber sheets and tapes were articles

manufactured from synthetic rubber or butyl regardless of whether

they required further processing upon arrival in Libya and found no

ambiguity in the term manufactured as it appeared in Tariff Item 1455

The Presiding Officer then concluded that Concordia properly applied

Tariff Items 1454 and 1450 and that no violation of section 18 b 3 had

occurred The following four reasons were expressly offered in support of

this result 1 Neither Respondent ever quoted CrestIine a price of

9 000 to ship the goods in question

2 Crestline failed to establish that it had a contract with the

Government of Libya to further process or install the rubber products in

that country the Libyans may have done the installation work them

selves

3 No one supplied the Respondents with any cargo descriptions or

directions different from those which appeared on Concordia s Bill of

Lading

4 It is doubtful that transportation costs of 23 347 99 for commodities

worth 205 988 00 into a troubled zone ofthe world are unjust and

unreasonable or in violation ofany section ofthe Act

III POSITIONS OF THE PARTIES

A Complainant

Crestline excepts to the Presiding Officer s conclusion that Concordia

correctly applied TariffItems 1454 and 1450 to the butyl sheets and tapes

in question and claims that the Initial Decision is procedurally and

substantively defective in several areas

Procedurally the Presiding Officer is alleged to have

I Failed to articulate a rational basis for the conclusion he reached because the four

reasons recited at pages 7 and 8 of the Initial Decision are irrelevant and immaterial

to the cargo classification issue under review and because Crestline s arguments were

notspecifically rejected

2 Improperly permitted Concordia s expert witness McKenna to testify that the

4 Concordia applied its contract rate to Crestlines shipment

S Crestline originally alleged that its rubber cement was also misrated and sought a

total of 16 483 74 in

reparations The rubber cement claim was withdrawn at the prehearing conference and the demand for reparations

reduced to 15 868 40 h should be noted however that the parties stipulation concerning the Item 1455 rate

applicable to the rubber sheets and tapes 7 861 37 Hearing Exhibit 16 was improperly computed The correctly

computed Rubher Synthetic rate would have been 14 473 and the amount of overpayment only 9 256 17 I e 119 5

measurement tons multiplied by the 105 32 contract rate including 19 bunker surcharge plus 15 war risk

surcharge

19 F M C
210 FEDERAL MARITIME COMMISSION

J

rubber sheets and tapes were fully manufactured for tariff purposes while refu

allow Crestline s expert witness Kenney to offer his opinion that TariffItem 14

ambiguous in light of the nature of synthetic rubber

Crestline concedes that its rubber sheets and tapes were to 

degree manufactured out ofsynthetic rubber It rests its claim 

Tariff Item 1455 rate on two contentions First the phrase not a

manufactured therefrom in Item 1455 is contradictory and amb

because all synthetic rubber is manufactured out ofother chem

Secondly Crestline s goods were not manufactured within the mean

Tariff Item 1455 because they were not completely finished 

further processing was required before they could be finally insta

the water conservation equipment for which they were ultimate

tended Consistent with this position Crestline attributes the fol

substantive errors to the Initial Decision

1 The uncontroverted testimony of expert witness Kenney was ignor

unwarranted weight was given to the testimony of expert witness McKenna

2 The conclusion that the rubber sheets and tapes were sufficiently fabricate

classified as articles manufactured from synthetic rubber is contrary to the w

the evidence

3 The conclusion that Tariff Item 1455 was unambiguous as applied to the 

shipment is contrary to the weight of the evidence

B Respondent

Concordia supports the Initial Decision and claims the evidence 

that the butyl sheets and tapes shipped by Crestline were in an ess

different form than the large synthetic rubber bales from which the

fashioned by the Carlisle Company Concordia further states that w

synthetic rubber may be used to manufacture any product req

synthetic rubber as an ingredient synthetic rubber in the form of 

and tapes has a relatively limited range of further uses Crestline 

that the sheets and tapes were not finished products must theref

incorrect because the construction of watering facilities out of the 

and tapes is a separate and distinct process from the manufacture 

sheets and tapes themselves

Concordia also argues that the classification of products for 

freight purposes does not depend upon the end use to which the con

intends to put the product if a roll ofbutyl sheeting is a finished p

when pieces are cut off and placed directly on hospital beds it 

also be considered a finished product when pieces are joined toge

form water proofing devices

IV DISCUSSIONAND CONCLUSION

The uncontradicted testimony ofCrestline s own witness 6

is su

to dispose of this matter on the merits and we also find that the 

sheets and tapes shipped in 1974 were manufactured articles a

6

This witness was Hugh Kenney Sales and Product Manaaer Construction Materials Department C

and Rubber Company Mr Kenney was qualified as an expert in synthetic rubber fabrication

19 
CRESTLINE SUPPLY CORP v CONCORDIA LINE 211

no Shipping Act violation has occurred We cannot however simply

adopt the Initial Decision without comment Crestline s contention that

the Presiding Officer s statement ofreasons is critically unclear cannot be

ignored A more disciplined and logical approach is unquestionably

required and rather than consume further time by remanding the

proceeding for clarification we have written our own decision denying

Crestline s complaint

The Carlisle Company fabricated the goods in question out ofcrumbly

bulk butyl which it purchased in 70 pound bales from one of several large

synthetic rubber manufacturers such as DuPont or Exxon 7The butyl

bales were then placed in mixing equipment with other materials such as

pigments extenders vulcanizing agents and antiozonants aqd the mixture

run between two steel rollers to form synthetic rubber sheets approxi

mately a quarter of an inch thick After being scored for 4872 hours

these sheets were fed into a calendar a series of steel rollers and further

formed into much thinner sheets The thin rolls of sheeting were then

joined into the particular widths and lengths desired by Carlisle s

customers placed on a mandrel and vulcanized After this processing the

rubber was no longer crumbly and the sheets could be directly employed

in a variety ofend products with only minor subsequent alterations The

only thing remaining to be done to Crestline s sheets and tapes upon

arrival in Libya was to cut them to appropriate sizes and apply them to a

tank or reservoir They could also have been employed as inner tubing

heater ducts or roofing materials

The primary factual question to be determined in this proceeding is

whether the sheets and tapes were manufactured from synthetic rubber

at the time they were shipped Crestline s evidence aimed at proving that

the sheets and tapes were not completely finished goods is irrelevant

to this determination The final application of a product with several

possible end uses is immaterial to the proper classification of commodities

for tariff purposes Misclassification and Misbilling of Glass Articles 6

F M B 155 159 1960 The applicable freight rate should depend upon

the intrinsic nature and market value ofthe goods themselves rather than

a shipper s

representation as to the intended use ofgoods as it would be

virtually impossible for ocean carriers to ascertain whether each item

transported is subsequently put to the use for which it was rated for

ocean transportation

The record leaves no doubt that Crestline s goods weresufficiently new

and different artillles from the butyl bales initially entering Carlisle s plant

to be considered manufactured articles See generally Interstate

Commerce Commission v Weldon 90 F Supp 873 W D Tenn 1950

affd 188 F 2d 367 6th Cir 1951 cert denied 342 U S 827 1951

where shelled but otherwise unprocessed peanuts were held to be

1

Butyl is itself manufactured out of petroleum products and other chemicals In bales it represents an

unprocessed stage of synthetic rubber comparable to that of natural rubber in its crude state

19 F MC
212 FEDERAL MARITIME COMMISSION

manufactured products within the meaning of section 203 b 6 o

Interstate Commerce Act 8

Cf East Texas Motor Freight Lin

Frozen Foods Express 351 U S 49 1955 see also Twine and C

Rubber Emery Transportation Company 311 IC C 226 1960 

Deringer Inc v United States 40 Cust Ct 261 1958 United Sta

International Paint Co 35 C C PA 87 94 1948

The fact that all synthetic rubber is manufactured from petro

products and other chemicals does not make Concordia s tariff am

ous Other than Rubber Synthetic and Rubber Crude or Raw all r

categories in the tariff describe specific products or groups ofprod

Tariff Item 1455 does not exclude manufactured synthetic rubbe

excludes only articles manufacturedfrom synthetic rubber The f

phrase would support the inconsistent and therefore ambiguous int

tation urged by Crestline The latter language is plain on its face

Applying the principles of tariff construction articulated in Sacram

Yolo Port Dist v Fred F Noonan Co Inc 9 F M C 551 55

1966 we find Tariff Item 1455 sufficiently clear as published to a

synthetic rubber experts and laymen alike that butyl bales or 

unprocessed unvulcanized forms of synthetic rubber are the only 

of goods entitled to the Rubber Synthetic rate 9

The instant c

therefore readily distinguishable from United States v Hellenic L

Ltd 14 F MC 254 1971 and Rubber Development Corp v Booth 

Co Ltd 2 U S M C 746 1945 where atariff s intended meaning 

not be fairly ascertained from its published language We recogniz

the term manufactured describes a process with no absolute boun

and that different goods may be manufactured in varying degre

that carriers may upon occasion be reqUired to make close judgme

rating synthetic rubber products for shipment Such a situation do

make atariffinherently ambiguous and in this instance the record 

that Concordia s a sessment of Crestiine s butyl sheet and tap

manufactured articles was indisputably correct Cf Trumbull V

pool Co v Luckenback Co 1 U S S B 126 127 128 1927

Accordingly on the basis ofthe foregoing and the entire record 

us it is concluded that the synthetic rubber sheets and tapes tender

shipment on September 27 1974 by Crestline Supply Corporation 

46 V S C 303 b 6

9 Crestline s hearsay evidence concernina the different rate quotations it received from three differe

forwarders between July and October 1974 provides no basis fora

flndina of ambiauity Rubber Developm

v Booth 5 S

Co

LId infra is inapposite for there acarrier actually applied three different rates to 

shipments of the same type of meta basin and the Commission found that the tariff was otherwise a

Eltrinsic evidence is not considered when a tariffis unambiauous on its face Moreover a

stupper s

relian

misquoted rate does not warrant the exaction of arate different from that specified in thecarrier s tarif

Pacific Ry v Mugg 202 US 242 245 1906 Farley Terminal

Co

Inc v Atchinson Topeka SantQ Fe 

522 F 2d 109 5 1098 9th Cir 197 5 Ken Royce Inc v Paciflc Transport Line

Inc

3 U S M C 183 

Pacific Lumber Shipping Co v Pacific Atlantic S S Co 1 U S M C 624 62j 1936

We also note thatCrestline s quotation evidence Is of little probative value in that it does not indica

three forwarders were given the same weiahts measurements and commodity descriptions with which t

even that they consulted the same tariff In fact the rate quotation from Lui i Serra Incorporated Hearlq 

states arate for synthetic rubber butyl without a lvina any indication that this butyl was in the form 

sheets and tapes

19 
CRESTLINE SUPPLY CORP v CONCORDIA LINE 213

not entitled to the rate described by North Atlantic Mediterranean Freight

Conference Tariff Item 1455 and that Concordia Line properly classified

these goods as Rubber Sheeting N O S and Rubber Goods N O S

respectively It therefore follows that Respondent Concordia Line did not

charge or demand a greater or different compensation for the transporta

tion of property than that specified in its duly filed Federal Maritime

Commission tariff and did not violate section 18 b 3 Shipping Act

1916 as to the aforesaid shipment Crestline s Exceptions are therefore

granted insofar as they demand a clarification ofthe Initial Decision and

denied in all other respects An appropriate order denying the complaint

and terminating this proceeding will be issued

SEAL S FRANCIS C HURNEY

Secretary

19 F M C
FEDERAL MARITIME COMMISSION

i DOCKET No 75 12

CRESTLlNE SUPPLY CORPORATION

v

THE CONCORDIA LINE AND BOISE GRIFFIN STEAMSHIP CO IN

ORDER

The Commission having fully considered the above matter and 

this date made and entered of record a Report containing its fin

conclusions and decision therein which Report is hereby referred 

made a part hereof

IT IS ORDERED That the complaint of Crestline Supply Corpo

is denied and that the proceeding in Docket No 7512 is dismissed

By the Commission

SEAL S FRANCIS C HURNEY

Secret

I

J

I

214 19 
FEDERAL MARITIME COMMISSION

SPECIAL DoCKET No 468

REAL FRESH INC

v

MATSON NAVIGATION COMPANY

NOTICE OF ADOPTION OF INITIAL DECISION

July 28 1976

No exceptions having been fIled to the initial decision ofthe Adminis

trative Law Judge in this proceeding and the Commission having

determined not to review same notice is hereby given that the initial

decision became the decision ofthe Commission on July 28 1976

By the Commission

SEAL S FRANCIS C HURNEY

Secretary

19 F M C 215
I

I

FEDERAL MARITIME COMMISSION

j

1 SPECIAL DoCKET No 468

REALFRESH INC

V

MATSON NAVIGATION COMPANY

Adopted July 28 1976

Requests to refund a portion and to waive collection of a portion of freiaht 

denied

i

INITIAL DECISION ON REMAND OF JOHN E COGRA V

ADMINISTRATIVE LAW JUDGEl

Matson Navigation Company Matson requested pennission to 

a portion and to waive collection of a portion of the freight charg

three shipments of sterilized milk in hennetically sealed containers 

Oakland California to Guam Permission was requested to r

170 77 and to waive collection of 327 38 Permission wasgranted 

initial decision On review however it was determined that s

18 b 3 ofthe Shipping Act 1916 did not apply as the foreign com

ofthe United States was not involved Rather it was the dom

offshore commerce ofthe United States and therefore the applicabl

would be section 18 a ofthe Shipping Act 1916 and Section 4 

Intercoastal Shipping Act 1933 The application was remande

consideration under the foregoing sections ofthe Shipping Acts 

Order ofRemand it was stated

Unlike section 18b 3 section 18 a of the 1916 Act and Section 4 of the 1933 

not contemplate refunds and waivers to compensate for orrors in tarifffilings T

however empower the Commission to detormine the reasonableness of a rate 

prescribe a reasonable maximum or minimum rate Consequently while an er

tariff may cause a

particular rate to be unreasonable it is not standing alone an

absence of a

finding of unreasonableness ground for permitting a carrier to charg

other than those on file and in effect at the time of shipment

In the present application Matson Navigation Company M

requests authority to refund a portion of the charges and also re

I

j

l

I

This decision became the decision of the Commission July 12 1976

216 19
REAL FRESH INC v MATSON NAVIGATION CO 217

authority to waive collection of a portion of the charges applicable to

three shipments ofMilk sterilized in hermetically sealed containers

aggregating 119 546 pounds or 2 768 cubic feet carried per bills oflading

dated September 9 23 and 28 1974 on Matson s vessels Transcham

plain Transoneida and Transontario from Oakland California to

Guam Matson issued on June 26 1974 effective August 5 1974 Second

Revised Page 109 to its Guam Container Freight TariffNo 32 FMC F

No 152 In doing so the rates for Items 1358 and 13592 were mistakenly

changed to W M from a W T3 basis Accordingly during the period of

these three shipments the 53 10 W M rate was the applicable rate

resulting in a higher charge than would have been the case if the

shipments had been rated on the basis of 53 10 WIT

Consequently on the shipment per bill of lading dated September 9

via the Transchamplain 1 295 56 was paid whereas it should have been

1 082 28 Permission to refund 170 77 is sought On the shipment per

bill of lading dated September 23 via the Transoneida 1 093 11 was

paid whereas it should have been 1 268 07 Permission to waive

collection of 174 96 is sought On the shipment per bill oflading dated

September 28 via the Transontario 1 418 13 was paid whereas it

should have been 1 5705 Permission to waive collection of 152 42 is

sought

According to the application the increased charge resulted from the fact

that the charges were based on a measurement rather than on a weight

basis Nothing more is offered All the precedents cited by Matson

involved the foreign commerce and not the domestic offshore commerce

ofthe United States By way ofexample but not limitation determination

of the reasonableness ofrates involves comparison of rates Oxenberg

infra cost of service distance taxes nature ofthe commodity volume

ofmovement and return on investment

Unlike Oxenberg Bros Inc v United States 3 FM B 583 1951

where the rate charged varied so greatly from rates for the same

commodity between nearly equidistant points on the same route as to be

clearly unreasonable and therefore in violation of section 18 of the

Shipping Act the situation in the instant situation is more like that

presented in Davies Turner Co as Agentsfor Robert S Schlesinger

Owner v Atlantic Lines Ltd 13 F M C 279 1970 There the final

charges for the transportation were merely alleged to have been higher

than the charges originally quoted the shipper because the carrier s agent

had not been advised that the rate he quoted had been deleted from the

tariffover a month before The Commission concluded

The application in this instance like that in East Asiatic 4

does not even allege

litem No 1358 MILK STABILIZER powdered W M 87 03 Item No 1359 MILK STERILIZED in

hermetically sealed containers with orwithout added flavoring W1M 53 10

J Rate applies perton of 2 000 pounds

4

The East AsiatiC Co 11IC Apl fi tioll Iilr Permissioll 10 Waive Collection of Undercharges 9 F M C 169

119651

19 F M C
I

1

J

I

218 FEDERAL MARITIME COMMISSION

that the rate duly applied was unreasonable nor does the record contain facts 

which such a finding can be made There being no alternative the application is h

denied Footnote added

Moreover in East Asiatic supra it was concluded

The Examiner however did not find nor did the applicant allege that the 

applicable rate was unreasonable and that the rate actually charged was reaso

Indeed the record is devoid of any facts upon which we in the final analysis 

make any such findings Therefore on the basis of the record before us we ha

alternative but to deny East Asiatic Incs application

As the determination of a reasonable lawful rate is a prerequis

establishing damages which is the difference between reasonable 

unreasonable rates S

and as such determination cannot be made here 

request of Matson Navigation Company to refund a portion and to w

collection of a portion of the freight charges on the aforementi

shipments must be denied

8 JOHN E COGRAVE

Administrative Law Judg

WASHINGTON D C

June 30 1976

Mueller v Peralta Shipping Corp 8 F M C 361 196 5

19 
19 F M C 219

FEDERAL MARITIME COMMISSION

INFORMAL DOCKET No 332 1

F POWERS CO INC

v

ORIENT OVERSEAS CONTAINER LINES

Claimant s contention that its cargo was destined for the Port of San Francisco and not

the Port of Oakland is sufficiently supported by the evidence

Respondent s policy of not paying overland transportation charges from the port of

discharge to the bill of lading port on LTL shipments is disallowed because

IRespondent s Tariff Rule 28 expressly provides for cargo forwarding to the bill

of lading port at carrier expense without distinguishing between LTL and trailer

load shipments

2 The implementation of special rules for LTL shipments which are not stated in

a carrier s tariffviolates section 18 b 3 of the Shipping Act 1916

DanielL Goldberg for Claimant

REPORT

August 18 1976

By THE COMMISSION Karl E Bakke Chairman Clarence Morse Vice

Chairman Ashton C Barrett Bob Casey and James V Day

Commissioners

This proceeding was initiated upon the informal complaint ofF Powers

Co Inc Claimant a textile importer principally located in San

Francisco against Orient Overseas Container Lines Respondent a

common carrier in the foreign commerce of the United States subject to

ourjurisdiction Claimant alleges that Respondent failed to adhere to Rule

28 ofits FMC tariff in violation of section 18 b ofthe Shipping Act 1916

46 U S C 817 b

1

I

HongKong Eastbound Pacific Coast Tariff No 1 FMC l Prior to October 1974 Tariff Rule 28 provided

If the carrier discharges cargo at a discharge port other than the port of discharge named in the bill of lading the

carrier may arrange at its OptiOIl to move the shipment from actual port ofdischarge as follows

To the port of destination stated in the bill of lading alternatively the carner may forward the cargo direct to apoint
220 FEDERALMARITIME COMMISSION

1

The instant controversy concerns eight relatively small shipme

cotton goods from Hong Kong to San Francisco California trans

during the period ofOctober 1973 to September 1974 Claimant 

that San Francisco was the intended port ofdischarge The good

unloaded at Oakland and trucked to San Francisco in less than 

load LTL lots at atotal cost of 297 93 which was paid by Cla

It is alleged that Respondent has followed a policy of not pay

transportation costs involved in trucking less than trailer load good

the port of discharge to the bill of lading port ofdestination while 

the trucking fee on full trailer load shipments Respondent does no

it has foUowed such a policy and the issue to be resolved is wh

distinction between LTL and full trailer load shipments is permitted 

Respondent s FMC tariff and if not whether Claimant is enti

reparation for the 297 93 it paid for overland transportation on th

shipments in question

The matter was referred to Settlement Officer James S Onet

issued a decision on June 29 1976 denying the complaint ontwo s

grounds

1

The Claimant did not produce the bills of lading bllt only in

and the bill of lading ports cannot therefore be establishe

sufficient certainty to make a determination thereof

2 The shipments involved were LTL shipments the carrie

policy ofnot paying equalization on LTL shipments and beca

such allowance was contained in the tariff reparation cannot be g

As to the fIrst ground for denial the Claimant alleged that althou

port ofdischarge was Oakland the bill of lading specified San Fra

As evidence ofthat allegation the Claimant submitted carrier invoic

but one ofthese show a

space calling for the bill oflading number 

aU those invoices there appears in that space before the numb

notation HK SF The Claimant states that this signifies Hong K

the port of loading and San Francisco as the port of destina

specified in the bills oflading 2

The invoices attached to the complaint indicate Oakland as the 

desi nated by the consillnee provided the consianee pays the costs which the conlianee normally 

incurred to move the cargo tosuch point had thecarlO bcen discharaed at the port of destination stated o

ladina Emphasis added

In Konwal Co Inc v Orient Overseas Container Line 16 S R R 39 482 1975 the Commission h

version of Rule 28 oblililated the carrier to pay the coil of overland transportation from Oakland the ac

discharae to San Francisco the port of discharae speclfted on the bill of ladln and awarded reparati

LTLshipments where the carrier had not paid

The rule was subsequently amended effective October 1 1974 and nowreads

If the carrier discharges cargo at a discharle port other than the port of dlscharae named in thebill o

carrier elshall arranae at Its C expense to move theshipment from actual port of discharae as follows 

ofdestination stated in the bill of ladlnl altmatively the carrier may forward the carao direct to apoint 

by the consignee provwed theconsignee pays thocosts which the consianoe normally would have incur

the car oto such point had the carao been discharaed at the port of deatination stated on tho blllof ladina 

added

2 It is acommon steamship practice to identify bills ofladina by port of loadina and port of discha

numerical number followina thus BIL Hona KonSan Francisco 1 orBIL Hona KongLos Anaeles 12 e

19 
F POWERS CO v ORIENT OVERSEAS LINE

discharge In referring to the bill oflading however the invoices contain

the annotation BlL HK SF This supports Claimant s contention that

while Oakland was the port ofdischarge the port ofdestination was San

Francisco

The Respondent s

reply to the complaint significantly does not deny

that the bill oflading port was in fact San Francisco The Respondent

says only that

We note with interest that the Complainant filed this complaint apparently on

the strength of HK SF bill of lading numbers taken from truck invoices and

without copies of the actual bills of lading

The Respondent could have denied that San Francisco was the bill of

lading port or could itself have provided copies of applicable bills of

lading if San Francisco was not shown thereon as the bill of lading

destination Instead the Respondent merely noted the Claimant s form of

proof

Rule 5 d of the Commission s Rules of Practice and Procedure 46

C F R 502 63 provides

Recitals of material and relevant facts in a complaint unless specifically denied in

the answerthereto shall be deemed admitted as true

The Respondent s allusion to Claimant s allegation is not such a denial

Consequently it must be taken as established that San Francisco was the

bill oflading port ofdestination

Furth rmore if the Settlement Officer deemed the proof inadequate

which we do not he should have required the Claimant or the Respondent

to supply additional documentation 46 C F R 502 304 a

e The

Claimant states that he was unable to obtain copies of the bills oflading

and the Settlement Officer should have directed the Respondent carrier to

produce them

The second ground for the Settlement Officer s decision rests on the

Respondents policy on LTL shipments of not assuming to pay equaliza

tion from the port ofdischarge to the bill oflading port The Respondent

in fact places its main reliance on that policy and says that all importers

were aware of it including the Claimant and that the Claimant is

therefore barred from seeking reparation for equalization of LTL ship

ments to the bill oflading port of destination This asserted policy or

rule did not appear at the pertinent time in Respondent s filed tariff

The Settlement Officer concluded that because

respondent s rule that no equalization would be paid on LTLshipments was

not embodied in respondent s tariff therefore reparation could not be awarded

thereon

Ifthat werethe law we could not award reparation unless a carrier s tariff

specifically provided for the payment ofreparation in the event a shipper

were overcharged

The fact is that the Respondents Tariff Rule 28 provided for the

forwarding of cargo at carrier s expense from the port ofdischarge to

19 F M C

221
222 FEDERAL MARITIME COMMISSION

the bill oflading port without distinguishing between LTL and trail

shipments Similarly no other provision of the Respondenfs tariff 

such a qualification

Section l8 b 1

of the Shipping Act 1916 provides that tariff

contain any rules or regulations which in anywise change aff

determine the tariff rates Consequently the Respondent carrie

not by a statement ofpolicy no matter how widely published esta

rule binding on shippers unless such rule was first filed w

Commission under section 18 b An unflled rule distinguishing b

LTL and trailer load shipments not only cannot be relied upon t

reparation but itself violates section 18 b 3 of the Act by d

transportation privileges to LTL shippers in a manner not st

Respondent s Tariff

The Respondent states in its answer to the complaint that it chan

policy in October 1974 and began paying equalization on the Cla

shipments Thus at that time Respondent began to fully adher

tariff rule without asserting any other disqualification in Cla

shipments Therefore there being no other defects in the Cla

shipments at issue here the Claimant is entitled to reparation as s

in its complaint

An appropriate Order will be issued

SEAL S FRANCIS C HURNEY

Secre

1
19 F M C 223

FEDERAL MARITIME COMMISSION

INFORMAL DoCKET No 332 1

F PoWERS CO INC

v

ORIENT OVERSEAS CONTAINER LINES

ORDER

The Commission having fully considered the above styled matter and

having this date made and entered of record aReport containing its

findings conclusions and decisions therein which Report is hereby

referred to and made a partthereof

IT IS ORDERED That the Settlement Officer s Decision is reversed

and reparation in the amount of 297 93 is awarded

By the Commission

SEAL S FRANCIS C HURNEY

Secretary
FEDERAL MARITIME COMMISSION

DocKET No 75 37

INDEPENDENT OCEAN FREIGHT FORWARDER ApPLICATION

INTERNATIONAL FREIGHT SERVICES LTD

1

ADOPTION OF INITIAL DECISION

August 18 1976

This proceeding was instituted to determine whether in view 

past activities of Mr Ismail K Renno and Mr Rafael Swift two 

Applicant s principal officers and stockholders International F

Services Ltd IFS is fit and able to properly carryon the busin

forwarding and to conform to the provisions of section 44 of theS

Act 1916 within the meaning of that statute and whether its for

application should be granted

In his Initial Decision Administrative Law Judge John E C

concluded that the Applicant lacked bOth the fitness and ability ne

to be licensed and accordingly denied IFS s application The basis 

conclusion were 1 the false representations made in IFS s app

and to the District Investigator and 2 IFS s lack of experie

conduct an ocean freight forwarding business

No exceptions were filed to the Initial Decision However IF

Hearing Counsel have submitted a stipulation intended to clar

record with respect to the fitness of Mr Dennis M Costin a th

officer to carry on the business of ocean freight forwarding Inthe 

of his opinion the Presiding Officer found that Costin was 

stockholder of IFS as was represented in the application Th

stipulation citing section 170101 Fof Ohio General Corporatio

advises that by virtue of a subscription aareement Costin is in 

IFS shareholder under Ohio Law This proceeding is now before 

our own motion to review

While we are accepting the joint stipulation it does not in an

undermine Judge Cograve s ultimate determination in this proce

The legal status of Costin as a stockholder or nonstockholder is 

irrelevant to the matter at issue in this proceeding What is impo

that on the record neither Renno Swift nor for that matter Costi

the necessary ocean forwarding experience to qualify IFS for an 

freight forwarder license

i

224 1
INTERNATIONAL FREIGHT SERVICES LTD 225

Even assuming arguendo that IFS had an officer qualified to conduct

ocean freight fOlwarding there is still the matter ofSwift submitting false

information to the Commission and its representative with the presumed

knowledge ofRenno who together hold most of the IFS stock This

activity alone calls into question Applicant s fitness to conduct afreight

forwarder operation

Therefore we are of the opinion that the Presiding Officer s

fmdings

and conclusions were proper and well founded Accordingly we are

adopting the Initial Decision a copy ofwhich is attached as our own and

making it apart hereof

By the Commission

8 JOSEPH C POLKING

Assistant Secretary

19 F M C
FEDERAL MARITIME COMMISSION

No 7537

INDEPENDENT OCEAN FREIGHT FORWARDER APPLICATION

INTERNATIONAL FREIGHT SERVICES LTD

Adopted August 81976

Applicant found neihrfit nor able to conduct the business of forwarding wichin the

meaning of the Shipping Act 1916

The application is denied

WBEwers for applicant

Pau J Kalerand Bert IWeinstein as Hearing Counsel

INITIAL DECISION OF JOHN E COGRAVE ADMINISTRATIVE

LAW IUDGE

The Commission instituted this proceeding to determine whether

International Freight Services Ltd Inemational should be licensed as

an independen ocean fieight fonvarder under section 44 of the Shipping

Act 1916 46 USC8416 The present applicaUon is the third one to be

filed by International

In November of 1973 International fded its first application for a freight

forwazder license but it was withdrawn and a revised application was

filed in Mazch of 1974 After review of the second application the

Commission advised International of its intent to deny the requested

license International made a timely request for a hearing to contest the

Commission sintended denial and by Order served in December of 1974

Docket

In Februazy

745was

of

instituted 2

1975 prior to heazing in Docket754International

filed its third appGcation theone under scrutiny here With the 51ing of

the third application Docket754 was dismissed and after due investi

ga4on of the hird applica ionnotice to InernaGonal ofinent to deny

that application and timely request by International for heazing the

present proceeding was instituted The Order institu6ng this proceeding

raises issues conceming the fitness and ability of the applicant to cazry on

the business offonvazding At issue aze certain fraudulen representa6ons

alleged to have been made by the applicant to the Commission which if

This decision will becomc the decision o Ne Commiuion Auemt I8 196

7e

pmvisiov 06 CFR 4 SI08 aset orth the procedum poverniny the issuance anA denial oGcensea

226 ivFMc
INTERNATIONAL FREIGHT SERVICES LTD ZZJ

proven would raise yuestions as to applicanYs fitness to be a forwarder

and an asserted lack of experience which if true would question

applicant sability to carry on the business of forwarding The Commis

sion Order defails certain apparent conduct which came to light during

its investigation ofInternational sfirst and present appiications

The Commission sOrder instituting this proceeding states that the

investigation ofInternationai sfirst application revealed 1 an apparenUy

false enlargement of the experience of one of International s

employees

who wasto be the qualifying officer ofthe corporation pursuant to section

510a2iii2 that Mr Rafael Swift the President of International

apparently induced an employee and another person to make false

representations to aCommission investigator and 3

that Mr Swift

stated that he was a citizen ofthe United States when apparently he was

a citizen ofMexico

The Commission sOrder then goes on to state that on the present or

third application a Mr Ismail K Renno appears as President and majority

stockholder ofInternational that Mr Rafael Swift previously listed as

President and sole stockholder ofInternational now appeazs as Executive

VicePsident and a minority stockholder ofInternational and that a Mr

Dennis M Costin is also named as an Executive Vice President and

minority stockholder ofInternational

According to the Commission sOrder investigation of the third

application the one here in question revealed apparently

1

that Mr Renno was always in fact the majority stockholder of International

2that while Mr Swift had previously stated that the capitalization of International

came exclusively from his own personal savings and proceeds from loans he had

received from a bank Mc Renno also contributed substantial monies for the capitaliza

tion of Intemational

3hat Mr Swift had sated on an application for an International Air Transport

Association cargo agency that he was the sole stockholder of International when he was

not

4that Mr SwifPs conduc while wi ha previous employer gave rise to a lawsuit in

which a final judgment of10000was entered and an injunction was issued prohibiting

Mr Srvift from soliciting employees and accounts from the employer

5that Mc Renno appears to have been a party to the deceptions and falsehoods of

Mc Swift as they relate to the ownership of International

The Order then raises the issue of the lack ofexperience on the part of

both Renno and Swift

For the purpose ofthis decision it is presumed that except for the

issues raised in the Commission sOrderthe application ofInternational is

in all other respects proper This presumption makes necessary some

comment on the procedure adopted for the trial of this case At the

prehearing conference Hearing Counsel took the position that it was

incumbent upon the applicant to proceed first and present a case

demonstrating that International was fit willing and able to conduct

the business of forwarding The reasons given for this position were that

1 the Order instituting this proceeding made Internationalapetitioner

FMC
ZZH FEDERAL MARITIME COMMISSION

pursuant to Rule 3a of the Commission sRules of Practic

Procedure 46 CFR 502 41 and 2 section 22 ofthe Shipping Ac

which had appeared in previous orders in forwarder licensing ca

authority for their institution had been omitted from the Order 

proceeding

It was my view however that 1 the Commiasion sOrder co

certain allegations offact which if proven would appear to demo

that applicant was not qualified for a license 2 the evidence to s

the allegations which was developed during the investigation 

applicant was then in the hands of Hearing Counsel and 3

h

Commission sinvestigation uncovered anything else tending to dia

applicant it would have included appropriate allegations in its 

Thus absent proof ofthe specific allegations in the Order Intern

was qualified for a license Under these circumstances to ha

appiicant to proceed first and prove Ehat he was fit willing and a

conduct the business offorwarding would make the applicant spr

this record facts which were not challenged by the Commissios

during its invesdgation nor raised as issues in the Commission sO

if applicant chose to challenge the allsgations in the Commission s

he would be put in the position of disproving allegations in sup

which no evidence had yet been adduced hewould be attemp

prove the negative Accordingly Iruled that Hearing Counse

proceed first and present his case in support of the allegations 

Order

Hearing Counsel take no issue on brief with the procedure adop

Ionly allude to it here because ofthe impression conveyed to 

Hearing Counsel that the Commission had intended a new t

procedure when it made the mentioned changes in its Order Ih

idea what if any changes in trial procedure were intended 

a Commission when the Order was changed and they are not evide

i

the terms ofthe Order Iffaced with the same kind oforder in the 

Iwould adopt the same procedure

The statement offacts set forth below is divided into two part

those findings dealing with the alleged misregresentations of appl

the Commission and second those findings concerned with the 

ence or lack of it on the part ofthe applicant corporation squ

officer Certain other facts appear in the Discussion and Con

portion ofthis decision primarily due to an effort to achieve conti

presentation

Misrepresentations

On its first application International represented one Miss 

Hilbert as an officer of International and gave her experience 

years in international freight forwarding On January 24 19

Swift then the purported President of International inform

Commission sDistrict Invesdgator Robert St 7ohn that Miss Hilb

19 
INTERNATIONAL FREIGHT SERVICES LTD 229

to be the officer of International who had sufficient ocean freight

fowarding experience to qualify International for a license

On January 25 1974 Mr St John phoned Miss Hilbert and she then

said that she had approximately three years of ocean freight forwarding

experience Later on February 6 1974 Miss Hilbert visited the Commis

sion New York District Office and talked with Mr St John At that

time she apologized to Mr St John for giving him false information

during their earlier phone conversation She then admitted that she had

only five months ocean forwarding experience Miss Hilbert explained

that Mr Swift was listening in on her conversation with Mr St John

and that Mr Swift was directing her responses to Mr St John s

questions by means ofwritten notes

Again on January 24 1974 Mr Swift told Mr St John that he had

confidentially arranged to hire a Miss Margaret Sforzo then employed by

Paulsen Guice a licensed freight forwarder and that in the event

International was granted a license Miss Sforzo would become a vice

president of International 3Subsequently Mr St John phoned Miss

Sforzo and she confirmed that she had made an arrangement with Mr

Swift whereby she would work for International as a vice president

Later however Mr St John interviewed Miss Sforzo at Paulsen

Guic thiswas on February 8 1974 During the interview Miss Sforzo

apologized to Mr St John for her previous statements She then told Mr

St John that her previous statements had been made at Mr Swift s

instigation that he had suggested that she tell Mr St John that she was

to be a vice president ofInternational when in fact the true situation was

that she was to be a vice president in name only with a salary of one

dollar

Rafael Swifr signed International sfirst application as President thereof

and reported his citizenship asUnited States with date and place of

birth as1194 Galveston Texas On the second application Swift

again as President reported his citizenship as Mexican with date and

place of birth as 1194 Matamoros Mexico Swift further gave his

residence as Cleveland Ohio from 1949 to the present Fina ly on the

third application Swift gave his citizenship as United States with date

and place of birth as 1194 Matamoros Mexico As for Swift s

residence being Cleveland Ohio from 1949 to present the record shows

that he moved from Mexico to Galveston in 1951 remained in Galveston

until 1957 when he moved to Cleveland Ohio

International sfirst applicadon filed November 30 1973 shows Rafael

Swift as the President and sole stockholder of the outstanding shares of

International But by an agreement executed November 3 1973 four of

On at least one occasion lsmail Renno also discussed with Miss Sforzo her possible employment with

Inremational

Again applicant doesn t

challenge the accuracy of the facts surrounding Swift srepresentations wncerning

binhplace citizenship and residence He only points toSwiR sassertions that he thought he was a citizen of the

Uni edSates and urges that Ihere is no fraud involved because there was no misrepresen ationofamaterial fact

ie

Uni edSaes citirenship is not a requiremen fora forwarder slicense

FMC
23O FEDERAL MARITIME COMMISSION

the six shares of International sstock were held in trusY by Sw

Ismaii Renno The shares were deliverable to Renno on demand

On December 3 1973 Rafael Swift in the course of sworn tes

offered in open court in the course of a lawsuit against him by a 

employer stated that he was not an officer or director ofInterna

but that he held stocks for some people and was the statutory 

for the corporation Yet on the second ofInternational sapplicadon

with the Commission onMarch 18 1974 SwiB again described him

thePsidentand sole stockholder ofInternational

Swift and Renno on October 15 1973 executed aManage

Agreement Swift was to receive 17000 a

year as Manage

Renno was to ceive 12000 a

yearasPartner The agreement 

provided that Swift and Renno would make a11 mjor decisio

jointty By a further AgreemenY made November 6 1973 the 

ofwhich was 5tock Issue Swift after being first duly sworn d

that four 4 shares ofsix 6 shares of common stock ofthe af

International that are held are being held in trust for the be

Ismail Renno The agreement further provides that upon dem

the said Ismail Renno ISwift will immediately assign and release 

said Ismail Renno and orhis nominee four 4 shares of common s

International Although denominated as AgreemenY the do

ofNovember 6 1973 is nothing more than a sworn affidavit by 5w

already noted in the rst application filed with the Commiss

November 30 1973 Swift listed himself as President and sole ow

International

The third application filed by Intemadonal shows the ownership 

corporation as Ismail Renno 51percent Rafael Swift 30p

Dennis Costin 10percent Mr Costin has not contributed fmanc

the corporation nor has he t5een issued any shares of sWck

Mr Renno in his testimony stated that both Rafael Swift and 

obtained 5000 loans individually and a15000 loan jointly tos

company

Over a period of time Intemational issued salary checks payable 

J Knott Swift testified that the monies were paid to J Kn

consultation services J Knott is actually the maiden name of Mrs 

and at no time did she perform any services for International

In May of 1974 Internadonal applied for an International Air Tr

Association cargo agency On the application Swift represent

Rafael Swift was the sole shareholder of the corporation and that n

individuais or business entities had any financial interest or an

form of control in the corporation S

Subsequently in May of 

revised application reflecting Renno sstock ownership was file

mately the application wasapproved

BeCween February of 1969 and November 13 1973 Sw

lameil Renno reviewed the application pdor to flliny it with IATA

1
INTERNATIONAL FREIGHT SERVICES LTD Z31

employed byAllirtransport an air export and import company whose

place of business was in Cleveland Ohio While sti11 an employee ofAll

Airtransport and prior to submitting a letter ofresignation or other notice

of such action Swift phoned a Mr Dodsworth requesting him to divert

traffic from American SteriGzer Company to International Swift called a

Mr Gusky ofthe Broadhead Garrett Company requesting him to alter a

bill oflading so as to consign a shipment to International Swift also

caused an employee ofthe McGee Company to divert a shipment to

Intemational These actions were made possible by Swift saccess to All

Airtransport scustomer fdes which were under his control These actions

of Swift gave rise to a lawsuit byAll Transport against Swift Inits final

order the Court of Common Pleas Cuyahoga County Ohio enjoined

Swift from using confidential information obtained while an employee of

All Transport and from soliciting employees ofAliirtransport and from

announcing his former employment withAllir ransport International

also paid 1000 in settlement ofthe controversy

Lack ofExperience

Neither Swift nor Dennis Costin has ever performed ocean freight

forwarding services which are defined by the Commission as encompass

ing freight forwarding service or dispatctung ofshipments at 46 CFR

510 2c

Renno has personally handled only a single ocean shipment This

occurred in London while Renno was directing the operations of

Cleveland Freight Service awholly ownedsubsidiary of International

However both Swift and Renno point to their experience in air

forwarding and urge what is in effect the transferability ofthat experience

to ocean forwarding This question oftransferability together with further

facts found on the alleged lack ofexperience ofapplicant is deferred to a

later portion ofthis decision

DISCUSSION AND CONCLUSIONS

Under sectiom 44 of the Shipping Act 1916 anyone who desires to

engage in the business ofocean freight forwarding must first secure a

license from the Commission Before issuing aforwarding license the

Commission must deternune that an applicant is fit willing and able to

carry on the business of forwarding Section 44 Shipping Act 1916 46

USC841b Hearing Counsel urge that International s

application for a

forwarder slicense be denied because ofits lack offitness and ability to

carry on the business of forwarding Applicant of course asserts the

contrary

A license granted under section 44 is somewhat more than a mere

license to do business The holder of a forwarder slicense occupies a

position ofenormous competitive and economic power and enjoys a

fiduciary relationship with shippers Dixie Fonvarding Co Inc Appli

FMC
232 FEDERAL MARITIME COMMFSSION

cation for License 8FMC109 1964 In the Dixie case sup

Commission spoke of the standards required of licenseea under s

44

a The business integrity of one who ocwpiea the position oY froiaht forwarde

a

be above reproach and he should cloarly demonstrate a cortiplete awarenesa 

willingness to accept the esponaibiflties that the profarrod position imposos

6

philosophy of section 44 is such that the ahipping public ahould ko entiNedto r

the responsibility and integrity as well as the tachnical ability of a fraiQht forwa

FMCat 118 6

Tahe giving of false informadon to the Commission or its represent

to be considered in determitring the fitness of an applicant Dizie 

Independent Ocean Freight Forwarder License Applicatio

LTC

Cargo Inc 13FMC269 1970 and HarryKar4

maIndepend

Ocean Freight Forwarder License 16FMC256 1973

cavalier

The record

approach

in this

to

proCeeding

the truth

is

of

replete

representations

with instances

made

of

by

apps

it 

Commission and its representative Mr St 7ohn To demo

applicant sapproach to the disclosure of discrepancies in its v

representations in at least two instanoes a chronology is instructive

International srst application was filed with the Commiss

November 30 1973 That application liated aMiss Belinda Hilber

officer of International On January 24 1974 Swift informed i

Investigator St John that Miss Hilbert was to be the offi

International who had sufficient ocean freight forwarding experie

qualify International for a license During this same conversatio

also informed the District Investigator that he had co

denti

arranged to hire a Miss Margaret Sforao then employed by a forw

to hecome a vice president of Internadonal in the event Internation

granted

On January

a license e

25 1974 one day after SwifYs conversation with 

John the latter phoned Miss Hilbert who then stated that s

i approximately three years ocean forwarding experience At abo

same time Miss Sforzo in another phone conversafion with Mr S

confirmed that she was to be a vicq presidant ofInternaUonal

On February 6 1974 some two waeks after her phone conve

with Mr St John Miss Hilbert visited the Commisaion sNew 

Appllcent does not queatlon the appiicebility oY the etandarde quotad e6ove rethar hearyuee 

comparuon oftfie conJUCt oP the applicant in theDlx7e caae with hiowp ThubP coune mieeee thepo

comparieon ie mede oreven auyeatsd Intero dnlyuQon rowneideratlon Dixie weyraaSad eUcenee 

applicants empheeized that their Iivelihood dependai upon their beln liceneed and 2appliaaMe have 

themeelvae to woperete Nlly witht4e CommGrlon 4nd adhere cmpduudy tn theraqut amente ofthe

reqyirementa impoeed by the Commisefon DIx7e Forwardlpg Ca et al Apptlcotlon for Llcensu 

Reconeideration 8FMC167 L4Subeequently the tlceneeewerc volunqrily eubmitted tor cence

fece oPfur he proceedinpe to revoke tham See Commianion Order detad October 19 1966 d

mi

proceWinye in Docket No 664fJ

Sectlon S109 eof Oenerel Order46 CPR 509 9cprbvldee thatstlcepee may be revoked o

madiQed Poe makiny any wilNlly falsa etatemepu to the Commi doIn wnnection with en epptloation

or its contlnuenca in effect

A6out the oNy conclusiop one cen cometo conceminp the wnEdentlnlity oP the 61NnQ oPAS1 eBYorw 

wes not known to Miee SPorzo ethen employer FaWwn Ouice CertaWy avaryone elae conam

Sw

and Mias Sform knew about it

19
INTERNATIONAL FREIGHTSERVICES rTn 233

District Office and apologized to Mr St John for giving him false

information during her previous phone conversation with him Miss

Hilbert explained that Swift was listening in on another extension and

was telling her what answers to give to Mr St John by passing her notes

written on pages from a yellow legal pad

On February 8 1974 two days after Miss Hilbert s

visit Mr St John

called Miss Sforzo a second time As in the case of Miss Hilbert Miss

Sforzo apolo8zed to Mr St John for giving him false information during

their first conversation She now told Mr St John that Swift had

encouraged her to represent to Mr St John that she was to be an active

vice president when in fact she was to be vice president in name only at

a salary of one dollar

On March 18 1974 International filed its second application Miss

Hilbert was no longer listed as the qualifying officer and no mention was

made of Miss Sforzo

Had there been no investigation of applicant by Mr St John the

inescapable conclusion is that applicant would have rested on his first

application and a license then granted would have been based upon the

patently false statements in that application Swift had no hand in the

ultimate disclosures

Applicant sposition on the foregoing events is best presented in its

own words on brief To take the case ofMiss Hilbert first

Hearing CounsePs allegations with respect to Miss Hilbert are to the effect that she

had only 5 months vice 3 years experience in ocean forwarding and that Mr Swifr

allegedly directed her in answering certain questions to Mc St John It is to be noted

that the first application Ex 1 listed Miss HilberYs experience as 2 years in

internationa freight forwarding What Miss Hilbert told Mr St John about herocean

experience is inelevant There is no evidence that Miss Hilbert did not have 2 years in

the international freight fonvarding area This question also became moot when the

second application was filed Ex 5 since she was no longer being considered for

employment

Several things may be said about applicanYs explanation ofthe incident

involving Miss Hilbert but the most striking thing about it is

attitude toward it an attitude held even now anattitude which

applicant s

clearly

belies any idea of the seriousness of being licensed as an ocean freight

fonvarder and the importance ofcomplete candor in the licensing process

Thus Miss Hilbert smisrepresentations become irrelevanY since she is

no longer being considered for employment

Moreover applicant

initial represtation to Mr

seems

St

to

John

be arguing

are irrelevant

that the

is

reason

because

Miss

on

Hilbert s

the first

application her experience was correctly stated as two years in

internadonal freight fowarding While this particular point is somewhat

obscure if Iunderstand the argument it goes somewhat like this Miss

Hilbert had at the time of the first application two years experience in

international freight forwarding Presumably this experience was in air

reight forwarding although this does not appear in the record There

ore since the original description of Miss Hilbert s

experience was
Z34 FEDERAL MARITIME COMMISSION

accurate anything followin that statement is irrelevant because the

original statement was correct 9

Is it really necessazy to point out that he application in which the

statement in question was made was an application for a license as an

independent ocean freight fonvarder Is it further necessary to state that

when an applicafion for a Gcense as an ocean freight forwazder calls for a

statement of experience it is expected that the experience given will be

experience in ocean fonvarding Apparently it is necessary to now make

this cleaz to the applicant

As for the incident involving Miss Sforzo applicant has only the

following to say

With respect o Miss Sfoao he alleged fraudulen representation according to

Miss Sfoao and MrStJohn

Q What falsehood

A Mc St John The falsehood thashe had indicated that she would be a Vice

President of he Coryora ion

and again

where in fact it was Mr SwifPs suggestion that she be Vice President in name

only with asalary of one dolfar

The salary of one dollar was obviously to be in excess of whaever salary she would

receive otherwise We suggest that judicial notice be taken of the fact that a vice

president tiledces not necessardy require a substantial salary ordollaz fegure

Miss SCoao was no even listed on ony of the appGca ionsand hersatus wi hrespec

to Ihe pending applica ionis mooL ApplicanPs brief page 2

The fust thing to be noted here is that there is not one word of

testimony or a single scrap of documentary evidence supporting he bald

assertion that Miss Sforzo sone dollar salary was to be in excess of

whatever salary she would receive otherwise Indeed since she was by

her own unrebutted statement to Mr St ohn to be a vice president in

name only what other salazy would be coming to her And for what

other duties The applicant attempts to explain away past misrepresenta

6ons by at the very least further obfuscation and at the worst by further

misrepresentations and here again the whole question of Miss Sforzo s

status is moot because she is not even listed on any of he

applications This is an interesting theory and under such aheory any

false representation made to an official representative of the Commission

is mooY and without consequence so long as nothing conceming that

representation appears on the application previously filed with the

More impotlantly when Miss Ndbert visited Mr St Jopo at Ue Commivion NwYort o6ce ehe lold McSt

lohn hat Aer ocean orwaNine ae Gmited w eome five mo onoa maioio me nhed been dance

ivructor ONer thenthe smement appeadng in Ne irs appGCnuon fileA by Interna ionalthe oNy oMerevNence

dealing wilh Icexpenence o Mise Hilbert is Swift seamcn tM1a ahewas employed byAllirtrensport sometime

pnarto November I

19D

There u absolumty wWng in this record m demonstraze hat Ihe epplicuLL wv ryingoquali yMisa HJertu

Ihe corporae ot5c rwith the requisim expericnce ov the gromM lhat wme forvWing expenence other than aceen

woWd serve as somesort of an equivdmL Tothe wntrery ilappean lo reprtunt yel awherinstmce o dculatM

lack ofcom0 ecmdor in dealinp with thComrttission

19 FMC
1m to

a Vice

n name

a ould

a vice

repect

rd of

e bald

ess of

as by

nt in

what

senta

urther

orzo s

if the

s any

ussion

g that

h the

d oDance sr

c dente

IclimC

II 1 as

umamS ocean

3 MC

Texas On the second application citizenship date and place of 

were given as Mexican 1194 Matamoros Mexico On 

same application Swift reported his residence as Cleveland Ohio 

1949 to present The record shows that Swift moved from Mexi

Galveston in 1951 remained in Galveston until 1957 when he mov

Cleveland

Applicant deals with these inconsistencies by simply pointing ou

Swift thought all along that he was an American citizen and conc

But more importantly citizenship is not required to be a fr

forwarder To be fraud there must be a misrepresentation of a ma

fact The fact that Swift throught he was a citizen does not go 

explaining how he could represent his birth as having taken place in 

different countries and how he could represent that he had live

Cleveland from the year of his birth to present Moreover as t

constantly held thought that he was an American citizen how w

he listed his citizenship as Mexican on the second application

On International sfirst and second applications Rafael Swift app

as President and sole stockholder The record shows otherwise As 

as November 3 1973 the first application was filed on Novembe

1973 Swift in an affidavit stated that he held four of the six outsta

shares of International in trust for Ismail Renno The shares 

returnable to Renno upon demand at any time

Applicant takes the position that the socalled stock agreemen

merely security for a loan from Swift to Renno The transaction is lik

to borrowing from a bank and pledging the stock as collateral and 

suggested that such a transaction does not make the bank a s

holder This argument overlooks two very salient points First th

called stock agreement makes absolutely no mention of any loa

which the stock is held in trust as collateral Secondly it overlook

Management Agreement executed on October 15 1973 in which R

was to receive 12000 a year as a Partner in International Final

have the testimony of Renno himself that he and Swift individ

obtained loans of5000 and jointly obtained a loan of 15000 to 

the company

There remains of course the fact that Renno sparticipation was 

any way reported on either the first or second application Applis

19 FMC
played a very active part in the management of 

situation goes beyond technicalities and legal fiction

listed anywhere on a forwarder sapplication has th

anytime the return of four of the six shares of the 

for the license the very failure to show him on th

the Commission spicture of the applicant Again as

Swift srepresentations to the Commission on wh

controlled the company is edifying

Here again intent must be examined Mr Renno sconnectio

a material fact in the application being granted or not Tech

Renno was not a Stockholder If he had been what wou

naming him as such Certainly it wouldn thurt the application 

didn ttry to hide the arrangement from the investig

arrangement was a non material fact that there was no fraud

and no one was deterred by it Emphasis mine Applicant s

The bare facts in this record clearly demonstrate tha

Swift sought to disguise Renno sownership and 

management decisions of International Thus the f

after the two agreements between Swift and Re

President and sole stockholder of International Th

clearly did not show the actual organization and ma

tional Yet applicant contents himself with the exp

was deceived and the deception did not involve a 

Commission of course was deceived and we

John sinvestigation the deceit would have bee

question

frequently

of

used

whether

word irrelevant

a material fact

I know

was

of

involve

no Co

and none have been cited to me dealing with mis

have held that the misrepresentations must be such 

fraud Questions of legal fraud of course have 

whether an applicant has been truthful in his rep

Commission about his qualifications for a forwardes

Applicant sconstant reference to fraudulent misrepresentations as kgany inv

fact stems quite obvioulsy from Hearing Counsel sfrequent use on bnef perhaps f

term fraudulent misrepresentations
INTERNATIONAL FAEIGHT SERVICES LTD 237

serve the public in an endeavor as sensitive as forwazding should not tum

on nice legal distinctions

The third app6cation lists Mc Dennis Costin as holder of 10 percent of

the outstanding shares oF International Costin had at the time of the

third application asubscription agreement which according to appli

cant by operation oflaw legally makes him a stockholder whether or not

the shares have been actually issued Applicant cites for authority 18

Am Jur 2d 465 as follows

To constitute a

stockholder some sort of contract expressed orimplied is required

whereby he obtains the right to hold srock or upon some condition demand stock and

to exercise the rights of a stockholder It is held that a subscription osock in a

cotporation aUeady organized by the colporation makes a subscriber a smckholder but

acontrnct to subscribe inthe future does not make one a srockholder

Hearing Counsel on the other hand argue that the omission of the

following paragraph from the cited seclion ofAm Jur 46S results in a

misstatement ofthe law

An agreement to transfer stock to a certain person at a future Yvne does not make that

person a stockholder as of the time of the agreemenL Even pezsons holding priority

rigMs or warrnnts for stock are not considered stockholders

Hearing Counsel by way of conclusion urges that Costin scase is but

anotheremple of the absence of forthright disclosure of Intema

tional sownership which has pervaded each ofpetitioner sthree

applications before this Commission

While it is true that Costin has been issued no shares in Intemational

he apparently has the right to purchase 0percent of those shazes when

he can However under the full statement of the law quoted above Mr

Costin was not legally a stockholder He had no right to hold stock

and he did not exercise the righu of a stockholder aleast so far as his

record shows He merely had an agreement which permitted him to

purchase stock at some unspeciSed future time However it seems to me

unnecessary to determine Mr Costids legal status as a stockholder or

non stockholder It is only pertinent to point out that once again applicant

has chosen to state first what it desires the Commission to know and later

argue the legalities and technicalities of its representations on an

application

Applicant does not dispute tha Rafael Swift was placed under an

injunction by an Ohio state couR nor does he argue that Swift did not

use his position withAllirtranspoR to spirit away clients from All

AirtranspoR to International while he was still an employee ofthe former

Rather applicant contents itself with characterizing the lawsuit as the

usual one by a disgrunUed employer For reasons not entirely clear

applicant ci es the fact that during the testimony at the trial it was alleged

that afrer Swift s

departure from AlliRransport some pictures were

missing from the walls of the office Applicant says that this is an

example ofthe employer sdisgruntlement

Fromhe transcnp it woWd appear that th 0rcswere of thpromdional type urnisAcd byaviinea

vFMc
23H FEDERAL MARITIME COMMISSION

Concerning he gravamen of the complaint and the subject of th

court sjudgnent and injunction applicant has only this to say

The complaint asked for more 750000plus prohibiting soliciting of any 

plainti@ sStvifr semployerAllirtranspoR customers To settle for a nuisance fee 

5I 0000and ameaningless mjunction shows good business acumen of appGcant

Would Hearing Counsel stitle this normal competition

Even the president of the company Mr Nachbury lef and started his o

wmpany ApplicanYs brief pages 5 and 6

What really can be said abou applicant satti udetoward his the

employer or toward the law and the responsibilities imposed upon him 

the law Having been found guilty by a cour oflaw of ucilawful busine

practices applicant now chooses to dismiss the court sdecision as 

meaningless injunction based upon a suit byadisgrunUed employ

and wants to know if Hearing Counsel stifle this normal competitio

Emphasis mine

Normal competition dces not consist of divetYing shipments from 

employer to someone els tosay nothing of the fact that the shipment 

diverted to a

company in which you have an interest nor does norm

competi ion include luring employees away from your own employ

without even some minimal notice ofintent to do so The applicanYs id

of what constitutes normal compe itionnot only brings into questio

the business integrity of applicant but casts considerable doubt upon h

awareness ofand his willingness to accept the responsibilities of t

preferred position of freight forwazder and should he be licensed ho

would his concept of normal competi ion affect the conduct of h

business

Couple applicant sidea of normal compelilion with his notion of wh

constitutes business acumen and some idea of the way in which applica

views his obligations as a prospecfive licensed ocean forwazder can 

gained This attitude certainly does not comport with a desire 

scrupulously adhere to the laws ruleg and regulations governing h

conduct as an independent ocean freight fonvarder

The record shows that International issued checks to J Knott 

payment for consultative services J Knott never afforded a

services to International The funds were actually for Renno At t

hearing in this prceeeding Swift first testified that L Knott performe

consultation services and referred to J Knott as him Swift sub

quenUy acknowledged that J Knott was Renno swife Renno testifi

that J Knott was his wife smaiden name that she had never performe

consultative services for Inernational and that in their nine yeazs 

mnrriage she had never before used her maiden name in a busine

TM1e recoN contaim mNing whaboever aboutM1e cvcumauncn of Mc Nachbur resi aionThe hnimon

Rrnno conceming hie inciEent Aoa show hat even Ihen Renno wu in clase uwciatloo with SwiR wd waa edvi

him

19FMC
INTERNATIONAL FREIGHT SERVICES LTn 239

transaction Hearing Counsel urges that this resulted in International

fraudulently reporting income to the Internal Revenue Service

Applicant merely says What fraud These werethe amounts paid to the

persons designated deposited by them and properly reported to the

IRS It cannot of course on this record be determined that the reports

ofincome to the IRS constituted fraud under the laws administered by

the IRS However if Swift was willing to distort International sbooks

and records for this purpose it is possible to infer that he would do it for

other purposes The inference is more readily drawn when this incident is

viewed in the light ofthe other activities ofapplicant spread across this

record

Finally under the heading Further Lega1 Argument applicant urges

Although we do not agree that applicant was in violation of any rules or regulations

for the reasons sated above even if it was it would appear to fall within the leading

case

FMC

of Bolton MitchellIncndependent Freight Forwarder License No 516 15

248 1972

Applicant points ouY that despite numerous violations ofboth the Act

and the Commission sRules and Regulations the respondent was given a

second chance Ifind that case inapposite Ido not believe that the

respondenYs conduct in the Bolton Mitchell case supra can be

equated with that ofapplicant in this case In Bolton Mitchell supra

the Commission after pointing out that respondent committed awiliful

violation of section 16 Fitst ofthe Act had the following to say

Under most circumstances wilful violations of law of the nature set forth above

would be sufficient standing alone to revoke respondent sfreight forwarder license

However we note that the record establishes that Bolton Mitchell embarked upon

this illegal activity only after consultation with Counsel While the acions of respondent

are viola ions of law nevertheless we are disinclined at this time to revoke respondenPs

license and deprive him of his livelihood when respondent appears to have acted ingood

faith upon advice of counsel FLrthermore Bolton Mitchell had been operating as a

licensed freight forwarder for the past ten years and formerly provided good and

valuable service for approximately forty years without serious complaints Emphasis

mine a

In Bolton MitcheU supra the activity which was ultimately found

violative of the law was at its inception at least arguably lawful and

respondent was found to have acted in good faith upon the advice of his

counsel in the conduct ofthat activity By contrast we have an applicant

who not only itself indulged in misrepresentations to the Commission but

also induced otilers to do so One does not indulge in this kind ofactivity

in good faith

The record in this case shows that the applicant was less than candid

in fact the record clearly shows a number ofinstances when the applicant

lied anperhaps more importantly two instances when the applicant

induced others to lie for him The applicant clearly has little regard for its

See also License Application GuyG Sonentino IS FMC127 1972 particularty the statements of

Sortentino at oae137 and lhe Commission scomments in its Adootion of he Initial Decision at oaae 12R A
24O FEDERAL MARITE COMMISSION

own repu ation for veracity and appears not to be concerned about

others who would be compromised MissHilbert and Miss Sfarto

The explanations offered by applicant on brief aze indicative of

applicant sattitude that he has done nothing wrong venif he has done

nothing right However applicant has in fact done a good number of

things wrong and it ill behooves the applicant to conclude by suggesting

to me on briefthat

What possible purpose could be served by utilizing prior possible peccadillos to

prevent expanded service ro the shipping pubGc AppGcant sbrief page lOJ

The record shows what the conduct ofthe appGcant was and the final

reference to that conduct as prior possible peccadillos is but another

example of the seriousness and worth applicant attaches to his various

supplications adrepresentations to the Commission and its representa

tives Even now when applican does not and indeed cannot challenge

he accuracy of the facts of record the appficant merely wants to explain

them away itwants to characterize the conduct as a series ofpeccadil

los

Ifwe are to set any standazds for integrity and if we aze to make any

eft or to insure that licensees aze fit then the applicant here must be

denied a license To do otherwise would be 1 to condone a cavalier

approach to misrepresen ations made by the applicant himself 2 to

ovedook he fact tFtat he induced ohers to falsely represent themselves

3 to finally accept those proven acts as peccadillos which should be

overlooked for the sake of permitting the applicant to provide expanded

service to the shipping public and 4 to accep applicant sconcept of

normal compe itiodpractices which were found unlawful in open

court

One need not rehash the varied and multiple instances of the applicanPs

disregard of candoc The record speaks for isel The applicant remains

secure in his own knowledge that his actions constituted nothing more

than peccadillos The applican has at no point in this proceeding

shown that he was even aware that his fabrications were ofany real

import nor has he shown or even hinted that he would do otherwise if he

were licensed

While the most troublesome of the activities dealt with above are more

duecdy attributable to Swift he record is cleaz that Renno was an active

participant in the management of International and either was or should

have been aware ofthe activities in question 16At no point in his

Applicam malcee brie rcPormtt toIhe l00 orC00 memben of Ihe shipping public who migAt want to uve 1FS u

ocean Geight forwardcr Thie rcPorence ie rothe ueerted number ofpenom who now use Internatioual aa an av

orwvder However applican ca11eE not one af them b

teeury mr did it mbmieingle at idavit bom one of them

exprcssiny a

desire to use Inmmefional ae m wem forvardec In ahort we ave oNyapPepeculationa in tM1e

recoN

It ie reLly inconceivable on hle remrd tha Renno could Aave remained in ignorance o SwiR a

probleme

parGCWady in newof he hree uparete mA distinc epplicatio u

it beceme

nessary to file with thCommissbn

19FMC
INTERNATIONAL FREIGHT SERVICES LTD 24j

testimony did Renno attempt to disassociate lvmselffrom Swift orSviftYs

past representations to the Commission

On the basis of the record before me and for the reasons stated Ifind

and conclude that applicant is unfit to carry on the business of

fonvarding within the meaning of section 44 ofthe Act and that therefore

the application should be denied

The Commission sOrler instituting this proceeding questioned appli

canYs ability to conduct the business offorwarding

As already noted Swift has had no actual experience in forwarding and

Renno sexperience was limited to one shipment which he personally

handled

However Renno testified that there was little significant difference

between the forwarding of a shipment by air and the forwarding of a

shipment by water In addition Renno has supervised the Cleveland

Freight Services offlce in Londo which has forwarded shipments by

water Renno also attended a two year course in transportation at LaSalle

testimony

College ofwhich

that the

the

work

biggest

involved

portion

in

was

ocean

ocean freight It is Renno s

freight is less than that

involved in air freight Renno states that he is familiar with all of the

documentation necessary for the successful movement of a foreign

shipment Renno also agrees should International be granted a license he

will spend whatever time is necessary in International soffice in Cleve

land to insure that all personnel are properly trained

In their opening brief Hearing Counsel urge that Mr Swift and Mr

Costin have no ocean freight forwarding experience and that Mr Renno

tried unsuccessfully to appear experienced beyond the one shipment he

claims to have made while in England 18 Hearing Counsel further

In fac Rennohimself seemsohave adopteA a rather cunous approach to his testimony The following colloquy

took place al Ihe hearing

Q Would you please describe what kind of financial aaangements exist between IFS and Cleveland Freight

Services

MR EWERS As of what time

THE WITNESS 1 can tunderstand really

BY MR WEINSCEIN

Q As of the time ihat IFS acquired Cleveland Freight Servitts

AYes

Well 1 will cllyou about it and if you don tlike it tell me and I will change it

This was elicidfrom Rennod uring the following calluquy

Q Mc Renno while you were operating in London with the company Cleveiand Freight Services how many

ocean shipmenls did you perform service on

A1 really havc no idea Figures are very very ditficult

Q Approximately

A1 wuuld say overone

Q More than a

hundred

A No no really

Q More Ihan 50

A Yes Well well I would say most of the shipments we have are on ei herletters of credior legalized

well let me tell you what accounts we have and then you makethe estimate

Q 1m interested in exactly and not the accounts but what services you were perfortning

AYou see Your Honoq there is something very importan here There are certain things I don twant my

competitor to know abouL It is unfair for example tolet them know at what level we are growing at this time

19 FMC

INTERNATIONAL FREIGHT SERVICES Lrn 243

that the applicant International Freight Services is unable to conduct the

business of an independent ocean freight forwarder and its application

should be denied

For the foregoing reasons I conclude that applicant International

Freight Services Ltd is neither fit nor able to conduct the business of

forwarding and that its application for a license as an independent ocean

freight forwarder should be and is denied

S JOHN E COGRAVE

Administrative Law Judge

WASHINGTON DC

May 19 1976

FMC
FEDERAL MARITIME COMMISSION

INFORMAL DOCKET NO 352 n

ANDES PRODUCTS EXPORT IMPORT

V

PRUDENTIAL LINES INC

NOTICE OF DETERMINATION NOT TO REVIEW

August 26 1976

Notice is hereby given that the Commission on August 26 1976

determined not to review the decision of the Settlement Officer in this

proceeding except to make the following clarifications

In page 2 the references to Pencils Not Mechanical Class Rating I

should read Pencils Not Mechanical Class Rating 11

In the concluding paragraph of the Settlement Officer sdecision it is

stated that the evidence substantiates the claim that the shipments were

lead pencils and thus should have been rated under the specific

commodity description The specific commodity description sought to be

applied however in not lead pencils but Pencils Not Mechanical We

find that the evidence substantiates the claim that the pencils were not

mechanical

By the Commission

S JOSEPH C POLKING

Assistant Secretary

244 19FMC
FEDERAL MARITIME COMMISSION

INFORMAL DOCKET NO 352 1

ANDES PRODUCTS EXPORT IMPORT

V

PRUDENTIAL LINES INC

Reparation granted

DECISION OF JAMES S ONETO SETTLEMENT OFFICER

By informal complaint filed in April 1976 Andes Products Export

Import Complainant alleges that Predential Lines Inc Respondent a

common carrier in the foreign commerce ofthe United States during July

and October 1974 overcharged complainant in violation of section

18b3of the Shipping Act 1916 on two shipments ofPlast OCplead

pencils in seventy fivecartons weighing 4725 pounds from New York to

Guyaquil Ecuador Complainant contends the shipments should have

been rated on the basis of the tariff commodity description Pencils Not

Mechanical and not as PencilsNOSInstead of total freight being

970 35it is contended it should have been 699 53Reparation in the

amount of270 82is requested

The shipments moved prepaid and hence are within limitations

The bills of lading were made out by Leading Export Service

Corporation foreign freight forwarder air freight forwarder and freight

consolidator FMC License Number 1027 The bills of lading described

the shipments as Lead Pencils The respondent stariff ofrates had

commodity description only for Pencils Not Mechanical otherwise

the PencilsNOSrate applied The respondent not knowing whether

the pencils were mechanical or not

NOS

rated the shipments Pencils

Accordingly the rate applied by the respondent per the bill of lading

description Lead Pencils was PencilsNOSClass Rating I in

effect July 15 1974 130 75WMand PencilsNOSClass Rating

I in effect October 23 1974 135 75WMComplainant argues the

Both parties having consented to the informal prmedme of Role 19 of the Commission sRules of Practice id

Prmdure a6 CFR 502314this decision will he final unless the Commission elects to review it within 15 days

from the date of sesvlce thereof

19FMC 245
246 FEDERAL MARITIME COMMISSION

proper description is Pencils Not Mechanical Class Rating Iin effec

July 15 1974 9150WMand Pencils Not Mechanical Class Rating

I

in effect October 23 1974 9650WM

Complainant by way ofexculpation argues it has no knowledge o

tariff matters and was not aware that the bill of lading description wa

inadequate for rating purposes Anyway itis not the declaration on the

bill of lading but what is actually shipped that determines the applicable

rate

Respondent replies that the bills of lading furnished by the complainan

described the shipment as Lead Pencils The attachments to the

complaint were not provided respondent at the time of shipment and to

require respondent or any other carrier to inquire of a shipper as to

whether or not the description of cargo is correct places an undue burden

on the carrier Respondent avers its tariffs are a matter ofpublic record

and complainant and orits forwarding agent are expected to maintain

their own expertise

Although the complainant states the pencil manufacturer Empire Penci

Company has no catalog the complainant ssupplier Cendisc Corp

states the company does not manufacture mechanical pencils and the

shipments in question were wood lead pencils with erasers The complain

ant has also submitted two invoices covering two shipments ofPlast O

Cap Pencils One invoice is dated twenty onedays before the first bill o

lading The other invoice is dated contemporaneously with the second bil

of lading The weights and quantities on the invoices tally with those on

the bills of lading Further documentation is afforded by a statement from

the merchandiser asserting that the shipments oftwo consignments o

Plast OCpPencils were made on the relevant dates to the complainan

The applicable law in these misclassification disputes is only partially

quoted by the complainant 3What was not mentioned wasthe counterpar

to the statement what is actually shipped determines the applicable

rateThat is where the shipment has left the custody of the carrier and

the carrier is thereby prevented from verifying the claimant scontention

the claimant has a heavy ultimate burden of proof to establish his claim

The rationale underlying the heavy burden of proof requirement in these

misclassification cases is simply that there is no practical way to

effectively check the contents of shipper loaded consignee unloaded

containers unless each and every container is stripped and its contents

examined piecemeal while in the carrier spossession

Although respondent sargument that forcing the carrier to inquire o

the shipper whether or not the description of cargo is correct places a

undue burden on the carrier is acompelling plea on equitable grounds i

is not a cognizable legal defense This agency cannot consider arguments

addressed to equitable considerations in matters arising under section

All rates from Atlantic and GWVWest Coast of South America Confemace Tariff

Docket No 383 1Western Publishing Co fnc Y Hapag LloydA G 13 SRR 16 19n

19FMC
ANDES PRODUCT v PRUDENTIAL LINES 247

18b3of the Shipping Act Moreover although the ocean freight

forwarder would appear to be at least in pari delicto with the carrier

nevertheless as the freight forwarder s

deliquencies are also not within

the stricture ofsection 18b3of the Shipping Act it may not be called

to account at least not before this forum

Therefore on the basis of the invoices and statements submitted it is

found that an adequate substantiation ofthe complainant sclaim that the

shipments were lead pencils has been established Thus since the

shipments consisted oflead pencils they should have been rated under

the specific commodity description and accordingly reparation in the

amount of270 82is awarded

S JAMES S ONETO

Settlement Officer

Mueller vPeralta Shipping Corp 8FMC361 1965

FMC
FEDERAL MARITIME COMMISSION

IbcKeT No 6957

AGREEMENT NO T233CNEWYORK SHIPPING ASSOCIATION

COOPERATIVE WORKING ARRANGEMENT

Nos 7127187126AND 34

TRqNSAMERICAN TRAILER TRANSPORT INC SEATRAIN LINES INC

DANIELS BC KENNEDY INC CHANDRIS AMERICA LINES INC GREEK

LNe INCHOME LINE AGENCY INC I NCRES LINE

THE NEW YORK SHIPPING ASSOCTION INC

V

Claim ot States Marine Group consisting of 12 breakulk Gnes against New York

Shipping Association based upon overassessments for the bene5ts for IongsAoro

men for the 196971 period found justified in amount of 568999New York

Shipping Association direcred to satisfy claim and notify Cnmmission of inethod of

satisfaction or establish with tM concurrence of the Group and advise of the

method of satisfaction within 60 days Provisions made for filing of additional

claimsby other persons seeking reEund for 196997 period

C P Lambos and Donato Caruso for Respondents the New York

Shipping Association and its members

Stanley O Sher and Jacob P Bi lig for Interveners States Marine

International Inc Isthmian lines Prudential Lines Inc AUanttrafik

Barber Lines Blue Sea Line Concordia Line Hellenic Lines Hoegh

Lines Meyer Line Nedlloyd Line and Norwegian America Line

Ronald A Copone and Stuart S Dye for Intervener and Complainant

Transamerican Trailer Transport Inc

NeaA1 Mayer for Intervener and Complainant Seatrain Lines Inc

Gerald AMa iafor Intervener Sea LandService Inc

AanF Wohlsrerter for Intervener Wallenius Irne

Herbert Rubin Ceeelia H Goetz and Alan ADAmbrosio for

Intervener Wolfsburger Transport GesellschaftmbH

Joseph F KeyJr for Complainant Daniels Kennedy Inc and

for Intervener the Madden Corporation

Samue H foerman for Intervener the Port Authority of New York

and New 7eey

24g 19 FMC
AGREEMENT NO T2336 249

Mario Escudero for Intervener the Commonwealth ofPuerto Rico

Donald J Brunner and Paul J Kaller as Hearing Counsel

REPORT

September 14 1976

BY THE COMMISSION KCI E B1kICC Chairman James V Day and

Bob Casey Commissioners Clarence Morse Vice Chairman and

Ashton C Barrett Commissioner concurring and dissenting

This is the final phase ofprotracted and complex litigation arising out

ofdisputes as to the proper method to be utilized by the New York

Shipping Association Inc NYSA an organization composed ofwater

carriers terminal operators and stevedores serving the Port of New

York for assessment for the period October 1 1964 September 30 1971

of cargo moving through that port in order to meet certain benefit

payments for which NYSA is obligated under a collective bargaining

agreement with the Internadonal Longshoremen sAssociation AFLrCIO

I

On June 9 1972 after two Initial Decisions by Administrative Law

Judge Charles E Morgan Judge Morgan or the AIJ and a prior Report

and Order of our own we approved aformula for the assessment ofthe

longshoremen sbenefits See Agreement No T2336 New York Ship

ping Association 15FMC259 1972 2This action was subsequently

affirmed by the Court of Appeals for the District of Columbia Circuit

Transamerican Trailer Transport Inc vFMC160 USApp DC

351 492F2d617 1974 Transamerican

Our decision in 15FMCdid not however resolve all ofthe problems

relating to the assessments When this proceeding was instituted we

granted an interim conditional approval to the assessment formula

proposed by NYSA to enable payments to be made to the ILA so as not

to jeopardize the bargained forbenefits The condition was that the

approval was subject to such adjustments and condidons which the

Commission might after hearing impose in determining a reasonable

formtila for allocating assessments on different categories of cargo See

Order ofMarch 11 1970

The assessment formula approved in 15FMC259 differed substan

tially from that to which we had granted interim conditional approval

Under the interim agreement with certain exceptions not here relevant

all categories of cargo were assessed alike on a basis including both

tonnage and manhour factors Direct employers of longshore labor

ie stevedores and terminal operators paid assessments on a manhour

basis while carriers paid on a tonnage basis Under the modified formula

Generally wherereference herein is made to assessment periods by years oNy such as 196971 this is meant

tocover the periods beginning October Iand ending Seprember 30

Our Eadier Report and Order appears at 14FMC94 1970

FMC
ZSO FEDERAL MARITIME COMMISSION

approved in our original Report at 14FMC94 cargo carrie

Puerto Rican trade was given excepted status ie was except

the manhour tonnage basis and assessed for both direct emplo

carrier contributions only on a manhour basis Under the m

formula approved in our second Report and rmed by the C

Appeals in Transamerican the Puerto Rican trade was given exc

status wittt respect to some benefits those funded for pensions 

and clinics but carriers in that trade were required to pay ihe 

Guaranteed Annual Income GAn on the regular tonnage basis 

proportion Puerto Rican tonnage bore to total tonnage Newspr

given ireatment similar to cargo in the Puerto Rican trade and a

biles were assessed under the manhour tonnageformula on aweig

rather than on the basis of20 of cubic measurement as had b

prior case

We recognized that our decision approving the modified formul

necessitate many assessment adjustments tha simply can

helped forthese adjustments are ordered on the record establ

this proceeding only and will not have application to additional 

ment pmceedings ifany initiated in the future 15FMC

Adjustments were particularly required in the case of the c

operating in the Puerto Rican trade the Puerto Rican carriers wh

been paying assessments on the excapted basia adopted 

Commission in its first decision NYSA was ordered to accomp

aciustments in the assessments which were made necessary by th

and conditions ofapproval granted to the assessment agreement 

ment NoT2390 15 FMCat 287 When the parties were un

agree on the specific amounts of adjustments or the manner o

menting the required acjustments the matter was referred to 

Morgan for the purpose of determining the amounta and resolv

manner and method adopted by NYSA to accomplish the adjus

While the assessment acjustment implementation proceedi

pending before Judge Morgan NYSA and the ILA negodated set

agreements with the newsprint and autoniobile interests and the 

Rican carciers T1rese settlement agreements related both to the 1

7

assessment period which is the subject of this proceeding a

assessment periods for 19714 covered by Agreement NoT2

and 19747covered by Agreement NoT300

NYSA and ILA which had become a party to the asse

agreements for the two later time periods agrexd that newsprint w

assessed on amanhour tonbasis during 1971 974 and on a com

excepted basis during 19747 In return newsprint agreed 

any claims for adjustments it may have had arising outofthe Comm

The style of tNs proceediny refep not ro the ayreemant actuelly in ieaue but an earlier apreemen

replflced by Agreement NoT2390

19 
AGREEMENT NO T2336 ZS 1

ordered modification ofAgreement NoT2390 orwith respect to No T

2804 The automobile interests agreed with NYSA and ILA to assessment

on a 14 measurement ton assessment basis e

somewhere between

the original 2A measurement ton basis ofT2390 and the weight basis

ordered by the Commission for the 19714period and aweight ton

basis for a full tonnage assessment for the 197977period NYSA

agreed to assessment for the 196971 period on the weight ton basis

prescribed by the Commission and ciedited the automobile interests with

165051 the difference between assessments on the basis approved by

the Commission and that upon which they had actually been made

Newsprint automobiles NYSA and ILA stated in their settlement

agreements that these agreements settled all issues with respect to the

assessment formulas for the three assessment periods as between them

selves The settlement agreements were approved by the Commission

The Puerto Rican carriers agreed with NYSA and the ILA to

assessment on a manhour tonnage basis for the 19714assessment

period and a full tonnage assessment for the 19747 assessment

period NYSA agreed to give up its right to recover the monies due it

from the Puerto Rican carriers under the Commission ssecond decision

inthis proceedingThisagreement was also approved by the Commission

but with the condition that the settlement with the Puerto Rican

carriers shall in no way affect or diminish the rights of States Marine

Internadonal Inc et al twelve breakbulk carriers operating in foreign

commerce who were seeking assessment adjustments before Judge

Morgan hereinafter the States Marine Group 5to refunds under Agree

ment NoT2390 and orarising out of Docket No 6457We explained

in granting the approval with condition that the mannerof assess

ment adjustmenY necessary to satisfy the claims of States et al as well

as the amounts to be paid are the subject ofthe implementation phase of

our pocket No 6957and will be decided therein

The Initial Decision

In his Initial Decision Judge Morgan found the claim of the States

Marine Group for refunds based upon alleged overassessments during the

196971period unjustified and completely without merit He further

found that to the extent the States Marine Group seeks recovery against

the three carriers in the Puerto Rican trade whose underpayments are the

basis for the States Marine Group sclaims such recovery is barred by

the provision of section 22 Shipping Act 1916 requiring that actions for

reparation be filed within two years ofthe accrual ofthe cause of action

UnderAgreement NoT3007asaessments for the 197Y1977 period were assessed oniy against carriers the

manhour assessment ageinst the direct labor employer embodied in the prior assessment agreements having been

dropped

These carriers aze States Marine Intemational Inc Isthmian Lines Prudential Lines IncAtlanttr k

Barber

Lines Blue Sea Line Concordia line Hellenic Lines Hoegh Lines Meyer Line Nedlloyd Line adNofwegian

America Line

19FMC
ZSZ FEDERAL MARITIME COMMISSION

The ALJ first of all determined that the Commiasion in its two e

decisions in this proceeding approved the combination manh

to

nage assessment of the breakbulk cargo carried by the States M

Group because it directed no change in such assessment basis and 

this assessment basis for the Statea Marine iroup was affirme

Transamerican Judge Morgan then stated that the Commission 

found that the States Marine Group had been overassesaed and tha

mjorissue in the Commiasion spriar actions in this proceeding wa

proper assessment for the Puerto Rican carriers the automobile inte

and the newsprint interests The ALT also maintained that in ord

grant refunds to the States Marine Group the Commisaion would ha

give similar refunds to all carriers of breakbulk cargo that had 

assessed on the regular man hours tonnage basis totaling a

28000 which would in turn cequire inereases in the present ton

assessments that would be likely to result in cargo diversions away 

the port of New York

Ifin fact the States Marine Group was overassesaed durIng the 

1971 period Judge Morgan contended then it was compensated 

assessment treatmentduring the 19714and 197977periods In

as the 19714period is concerned Judge 1Vlorgan found that the S

Marine Group obtained areduction in assessmenta by virtue of the P

Rican carriers acceptance ofassessment on the man hour tonnage

during that period which resulted in increased assesaments on the P

Rican carriers The increased assessments on the Puerto Rican ca

created theAIJ asserted asavinga to the States Marine Group of 

75000 which more than offsets the claimed 715000 overassess

ofthat group for the 196971period

DISCUSSION AND CONCLUSIONS

The States Marine Group and Hearing Counsel have excepted t

ALJ sdenial of the claim of the States Marine Group wlrile NYSA 

the Puerto Rican carriers support such denial We turn now t

positions of the parties with reapect to the individual issues for reso

raised by the exceptions to Judge Morgan sInitial Decision an

replies thereto e

The Stetea Marina 6roup hed meintained bePoro the ALl thst it wae endqad ae part oP in refund cl

aherc ofen e11epW eurylue in the eaceesment tund at the and of lha I1971 uwvment period The AL

this part oP the cleim on theprounde thet the e11eyW eurplw ulaimwae not reiwd at dearina ormede tbe u

proofedthet in eny cese the eurplue wao meroly the roedt ot impreche prqdictlon ato amounto whic

heve to be expended durinp the aeewement pertod and hsve ince been expended to maat NY9A econUnW

6ene6t obllpatione Tothe extant there wee aurplun at the end of lhe 19971 pedod euch eurplu

indicazad Natthe amaunte payable by lonyehoro emplnye stor the tI971 perlod lud moro tlun been 

Punds recelved by NYSA pre not held but prompqy expendad to pey flinpe beneflt obq0edone Yor eu

eseesemen pariode Asaesamente with rcepect to tAeee Istor pedod ere the auleot maller otuthe procea

which the Stata Merine 6roup hee choaen not to participate In Ila excepNon the 9tatae Marlne arouD e

we rccopnlu thet etdcUy apaakinp the eurylue arleee to wme extent Prom NYBA embcelodadom 

Porum and underthe easumptiana the mtWnde will be mede wedo not at thie Uma prcee the eurylue ieme

19 
AGREEMENT NO T2336 253

IThe Alleged Overassessment of the States Marine Group During the

l969 1971Assessment Period

We agree with the States Marine Group and Hearing Counsel that the

ALJ erred in finding that the Commission has not already determined that

the States Marine Group had been overassessed forthe 196971period

We

FMC

have spec cally found in our Report and Order of June 14 1972 15

at 275 that the improper basis of assessment for the Puerto

Rican carriers had resulted in the underassessment ofthat group It

necessarily follows since the total assessment obligation is fixed that the

States Marine Group was overassessed We also specifically found

moreover at 15FMC275 that the underassessment of the Puerto

Rican trade resulted in the glaring inequity of shifting some 6

million in costs to the remaining carriers among which of course aze

the States Marine Group The earlier phases of this proceeding were

designed solely to determine the proper bases of assessments for different

categories of cargo The fact that we did not in such earlier phases

require an adjustment of the tonnage manhour basis upon which the

States Marine Group scargo was assessed as we had done with respect

to automobiles newsprint and Puerto Rican trade cargces dces not mean

that in impiementing our order requiring adjustments of assessments the

breakbulk carriers cannot be compensated for overassessments caused by

underassessments on the Puerto Rican carriers

II The Amount of the States Marine Group Overassessment

Although NYSA does not agree that it has any liability to the States

Marine Group with respect to the 196971 assessment period it is in

substandal agreement with the States Marine Group as to what the dollar

amount ofthe Group s

claim would be if valid Basically the methodol

ogy used by the States Marine Group in computing the claim was to take

the difference between the dollar amount ofthe assessments due from the

Puerto Rican carriers for GAI on the tonnage basis approved by the

Commission see page 3 supra and the excepted basis onwhich such

payments had actually been made and then to determine the amount due

each member ofthe States Marine Group by multiplying the amount still

owing from the Puerto Rican carriers by the percentage each carrier in

the States Marine Group has borne oftotal tonnage assessments NYSA

maintains that if this methodology were used the amount of the States

Marine Group s

claim should be reduced by the net effect of the

automobfle credit adjustments for the 196971 period made as a result

ofthe automobile setUement

We agree with NYSA that in computing any liability to the States

Marine Group account must be taken ofany valid claims that reduce the

Aithough the diNerence between the totalIiability to all carticrs of Ihe States Merine Group as computW by the

Group and as reAuced by NYSA is as ludge Morganobserved relauvely small ie5715 621 as opposed to

566999the exact amount of such liability becomes important here since weunlike the ALJ find thatNYSAin fact

haz such IiabiGty

19FMC
2S4 FEDERAL MARITIME COMMISSION

size ofthe liatrility against which the States Marine Group sclaims a

be offset The present amount ofsuch total liability iethe underas

ment ofthe Puerto Rican carriers for the 1969 i971 period has by 

ofCommission approvedsettlement see pages 4Ssupra been red

by credits by NYSA to the automobile interests to effectuate 

adjustments required by our order at 15FMC287 As thus reduce

amount of overassessments against the members of the States M

Group are as follows

Total States Mazine Gmup Overpayment October

5

1 19Septamber 30 1971

00434Puerto Rican carrier 

payment less

165051 automobile credit 

68959 plied by

143

asseasmonts

of States Marine

visa

Gs

tonnage assessmen

Overpaymant of each member of States Marine Group 196971

Norwegian America Line 14518 30of total tonnage

Atlantttaf dc 1Q646 22of total tonnage

Nedlloyd Hoegh Lines 17905 37oftotattonnage

Hellenic Lines Ltd 29520 61oftotal tonnage

ConCordia Line 62911130oftotal Wnnage

Blue Sea Line 87ll 18of totaltonnage

Barber Steamship Lines Inc 94850 196a

of total tonnage

States Marine Intemational Inc and Iath

mian Linea103077 213oftotaltonnage

Meyer Line 114207 236oftotaltonnage

Prudential Grace Steamahip Co owPru

dential Lines Inc 23354482oftotaltonnage

III The Alleged Satisfaction ofthe States Marine Group s

Clat

Virtue of the Group sAssessment Treatment During the 19

4

and 19747Assessment Periods

Hearing Counsel and the Statea Marine Group maintain ttat the 

erred in concluding that even if the States Marine Group had 

overassessed during the 196971period it was compensated 

treatment during the following two assesatnent periods We agi ee

As we stressed in our second Raport in this proceeding assea

aciustments are ordered on the record established in a part

assessment proceeding and do not have application to add

assessment proceedings if any initiated in the future 15FMC

282 Once liability for overassessments has been established it can

removed by contentions that since assessments are raised condnu

over successive periods all periods must be considercd in determ

assessment liabilities Under such atheory assesament acjjustments 

the Commission had found to be required by law could be posE

indefinitely in light of the posaibility that ahifting liabilities for succ

assessment periods would even outliabilides for prior periods a

approval which we originally granted to the assessment agre

19 
AGREEMENT NO T2336 ZSS

embodied in NoT2390 upon the condition that any and all

adjustments and condidons as shall be ordered by the Commission in its

final disposition of this proceeding would be rendered meaningless If

one determined to be entided to adjustments because of overassessment

during a certain assessment period were not given such adjustments

promptly the result in Hearing Counsel swords would make a

mockery ofthe Commission sconditional approval as well as its

ability to evoke confidence in the use of this device when deemed

necessary to the public interest in the futu

On the other hand since payments are made for benefit funds on a

continuing basis over many assessment periods it is arguable that liability

to certain carriers for overpayment for earlier periods could be discharged

by assessment reductions for later periods Such an approach has been

used by NYSA in the past and is the basis for the settlement with the

automobile interests herein Assessment of the automobile interests on

the basis prescribed by the Commission for 196971which was one of

the bases of the settlement was achieved through credits for the

automobile interests against payments for the 19714period See

pages 5supra NYSA contends that insofar as the States Marine

Group is concerned its claim has been discharged because increased

payments by the Puerto Rican carriers for the 19714 assessment

period have fully compensated the States Marine Group for any overpay

ments for the 196971 period

The compensation offered the States Marine Group is however

totally unlike that given the automobile carriers Specific credits were

given the automobile carriers for overassessments while the States

Marine Group is asked to accept compensation not based on actual

credits but upon an alleged reduced assessment it has been given in a

later assessment period

Ordinarily we would be reluctant to pursue NYSA scontention that the

States Marine Group may be compensated for claims relating to overas

sessment in an earlier period not by credits but by alleged reducfions for

later periods flowing from the assessment formula for a later assessment

period Such contentions have the same basic fault as the position that

liability for a single contract period cannot be considered by itself

namely that the payment ofjust claims could be postponed indefinitely

Here however where the period upon which the alleged compensation

is based ie 19714is past and all relevant assignment figures with

respect to it are of record herein we will eacamine NYSA scontention

The problem with NYSA s

argument is that it rests upon many integial

assumptions none of which has been or can be proved in the context of

this proceeding These assumpdons are 1 that if the assessment formula

for the 19714period had been litigated the Puerto Rican carriers

would have been found to have been overassessed by virtue ofthe shift

to the tonnage basis embodied in the Puerto Rican carrierNYSA

settlement agreement 2 that by virtue ofthis fact the States Marine

19FMC
ZSE FEDERAL MARITIME COMMISSION

Group was underassessed and 3 that the underasseasment ofthe S

Marine Group during the 19714period exceeded any overasaess

of that group during the preceding period thus wiping out the S

Marine Group sclaim

Perhaps the weakest link in NYSA sargumentative chain 

assumption as to what would have happened with respect to 

assessment for cargo in the Puerto Rican trade if the assessment fo

for the 19714period had been litigated The context in whic

assessment formulas for Puerto Rican cargo for the 19714and 

1977 periods were approved was one ofsettlement As stated in our 

ofbonditional approval ofthe agreement between NYSA the ILA 

the Puerto Rico carriers for assessments for those periods we app

that agreement because the parties appmach to setUement of the 

and obligations between and among themselves does not appear 

improper Considerations underlying settlements do not neces

coincide with the process of making findings on a record in a litig

proceeding SeeAgreement NoT2635 acicMaritime Assoc

Final Pay Guarantee Plan 16SR 103 1323 1975 8 More

although our decision in this proceeding in 15FMCestablishin

assessment formula for the Puerto Rican carriers can be said to 

some significance forthe future it has such si ificance only to the e

that the facts and ciroumstances are the same in the future ie 

1974 197497 nas they were in 196971As we said in 15 FMC

282 We should also point out that our decision ofcou seapplies 

to the obligations arising under AgreementT2390 and the part

collective bargaining agreement which created the benefits to be fun

We cannot assume absent findings on a

record that conditions a

same now as they were with respect to AgreementT2390 s

To the extent that the record in ttus proceeding shows anyttring 

the applicadon ofthe formula adopted by the Commission for the P

Rican carriers for the 19971assessment period to the later perio

would appear to lend significant support to the argument that 

matter had been litigated shapplication would not have been m

o

a

In both of his Initial Decisions in this prnceeding Judge Morgan 

the likelihood thatawhole tonnage Pormuia ofthe type we 

approved for the 197977 period see page S supra would b

appropriate and lawful form of assessment for al categories i

Nothina we eey heroin ie to be coneUUed ae emtinp doubt upon the vaUdily oP thaPuerto Rican cartie

approveA aetqehent ayreementa ea betwean the pertiee theroto By virtue oP thoee ereemenn the par

reeolved theirdiffercncee in amanner which we have found to be propec ReQardleee of how the leeuw w

re

the aseeaements forthe 19714 end 19747 periode may Aave been roeolved ifthey had beea tWly Iltip

partiea wthe wttlement eyremente exerciaed pood ailhIn atlempUnQ to predlcfdyhta end tiabWNeo and 

fsWteA indaeiriny thet ea between tkemeelvee eawemrnt 6tlyslion ehodd cewe

See Order of Inveetipetion and Hearing onAeement NoT30W covedny the 1914I977 eeeeeemen

pege3 eerved November 1

1974

We take no poeition ea to what Poerto Rican aeeewment tormWa woWd have been approved for the 

and 197977 periada iftheae matten had baen litipeled We wieh oNy to hiyNitthe hipAly epeculatlve 

predictiona in thie rcyarcl

19
AGREEMENT NO T2336 ZS7

future We furthermore relied at least in part in establishing the

parrtilal exemption of the Puerto Rican cargo from the tonnage portion of

the assessments for the 196971 period on the ground that such partial

exemption would prevent imposngon the Puerto Rican trade at this

time an unnecessarily severe increase in costs 1S FMCat 2b5 12

Prior to 1969 NYSA collected all benefit assessments on a manhour

basis See 15 FMCat 2912 Since the Puerto Rican carrier

assessment formula approved for the 196971 period imposes cost

burdens somewhere between those ofthe excepted ie manhour

assessment level and the manhour tonor whole ton level the shift to

manhour tons and whole tons embodied in the agreements covering 1971

1974 and 197977respecdvely would have been much less severe and

may have suggested a different resuit in the Commission sdeterminations

Since it cannot be shown that the Puerto Rican carriers were

overassessed for the 19714 period it follows ipso facto that the

States Marine Group cannot be shown to have been underassessed by

virtue of such overassessment

Although the States Marine Group never challenged the assessment

formula as it applied to breakbulk cargo for the 19714 period before

the Commission the record is not without evidence suggesting that even

if the Puer oRican assessment formula did not result in overassessment

for Puerto Rican cargoes during 19714 the States Marine Group may

still have been overassessed during that period The presidents of both

NYSA and the ILA testified that they felt the assessments during this

period were unfair to the breakbulk carriers and this was also the view of

an independent labor arbitrator who however lacked jurisdiction to alter

the assessment formula

Insofar as the 19747assessment period is concerned the president

of NYSA testified that the assessment on breakbulk cargo embodied in

the agreement for that period reflected only that to which the breakbulk

carriers were already entitled asfairand equitable The president of

the ILA testified that he felt the formula for 197977 although more

equitable than those of earlier periods should have been even more

favorable to breakbulk cazgces

The implication of all of this is that rather than reimburse the States

Marine Group for claims for overassessment during the 196971 period

the assessments upon it during the later periods may themselves have

Hours was the key in the past Tons will be the key in the fuNre In the present a combination of tons and

hours is the key Agreement NoT2390is a combinetion of tons and hours II places some ofthe assessment costs

on aman hours basis and some on a tons besis In other words it is a

compromise soWtion IS FMCat 293

Thetime probabiy wBl come sometime in the fuWre when the whole tonnage formula will not only be reasonable

and IawfW but also acceptable to substantially aIl elemenis of NYSA 14FMCat 146

See also Cfhe PueM Rican assessment CormWa not only requires the Puerto Rican trade tike all others ro

contribute towartl the industry problem of escalating GAI cos sin en adequate fashion but also cushions the trade

ngninsr the serere inrreuse in nsrsfnr ennlainerized opemrions uhich resJtsjrarn pshiflfrom atystric mpn Nours

husis ofussessmrn tn mimngr IS PMC272 Emphasis supplied We are convinced that Ihe proposals

adopted mtonly have substantial recoid support but also obtain a

reasonable degree of relating benefits derived

to the cosis imposed inelndinp nrnd irtinnnJrhe severiry ofsls to Ihese parties had we adopted

decision IS FMC282 Emphasis supplied

he examiner s

19 FMC
ZSH FEDERAL MARITIME COMMISSION

been too high or may only hava been what they should have been 

upon the weiglring ofrelative benefits and burdens for that period 

not say that this is necessarily the case We do however stress tha

possibility

contendon that

as shown

assessments

by the

on

records

the States

herein

Marine

hardly supports N

s

Group during th

periods compensated it for any overassessments which may hav

made in the 196971period

The mathematical computadon engaged in by NYSA with resp

the assessments levied against the States Marine Group for the 19

period as compared with the assessments levied against the Group 

19714period is faultless as a mathematical computation I

indeed show as NYSA contends that assessments against the 

Rican trade on the manhour tonbasis for 19714did result 

assessment against the States Marine Group as awhole of74

3341

than would have been the case if the Puerto Rican trade had 

assessed on the basis established by the Commission for the Puerto 

carriers for the 196971 period and that the 749334 figure is 

than either the 715621 claimed by the States Marine Groap 

68959 we here find to be the proper amount of the claim NY

faced with the difficulty however that the record herein will s

neither the conclusion that the Puerto Rican carriers were overass

for the 19714period nor the finding that the States Marine 

was underassessed for that period and in fact suggests that the co

may be the case Thus the mathematical computation must remain a 

exercise in arithmetic insofar as its utility in this proceeding is conc

We conclude that the States Mariae Group sclaim for overasses

during the 196971 assessment period has not been satiafied by 

ofthe Group sassessment treatment during the 19714and 19

assessment periods

IV The Alleged Agreement Not to Pursue or Waiver of the S

Marine Group s

Claim

Even though an unsatisfied claim of the States Marine Group may 

existed with respect to the overassessment it bore for the 19

assessment period such claim may as NYSA asserts and as the 

Marine Group and Hearing Counsel deny have been reiinquished b

Group sagreement not to pursue it orby its waiver ofthe claim We 

however upon careful examination of the record herein nothing 

convinces us that such arreement or waiver has taken place and 

whieh convinces us that it has not

Certainly the Puerto Rican settlement itself cannot be said in any 

to constitute a waiver or setdement of the States Marine Group s

That agreement specificaIly recognizes as do the automobile and 

print settiement agreements the passibility of the continuance o

the litigation in this proceeding by other parties and our appro

the Puerto Rican settlement was specifically conditioned upo

r9
AGREEMENT NO T2336 259

preservation of the rights of States Marine Internadonal Inc et al to

refunds under Agreement NoT2390 and or arising out of Docket No

6957Moreover the States Marine Group sconduct with respect to its

claim is entirely consistent with its position that such claim was never

waived or setUed The States Marine Group has consistently maintained

from 1972 to the present time by means of formal pleadings and

representations of counsel in this proceeding statements to NYSA

representatives fonnal representations to the NYSA ILAContract Board

and letters to the entire industry that it intended to pursue and was

pursing its claim for refundsFrthermore counsel for NYSA informed

NYSA sboard ofdirectors shorfly before the whole tonnage formWa had

been adopted and the Puerto Rican settlement had been agreed to

between the parties thereto that breakbulk carriers might in spite of the

settlement nevertheless proceed with their refund claims Although the

representadve of the States Marine Group on NYSA sboard ofdirectors

voted to approve the Puerto Rican setUement he at that time expressed

that this would not affect in any way the break bulk carriers interests

and voted against a board resolution to deny claims of breakbulk carriers

arising out ofthis proceeding 13

As evidence in support ofthe alleged settlement or waiver ofthe States

Marine Group sclaim NYSA relies upon testimony ofrepresentatives of

NYSA and the ILA and some documentary evidence intended to show

their understaniling that the Puerto Rican and other settlements would

and should bar the States Marine Group sclaim and upon the bylaws of

NYSA The record is not completely cleaz with respect to the extent that

the positions ofNYSA and ILA that refunds should not be paid were

communicated to the States Marine Group but even assuming that all

such communications were made to and fully understood by the States

Marine Group they can hardly be viewed as constituting either a

satisfaction ofthe Group sclaim in view of the language in all the

settlement agreements referring to the continuance of this proceeding by

other parties and our order preserving the Group sclaim nor awaiver of

the claim in view ofthe persistent prosecution of that claim by the

Group

Simarly the mere fact that representatives of breakbWk cerriers weredue to theirinsistence granted places on

Ihe IIANYSAContract Boa1d NYSA Negotiating Committee and NYSA Intemal Assessment Commdtee in t974

and participateA in the formulation ofthe fdl tonnage assessment basis for he 197977period and he Puerto Rican

cartier and other settlement agreemenls hardly demonstrates asetHement orwaiver of

clflims

the States Marine Group s

It isparticWady difficdtto see how the IlApositlon can affectthe claim when it is remembered that the ILA

wat not aparty to the avsessmentaeement for the 196971period out of which the claim arises We note in this

regard the deciaionissued on Auguet 27 1976 by the Coun ofAppeals forthe District of ColumbiaCircuit in Pacifc

Mqrifime Associa ionand lnterna ionlLongshoremen sand Warehousemen sUnian v

FMC USA Nos7ll40

and 751215 in which Ihe court held Ihat the Commission lacked preimplementation approval authority mder section

15 ofIhe Shipping Act 1916 overany agreements between laborand management contrary o the holding ofthe

Court ofAppeals Por Ihe Second Cimuit in New York Shipping Associalian nc v FMC 495 F2d 1215 2d

Cir

1974 cert den 419US964 1974 WhOe we are seeking review of heDCCvwiCsdecision thatdecision does

not aHect the Commission saction in the subject proceedings As theDCCircuit itself observed it hasarmed the

Commission sjurisdiction overthe Agreement here in issueT2390 in Transamerirnn and Ihat Agreement deals

only with obligazions between employers m those negotiared between union and themWti employer uni4

Seefn 33

19FMC
ZEO FEDERAL MARITIME COMMISSION

The bylaws ofNYSA authorize NYSA to represent its members 

I with respect to actions against labor organizations and ot icials a

organization spurposes are restricted to labar relations ma

Moreover the president ofNYSA testified that he speaking for N

had no authority to setUe the States Marine Group sclaims if the 

did not wish to settle its claims because it takes two to tango 

presence of a majority vote provision in the bylaws and the fact t

but one of the Board of Directors voted to deny the States M

j Group sclaim does not in any way militate against the viability 

claim where the action on the claim appears both from the 

language of the bylaws and NYSA spresident s

admission to be 

vires and where the representative of the States Marine Group 

against denial ofthe claim

We further note the additional facts that there is no evidence th

Group or its members ever authorized anyone to aettle such clai

nothing resembling a settlement has bee tproduced on the record 

and that parforce no such settlement has been approved by us 

required by section 15 ofthe Shipping Act and as was done with r

I to the setUements with the other interests with which NYSA has re

agi eements ie the Puerto Rican cacriers newsprint and autom

When all of the above matters wiEh respect to the question 

ecistence of an agreement not to pursue or awaiver of the States M

Group sclaim are weighed together with these additional facts w

only conclude that the States Marine Group has not in any way 

not to pursue or waived its claim for assessmant acjiustments aris

of our decision in 15FMCin the earlier stagea of this proceeding

NYSA remains liable for the sadsfaction of such claim NYSA i

an entity subject to the Stripping Act See New York Shipping As

tion 16FMC381 3879 1973 af rmed sub nom New 

Shipping Association Inc v FMC 49S FZd 1215 2nd Cir 1974 

den 419 US964 1974 see also United Stevedoring Corp v B

Shipping Assoc 16FMC7 41019Y2 and bars the reaponaib

make such acjustments as are necessary to implement our appro

Agreement NoT2390 See IS FMC282 287 Whatever effe

various Commission approvedsettlement agreements may have 

tween the parties thereto see footnote 8 supra they cannot 

spec iedin the order conditionally approving the Puerto Rican 

settlement and as NYSA itself unconaciously suggeats affect the 

ofthe States Marine Group s

V The Clairrt For Interest on the Refunds Due the States Marine 

The States Marine Group claims interest as a

part of the outst

liability with respect to the 196971 assesament period It a

Ae noted at paes17supra in both ita deliberaHone on and In the lanyua4o of the eettlement 

themsalvea therp is sn acknowledpement on the part ofNY9A thatpartiee ta thie proceediny could c

Iitigation in spite oP he settlemenis

19 
AGREEMENT NO T2336 261

NYSA and the Puerto Rican carriers of engaging in delaying tactics

and suggests two percent per month as the measure of interest since this

is the rate NYSA charges carriers for late payment ofassessments BThe

Group states however that the rate of interest is not as important as

the

funds

principle

for such a

There must be some cosi to those who hold another s

protracted period We feel that the claim for interest

should be denied

The decision whether or not to grant interest as a part ofthe States

Marine Group srecovery is one within our discretion See Flota Mercante

Grancolombrana v FMC 373 F2d674 681 DCCir 196 nand we

feel that neither equity norpromotion ofeffective reguladon requires such

grant here Although it is true in a sense that the States Marine Group

has been deprived of the use of its funds by virtue of its overpayment

the fact that such overpayment was made much less the amount of such

overpayment could not have been ascertained prior to our second

decision herein tInfact in our first decision in this proceeding we found

that the Puerto Rican carriers should have been assessed on an excepted

basis See 14FMC94 979 103 which would have required

adjustrnents in their favor as opposed to that ofthe States Marine Group

Insofar as the period from the date of our remand is concerned

althougl various delays in this proceeding have occurred the postpone

ments were granted by Judge Morgan or by us because good cause was

found for them We also note in this regard that the States Marine Group

itself has obtained several delays in the proceeding We find nothing

showing delaying tactics by anyone in obtaining such delays

The contention that NYSA has held the funds which the States

Marine Group claims is incorrect NYSA prompUy pays over any monies

it collects to fund the benefits under its collective bargaining agreement

with the ILA

Although NYSA cannot be absolved from its liability to the States

Marine Group for overassessment for the 196971 period it dces not

appear equitable or necessary orhelpful for regulatory purposes to impose

liability for interest upon it whe eNYSA has not engaged in any conduct

wtuch it should have known was improper at the time has not been

shown to have improperly delayed this proceeding and did not hold but

prompdy paid over the assessments it collected for the use and benefit of

ILA which was their intended and proper purpose 1e

1

Although in view ofour denial ofany interest on the States Marine Group sclaim it is unnecessary for us to

determine what aproper rare of interest would have been wedo note in passing Ihat Ihe two percent figure suggestW

by Ihe Group may not have much relevance to the problem since there appears ohave been no late payment for

which NYSA has exaaed atwo percent penalty

Cf our denial of interest on unliquida eAcieims in Philip R Consalo r Flom Mercante Grancolombia 6

FMC262 269 196Q reversed on olher outdssub nomFlotu MercanteGrnncolombiana v FMC 342F7A924

DCCir 1964 aultimately afftrmed sub nom Consolo v FMC 383 US607 196G

1

The claim of he Sta es Marine Group forrePond unlike its claim for interest does not rest upon adiscretionary

basis It resb upon the requ vment of complience with our order approving AgreementT2390upon the condition

tha such adjustments woWd be made as the ultimate decision showed to be necessary our order in IS FMCat

262 28n ordering adjustments our order of remand to Judge Morgan directing implementation of the terms and

19 FMC
ZG2 FEDERAL MARITIME COMMISSION

VI The Manner in Which the Claim ofthe States Marine Group is 

Satisfted

There remains as an issue in this proceeding the manner in whi

necessaryacjustments to satisfy the claim of the States Marine 

will be made As we observed in our order conditionally approvi

settlement with the Puerto Rican carriers and in our order remandin

proceeding to Judge Morgan the manner and method to accompli

necessary assessmentacjustments is one which is to be adopt

NYSA We moreover have not as yet deterrt ined that any 

members of the States Marine Group is necessarily entitled to 

refund See Order of Remand pages 56 We expect NYSA to 

out its responsibility under our orders and establish aproper mea

meeting its liability While as we have stated above we atta

culpability to anyone for the delays which have occurred i

proceeding we do note that overfour years have elapsed since ou

requiring that assessment acjustments be made and over two and 

years since the Court of Appeals for the District of Columbia C

affirmed the decision incorporated in that order We now expect th

amount ofrecovery having been determined here the method ofsa

the States Marine Group sclaim can be established with some dis

We would further expect NYSA and the 3tates Marine Group wh

with assessments on a regular basis and who best understan

mechanics involved in aciustments to be able to resolve this ma

the most appropriate manner To facilitate the resolution of tlus 

conditlons of thaepprovei ofAareemont NoT2390 qnd our order epprovinp tha eotqemrnt with the P

carriere upon the condiHon that the riyMe oftAe 9tatee Marine 6roup ware proserved Ow duty uqder ee

inaure that ayraments ere carried out only ee approvad as well ae ourobliQatlone to ineure thet aQre

approve do naoperatein a

diecriminetory manner roquUe that the ewtmenta wehave ordereA ba mede 

mekethe edjuetmonq hare required wodd conetiwte the carryina outoPan unepprovad eyraement beceu

reedt in the impoeidon oP an eaeeeement bmden on theSteta Merino Oroup differcntrom thatwlrich flow

j modi6ad aeeeeement eliocetion Pormda which we hava approved PorAreemant NoT2390 Furtherm

noted in ouroder ofcandiNanal epprovel oP tAe eetUement eyreament withtho PuertoRicen carriere en 

thet epreamani which did not adequately protect tha rlyhW oP tAa 9tatee Marlne 6roup wodd operetein 

Neerimmerory menner

Even ifthe cleim for rofunde to the Staroa Marine 6roup codd be aneloyized to en action for repe

private compiainent which unlike the directlve ambodied in Commieeton ordera msy permit of diae

equ table 3hippina Act policy conaidarpNoneSee Consolo v FMC 383 US6W 62121465 it ia cle

equity end poUcy coneideretiona wodd taquirc thet the cleim oP tho Statee Merine Group be aranted In co

approviny Agroement NoT2390 tha Commiseion wea reeolvina adUemma In the oNy feaalble mennar 

intereet required thet same aeaoeement formula ba spprovad in order tAat the paymenU be made to lon

which NYSA wpe oblipated b make 3ee Order of CondiNonal Approval March 11 1970 payee 78

i

importent publlc intereet in epraemente oY thie type eee aleo Volkswagenwerk vFMC390II S261 2

York SNlpping AssocloNan vFMC493F7A1213 2nd Cv1974 cert denie 49U341974 Ho

ayeemem coitionelly approved by theCommiaeion 6ed not been eu6jacted to hearin and in Pect a8er h

fowd uNflwNl N pert end ordered modi9ed See 13FMC282 287 In order both to eerve tha public 

allowiny collection oY tha IonYehoreman e

benefite to be mada and to protec4 ali interaeta challe

1 reaeonablenees ofthe aeaeeemon formda theCommieeion Aad no elromaNve butto approvaT2390 on th

that the neceasery eQjuatmenta be made For the Commieeion nowto deythe Statea Merina 6roup eclaim 

tentamount ro declerinQ that itewitionel approval wee improper eince auch approvel abeent hasriny 

juati9ed on the theory thet etYective aQwtmenu would be mede to curcany probleme ariainp from eeaeesm

are ehown afler haerina to be unlawNl The Commieeion Mowever 6eceuea ofthe peramount public 

aeeinp tNat lon hommen s

beneEt paymente ere mede adMippinR is notdisrupted hee no eltemaHve bu

conditional approvei prior to heeriny Thua sretLeal by the Commiesian to yrant the 6roup ecleim woul

I

Commiaeion in the untenable poaitlon ot acknowledyin ontheone Aend thet it Aae to give conditlonal 

essesamant egreemants and on the otharthat R cannot effectivety do ao

19 
AGREEMENT NO T2336 263

we now set forth guidelines for the parties consideration with respect to

the manner and method of the adjustments which we here require

Of course cash refunds would be a proper means of making the

necessary adjustments due the States Marine Group Such cash refunds

were made by NYSA to certain stevedores for overpayment of assess

ments at the end of 1968

We further Snd no fault in principle with a system of credits against

present or future assessments in lieu of direct payments as a means of

reimbursement We have in fact recognized that amounts due because

ofpast expenditures may be repaid by means of credits rather than direct

cash payments See Philippine Merchants Steamship Co Inc v Cargill

Inc 9FMC153 163 1965 The crediY method moreover may be

a particulady appropriate one where as here we deal with continuing

obligations under several successive agreements the smooth operation of

which is critical in the area oflabor relations 19Credits as noted above

have been given the automobile interests against overassessments for the

196971 period as a basis for the settlement with those interests

c

One other method might be to give the members ofthe Group partial

edits Rather than not imposing any assessments against the States

Marine Group until assessments due for future cargo movements equalled

the 68959 liability NYSA might assess the members ofthe Group at a

lower rate The effect of this would be that the repaymenY would take

more time but since it would nevertheless be certain such an approach

could be acceptable if the time for repayment were reasonable

Of course although we here nd that no settlement or waiver has

occurred with respect to the Group sclaim the States Marine Group

could if it desired agree to such settlement or waiver for valid

consideration

Our singling out of these methods of satisfaction of the States Marine

Group s

claim is not intended to exclude other methods as permissible

approaches to satisfaction Certain approaches of course are not

acceptable As we have made clear above we cannot accept any lack of

adjustments based upon the theory that adjustments have because ofthe

assessments in later assessment periods already taken place

Similarly we cannot accept NYSA sposidon that three carriers of the

States Marine Group States Marine International Inc Isthmian Lines

and Meyer Line which no longer serve the port ofNew York are not in

any case entikled to assessment adjustments No carrier has ever been

charged orpenaGzed by NYSA in the past for leaving the port Moreover

we aze unable to see that the departure of the carriers has as NYSA

asserts left assessment obligations behind Uncontested evidence of

record shows that each of these three lines paid a1l assessments due

during the entire period it served New York Assessment obligations in

The Stazes Marine Group itself suggesta thet its members presently serving New York might be compensaced

by direct credits against present avsessments

19FMC
ZC FEDERAL MARITIME COMMISSION

the future wiU be met as they should be by those who actually e

longshore labor directly or indirectly By requiring adjustenents f

three named carriers we do not as NYSA contends reward the

leaving the port We merely require t1at the liability owed them b

Since the three carriers no longer serve the port of New York ho

and thus no longer pay assessments a system of credita or partial 

against prescnt or future assessments is not a feasible means to 

their claim and some other means of saUsfacdon must b adopted

Although of course the burden which might fa11 upon NYSA 

result of its obligation to make acjustmnts cannot defeat that obli

we do wish to point out that it is by no means clear that the bur

either of the type or magnitude which NYSA alleges It is e

possible forecample that the satisfaction of the States Marine G

s

claim may require no adjustment whatscever in the level of assesa

payable by those who pay fringe benefit assessments now and 

future We note for example thatasurplus exiated both 

beginning and at the end of the period eovered byT2390 Ifthis 

true at the end of the present period no increasea in the asseasmen

will be necessary and no disruption or modification of the asses

funding will be necessary or occur by reason ofthe Group sclaim

Furthermore it is not certain that the liability of NYSA as a re

our decision herein will beSOU0 000 as it contends It is true th

total overassessment against which refunds could be made for the 

1971 period is4839293 500434 Puerto Rican carrier undera

ment less 165051 automobile overassessment see page 9 supra 

dces not however mean that NYSA will therefom be requirod to 

i this amount Since only the States Marine Group of all the po

j recipients ofrefunds has participated in this phase of the proceedi

pressed its claim here it would be inappropriate to attempt to ma

determinations with respect to the right of others to refunds We 

make

a

only three observations in this regard First of all tlie nec

justments to sa6sfy the claima of the States Marine Group wil

way affect the possible rights to refunds of any other claimant

dollar amount ofthe refund due the States Marine Group has 

calculated in such a way that it is limited solely to that part of the 

to which the States Marine GCOUp ia entitled Thus the possib

refunds to othEr claimants is irrelevant tothe Groug sclaim a

j reason appears why such claim should not be discharged now Sec

other claimants may not be in the same position with respect to 

claims as the States Marine Group havi gsettled waived or agre

to pursue such claims 20xinally even if the entire 483

29overass

0We notain thie reyard without of coune inany way dxidlny themarite oPuvercharae claime byclaim

thanthe Stetea Marine Group that the Statoa Marine 6roup eppeara to be the only cleiment w6ich h

pureued ita claime the oder of approvel oPthe Puerta Rican attlement rePen apeciGoally oNy eo tha clp

Statea Marine Croup and thet eome potential cleimante wlilch may hsve bean endtled to retunde ro

informel pol canductd by a reprcaentetive ofthe Staue Merina droup lhat they dMnot wleh euch roNnd

19 
AGREEMENT NO T2336 265

ment were repaid it would amount to only about155 percent ofthe 312

million benefit fund which is the subject of the present assessment period

and thus would not appear to create a significant financial problem when

viewed in its proper context

Accordingly we will hold this proceeding open and direct that within

60 days from the date of service of this Report and Order21 NYSA 1

satisfy the States Marine Group sclaim and notify us in writing of the

method of satisfaction thereof or 2 establish with the concurrence of

the States Marine Group 22the manner and method by which satisfaction

of such claim is to be made and furnish us with a written description

thereof z3

Additionally wittrin ttus 60day period we will receive filings of claims

on behalf ofpersons other than the members of the States Marine Group

for assessment adjustments Such claims must be supported by computa

tions establishing the amount ofthe alleged overassessment in the manner

adopted herein to compute the overassessment of the States Marine

Group ie 4839293 multiplied by the percentage the claimanYs

assessment bears to total assessments for the October l1969 September

30 1971 period See pages 89supra In light of the problems present

here with respect to the eacistence ofpossible settlements agreements not

to pursue or waivers of claims see pages 256 supra such claims

should also be supported by evidence that they are still extant Copies of

such claims should be served on counsel for NYSA Finally to insure

that all possible claimants will be fully advised we will publish in the

Federal Regis7er a notice of our action herein

For the foregoing reasons we find that refund adjustments are due the

States Mazine Group for the October 1 1969 September 30 1971

assessment period in the amount of68959 An order will be issued

directing that within 60 days ofdate of service NYSA 1 make such

adjustments and notify us in writing of the method used for the

adjustments or2 establish with the concurrence of the States Marine

Group the manner and method of such adjustments and furnish us with

a written description thereof Claims by other persons for assessment

adjustments reladng to this period duly supported with copies to counsel

for NYSA may also be filed during that time

Vice Chairman Clurence Morse and Commissioner Ashton C Barrett

concurring und dissenting

We dissent from the majority report because we do not consider there

to be any amounts owing from NYSA to the States Marine Group except

Sinry days appears to be sufficient Cor such action in light ofthe parties long familiarity with he subject ma er

ofassessments and the fact tha only the manner and me hodof satisfaction of the claim and not the amount of the

claim iselfis to be resolved

We of course expec that he States Marine Group will not withhold such concurrence for any manner and

method of satistaction which a within lhe spirit of this Report andOrder

We of course cannot accept adjuslmen methods which we here find ro be improper and remind both NYSA

and ihe Group tha a salisfaction orme hodofsatisfac ionrisks rejection if it is no in good fai hcompGance with his

repon and order See AureriranErpnrrdabrm drsenL Drc vFMC444F7d 824 82769DCCir 1970

FMC
ZGG FEDERAL MARITIME COMMISSION

perhaps to the three carriers which discontinued service to the 

1972

Our disagreement is not as to whether the States Marine Grou

overassessed in the 196971 period We agree that it was overas

as themjorityfound in the Commission sprior decision 24 We fin

the evidence however that the overassessment of the States M

Group not including the three carriers has since been recompens

no furtheracjusttnent is required

One of the critical elements of this matter is the Puerto 

settlement 2There is no question that the settlement itself a

Commission sapproval ofit did not extinguish the States Marine G

s

rights if any wluch were then unsatisfied Similarly those same 

did not create any new rights or revive any rights previously sa

What the settlement and order of approval did accomplish in this 

was to settle certain claims and permit the States Marine Group t

the opportunity to lidgate its claims under any rights it believed re

to it after our approval of the settlement Our Order ofApprova

Condidon said

We believe ouraction here is fuUy wnsistent with the preservation of all 

orclaims which States et al have acquired by virtue of ourdecision in Do

57 Emphasis added YB

By stating the alternative words rights and claims the 

merely ensured that the States Marine Group could still make a c

to any rights which the Group acquired in Docket No 6957

language dces not say that the Group had any unsatisfied rights

As the order further said

The manner of assessmentacjuatment necessary to satisfy the claims of S

al as well as the amounts to be paid ara the aubject of the implementation 

ourpocket No 6957 and will be decided therein Emphasis added T

This language can be fairly read to mean only that any unsatisfie

previously accrued by the 3tatea Marine Group could still be purs

to the amount ofanyacjustment and the manner osadsfying it

Nowhere is it said that the rights preserved included the rig

prevail as to any claim

Thus with respect to the effect ofthe Puerto Rican settlement i

enough to say as dces themioritythat by the Puerto Rican sett

NYSA gave up any and all claims to any recoveries which may 

in Docket No 6957ge the 196971 period There was a q

quo for that release The Puerto Rican carriers waive dany 

ABreemen NoT2336 New York Shipping Association IS FMC259 1972 But eee con

disaenting opinbn oP Commiseioner Morea IS FMC239 at 283

9

Agreement NoT3017 approved lenuery 16 1975

tepyreemont NoT3017 Approval with Conditlon Jenuery 16 1975 pp 45

AP 6

j Agreament NoT3017 par 2

19 
AGREEMENTNO T2336 267

rights to any recovery from NYSA pursuant to the issues involved in

DocketNo 733428iethe 19714period

The mjority gives little weight to those claims asserted and then

waived by the Puerto Rican carriers Considerations underlying setfle

ments do not necessarily coincide with the process ofmaking findings on

a record in a litigated proceeding That is true but the parties to the

settlement agreed to something And that something according to our

order was the settlement of the rights and obligations between and

among the parties ao

Is the majority now saying that there really wereno mutual obligadons

subject to the settlement thatit was amere facade andthat because

there existed real obligations on only one party ie NYSAthere was no

agreement and nothing to approve Yet we said in our order approving

the agreement that the settlement dces not appear to be improper a

There was a legitimate understanding among the parties to the Puerto

Rican settlement while NYSA had real claims for the 196971 period

the Puerto Rican carriers had real albeit unlitigated claims for the 1971

1974 period In addition there were other claims against NYSA by

carriers which were overcharged in 196g71 because ofand aside from

the underpayment by the Puerto Rican carriers during that period Thus

NYSA had the prospect of paying claims of carriers for 196971 and

19714For 196971 it wasnon Puerto Rican carriers and for 1971

1974 it was the Puerto Rican carriers However there was also the

collectiMe debt due to NYSA from the Puerto Rican carriers 32

What Hien was to be done NYSA could have insisted upon payment

to it by the Puerto Rican carriers of 5 million which it would probably

have had to distribute to all carriers overassessed in 196971 Then

NYSA would have had to pay a substantial sum estimated at 74

million to the Puerto Rican carriers but to do so NYSA would have had

to collect that amount from allnon Puerto Rican carriers underassessed in

19714 As afuRher complicadon there were specific payments due

from NYSA to certain carrier groups iethe automobile and newsprint

carriers and also claims arising out ofperiods after 196971

To avoid the making of payments back and forth and to avoid further

litigation NYSA on behalf of its membership 33 including the States

Marine Group negotiated settlements with the specific carrier groups

found in Docket No 6957to have been improperly assessed Such

agreements were reached with the automobile newsprint and Puerto

v

dPsr 3

j0Approval wrth Condition p 4

In fect the reco dshowa Ihe value of NYSA claims to be abou SS million and of the PuertoRican carriers

claim5 ataut574

m7tion See IS FMC259 275 end Exh 157 p 3

Approval with Conditan p

4

aNYSA BYws Article IVsection 3Exh 160 P 11

DutiesojDvecmrs The Boa dshall have Ihe power to employ counsel and todirect any ofIAe empbyees of

the Associalion lo devive and carty into execution such other measures as they may deem proper and ezpedient

to promare the objecis of theAssociation and topfocect tlw interesis and welfare ofthe membership

FMC
ZGH FEDERAL MARITIME COMMISSION

Rican carriers and included several types of settlement credita 

and waivers ofclaims

The improper assessment of the Statea Marine Group was n

with by NYSA in the same fashion because the States Marine Gro

on the same side ofthe settlement table Itwas among the mem

NYSA for whom NYSA was negotiating the settlements w

automobile newsprint anti Puerto Rican carriers Thus th

settlements resolved the improper assessment probleins for all con

those carriers whose overassessments were speci cally rep

underassessments specifically collected and the rest of the 

membership

No one objected to those settlements Neitt erthe 5tates Marine 

nor any othex carriers objected to the necessazy payments cre

setoffs Most importantly no objections were made to the fc

although the automobile and newsprint carriers claimg arose or

out of the 196971 period NYSA agreed to make paytnent 

through reduced assessments in later periods strthermore th

mission

It is contended

approved those

by the

settlements 9

mioritythat merging more than one c

period is wrong for purposes of effecting a settlement with the 

Marine Group Yet as noted above that very apDroach was appro

the Commission when it approved the aptomobile and newsprint c

setflement agreements with NYSA There is therefore precedent 

use offuture reduced assessments for the settlement of claims aris

ofthis proceeding

Furthermore the relationship between NYSA and ILA is more 

continuing ongoing long term relationship than it is a series o

short term unrelated agreements threlationship is long term o

details of the relationship vary om contract period to contract 

Rather than becoming involved in unneeded and expensive litigad

in the public interest in these ongoing relations6ips of lab

managemeht that the interested pai ties themselves adopt adju

procedures which have the objective ofleveling out the occ

contractual inequities

The States Marine Group however objests vigoroualy to that 

settlement as applied to it as being improper The Group conten

this proceeding and the 196971 period for which it has been l

must stand on its own completely separate from a11 considera

future periods Obviously other carriers who possessed rights and 

arising out of the 196971 period did not share that view wh

agreed to ecchange their rights and claims for future benefits and 

did the Commission object to that approach in approving those a

ments

Ayreement NoT3023 par 4Aeement NoT3Q53 par 6

Approvel ofApreement NoT3023 Decambar 13 1974 end Approvel oP Ayreamenl NoT3Q55 

1975

1
AGREEMENT NO T2336 269

It cannot therefore be found that the Commission may not accept

satisfaction of the States Marine Group sclaims on the same basis It

might be contended however that although the Commission may

approve such a settlement of the States Marine Group s

claims on that

basis the States Marine Group has not agreed to it Nevertheless the

purpose ofthis phase of Docket No 6957is to finally resolve all claims

arising out of our prior decision herein and the Commission has the

authority to find and we do find that although no agreement as such

has been reached between NYSA and the States Marine Group

nevertheless adequate recompense has in fact been made except

perhaps as to the three carriers which discondnued service to the port in

1972

The majority leaves it to the parties to agree on a settlement within 60

days Despite our approval of the other setdements based upon reduced

future assessments the majority would apparently not accept an agreed

settlement on the same basis We find however that satisfaction ofthe

States Marine Group sclaims except as noted has been made in that

fashion and there is no point in proGnging the litigation Ifthe parties do

not agree on a settlement within the 60 days the majority will be faced

with the problem of imposing a settlement although we find one is in

existence now

We consequently conclude that the reduced future assessments ac

corded the States Marine Group adequately settled the States Marine

Group sclaims but even if they did not do so in whole or in part the

claims have been resolved entirely by virtue of the setoff aspect ofthe

Puerto Rican settlement

The Puerto Rican settlement was basically a setoff ofclaims NYSA

could have insisted that the Puerto Rican carriers pay the 5 nillion but

those carrieis would then have pursued their claims against NYSA for the

74million Instead the two parties mutually relinquished their claims

The obvious benefit to the States Marine Group and other carriers was

avoidance ofthe need to pay the difference to the Puerto Rican carriers

The argument is made by the States Marine Group and adopted by the

majority that such a conclusion is based on speculation They contend

that the level ofthe NYSA debt to the Puerto Rican carriers is unknown

if itested at all having not been litigated

As we discussed above however the Commission having approved

the Puerto Rican settlement as not being improper we may not now say

that no claims ofthe Puerto Rican carriers against NYSA existed

Furthermore the States Marine Group did not oppose the settlement

except to reserve its rights In other words the States Marine Group

acquiesced in the Puerto Rican carriers assertion of74million in ctaims

and in NYSA s

agreement to set them off against the 5 million NYSA

claim against the Puerto Rican carriers In fact the States Marine Group

19 FMC
27O FEDERAL MARITIME COMMISSION

asserted their posiflon that inasmuch as they have no direct inte

the settlement they neither object to nor oppose its approval 88

That the States Marine Group felt it had no direct interesY 

Puerto Rican settlement cannot pievent us from finding that the set

did in fact resolve its claims as part of the over all interests of

Counsel for the States Marine Group said at Oral Argument 

proceeding

The entire case against us is that setUement which is used to offaet our cla

and frankly had we known that the argumenta were going to be made 

think we would have taken a different position on that Puerto Rican aettleme

Having therefore not objected to the settlement and its conte

States Marine Group was bound because of its membership status 

the NYSA structure 98

Thus regardless whether or not the Puerto Rican carriers 

against NYSA were litigated as to validity or amount all pa

interest accepted those claims as fact and we approved them

The mjority says however that the NYSA case is ba

speculation

m

and is therefore untenable The same can be said 

jority sview The mjority starts with the conEenUon that the 

Marine Group was overasseased in the periods after 196971 It 

said that even if the Puerto Rican carriers were overassessed i

1974 the States Marine Group may also have been overassessed 

period thereby negating the benefits to the latter of the Puerto 

settlement Yet themjoritysays We do not say that this is nec

the case but stress that such possibility hardly su

NYSA scontention that assessments on the States Marine Group 

the later periods compensated it for any overassesaments wlu

have been made in the 196971period supra p 15

Ifthe claims ofthe Puerto Rican carriers for 19714are spec

as the mjority contends the possible overassessment of the 

Marine Group in the same period is even aworae sort ofcojectu

based merely on the implica6on of some evidence

Themjoritysays frther

Since it cannot be shown that the Puerto Rican carriera were overasaease

19714 period it follows ipso facto that the States Marine Group cannot 

to have been undeiasseased by virtue of auch ove assesament supra p 14

The evidence is certainly no less persuasive as to the converse 

cannot be shown that NYSA and the Puerto Rican carriers entere

meaningless settlement based on a nonexistent overassessmen

Puerto Rican carriers it cannot be shown that the States Marine 

not including the three carriers was notrecompensed by that set

Themjority argues ttat the reduced assessment for future c

periods is not a proper setoff for the States Marine Group s

Agreament NoT3017 Approval withCondition p

4

0

Trenecript oPOrel Argument Docket No 6957Jdy 1 1976 p 68

a9eeFootnote supra

1
AGREEMENT NO T2336 271

because the Group was entitled to the lower assessment This is based on

the assumption that the Commission approvedassessment formula for

196971 would not have been approved for later periods This assumes

that the parties to the later assessment agreements would have ultimately

submitted the same formula which they did not and this is surely no less

speculative than NYSA scontentions Furthermore if the majority is

correct now the Commission should not have approved the automobile

and newsprint carriers settlements which gave future reduced assess

ments to which those carriers were arguably entitled What is pern issible

for one group of carriers ought to be equally so for all The evidence in

this case dces not reveal any grounds for different treatment

With respect to the thecarrieis which discon6nued serving the port

in 1972 we find them not to have been compensated by NYSA Their

claims were not covered by either the reduced future assessments or the

setoff aspect of the Puerto Rican setflement being events subsequent to

the

m

three cazriers depazture from the trade Also we concur in the

jority sconclusions with respect to NYSA scontentions as to the three

carriers having left debts behind We therefore concur in the requirement

imposed by the majority that as to the three carriers which discontinued

serving the port in 1972 a method ofsatisfaction exclusive ofinterest be

adopted within 60 days

SEAL S FRANCIS C HURNEY

Secretary

19 FMC
FEDERAL MARITIME COMMISSION

1 DOCKET NO 6JS

li AGREEMENT NO T2336 NEWYORK SHIPPING ASSOCIATIO

COOPERATIVE WORKING ARRANGEMENT

Nos 7127187126AND 134

TRANSAM6RICAN TRAILER TRANSPORT INC SEATRAIN LINES 

DAN ELSBI KENNEDY INC CHANDRI3 AMERICA LINES INC 

LINE IIVC HOME LINE AGENCY INC INCRES LINE

V

THE NEW YORK SHIPPING ASSOCIATION INC

ORDER

The Federal Maritime Commiasion having this date made and 

of record aReport in the above matter which Report is hereby 

to and made a part hereof

THEREFORE IT IS ORDERED That the New York S

Association Inc NYSA is found and declared to be liable 

following carriers for claims in the following amounts cons

overpayments made by such carriers with reapect to the Oct

1969 September 30 1971 period of assessments for

i benefits

longshos

Nonvegian America Line

Atlantra6k

Nedlloyd Hoegh Lines

HeUenic Lines Ltd

Concordia Line

j Blue Sea Line

Barber Steamship Linea Inc

Statea Marine International Inc and Iathmian Linea

Meyer Line

Pmdential Lines Inc

10

12

2

IT IS FURTHER ORDERED That NYSA sha11 within 60 d

272 19 
AGREEMENT NO T2336 273

date of service ofthis order1satisfy the above enumerated claims and

notify the Commission in writing of the method of satisfaction employed

or2 establish with the concurrence of the above named carriers a

manner and method of satisfaction of the claims of said camers and

furnish the Commission with a written description thereof and

1T IS FURTHER ORDERED That witlrin 60 days ofdate of service

ofthis order the Commission will receive filings of claims on behalf of

persons other than those above named for assessment adjustments for

the October 1 1969 September 30 1971 period Such claims must be

supported by computations establishing the amount of the alleged

assessment

overassessment

bears

ie

to total

4839293

assessments

divided

for

by

the

the

October

percentage

1 1969 Septem

the claimant s

ber 30 1971 period and evidence that claimants have not settled agreed

not to pursue or waived such claims Copies of such ciaims shall be

served on counsel for NYSA and

IT IS FURTHER ORDERED That a notice of our action in this

proceeding shall be published in the Federa Register

By the Commission

SEAL S FRANCIS C HURNEY

Secretary

FMC
FEDERAL MARITIME COMMISSION

DoCKET No 6957

AGREEMENT No T 2336NEW YORK SHIPPING ASSOCIATIO

COOPERATIVE WORKING ARRANGEMENT

Nos 71 2 71 8 71 26 AND 71 34

TRANSAMERICAN TRAILER TRANSPORT INC

SEATRAIN LINES INC

DANIELS KENNEDY INC

CHANDRISAMERICA LINES INC

GREEK LINE INC

HOME LINE AGENCY INC

INCRES LINE

v

THE NEW YORK SHIPPING ASSOCIATION INC

j

Claim of States Marine group consisting of 12 so called break bulk lines t

lines were overassessed in 1969 1971 for fringe benefits for longshorem

Port of New York in the sum of about 4 000 000 including an alleged s

surplus of funds of the New York Shipping Association and including inte

percent per month found unjustified and completely without merit s

insofar as made against three Puerto Rico carriers namely Sea Land Sea

TIT found barred by the two year statute of limitations

C P Lambos and Donato Caruso for respondents the New 

Shipping Association and its members

Stanley O Sher and Jacob P Billig for interveners States 

International Inc Isthmian Lines Prudential Lines Inc Atlan

Barber Lines Blue Sea Line Concordia Line Hellenic Lines 

Lines Meyer Line Nedlloyd Line and NOIwegian American Line

Ronald A Capone and Stuart S Dye for intervener and comp

Transamerican Trailer Transport Inc

Neal M Mayer for intervener and complainant Seatrain Lines 

Gerald A Malia for intervener Sea Land Service Inc

Alan F Wohlstetter for intervener Wallenius Line

Cecelia H Goetz and Alan D Ambrosio for intervener Wolf

Transport GesellsclaUt m bH

274 19 
AGREEMENT NO T 2336 275

Joseph F Kelly Jr for complainant Daniels Kennedy Inc and

for intervener the Madden Corporation

Samufi H Moerman for intervener the Port Authority ofNew York

and New Jersey

Mario Escudero for intervener the Commonwealth ofPuerto Rico

Donald J Brunner and Paul J Kaller as Hearing Counsel

SUPPLEMENTAL INITIAL DECISION OF CHARLES E

MORGAN ADMINISTRATIVE LAW JUDGE

In the subject proceedings many ofthe matters in issue for a long time

either have been litigated to fmal conclusion or have been settled by

certain settlement agreements 2

reached voluntarily by the parties and

approved by the Federal Maritime Commission FMC or Commission

These approved agreements pertain to the automobile interests the

newsprint interests and to the Puerto Rican ocean common carriers The

last ofthese agreements concerning the Puerto Rican carriers was

approved on April 22 1975

There remains presently in issue the claim for about 4 000 000 made

by 12 soalled break bulk lines the States Marine group based upon this

group s allegation that these 12 lines or their predecessors wereoveras

sessed by the New York Shipping Association Inc NYSA in a 1 9

1971 period for fringe benefits for longshoremen in the Port ofNew York

NYSA made the assessments to raise monies required by the collective

bargaining agreement between NYSA and the International Longshore

men s Association AFI r CIO ILA

Besides the settlement agreements there have been two prior FMC

decisions and a Court of Appeals decision which affirmed the second

FMC decision The first FMC decision is Agreement No T 2336 14

F M C 94 1970 The second FMC decision is Agreement No T 2336

New York Shipping Assoc 15 F M C 259 1972 The Court decision is

Transamerican Trailer Transp Inc v Federal Mar Com n 492 F 2d

617 D C Circuit 1974 These decisions will be referred to as the first

decision the second decision and the Court decision The second

decision made findings which in the view of the States Marine group

support the present claim

In both its first and its second decision the Commission dealt with

agreement no T 2804 which was NYSA s so called permanent man

hour tonnage assessment agreement for the two year period from October

1 1969 through September 30 1971 Generally where reference herein is

made to assessment periods or labor contract periods by years only such

I

This decision will become the decision of the Commission in the absence ofexceptions thereto or review thereof

by the Commission Rule 13g

Rules of Practice and Procedure 46 CPR 502 227

Z

Approval of Agreement No T 3007 1 December 13 1974 Approval ofAgreement No T 3023 December 13

1974 both relativetothe automobile interests Approval ofAgreement No T 3007 2 February 21 1975 Approval of

Agreement No T 305S February 21 1975 both relative to the newsprint interests and Approval With Condition of

Agreement No T 3017 January 16 1975 Approval ofAgreement No T 3017 3 April 22 1975 both relative tothe

three Puerto Rican carriers Sea Land Seatrain and ITT

19 F MC
I

I

j

276 FEDERAL MARITIME COMMISSION

as 19691971 this is meant to cover the periods beginning October 

ending September 30

In both decisions the Commission approved agreement no T 

subject to certain modifications There were differences in th

decisions as to the modifications approved by the Commission m

with regard to the rate of assessment for the three carriers then 

Puerto Rican trade namely Transamerican Trailer Transport Inc I

Seatrain lines Inc Seatrain and Sea Land Service Inc Sea L

Other modifications in the first decision related to bananas Al

cargoes and Hawaiian cargoes and in the second decision to autom

and to newsprint

The present claim is largely if not entirely related to the fin

regardmg the Puerto Rican carriers in the second decision and 

approval with condition of the Puerto Rican settlement agreemen

for background purposes and for acomplete understanding of the p

issues many other facts of record are pertinent

Agreement no T 2804 provides the socalled man hour tonnage c

nation assessment basis for all regular cargoes not otherwise sp

provided for in this agreement Agreement no T 2804 also provid

socalled excepted cargo treatment for listed cargoes such as do

intracoastal and intercoastal lumber at lumber terminals bulk 

including scrap and sugar ahd passengers and their personal ba

Excepted cargoes generally are considered to be marginal cargoes 

might otherwise be lost to the Port of New York if they were 

assessed on some other basis such as the combination basis of man

and tons Excepted cargo pays on a man hour basis subject 

applicable royalty exhibit no 9 and first decision 14 F M C 9

The excepted cargo assessment rate included a flexible amount 

fringe benefit expense of guaranteed annual income GAl becaus

fluctuated from quarter to quarter depending upon the numb

longshoremen eligible for GAl second decision 15 F M C 259 

footnote 10 and 302

The tonnage assessment factor under agreement no T 239

variable or plugged amount first decision 14 F M C 94 12

tonnage assessment is calculated by first estimatingtotal1iabili s o

fringe benefit obligations then subtracting therefrom the estimated 

the monies to be obtained from excepted cargo assessments an

the man hour portion of assessments on regular cargoes From 

figure above divided by estimated tons of regular cargo is deriv

per ton assessment for the regular cargoes assessed on the comb

basis

Besides excepted cargo other cargoes such as bananas and un

automobiles trucks and bUses received special treatment by vi

variations in the definitions ofa ton ofcargo

When various cargoes were given excepted cargo treatment 

tonnage definition treatment orpartially excepted cargo treatment 

19 
AGREEMENT NO T 2336

the cargo ofthe Puerto Rican carriers in the second decision 15 F M C

259 271 272 it naturally followed that the remaining regular cargoes

assessed on the man hour tonnage basis would tend to be assessed higher

tonnage factor rates insofar as the excepted cargoes and partially

excepted cargoes did not pay assessments equal to those paid by the

regular cargoes on a ton of cargo

Because NYSA never could precisely forecast tonnages prospectively

moving in the Port of New York the agreement T 2804 tonnage factor

was an estimate always subject to change from time to time Also as

seen the excepted cargo man hour rate of assessment was subject to

change because ofthe GAl factor

When NYSA underassessed its members because ofinaccumte tonnage

estimates at times NYSA had to borrow funds from banks to meet its

fringe benefit obligations to the various ILA NYSA trust funds On the

other hand when NYSA overassessed its members it could carry

forward such monies to be used in the next quarter or next contract year

An ovemssessment in one period generally would be offset by a reduced

or adjusted assessment in the next period Such a procedure was fully in

accord with the provisions ofagreement no T 2804 regarding Tonnage

Assessment wherein the Board ofDirectors ofNYSA was authorized

to modify the tonnage assessment on the basis ofexperience

From the above it follows that various carriers as they entered and left

the tmde ofthe Port ofNew York might tempomrily gain or suffer from

the changed tonnage assessments which were necessarily imprecise

because of the vagaries of the economics of the times and because of

other factors affecting shipping tonnages as well as because of the

problems of forecasting precise fringe benefit expenses when these

included the highly unpredictable expense ofGAL However from period

to period all carriers ovemssessments and undemssessments would tend

to evenout and compensate for the imprecise tonnage estimates And it

was the standard pmctice and the only pmcticable method to opemte for

NYSA to adjust or offset overassessments and underassessments by

adjusting the assessment rates or net bills on future but not on past

assessments

As inflation increased from year to year and various fringe benefit

expenses for longshoremen increased from year to year this had the

general effect of placing many ofthe burdens offringe benefits on carriers

new to the trade ofthe Port of New York and in effect ofletting those

carriers which ceased serving the tmde escape many of theirjust fringe

benefit burdens which they left behind such as the fringe benefit burden

ofpensions

As may be seen from the general discussion above among other

reasons there is no way that the benefits derived by the carriers serving

the trade of the Port of New York can be related precisely to their

obligations to pay fringe benefit costs There is simply no way to obtain a

19 F M C

277
278 FEDERAL MARITIME COMMISSION

perfect formula ofassessment second decision 15 F M C 259 281 

andfirst decision 14 F M C 104 147

In the second decision 15 F M C 259 275 as well as in the 

decision the FMC made no changes in the combination man hour to

assessment basis proposed by NYSA for carriers ofgeneral ca

operating in the foreign trades including containership carriers and 

bulk carriers including among the latter the 12 lines ofthe States M

group except to the extent that these carriers may have han

relatively few unboxed automobiles Most autos were handled by c

who specialized in carrying autos Inthe seconddecision the Comm

said It would perhaps be desirable if the entire formula cou

reworked so that every interest could be carefully examine

assessments revised in an attempt to achieve amore equitable alloc

but such an exercise would lead to administrative complexities 

would offset any slight improvement that could be achieved

Inother words the basis ofassessment ofthe lines ofthe States M

group was approved by the FMC in its two decisions Also 

assessment basis for the States Marine group was affirmed by the 

decision

How then can the States Marine group now assert any cla

overassessment The Commission promised that necessary adjust

in assessments would be made based on the findings of its s

decision but there were no findings in the second decision that th

in the States Marine group were overassessed The mlior issue c

in the second decision was the rate of assessment for the Puerto 

carriers and for the automobile and newsprint interests second de

15 F M C 259 262

Nevertheless the States Marine group latches on to the findings 

second decision that the Puerto Rican carriers were underassessed 

extent that they were found not to have been assessed for their fai

ofthe fringe benefit cost ofguaranteed annual income in 19691971 

this finding regarding the Puerto Rican carriers the States Marine 

leaps to the conclusion that concomitantly it was overassessed in 

1971 The States Marine group chooses to ignore its assessment tre

in 1971 1974 and 19741977

Ifunderthe reasoning of the States Marine group those 12 line

overassessed in 19691971 so also were the numerous other c

operating in the foreign trades including the containership lines a

other break bulk lines In other words not only would the States 

group be entitled to assessment adjustments but so also would all c

which were assessed on the regular man hours tonnage basis This 

even necessitate 19691971 aljustments for Sea Land and Seatrain 

also operated in the foreign trades where they were assessed 

combination basis in addition to their operations in the Puerto 

domestic off shore trade

The States Marine group in effect now says to forget about the 

19 
AGREEMENT NO T 2336 279

carriers in the foreign trades because these other carriers have not been

represented by their own counsel continuously and have not pressed

claims for adjustments of their assessments as have the States Marine

group and as have the automobile and newsprint interests The States

Marine group conveniently forgets that the Commission made specific

fmdings necessitating assessment adjustments regarding the automobile

and newsprint interests

Also NYSA points out that adjustments for 19691971 on the basis

sought by the States Marine group when prqjected for all of the carriers

in the foreign trades would total about 28 000 000 If such a sum now

had to be raised the monies would have to come from carriers presently

serving the trade ofthe Port ofNew York and an increase in the present

tonnage assessment would be required Such an increase would do

nothing to help preserve the Port s cargoes In fact there likely would be

cargo diversions to other ports and the resulting increased assessments

for fringe benefits would result in harm to the shipping industry and its

labor relations at the Port ofNew York

In the FMC s order second decision 15 F MC 259 2fr7 NYSA was

required to submit a report on the manner and method adopted by NYSA

to accomplish the adjustments in the assessments made necessary by the

terms and conditions of the second decision NYSA submitted its

proposed method ofimplementation and the otherparties were permitted

to comment thereon

Seatrain and Hearing Counsel then suggested that there be an informal

meeting ofall parties to develop mutually acceptable procedures with

FMC staff supervision to meet the issues then posed The Director

Bureau ofHearing Counsel was designated by the Commission to select

staff members

Staff attempts to implement the FMC s second decision by voluntary

agreement ofthe parties were unsuccessful For one reason the parties

insisted that action could not be taken pending decision by the Court of

Appeals Also dollar amounts and methodology ofadjustments remained

bitterly contested

Accordingly on April 6 1973 the Commission ordered the proceedings

remanded to the Office of Administrative Law Judges for further formal

hearing for the limited purpose of implementing the manner and method

adopted by NYSA to accomplish the adjustments in the assessments as

made necessary by the terms and conditions ofapproval ofagreement no

T 2390 contained in the FMC s second decision The present initial

decision is the decision in accordance with that order except to the

extent that subsequent to that order the parties voluntarily have reached

certain settlement agreements approved by the FMC which settlement

agreements have disposed of most ofthe issues covered by the said order

of remand for implementation In fact as ultimately concluded herein the

said settlement agreements have disposed ofall issues covered by the

19 F M C
J

280 FEDERAL MARITIME COMMISSION

order ofremand and implementation inasmuch as it is found here

the claim ofthe States Marine group is Ul iustified

Before the voluntary settlements were reached aprehearing confe

was held in May 1973 in Docket No 6957 and the related s

proceedings and certain discovery procedures began Audits by ce

public accountants were deemed necessary with regard to docume

confidential nature Each party wanted to perform its own audit 

have its own auditor check the tonnage records ofother ocean carri

limited group of auditors was ordered to be agreed upon and in 

audits were made

Whether as a result of the audits or because the Court of A

made its decision in 1974 or because of the desire to avoid 

protracted and expensive litigation the parties reached their sett

agreements voluntarily

Also to a great extent the parties including the ILA reach

settlement agreements so as to avoid labor problems in connectio

the 19741977 longshoremen s labor contract

The hearing on remand for implementation wasconcluded on Ap

1975 and the record includes the records of the two prior procee

with a total of 4649 pages of transcript and some 167 exhibits 

which are the recent settlement agreements

The States Marine group never filed a formal complaint in 

proceedings While two of the Puerto Rican carriers had filed com

and the three in time had protested agreement no T 2390 the 

Marine group never listed itself or its lines as protestants Infact th

lines or their predecessors were designated as respondents in Dock

6957 as members of NYSA But this group knowing that its in

did not coincide with the interests ofthe members of NYSA inte

and were represented by their own counsel Generally the States M

group supported the NYSA s contention that the combination asse

basis was proper for most all carriers including the States Marine 

and the Puerto Rican carriers although the States Marine group 

have preferred a straight tonnage assessment basis for the 196

period

Other members of NYSA such as the Puerto Rican carriers 

vigorously protested agreement no T 2390 also were represen

their own counseL Non members of NYSA such as Wobtnlns a 

of Volkswagen automobiles and Wallenius a carrier of other foreig

westbound and of afew American cars eastbound also intervene

opposed agreement no T 2390 These automobile interests bo

expenses of the fringe benefit assessments through payments whic

made to their stevedores who were the direct employers 

longshoremen The newsprint interests likewise intervened and op

agreement no T 2390 Many other interests also were represen

independent counsel from time to time in these proceedings but th

their counsel withdrew either after agreeing with NYSA on 

19 
AGREEMENT NO T 2336 281

assessment bases or upon the belief that NYSA and its counsel properly

represented the positions ofthese other interests

From time to time counsel for NYSA representing the majority views

of NYSA has been aligned on many issues with the views of the break

bulk carriers and on other issues has been aligned with the views of

other parties As to the present claim ofthe States Marine group both

NYSA and the Puerto Rican carriers oppose making additional adjust

ments or payments to the States Marine group At all times the break

bulk carriers have been represented on the Board ofDirectors ofNYSA

In fact when the recent settlement agreement with the Puerto Rican

carriers was approved by NYSA it was without objection by any ofthe

members of the Board of Directors including the so called break bulk

representation on the Board ofNYSA

The ILA also participated in the so called settlement agreements with

the automobile interests the newsprint interests and the Puerto Rican

carriers The ILA had long supported the views ofthe break bulk carriers

that there should be a change from the old man hours only method of

assessment for fringe benefits The ILA also supported arguments made

in 1974 that changes were needed to correct inequities in the man houri

tonnage assessment formula It is the view of the ILA through its

president that the said settlement agreements along with the full tonnage

assessment agreement approved by the ILA and NYSA for 19741977

would put an end to all assessment litigation such as the present claim of

the States Marine group The president of the ILA stated that the ILA

was ultimately convinced that the full tonnage assessment method of

19741977 was on a fair and equitable basis because it very substantially

reduced the assessment cost to the break bulk carriers The ILA agreed

with this assessment method on certain conditions one important

condition being that the litigation regarding fringe benefit assessments in

the Port ofNew York be settled

Accordingly in 1974 discussions were had by the ILA with NYSA

members of the Negotiating Committee including members ofNYSA s

Board of Directors including Mr Dagfinn Gunnarshaug who is also a

director of Concordia Line one of the States Marine group Mr

Gunnarshaug was put on the Board of Directors ofNYSA to represent

the interests of the break bulk lines and he was also amember of the

NYSA ILA Contract Board

The ILAtook the position that the assessment solution had to be a full

fair and final one and that only three adjustments were required as

follows

I Newsprint had to be encouraged to stay in the Port by the settlement of its claims

2 Automobile carriers that had been seeking berths in other ports should also be

encouraged to stay in the Port of New York by adjustment of the tonnage defmition of

an unbaxed automobile to a weight basis and

3 The Puerto Rican carriers should continue to pay on a full tonnage basis but the

NYSA claim for 196971 should be waived by NYSA and the Puerto Rican carriers

claim for 1971 74 should be waived for the Puerto Rican carriers

19 F M C
j

coj

i

I

282 FEDERAL MARITIME COMMISSION

The above three were the only assessment acljustments contemp

and it was clear to all participants in the negotiations thatas a res

the negotiations the break bulk carriers were fully satisfied and had 

given more than ample consideration for waiving any and all claims 

they may have alleged under the 19691971 period Infact the pre

ofthe ILA had specific and express discussions with respect to the 

ofthe break bulk carriers and he stated on a number of occasions t

was sure that the break bulk carriers would not seek icing on 

cake after having been given full consideration in the 1974 negotia

The president of the ILA accordingly was greatly surprised wh

learned of the position taken by the States Marine group in the p

proceedings

The president of the ILA points out also that States Marine In

tional Inc including Isthmian Lines and Meyer Line reduce

phased out their operations in the labor contract year 1971 1972 

contract year 19721973 they completely abandoned the Port of 

York and that they left behind tremendous liabilities of over a ha

billion dollars to the ILAs pension fund and other fringe benefit 

The testimony ofthe ILA s president exhibit 159 of record is unco

erted

It is the position of the ILAthat the ILA will continue to prote

interests of the break bulk carriers as well as the interests 

contributors to job opportunities for the ILAs work force in the P

New York but that the break bulk carriers including the States M

group have no justifiable present claim

The consist of the States Marine group varied from time to 

Originally it included only two lines States Marine Lines Inc 

Isthmian Lines Inc At onetime it included Marchessini Line

Moller Steamship Co but these two lines are no longer listed 

present 12 lines as listed on the brief of their counsel are States M

International Inc Isthmian Lines Prudential Lines Inc Atlant

Barber Lines Blue Sea Line Concordia Line Hellenic Lines H

Lines Meyer Line Nedlloyd Line and Norwegian America 

Prudential Lines Inc apparently is the successor to Prudential 

Steamship Co listed in the seconddecision IS F M C 259 262 fo

3 Presumably the States Marine group consists of only those brea

lines willing to bear the expenses of separate counsel independ

counsel for NYSA whose expenses they share through the fringe b

expense ofNYSA administration

Specifically the States Marine group alleges four things One 

collectively these 12 lines for 19691971 were overassessed 71

Two that these 12 lines are entitled to a further collective s

1 315 600 as their allegedly proper share 14 3 percent of an a

surplus ofabout 9 200 000 in the fringe benefit funds as ofSeptem

1971 Third that on the total ofthe two above sums of about 2 031 

dollars these lines are entitled to interest at 2 percent per month 

19 
AGREEMENT NO T 2336 283

amounts to at least 24 percent per year if not compounded with interest

payable from September 30 1971 until paid Adding 96 percent for

interest for 4 years results in the total claim ofabout 4 000 000 Four

that these sums are due and payable to the States Marine group directly

from Sea Land Seatrain and TIT the three Puerto Rican carriers which

operated in the New YorkPuerto Rican trade in the 19691971 period

Inits reply brief the States Marine group states that its claim is against

both NYSA and the Puerto Rican carriers

Item four above the claim of direct liability ofthe Puerto Rican

carriers is made in spite ofthe fact that in the past no ocean carrier ever

made any assessment payment to any other ocean carrier and in fact all

assessment payments were made by the direct employers ofthe long

shoremen that is by the ocean carriers and stevedores members of

NYSA to NYSA Inturn NYSA turned overthe monies raised from the

assessments to the fringe benefit funds administered jointly by NYSA and

by the ILA

The States Marine group on brief states that an order by the

Commission is acceptable to the States Marine group if the order frrst

requires the three Puerto Rican carriers to make sufficient payments to

NYSA and second requires NYSA to pass on these payments to the

States Marine group so as to fully recompense this group

Technically the claim of the States Marine group against the three

Puerto Rican carriers is barred by the two year statute of limitations No

complaint was filed against these carriers in accordance with section 22 of

the Shipping Act 1916 the Act Also there are meritorious reasons for

denying such a claim if it had been fIled properly

The States Marine group denies that it is exercising anything in the

nature of a vendetta against the Puerto Rican carriers

The Puerto Rican carriers and the States Marine group have been at

opposite poles regarding the assessments issues simply because the

Puerto Rican carriers have been innovative using large containers

containerships and roll onlroll off ro ro ships whereas the States Marine

group largely have used the relatively old fashioned break bulk ships but

with such ships adapted to improved methods such as palletization of

cargoes and carrying some containers Generally speaking containers

containerships and roro ships require large capital investments in ships

containers cranes and shoreside facilities whereas break bulk ships

operate with much smaller capitalizations

By using large containers and cranes located at shoreside facilities the

labor productivity ofthe containership lines is about 5 times as efficient

as that of the break bulk lines A containership with an estimated

productivity of 254 tons of cargo per man hour oflongshore labor may

be loaded or unloaded about 5 times as fast as a conventional break bulk

ship with an estimated productivity of 0 52 tons of cargo per man hour

First decision 14 F M C 94 119

For many years prior to October I 1969 the ocean carriers in the Port

19 F M C
j

j

j

I

j

i

j

1

I

284 FEDERAL MARITIME COMMISSION

of New York were assessed for fringe benefits on the basis of man 

of longshore labor This was the logical way to do when the so 

industry fringe benefit expenses of pensions and welfare clin

peared to be related proportionately to the hours worked b

longshoremen Vacation and holidays expenses were and are also 

to hours worked But these expenses are not included in the fringe 

expenses and assessments in issue herein

When more and more cargoes moved in containerships and in 

containers lesser hours of longshoremen s labor were required f

same tonnages of cargo and the lLA began to blame the contain

carriers for their reduced hours of labor and for the increased numb

hours ofguaranteed annual income expense another of the fringe b

of the longshoremen The break bulk carriers had taken the same 

The Puerto Rican carriers responded to the ILA and to the brea

carriers that the Puerto Rican trade tOlUUlie increased from year t

from 1959 to 1969 and that the Puerto Rican trade was not resp

for the shortfall of hours worked by the longshoRlmen first de

14 F MC 94 98

Upon further consideration in its second decision the Comm

concluded that while the Puerto Rican carriers were not responsi

the shortfall ofhours worked they wereresponsible for their share 

10 percent of the fringe benefit expense of guaranteed annual in

second decision 15 F M C 259 271 272 because GAl was ash

industry problem The Puerto Rican carriers were left to pay the 

benefit expenses of pension welfare clinics and NYSA administra

the man hour excepted cargo level but would have to pay GA

tonnage basis Thus the Puerto Rican carriers had beenunderass

for 19691971

As proposed in agreement no T 2390for 19691971 also for the 

1971 1974 NYSA proposed a similar man hour tonnage assessmen

in its agreement no T 2804 This agreement was placed under inv

tion in Docket No 7334 New York Shipping Association Man 

Tonnage Assessment Formula Hearing in No 7 34 was closed 

tionally subject to petition for reopening in the event that the so

settlement agreements previously referred to herein did not settle 

issues in No 7334

The Puerto Rican carriers were assessed and paid their assessme

fringe benefits for the 1971 1974 period on the combined man 

tonnage basis It is their view and the view ofNYSA that if the

been no voluntary settlements with reference to both the 19691971 

of Docket No 6957 agreement no T 2390 and the 1971 1974 pe

Docket No 7334 agreement no 2804 and if Docket No 73

agreement no 2804 had been fully litigated before the Commissi

the Courts that the same assessment basis would have been gran

Puerto Rican carriers for 1971 1974 as for 19691971 Thus it wou

19 
AGREEMENT NO T 2336 285

been found that the Puerto Rican carriers were overassessed for 1971

1974 The States Marine group naturally disputes these assumptions

NYSA calculates overassessments of the Puerto Rican carriers and

NYSA estimates its liability to the Puerto Rican carriers under agreement

no T 2804 for 1971 1974 as 7457 849 if the matter had been fully

litigated NYSA points out that the same parties protested no T 2804 as

had protested no T 2390 namely the Puerto Rican newsprint and

automobile interests The same formula of assessment was present in

both no T 2390 and no T 2804 and the issues werethe same

Likewise NYSA calculates that the Puerto Rican carriers were

underassessed for 19691971 in the amount of 5 004 344 Exhibit no

157

Of course no one can be certain what would have been the result if

agreement no T 2804 for 1971 1974 had been fully litigated but what is

certain is that the Commission approved settlement agreements no T

3017 and no T 3017 3 for the settlement of the Puerto Rican carriers

assessments

Therein exhibits no 155 and no 165 respectively approved January

16 1975 and April 22 1975 it was stated that the settlement agreements

were between the ILA NYSA and the three Puerto Rican carriers that

the agreements provide for the settlement ofthe parties litigation in and

the withdrawal ofthe Puerto Rican carriers from FMC Docket Nos 69

57 and 7 34 that NYSA and the ILA relinquish all claims to any

recoveries in No 6957 for 19691971 and will not make further claims

against the Puerto Rican carriers regardless offuture developments in the

proceeding that with respect to No 7334 for 1971 1974 the Puerto

Rican carriers withdraw and waive all rights to any recovery from NYSA

the ILA or any NYSA ILA fringe benefit funds regardless of the

ultimate disposition of No 73 34 that proponents of this settlement

agreement made statements in support of the settlement agreement that

in reply the States Marine group stated that it had no direct interest in the

settlement and that the States Marine group only sought a clarifying

condition to the Commission s order ofapproval ofagreement no T 3017

that this group s rights to refunds for the 19691971 period would not be

affected the Commission stated that it believed that its action approving

agreement no T 3017 with a condition as explained below is fully

consistent with the preservation of all rights or claims which the

States Marine group acquired by virtue of the second decision of the

FMC that the FMC had not prescribed any particular manner or method

ofmaking assessment adjustments that nowhere did the FMC state in its

second decision and order of June 14 1972 that the only way assessment

adjustments could be made in conformance with the FMC s order was by

direct cash refunds to the States Marine group that the FMC s order ofhapproval

ofthe Puerto Rican carriers settlement agreement isnot to be construed

as determining that the States Marine group are necessarily entitled

toa cash refund and that the manner ofassessment adjustment19

EM C
286 FEDERAL MARITIME COMMISSION

j

necessary to satisfy the claims of the States Marine group as well 

amounts to be paid are the suQject of the implementation phase of 

No 6957 and will be decided therein

The Commission clearly provided that the implementation phase 

hearing in No 6957 et al would decide the manner ofthe adju

and the amount of the alljustment of assessments for the States 

group The amount ofany alljustment to be determined in the imp

tation proceeding thus could be anything which the record 

implementation proceedingjustified The amount thus might be 

small or even zero The implementation proceeding also could det

the mannerofadjustment including that adjustments might be oth

cash refunds In other words adjustments might be made in 

assessments as offsets of the 19691971 assessments The adjus

might be adjustments made in assessments subsequent to Septem

1971

Exhibit no 157 of record shows 689 599 of alleged overasses

for 19691971 of the 12 lines in the States Marine group This co

with the States Marine group s claim of 715 621 as per Exhibit n

The difference is relatively small and unimportant in view ofthe u

conclusions herein

Ifthe reasoning of the States Marine group is to be given any cr

that it was overassessed in 19691971 because the Puerto Rican 

were underassessed in 19691971 then it follows that if the Puerto 

carriers were overassessed in 1971 1974 then the States Marine 

was underassessed in 1971 1974 The Puerto Rican settlement agr

was based upon the assumption that the Puerto Rican carriers 

overassessed in 1971 1974 and these carriers dropped their claims 

reimbursement or adjustment for 1971 1974 in consideration foJ t

that NYSA and the ILA dropped any claims against the Puerto 

carriers for 19691971

The States Marine group claims that it was overassessed in 196

but fails to acknowledge that it was underassessed in 1971 1974 

effect the States Marine group would throw out any consideration 

factual basis on which the Puerto Rican settlement was made

Ifthe States Marine group is to be given the benefit of the tec

rather than meritorious argument that only the years 19691971 

be considered then likewise the States Marine group must be bo

the technical argument that there was no finding in the second d

that the States Marine group was overassessed

The States Marine group cannot have it both ways that is it 

argue the technicalities in one instance and insist on merits in a

The States Marine group cannot argue that there is merit to its con

that since the Puerto Rican carriers were underassessed in 196

that ergo concomitantly the States Marine group was overasses

19691971 unless the States Marine group also admits the merits 

facts that the States Marine group was underassessed in 1971 1974

19 
AGREEMENT NO T 2336 287

The facts are that the dollar figures are greater for 1971 1974 than for

19691971 That is the Puerto Rican carriers were underassessed about

5 million in 19691971 and overassessed about 75 million in 1971 1974

Similarly if the States Marine group as alleged was overassessed about

715 000 in 19691971 then also it was underassessed about 750 000 in

1971 1974 with allowances being made in the latter figure for the fact

that States Marine International Inc including Isthmian Lines and

Meyer line ceased operations in the Port ofNew York during the 1971

1974 period Exhibit no 157 Thus there is no merit to the contention of

the States Marine group that it was overassessed by NYSA

Another allegation ofthe States Marine group relates to the alleged

surplus question The States Marine group in its brief makes claim for the

first time for a total of 1 313 000 brief page 39 or 1 315 600 brief

page 38 of an alleged surplus of 9 200 000 in NYSA sfringe benefit

funds as of September 30 1971 The record as to the alleged surplus

came from cross examination of a NYSA witness And in fact the 9 2

million was afigure for total NYSA activity which only in part included

fringe benefits under agreement no T 2390 No precise figure was

developed for these benefits The burden here was on the States Marine

group which failed to meet its burden of proof The record shows that

this claim for a share of the alleged surplus was never raised at any time

in the hearing the claim was never made the subject of proof it was

never mentioned in the States Marine group s written direct case or in its

oral rebuttal The States Marine group state on brief that we have direct

rights against the Puerto Rican carriers because that is what this litigation

is all about But the States Marine group is barred from any rights

against the Puerto Rican carriers As an alternative the States Marine

group turns and seeks to exercise a claim against NYSA In the second

decision there was no finding that the States Marine group was

improperly assessed or that it deserved any share ofany alleged surplus

What the States Marine group is now trying to do is not to uphold the

second decision but to attack the manner in which NYSA has adminis

tered and implemented the assessment formula ofagreement no T 2390

The States Marine group have concocted an alleged right predicated upon

the non existent duty ofNYSA under agreement no T 2390 to conclude

the administration ofthat agreement with azero balance in its assessment

account Nowhere in agreement no T 2390 is there any requirement that

NYSA must so administer the assessment program In fact that was a

practical impossibility in view ofthe difficulties in forecasting tonnages

and fringe benefit expenses including GAL

NYSA did not collect assessments under no T 2390 for its own use

rather it did so as the fiduciary for the fringe benefit funds NYSA cannot

now refund any monies from the alleged surplus because the surplus has

been expended or to the extent any surplus exists NYSA consistent with

labor law and internal revenue service law must utilize its funds for

prospective fringe benefit obligations

19 F M C
288 FEDERAL MARITIME COMMISSION

1

The States Marine group were neither overassessed nor underas

during the period 19691974 For the 19741977 period the States 

group on the full tonnage basis will pay less per ton of cargo in 

benefit assessments than will the containership carriers and other i

tors because all will be paying the same per ton assessments 

addition the innovators will be paying container royalties The brea

operators including the States Marine group will be paying the s

less assessments per ton of cargo in 19741977 notwithstanding t

that their method ofoperation is labor intensive and requires abo

times as many hours of longshore labor toload aton of cargo

In view of all the above circumstances there is indeed not the 

bit of merit to the claim of the State Marine group in these proce

It is ultimately concluded and found that the claim herein of the 

Marine group is unjustified and completely without merit and furth

found that insofar as the said claim is directed against the three 

Rican carriers namely Sea Land Seatrain and TTT the claim is 

by the two year statute of limitations in the Shipping Act

All other complaints and outstanding lIlatters in the suQiect proce

to the extent that these matters have not been fully litigate

concluded heretofore should now be concluded by orders dismiss

subject complaints and by order discontinuing the subject investiga

Docket No 6957 on the grounds that either the remaining com

are without merit or that the parties have dropped their compla

lack ofprosecution

I

S CHARLES E MORGAN

Administrative Law Ju

WASHINGTON D C

January 20 976

19 
FEDERAL MARITIME COMMISSION

DOCKET No 7246

AGREEMENT No 57 96 PACIFIC WESTBOUND CONFERENCE

EXTENSION OF AUTHORITY FOR INTERMODAL SERVICE

ORDER

September 15 1976

The Commission instituted this proceeding pursuant to sections 15 and

22 ofthe Shipping Act 1916 to determine whether Agreement No 57 96

Agreement wherein the members of the Pacific Westbound Conference

PWC agree to fix intermodal rates should be approved disapproved or

modified 1 Although others were granted leave to intervene in these

proceedings only Seatrain Lines Inc Seatrain Far East Conference

FEC and Hearing Counsel filed briefs and participated in this proceed

ing

After investigation hearing and oral argument the Commission on

July 8 1975 issued its Report and Order approving the Agreement for 18

months on condition that the Agreement be modified to permit member

lines to individually offer intermodal service not only as to minibridge but

as to interior intermodal as well until such time as the Conference

implements the authority granted herein by the filing ofappropriate tariffs

Approval ofthe Agreement was further conditioned upon the submission

ofthe modified Agreement within 60 days of the date of the Order i e

September 8 1975 On September 8 1975 the Commission suspended its

July 8th Order

PWC has now filed a modification of Agreement No 57 96 which

complies with our July 8th Order and a motion requesting that the

Commission vacate its Order of September 8th

THEREFORE IT IS ORDERED That the Commission s Order of

Suspension of September 8 1975 is hereby vacated

I A protest tothe Agreement and request for hearing was filed by Seatrain Lines Inc anamed Respondent

19 F M C 289
290 FEDERAL MARITIME COMMISSION

IT IS FURTHER ORDERED That Agreement No 57 96 as mo

is approved effective this date

By the Commission

SEAL S FRANCIS C HURNEY

Secre

19 
19 F M C 291

FEDERAL MARITIME COMMISSION

DOCKET No 7246

AGREEMENT No 57 96 PACIFIC WESTBOUND CONFERENCE EXTENSION

OF AUTHORITY FOR INTERMODAL SERVICES

Agreement No 57 96 granting the Pacific Westbound Conference authority over

intermodal rates is approved pursuant to section 15 of the Shipping Act 1916

subject to certain conditions and limitations

No modification of Agreement No 57 96 is warranted in order to restrict the rights of

members to vote on matters related to intermodal traffic and tariffs to only those

lines who offer and participate in such services or in order to prohibit the

application of conference self policing procedures to independent intermodal tariffs

published by any of its member lines

Edward D Ransom and Joshua Bar Lev for Pacific Westbound

Conference respondent

Marvin J Coles and Neal M Mayer for Seatrain International SA

respondent

Elkan Turk Jr for Far East Conference intervenor

J Kerwin Rooney for Port ofOakland intervenor

Lawrence F Daspit and G B Perry for New Orleans Traffic and

Transportation Bureau Board of Commissioners of the Port of New

Orleans and Galveston Wharves intervenor

Sam H Lloyd for Georgia Ports Authority intervenor

George E Strange for Houston Port Bureau Inc intervenor

Donald J Brunner and C Douglas Miller as Hearing Counsel

REPORT

September 15 1976

By THE COMMISSION Helen Delich Bentley Chairman James V Day

Vice Chairman Ashton C Barrett and Clarence Morse Commis

sioners

The Commission instituted this proceeding pursuant to sections 15 and

22 ofthe Shipping Act 1916 to determine whether Agreement No 57

96 Agreement which generally would grant the Pacific Westbound

Conference PWCauthority over intermodal rates should be approved

disapproved or modified 1 While the Far East Conference FEC and the

1 A

protest tothe Agreement and request for heariDg was filed by Seatrain Lines Inc
292 FEDERAL MARITIME COMMISSION

Ports of Houston Baton Rouge New Orleans Oakland and 

Francisco as well as the Georgia Ports Authority have all been gra

leave to intervene in this proceeding only FEC has filed briefs Sea

Lines Inc Seatrain a named respondent and Hearing Counsel 

also participated and tiled briefs in this proceeding

Hearings have been held and Administrative Law Judge Stanley 

Levy has issued an Initial Decision disapproving the proposed Agreem

to which exceptions and replies to exceptions have been filed We h

oral argument

FACTS

The facts and background relevant to the present application 

developed in this proceeding are as follows

The Pacific Westbound Conference operates pursuant to Agreem

No 57 in the trade from the Pacific Coast ports ofthe United State

ports in the Far East PWC is currently composed of 21 regular mem

and four associate members Thirteen of the regular members are 

members ofthe Far East Conference

FEC is a conference of 19 member lines providing an all water se

from U S East Coast ports to ports in the Far East FECpublish

tariff naming local rates only i e port to port rates

From its inception PWC has published both local and overland rat

its tariff 2The overland tariff is applicable to cargo originating east o

Rocky Mountains which at the time of the hearing in this procee

moved under an inland carrier through export bill of lading by in

carriers who have an agreement for interchange of cargo with PWC

The local tariffofPWC covers all cargo byPWC members in the P

trade not covered by overland rates Generally this is cargo w

originates in the local territory west of the Rocky Mountains but 

includes cargo which in fact originates in the overland territory but 

not met the requirements for the overland tariff Local cargo is move

Pacific Coast ports at exporter s expense

PWC and FEC generally compete for cargo moving from the l

industrial centers in the midwest 3 The aggregate of inland and o

rates covered by PWC OCP service is comparable to the aggregat

inland rates to the port ofloading and FEC port to port rates Inord

rationalize this competition they have entered into an agreement F

No 82002 which permits them to meet and discuss conference r

and rules Although they may reach agreement on the subjects discus

I

1 Overland rates unlike intermodal rates wtucharejoint land ocoan rates are port to port rates PWC s u

overland tariff was pproved by the Commission in InvestlgQtlon of OverlandlOCP Rates and Absorptio

F M C 184 1969 and is designed as the Commission explained therein

to meetthecompetition ofocean caniers operatina out ofGulf and Atlantic Coast ports to and from th

foreign ports with respect to carlO oriainating in ordestined for the Central orMidwest United States F

cargo the effect of overland OCP tariffs is to make the aaarellate freillht charaefor inland rail plus 

transportation via the Pacific Coast iateway competitive with such aarellate charae via theAtlantic orGulf I1

J pwe does not draw a substantial amount of overland carlO from areas within 200 miles ofBast and Oulf 

19 F 
AGREEMENT NO 57 96 293

each conference has a

right of independent action Nothing in the

Agreement permits discussion of the relationship between the PWC

overland rates and the FEC local rates

PWC has not in the past assumed jurisdiction over any intermodal

rates whether interior or minibridge While at least 14 member lines of

PWC have individually f1ed minibridge tariffs 4

no PWC member has yet

filed an interior intermodal tariff in the Conference trade

Nine of the 13 lines which are common members of PWC and FEC

have minibridge tariffs on file with the Commission

Seatrain operates an all water service from California ports and ports in

the Far East and as such is a member of PWC While Seatrain carries

both local and overland cargo under the conference tariff it is not a major

carrier of overland cargo when compared to other PWC carriers 5

Instead it has concentrated its efforts in offering minibridge services

In order to strengthen its position in the trade Seatrain decided it was

necessary to penetrate markets on the Atlantic and Gulf Coasts Since it

did not provide direct all water service from Atlantic Coast ports it

entered into arrangements with several railroads for the inland carriage of

cargo between Atlantic and West Coast ports After reaching an agree

ment with the railroads Seatrain published a minibridge tariff naming

joint through rates from Atlantic and Gulf Coast ports to the Far East

Rates shown in the tariff include rail transportation from Atlantic and

Gulfports to West Coast ports and water transportation from West Coast

ports to the Far East 6

The level ofthese joint through rates is basically

the same as the port to port rates established by FEC which serves the

Atlantic and Gulf Coasts 7

Since minibridge is priced at parity with FEC it is capable of drawing

cargo from all of the areas which have traditionally been served by the

FEC In fact however Seatrain is drawing most of its minibridge cargo

from areas within 200 miles ofEast and Gulf Coast ports

Seatrain characterizes the unit train as an important element of its

overall minibridge service although only about 28 percent ofall Seatrain s

Atlantic and Gulf Coast traffic destined for the Far East moves via unit

train Nevertheless Seatrain has been successful in penetrating the

Atlantic Coast markets through the use of minibridge During the last

three months of 1972 Seatrain handled 539 minibridge containers west

bound The average revenue to Seatrain for minibridge traffic moving

from the Atlantic Coast after the rail division is paid is 1 853 00 per 40

4

Minibridge service is defined as receipt of the cargo by an intermodal carrier at aport area rail head for

transportation by land and thereafter transportation by sea from aport on the opposite coast Receipt of cargo other

than at a port area rail heoo is denominated interior intermodal service Both minibridge and interior intermodal rates

are joint through rates

5 At the time of the hearings in this proceeding Seatrain was only carrying approximately 15 containerloads of

overland cargo on its vessels permonth

6

Seatrain is generally recognized as being the leader in the development of intermodal minibridge services In

addition to its minibridge service from Atlantic and Gulf Coasts to the Far East Seatrain also offers minibridge

services between West Coast ports and Europe and between New York and Hawaii

1 Rates shown in all 14 minibridge tariffs are generalJy in parity with FEC rates

19 F M C
294 FEDERAL MARITIME COMMISSION

1

foot container The averaage revenue to the vessel for minibridge c

moving from the Gulf Coast after the rail division is paid is 1 635 0

container In comparison the average net to the vessel carried u

PWC s local tariffis between 1 000 00 and 1 100 00

In order to obtain the most favorable division of revenues from 

participating rail carriers under its minibridge service Seatrain has ut

the unit train concept A unit train of up to 60 cars carrying up to 

containers departs once a week in each direction from North Be

New Jersey and RichmondLos Angeles California

The unit train is able to move cargo between North Bergen 

RichmondLos Angeles in approximately 412 to 5 days Seatrain s w

service from the West Coast to Japan takes approximately 10 days T

Seatrain s minibridge service to Japan compares favorably with th

day all water service offered by five Japanese member lines ofthe F

It is faster than the all water service provided by the remaining 

member lines which require from 21 to 28 days transit time

Seatrain s minibridge shipments which are not placed aboard unit t

take approximately five to six days to cross the United States Alth

this service to the Far East is slightly slower than that of the 

Japanese lines it is faster than the all water services offered by anu

of FEC carriers

Since the publication of Seatrain s minibridge tariff 13 other mem

ofPWC have filed similar tariffs but what little information is availab

this record indicates that they are moving little traffic under them N

is using unit trains

During the year preceding the hearings in this proceeding Seatrai

reduced rates on approximately 12 commodities below the rates e

lished by FEC The record indicates that Seatrain lowered rates on 

commodities because shippers complained that they could not shi

commodities at the rate levels established by FEC 9

There is no evid

that PWC has been forced to reduce its overland rates in order to 

minibridge competition

I AGREEMENT NO 57 96

Agreement No 57 96 would permit the PWC to a broade

geographic scope to include inland points in the United States and in

points in various Asian nations b in effect establishport to point p

to point point to port through and joint rates with inland conne

carriers or associations thereof in addition to its conventional po

port rates c allow member lines to publish and utilize indiv

intermodal tariffs covering only traffic from points at Atlantic and 

ports and adjacent land carriers terminals to destination ports or p

8 These flve Japanese lines Mitsui Japan Line KLine NYK and Yamashita Shinnihon belong to aCom

approved space charter aareement Agreement No 997

9

FEC statistics do indicate however that some traft lc nevertheless moved at those FEe rate levels

19 F 
AGREEMENT NO 57 96 295

until such time as the PWC adopts and effectuates a tariff or tariffs

which includes such traffic at which time the individual tariffs must be

cancelled unless by the Conference action required to adopt or amend

tariffs such individual intermodal tariffs orparts thereof are permitted to

remain in effect and d subject the individual intermodal tariffs to all

applicable provisions of this Agreement No 57 as amended the

Appendix thereto the Conference Administrative Regulations and Rules

and Conditions

THE INITIAL DECISION

The Initial Decision rendered by Administrative Law Judge Stanley M

Levy would withhold approval of Agreement No 57 96 on the grounds

that 1 the record fails to demonstrate any transportation need for the

intermodal authority granted therein to the PWC and 2 the public

interest does not require approval of such agreement at this time It

recommends that the proceeding not be discontinued but rather that

jurisdiction be retained so that the Commission may act expeditiously if

there is brought to the Commission s attention evidence demonstrating

that there is a transportation need for such conference authority and that

the grant of such authority would not be contrary to the public interest

On other issues raised in the Commission s Order instituting this

proceeding Judge Levy ultimately concludes that

No modification of Agreement No 57 96 is warranted norcould it be permitted in

order to prohibit the application of self policing procedures to independent intermodal

tariffs published by any member of PWC

Agreement No 57 should not be modified to restrict the rights of members to vote on

matters relating to intermodal traffic and tariffs

DISCUSSION AND CONCLUSIONS

Exceptions to the Administrative Law Judge s Initial Decision have been filed by

PWC FEC and Hearing Counsel Replies to exceptions have been filed by PWC FEC

Seatrain and Hearing Counsel

Generally speaking PWC challenges Judge Levy s ultimate conclusion that Agreement

No 57 96 should not be approved In so doing PWC has taken exception to virtually

every conclusion of law and finding of fact leading to the Presiding Officer s ultimate

conclusion

FEC largely duplicates the exception of PWC with regard to the burden ofjustifying

inland intermodal authority In addition FEC reargues the contention that it rather than

PWC should be given authority over minibridge

Seatrain strongly supports Judge Levy s Initial Decision as being fully supported by

substantial reliable and probative evidence in the record and urges the Commission to

adopt it as its own In so doing Seatrain would reject every exception which directly or

indirectly supports the approval of Agreement No 57 96

While Hearing Counsel believe that Judge Levy has applied the correct standards to

determine the approvability of the Agreement they disagree with the ultimate conclusion

reached They submit that the evidence of record supports the approval of Agreement

No 57 96 with certain limitations

For reasons set forth below we are approving Agreement No 57 96 granting PWC

authority over intermodal tariffs for a period of 18 months without prejudice to a timely

19 F M C
296 FEDERAL MARITIME COMMISSION

petition for its extension on the condition that the Aareement be modified to p

member lines to individually offer intermodal service notonly as to minibridge but 

interior intermodal as well until such time as the Conference implements the aut

granted it herein by the filing of appropriate tariffs 10 Further we fmd that I

the 

policing provisions of Conference Agreement No S7 are applicable to indepe

intermodal tariffs published by any member of PWC and 2 Agreement No S7 s

not be modified to restrict the rights of Conference members to vote on matters re

to intermodal traffic and tariffs

Approval ofAgreement No 5716

The 1IUi0r issue to be resolved in this proceeding is ofcourse whe

Agreement No 57 96 which in effect would extend PWC authority 

intermodal through joint rate transportation from any place in the U

States to any port or point in PWC Far East destination countries 

cargo loaded on PWC member line vessels at West Coast ports sh

be approved disapproved or modified pursuant to section 15 o

Shipping Act 1916 Before addressing ourselves to this question 

ever we believe that we should first dispose of the contention adva

by FEC first before the Administrative Law Judge and now before u

ex eption that it rather than PWC is the appropriate conferenc

have minibridge ratemaking authority on traffic moving westb

from Atlantic and Gulfports overland to Pacific Coast ports 

thence by vessel to ports in the Far East

As the Administrative Law Judge explained in his Initial Deci

FEC s argument that it should control minibridge is predicated o

theory that the loading of goods aboard an oceangoing vessel at aP

Coast port is totally irrelevant to the proper location of the ratema

authority FEC believes that the more important consideration is tha

cargoes involved originate for the most part in areas adjacent t

Atlantic and Gulf portsports traditiona1ly served by FEC Judge 

rejected FEC s basic contention concluding that if any conference 

have authority to promulgate minibridge tariffs for cargo moving 

Pacific Coast ports to the Far East it must be PWC and not FE

Under the circumstances we believe that the Presiding Officer s a

ment and disposition of the matter was entirely proper and well fou

Aside from the fact that FEC s proposal is inconsistent with its ex

authority and would at the very least require a mlior amendment t

FEC agreement II not presently before us FEC has failed to presen

convincing arguments why it rather than PWC should be adjudged 

the appropriate conference to exercise westbound minibridge jur

tion to the Far East

Certainly we cannot accept on this record FEC s suggestion th

0This approval Is further conditioned uponthe submission of the Aareement modified as required here

60days of the date of the Order attached hereto

II Although not silljularly determinative ofthe feasibility of FEC s

proposal we note that theftUoaof am

tariffby FEe haa in the put met with some inJemal resistance by FEe member Unel 8S evidenced by the 

when FEe consklered amending its orpnic aareement to include authority overminlbridae It was unable 

the unanimous vote required

19 
AGREEMENT NO 57 96 297

rather than PWC has the greater interest in promoting minibridge because

its aU water service is in direct competition with a westbound minibridge

service to the Far East where cargo is loaded at West Coast ports

Equally unsupported is FEes contention that

pwc would certainly not be in a position to reconcile the needs of an all water

route from Atlantic and Gulf ports for stability with the motivation of its members to

maximize profits or minimize losses on the strictly trans Pacific route

FEC s thesis as to why it is the proper conference to assume

cljurisdiction overwestbound minibridge service out ofWest Coast ports is

both unsubstantiated on this record and dir ct1y contrary to the Presiding

Officer s

finding on this point to wit

I

fFEC is permitted to establish minibridge tariffs for shipments outof Pacific

clcoast portsthe growth and development of minibridge intermodalism must inevitably

be stifled The raison d elre for FEC is shipping out of Atlantic and Gulf ports to the

Far East Any minibridge service which utilizes Pacific cost ports for shipment to the

Far East must necessarily be inimical to FEC members who do not operate out of

Pacific coast ports and to a degree even to the interests of those members who operate

out of both coasts This is so because some members operating out of both coasts may

prefer to more fully utilize their all water service from Atlantic and Gulf ports and limit

their carryings from Pacific coast ports to local and overland cargo Thus there is a

strong probability that FEC would establish minibridge rates at a level which prevents

minibridge from successfully competing with all water service

We have been provided with no sound basis or justifiable reason to

disturb this finding Accordingly it stands affirmed as does the Presiding

Officer s ultimate determination in this matter that if any conference is to

be accorded authority over the pertinent minibridge traffic it should be

PWC We move now to a consideration of whether PWC should be

granted the intermodal authority requested

In denying approval to Agreement No 57 96 Judge Levy applied the

now well recognized principle first enunciated by the Commission in

Investigation of Passenger Travel Agents 10 F M C 27 3435 1966

and adopted by the Supreme Court in FM C v Svenska Amerika

Linien 390 U S 238 243 1968 that conference restraints which interfere

with the policies ofantitrust laws will be approved only if the conferences

can bring forth such facts as would demonstrate that they are required

by a serious transportation need necessary to secure important public

benefits or in furtherance of a valid regulatory purpose of the Shipping

Act Because Agreement No 57 96 was one involving intermodal

authority the Presiding Officer determined that it required the most

stringent proof of a serious transportation need Failing to find any

showing of instability or malpractice by reason ofthe absence of

conference control over intermodal rates Judge Levy concluded that

n o transportation need can thus be said to exist which would warrant

approval ofthe authority sought

In challenging the findings and legal conclusions reached by the

Administrative Law Judge in denying approval to Agreement No 57 96

PWC first contends that the subject Agreement need not meet the

19 F M C
I

j

I

j

cl

I

1

I

1

j

298 FEDERAL MARITIME COMMISSION

standards for approval set out in Investigation of Passenger Tr

Agents supra and FM C v Svenska AmerikaLinien supra On 

point PWC takes the position that

Such basic agreements should be approved on the basis of the public benefits 

Congress recognized they will render the trade They do notrequire an ad hoc sh

of imminent and serious transportation conditions

Notwithstanding its position on the applicability ofthe Svenska doc

to the present agreement however PWC argues that in any even

Presiding Officer erred in finding that the record fails to demons

any transportation need for PWC to have authority over interm

tariffs

The positions ofthe other parties to the proceeding on the mat

the approvability of Agreement No 57 96 and standards to be ap

vary considerably Whhile not actually advocating that the Judge err

applying the Svenska standard FEC appears to agree with PWC 

demonstration of a precedent serious transportation need is not nece

to the approval ofAgreement No 57 96 In any event FEC feels t

is unrealistic to require a demonstration of existing rate instability b

Agreement No 57 96 can be approved

In concurring in Judge Levy s decision Seatrain argues that 

misconceives the requirement of section 15 and the Svenska decisio

this regard Seatrain submits that Judge Levy s conclusions conce

the requirements ofthe Svenska case are correct and his applicat

the Svenskadoctrine wasfullyjustitied by the record Seatrain urge

Commission to reiectJUly sulliutionthat Agreement No 57 96 is a 

ofthe mill rate ag D1 and aa such preumptively valid an

the Commission shQuld sene the function of a mere rubber stam

conference agreements

While Hearing Counsel do notsugest that the conference hasjus

the Agreement as written they believe that the record support

approval of an agreement of more limited scope Specifically He

Counsel feel thatthe Commission should approve an agreement wh

excludes conference authority over interior intermodal services th

limiting conference activity to minibridge and 2 limits the appro

such agreement to 18 months 12 lIearing Counsel feel that su

agreement is justified by 1 the need to eliminate multiple tariff

desirability of uniformity of tariffs and 2 thll potential for rate inst

and malpractice which exists in the trade In support of the latter H

Counsel point out that the trade is nowovertonnaged and explain

It is generally acknowledged that overtonnaging leads to malpra

and rate instability as carriers compete for cargo

Hearing Counsel would withhold from PWC authority over in

intermodal service as being lI1liustified by the circumstances in the 

11 The 18month period Maaona CQunscl believe wiU enable the Commission to identify any difficu

miaht develop in the implementation of the aaroement and reevaluate the need for conference intermodal a

19 
AGREEMENT NO 57 96 299

They submit that the transportation circumstances which wOl lld justify

the authority are not present now nor is there any strong possibility that

they will exist in the near future Except to the extent Hearing Counsel

would deny PWC authority over interior intermodal service we are in

general agreement with the position taken by them 13

By restricting and precluding individual member lines from publishing

tariffs for through intermodal transportation and fixing the rates and

charges at which such transportation will be offered Agreement No 57

96 constitutes a clear illegal restraint oftrade As such the Agreement is

contrary to the public interest unless it can be shown to be justified or

warranted in terms of legitimate commercial objectives FM C v

Svenska Amerika Linien supra p

244 Thus the Administrative Law

Judge correctly held that before this provision of Agreement No 57 96

can be approved under section 15 and particularly the public interest

standard thereof the Conference must demonstrate that the Agreement

serves a serious transportation need is necessary to secure important

public benefits or is in furtherance of a valid regulatory purpose of the

Shipping Act

PWC s argument that conference ratemaking agreements are somehow

immune from the approval standards of section 15 including the public

interest consideration ofSvenska is not only not supported in any prior

court or Commission decision but is wholly inconsistent with the clear

language of section 15 itself Section 15 explicitly requires that the

Commission subject to its approval requirements any agreement which

provides for one or more of the activities specifically set forth in the

seven categories enumerated therein one ofthose being the fixing or

regulating ot transportation rates As Hearing Counsel have pointed

out there are no exceptions Nor is there any presumption which

automatically exempts from the standards of section 15 all conference

ratemaking agreements or for that matter any other class or type of

agreement or arrangement which otherwise falls within the coverage of

that section PWC s arguments to the contrary while extensive and

ingeniously presented and briefed are without basis in law or fact and

must be rejected

Similar arguments by PWC advocating the general inapplicability of

section 15 standards to conference ratemaking have already been consid

ered and rejected by the Commission in Agreement No 8760 5

Modification of the West Coast United States and Canada India

Pakistan Burma and Ceylon Rate Agreement 17 F M C nn 1973 In

that case we expressly ruled that the applicable standards justifying

IlHearing Counsel also object to the procedure adopted by Judge Levy wherein he would disapprove the

Agreement but retain jurisdiction overit by continuing the proceeding Hearing Counsel view this as a

device to

ensure that Seatrain cannot vote on any minibridge amendment to PWC sbasic agreement which it would otherwise

be entitled to do and know ofno regulatory purpose to be selVed by such procedure especially since the Commission

bas other tools at its disposal to control malpractices In view of the manner of our disposition of the issues in this

proceeding and our approval ofAgreement No 57 96 weneed not address ourselves tothe merits or wisdom of the

Presiding Officer s recommendation that the Commission should retain jurisdiction overadisapproved agreement

19 EM C
300 FEDERAL MARITIME COMMISSION

1

continued overland ratemaking authority are spelled out in sectio

itself We would have thought that this unequivocal statement cou

with our general disposition ofthe issues raised in that proceeding w

have laid to rest the matter of applicability of section 15 standard

conference ratemaking Judging from PWC sreargument of that 

matter here and continued insistence that section 15 somehow con

plates an exemption for conference ratemaking agreements we 

obviously mistaken Lest there be any further misunderstanding how

we intend to leave no doubt in this opinion that all conference ratem

arrangements are subject to the approval standards of section 15

Even simple conference ratemaking arrangements involve the an

and public interest considerations that were present in Svenska and 

rise to the doctrine adopted therein because even simple confe

ratemaking arrangements involve the concerted fIXing of rates wh

per se unlawful under the antitrust laws unless specifically gra

immunity under section 15 And like all agreements contemplate

section 15 they must be considered individually on their own m

based on all the available information and facts of record

But while all conference ratemaking agreements are required to 

the standards for approval set forth in section 15 as constru

Investigation ofPassenger Travel Agents supra and F M C v Sv

Amerika Linien supra the extent of the justification that need be s

for such approval will ofcourse vary from case to case with the inte

of the otherwise illegal restraint involved Thus the clegit

commercial objectives which the Comnussion will accept as evide

the necessity for the restraint will generally be determined by the 

and scope of the agreement under consideration This we made cl

our Adoption ofInitial Decision in Agreement No 8760 5Modification

of the West Coast United States and Canada India Pakistan B

and Ceylon Rate Agreement supra where we explained that 

indicated in Svenska the scope and d pth of proof required from c

case may vary in relation to the dearee ofinvasion of the antitrust l

Because ofthe intermodal aspects of Agreement No 57 96 the A

istrative Law Judge would require as justification for its approva

the most stringent proof of a serious transportation need We c

agree

Agreement No 57 96 involves after all only an extension 

Conference s existing and approved ratemaking powers The Confere

basic authority to establish rates and charges port to port as w

OCP have obviously already been considered by this Commission 

predecessors and found fully justified and warranted or else it wou

stand approved So we are concerned here only with confe

ratemaking as it applies to intermodal tariffs and traffic Sinc

amendment before us represents but an extension of the Confer

established ratemaking authority under its organic agreement and be

intermodalism as it relates to the through movement of cargoes a

19 
AGREEMENT NO 57 96 301

shipper benefits that may be derived therefrom is generally desirable we

believe that the proofthat need be demonstrated to support the approval

ofAgreement No 57 96 is considerably less stringent than that the

Presiding Officer would require

Without confusing statistics with the law as PWC appears to have

done here 14

we would point out that the Commission has in fact to date

approved numerous agreements granting conferences intermodal ratemak

ing authority While this falls far short ofclothing such agreements with a

presumptive validity it does indicate that the Commission has gener

ally found them to be in the public interest On the basis oftheir high rate

of approval we believe that we can properly characterize these types of

intermodal agreements as generally acceptable This is not to say

however that Agreement No 57 96 or other like agreements granting

conferences intermodal ratemaking authority will be approved summarily

merely because similar agreements have been found warranted and

approved by the Commission under section 15 in the past The public

interest cannot be served by such tokenism rubber stamping of submitted

agreements and the Commission will not so abdicate its responsibility to

assure that the conduct legalized by such agreements does not invade

the prohibitions ofthe antitrust laws any more than is necessary to serve

the purpose of the regulatory statute Isbrandtsen Co Inc v United

States 21 1 F 2d 51 57 D C Cir 1954

Here applying the standards of section 15 as interpreted in Svenska

we find on this record that the approval ofAgreement No 57 96 is

required by a serious transportation need and will serve to secure

important public benefits There are some definite legitimate commercial

objectives to be derived from the approval ofAgreement No 57 96 one

of which is the elimination of the multiplicity ofminibridge tariffs which

exists under the present system ofallowing each PWC member line to file

its own individual tariff

We believe the Administrative Law Judge himself presented the

strongest case for the desirability of a single source of tariffs when he

stated in his Initial Decision that

In regard to the present multiplicity of minibridge tariffs it is true that the rate changes

are not always made simultaneously For example on June I 1972 FEe placed a

general rate increase in effect Despite advance notice of the increase some minibridge

operators did not file a corresponding increase for two to three months Further a

shipper in order to be certain of obtaining the lowest rate available must consult as

many as 14 tariffs Undoubtedly this is inconvenient and might represent a considerable

14 Referring to some 24 agreements extending the ratemaking authority of conferences to intennodal traffic without

a hearing PWC argues that this indicates that the Commission has regarded such agreements as presumptively in

the public interest PWC goes on to suggest that the Commission should consider Agreement No 57 96 to be

likewise presumptively valid and approve it in the absence of proof that it is detrimental to the commerce of the

United States or contrary to the public interest Since Seatrain formally protested the Agreement PWC believes that

it had the burden of adducing such proof which Seatrain has allegedly failed todo For reasons heretofore stated this

argument is wholly without meritThere is no presumption in favorof conference ratemaking agreements Each must

be considered on its own merits and approved in light of the standards of section 15 This the Commission has done

with regard to each intermodal agreement which has come before it whether approved with orwithout hearing and

any suggestion tothe contrary is wholly unfounded and unsubstantiated

19 F M C
302 FEDERAL MARITIME COMMISSION

burden if large numbers of commmodities wereobeing shipped Moreover the exp

maintaining 14 tariffs could be substantial A shipper witness indicated that it wo

necessary to employ additional personnel in order to keep the tariffs current 

tariff services are available for that purpose There are also a number of differen

minibridge tariff rules For example the minimum charge per container varies b

carriers Some carriers extend credit to shippers while others do not The prepaym

freight is required by some and notby others

In spite of these findings and his added observation that it wou

simpler for shippers to look to a single rather than multiple tariff 

Presiding Officer somehow concluded that the multiplicity of interm

tariffs did not demonstrate that important public benefits would re

they were well replaced with a single conference tariff We believ

the Administrative Law Judge s conclusion flies in the face not o

his own unequivocal findings but his own reasoning as well The 

and realities ofthe situation speak for themselves

Undoubtedly under the present system a shipper in order to o

the lowest rates available and most favorable rules as is his want 

continually consult some 14 separate tariffs This is clearly time con

ing and most inconvenient to the shipper and the burden involved 

obviously increase with the number ofcommodities to be shipped 

result it follows that it is difficult for some shippers to obtain the be

of minibridge and the full advantages ofthat intermodal service are 

realized Therefore taking the Presiding Officer s own finding to 

logical and obvious conclusion it is clear that the elimination ofa mu

intermodal tariffwill confer important public benefits which must be 

considerable weight in determining the approvability of Agreemen

57 96

In connection with our discussion of the virtues of a single sour

intermodal tariffs we point out at this juncture that probably the 

most important public benefit that Agreement No 57 96 can be exp

to provide derives from the advantages that conference authority 

intermodal rates will offer This is a point we have alluded to earl

this opiriion and will discuss more fully here The intermodal move

of cargoes allowing as it does for continuous movement under a

bill of lading with less handling provides an essential transport

service to shippers and consignees As such intermodalism as a co

is to be encouraged fostered and promoted The conference system 

believe provides the manner by whichthe development of intermod

can be most effectively accomplished in the individual trades A

stated in Disposition of Container Marine Lines 11 F M C 475 

1969 The conferences as the dominant commercial units in this 

in our opinion should beat the forefront in stimulating and encour

improvements in transportation

Not only can the conferences provide the necessary incentives t

institution and implementation of intermodal services but also the

ensure its healthy development Uniformity of tariff rules is one o

desirable benefits that can be expected to result from the approv

19 F 
AGREEMENT NO 57 96 303

Agreement No 57 96 Clearly conference authority over intermodal rates

and traffic especially during this period of changing transportation

systems and concepts is an important public benefit that militates in

favor ofthe approval of agreements such as the one under consideration

here

In addition to the clear and present benefits that can be derived from

Agreement No 57 96 by virtue of the elimination ofthe inconveniences

and burden to shippers and consignees which naturally flow from the

existence of multiple intermodal tariffs and conference jurisdiction over

intermodai rates generally the approval of Agreement No 57 96 is also

warranted by transportation circumstances and therefore will serve to

fulfill a transportation need As Hearing Counsel point out although the

Conference has not demonstrated any present rate instability or evidence

of malpractice there is definitely potential for both In short the

conditions and circumstances which have historically led to instability and

resulting malpractices in a trade are present here There is testimony in

this record offered by several witnesses that the trade served by PWC

ie the U S West CoastFar East Trade Westbound is overtonnaged

and it is generally acknowledged that overtonnaging invariably gives rise

to rate instability and malpractices as the carriers in the trade compete for

the available cargo And when one considers the number of individual

minibridge carriers that are competing for the available cargo the

potential to instability becomes very real indeed

In view of the foregoing we find and conclude that the threat to

stability posed by the existing conditions in the subject trade which we

might add can only be expected to continue if not further deteriorate as

minibridge grows coupled with the disadvantages which are inherent in a

multi tariff system fully support PWC s

jurisdiction overintermodal tariff

and traffic both interior and minibridge

Hearing Counsel would deny PWC authority over interior intermodal

service 15

on the grounds that present transportation circumstances do not

warrant it Hearing Counsels position appears to us to be somewhat

shortsighted and at odds with their stand on the minibridge aspects of

Agreement No 57 96 unless of course the Commission is expected to

await the actual advent ofinstability malpractices and the institution of a

hodge podge ofdiffering interior intermodal tariffs before it can act

Since as ofthe time ofthe close ofthe record here no PWC carrier had

fded an intermodal tariff to the Far East other than minibridge any grant

of interior intermodal authority must of necessity rest upon potential

rather than actual traffic considerations In this regard we find consider

able merit in PWC s argument that the identical situation which we found

I

The Administrative Law Judge defined interior intermodal as follows

If minibridge were extracted from Far East intermodalism via the west coast the remainder would be what has

beenreferred to in this proceeding as interior intermodal

19 F MC
I

eel

1

j

L

j

I

304 FEDERAL MARITIME COMMISSION

existed with regard to minibridge service can be expected to ari

interior intermodal if it is not placed under conference

Interior intermodal presents an equal if not greater threat to sta

than does minibridge if only because the volume of cargo poten

available in intermodal operations from the industrial heartland o

United States exceeds the volume involved in minibridge Likewis

multiplicity of tariffs can be expected to present even greater diffic

than did with regards to minibridge because of the number of t

involved Under the circumstances we see n9 reason or regul

pu se to be served by limiting the Conference s intermodal author

mimbridge 16 Accordingly the approval granted herein extends to in

intermodal as weH

The Administrative Law Judge faults the Conference for not h

taken even preliminary steps leading to implementation of an in

intermodal tariff under the authority it now seeks To the extent th

understand this objection we find it to be self defeating How could 

be expected to legally implement authority it did not have but 

requests Indeed if the Conference had taken the steps suggest

the Presiding Officer it could be held to a violation of section 

carrying out an unliled and unapproved section 15 agreement

While the Administrative Law Judge himself concedes that the C

ence s failure to take the preliminary steps referred to above doe

per se preclude the Commission from approving such authority 

found that it did

raise serious questions as to whether such authority if unexercised will se

inhibit the arowth and development of intermodal transportat on thu frustratina 

which this Commission enCO lll8es

This statement was based in large measure on the fact that u

minibridge Agreement No 5796 as submitted does not permit in

individqal tariffs

We share in the Presiding Officer s concern that failure of PW

expeditiously publish an interior intermod9J tariff could depriv

shipping public ofbenefits which it might otherwise receive if a m

line published an intermodal tariff Accordingly and lonsisten

established Commission policy we are requiring as acondition 

approval ofAgreement No 57 96 that it bemodmed to permit 

member lines to individually offer interniodal service not only 

minibridge but as to interior intermodal as well until such time 

Conference implements the authority granted it by the filinofappro 

tariffs This requirement should obviate the problem that the Pre

16 Nor do wereally aee Bny purpose orreason to eYen diltlnaul1h betweenminibridle and interior intenn

are after all both throuah intermodallervicu whil hdiffttr ly In terma of distance Aa IUQb we ablolu

find any sianlflcance to the distlnction that Hearina Counael would draw here

19 
AGREEMENT NO 57 96 305

Officer envisioned should the Conference not implement the requested

authorityY

PWC has taken the position in this proceeding that if the Commission

requires any modification to Agreement No 57 96 it should be done in a

manner that requires no further conference vote on the amendment The

problem arises because the unanimity voting provision in the basic

Conference agreement places Seatrain in a position to defeat any modification to Agreement No 57 96 and if approved conditionally

Agreement No 57 96 itself

While PWCs concern is premature we do appreciate the situation in

which the Conference finds itself The fact remains however that the

Commission cannot itself modify Agreement No 57 96 without the

unanimous approval of the present members of PWC including those

members who had no part in the original submission The Commission

simply cannot create or impose an agreement upon parties if no such

agreement exists and no cases cited by PWC or arguments advanced by

it convince us otherwise The Commission s standing to amend or modify

an agreement under section 15 is always subject to the subsequent

acceptance ofthe amendment or modification by the parties thereto This

is not to state however that the Commission is powerless to rectify a

situation created when a single conference member line consistently

frustrates the wishes of the vast majority by continually casting the one

dissenting vote in matters that come before the conference and are

presumably in the Conference s interest 18 There are no facts before us

however that would in any way indicate that this is the situation here

Finally we come to the matter of the duration ofthe approval granted

herein While Agreement No 57 96 as submitted would run indefinitely

Hearing Counsel submit that the Agreement should be limited in duration

to a period of 18 months with the understanding that the Conference

could seek further approval ofthe Agreement at the end ofthe period if it

wishes to continue offering intermodal service Hearing Counsel believe

that limiting the approval of the Agreement as suggested by them would

enable the Commission to identify any difficulties which might develop

in the implementation of the agreement and reevaluate the need for

Conference intermodal authority PWC advises that it would not object

to such a condition

Hearing Counsel s proposal is consistent with Commission policy to

17 Of course wewould expect thai when and jf the Conference adopts intermodal tariffs it will not do so in a

manner which will in any way stitle interrnodal shipments The Conference will not be permitted todo indirectly what

it cannot do directly IIIThe Commission has in the past acted where necessary toremove obstacles which have gone against the wishes

of a m ority of conference members to take necessary action Investigation of Passenger Steamship Conference

Regarding Tr llel Agel ts 10 F M C 27 1966 afld sub nnm Federal Maritime Commission v Aktiebofaget

SI enskll Amerik Lillin 390 U S 238 1968 and Docket No 7016 Modification ofArticle 8 Agreement No

5850 North Atlantic WlslbOlmcl Freight Association discontinued by the Commission s Order served August 20

1970 More recently the Commission issued an Order in Docket No 73 74 Modification ofArticle Agreement No

3302 Thl A 5sociClfiofl of West CCJtl 5fSteamshif Companies directing the Respondent therein to show cause whyits

unanimity voting provision which in certain instances may have resulted in frustrating the desires of a strong

majority ofthe members of Respondent Conference should not be modified

19 F M C
306 FEDERAL MARITIME COMMISSION

1

avoid granting indefinite and unmited approval of requests by co

ences for authority in the intennodal field Moreover in this part

case it will as the Presiding Officer has noted enable the Comm

to pinpoint any problems which may develop with the implementat

Agreement No 57 96 Accordingly and consistent with the abov

are limiting the approval ofAgreement No 57 96 to 18 months whi

view as being sufficient time to carry out the authority accorded w

prejudice to the Conference petitioning the Commission for its exte

within the time specified in the Order attached hereto

SelfPolicing and Voting

In addition to the question of the approvability of Agreement No 

96 under the provisions of section 15 and the matter of P

prescription of more clearly defined standards governing the Confere

right to prohibit its members from establishing their own interm

tariffs the Commission specifically set down for detennination i

proceeding the following two issues

whether any modification of Agreement No 57 96 is warranted in order 

restrict the rights of members to vote on matters related to intermodal traffic and 

to only those lines who offer and participate in such services or in order to proh

application of Conference self policing procedures to independent intermodal 

pubtished by any of its member lines

Addressing himself to these issues the Administrative Law Judge 

some discussion concluded that no modification ofAgreement No 

96 is warranted either to prohibit the application of self po

procedures to independent intennodal tariffs published by any mem

PWC or to restrict the rights of members to vote on matters relat

intennodal traffic and tariffs

Since no exception was taken to either of these conclusions and 

we find that the Presiding Officer s determinations were proper and 

founded we are adopting so much of the Initial Decision as deals 

the self policing and voting issues 19 Those portions of the 

Decision are attached hereto as an appendix and are incorporated h

by reference

Motion to Strike Reply to Exceptions

One final matter remains to be considered in this Report Th

pending before the Commission and outstanding at this time a m

19 While Hearina Counsel were in complete aareement with thoseportions of the Initial Decision dea

voting and seif policin which we are adoptin hero they look isaue wJth the statement made by the Presidio 

on paae 39 of the Initial Decision underthe heading Ultlmate Conclusions to wit that The self policin

of Ajreement No 7 are applicable to independent intermodal tariffs published by any member ofPWC 

Counsel explain that inthe absence of approval of Ajl eement No 57 96 they faUto find any justification in 

Conference aareement upon which to conclude that the self policlng features ofAa reement No 57 are 

applicable While lugesting that thecballen ed Ultimate Conclusion relatina to self policing was a

inadvertenUy made Hearina Counsel nevertheless submit that it should be amended to conform to theearlie

of the Presiding Officer on the matter Hearina CouDsel spoint is well taken The ultimate conclusion 

objection is raised was obviously not intended since it is clearly inconsistent with the discussion and iodin

preceded it and should accordingly be disregarded

I

19 
AGREEMENT NO 57 96 307

fded by Seatrain in which Hearing Counsel join requesting us to strike

certain portions of PWC s Reply to Exceptions to wit pages 1016 as

being new material not actually constituting a reply to any matter

raised on exception

PWC in its reply to Seatrain s motion concedes that the matter referred

to does deal with new material but advises that this new material

relates entirely to two orders of the Commission which are issued

subsequent to the filing of PWC s

reply brief PWC thus explains its

action as being merely calling the Commission s attention to its own

intervening decisions 20

Whatever the reasons for PWC s introduction of the matters com

plained of it is clear that they do not respond to any thing raised in the

exceptions filed by either FEC or Hearing Counsel but rather merely

advance further arguments in support ofPWC s own exceptions As such

the challenged matters constitute new material improperly introduced

which must be stricken from this record Accordingly we are granting

Seatrain s motion

ULTIMATE CONCLUSION

Upon the record herein and for reasons stated above it is concluded

by this Commission that

1 Agreement No 57 96 granting the Pacific Westbound Conference

authority overintennodal rates is approved pursuant to section 15 ofthe

Shipping Act 1916 for a period of 18 months on the condition that such

Agreement be modified to permit member lines to individually offer

intermodal service not only as to minibridge but as to interior intermodal

as well until such time as the Conference implements the authority

granted it herein by the filing ofappropriate tariffs Ifamended as

provided herein Agreement No 57 will not be unjustly discriminatory

or unfair as between carriers shippers exporters importers orports or

between exporters from the United States and their foreign competitors

or operate to the detriment ofthe commerce ofthe United States or be

contrary to the public interest or be in violation ofthe Shipping Act

1916

Approval of Agreement No 57 96 is further conditioned upon the

submission ofthe Agreement modified as required herein within 60 days

of the date ofthe Order attached hereto The effective date of this

approval shall be the date upon which the Commission shall receive such

modified Agreement

2 The self policing provisions of Agreement No 57 96 are applicable

to independent intennodal tariffs published by any member of PWC and

no modification ofAgreement No 57 96 in this regard is warranted

20 While the concern which apparently motivated PWC to introduce the particular matters at issue here is

understandable wewould point out that the Commission is perfectly well aware ofits ownoroers and decisionsand

need not have themspecifically called toits attention As precedent they will be duly considered whererelevant and

appropriate

19 F MC
308 FEDERAL MARITIME COMMISSION

3 No modification of Agrement No 57 96 is warranted to restri

rights ofthe Conference members to vote on matters related to interm

traffic and tariffs

4 The motion ftled by Seatrain Lines Inc requesting the Comm

to strike certain portions ofPWC s Reply to Exceptions is granted

An appropriate order conditionally approving Agreement No 

and otherwise effecting the above will be entered

SEAL S FRANCIS C HURNEY

Secreta

19 
19 F M C 309

APPENDIX

EXCERPTS FROM INITIAL DECISION

SELF POLICING

The Commission requires adetennination among other things whether

modification ofAgreement No 57 96 is warranted in order to prohibit the

application of self policing procedures to independent intennodal tariffs

published by any member ofPWC

One of the major purposes ofself policing is to insure that competition

between the carriers will be on a service basis rather than price and tariff

competition as such The evidence is that self policing prevents or at least

hinders rebating and particularly where atrade is overtonnaged it helps

to stabilize the trade There is awidespread belief that there is a greater

tendency to commit a malpractice in any trade where the carriers are not

subject to aneutral body selfpolicing procedure Self policing is so

integral it part of a section 15 ageement that the Commission is required

by the statute to disapprove any agreement which does not provide for

adequate policing ofthe obligations under the agreement Thus anyone

who advocates as does Seatrain that the self policing provision ofa

conference ageement has no applicability to members activities in

intennodal services when that traffic and rates thereunder are not being

performed pursuant to any conference tariff has a difficult position to

sustain The essence of such position is the contention that self policing is

limited to those services in which the conference has a tariff interest

That is to say that if the conference has no intermodal authority or

having such authority publishes no intennodal tariff and pennits individual

tariffs then the conference is not concerned with price competition as

such Having individual tariffs the carriers are free to set whatever price

level they choose and there is no need to commit malpractice since they

can lawfully achieve any desired rate and service level by published tariff

As in the case ofvoting practices where the comparison was made to

break bulk carriers voting on container issues being considered by the

conference so in the matter ofself policing applicability to business

generated under individual tariffs areference was made by PWCs witness

Purnell ofthe application of self policing to open rated commodities The

open rated commodity is one in which the conference relinquishes control

and the ratemaking authority is left to the individual lines who issue their

own individual tariffs on commodities where the tariff filing exemption for

bulk without mark or count does not apply Hence the situation is the

exact equivalent of individual minibridge tariffs in the interim before the
310 FEDERAL MARITIME COMMISSION

conference publishes its own tariff Mr Purnell pointed out that indi

tariffs of conference members on open rated commodities are subj

conference selfpolicing stating Idon tbelieve that opening a rate 

a carrier license to rebate or to perform any other illegal function t

prohibited in the basic agreement

The rationale that self policing is compartmented and that aconfe

member is free of its salutary intluence in a trade in which the confe

members are engaged merely because some aspect ofit is not cond

under a conference tariff is erroneous in its underlying concept 

policing is a means to an end The end is that violations ofthe A

illegal and should be uncovered Whether a member carrier is vio

the Actin the course of its intertnodal activities under an individua

or under a conference tariff is irrelevant to the issue of confe

responsibility under an approved section 15 agreement Ifthe confe

is to obtain or retain approval it must exercise that responsibility 

if the conference were to agree with Seatrain s contentionwhich i

not it could not be permitted to abdicate its self policing responsib

Examination of Agreement No 57 reveals that the self po

provision relates to all acts or omissions of the parties which con

malpractices as define in the agreement and in Schedule A t

agreement These are not limited to acts or omissions with resp

tariffs published by PWC

Significantly Seatrain in its brief ignores any reference to this p

the Commission s order tacitly conceding that it places no great m

the propositionthat the conference has no self policing authority 

regard to members minibridge servic es pursuant to individual t

Accordingly nomodification ofAgreement No 57 96 is warrante

could it be permitted in order to prohibit the application of self po

procedures to independent intermodaI tariffs published by any mem

PWC

VOTING

The Commission has required that the proceeding determine wh

or not Agreement No 57 96 should be modified in order to restrict 

on intermodal matters to only those member lines who offe

participate in such services To this end evidence was introduced 

in large measure established that not all members of a conference p

all of the services offered by the conference that often members 

divergent interests in conference serVices that usual conterencep

dures are to allow all members to vote on all conference matters 

though some members may not be participating in the precise s

which is the subject matter being voted upon that despite va

interests Or noninterest in specific matters of conference conce

The aare cmentprovides that all mem rs vote on all tariff mattol1l and thetwo thirds rrnQority requirem

Article 7 applies to inteimodal tariffs local tariffs and overland tariffs

9 
AGREEMENT NO 57 96 311

conference system has not been based on limiting member voting to only

those services which the member offers that matters relating to intermo

dal traffic and tariffs are not so distinctive from otherissues which in the

past have been matters ofconference concern as to warrant deviating

from established conference practice ofallowing all conference members

to vote on all matters concerning the conference The outstanding

example to which the witnesses referred was the divergent interests

between break bulk carriers and container oriented carriers where confer

ence rules and regulations concerning containerized cargo werehammered

out with the participation of break bulk members Conceivably it might

have been to the self interest of break bulk carriers to inhibit hamper or

prevent the growth of containerized cargo This was not in fact what

occurred

PWC s Chairman testified that

At the present time aU members vote on all rates regardless of whether they engage in

the full range of transportation within the jurisdiction of PWC This is a competitive

necessity All of the rates offered by the Conference are in one way orthe other

interrelated Further member line services are constantly changing Service not

provided by a carrier today may be provided the next day and vice versa The

expansion of minibridge service is a good example When Agreement 57 96 was adopted

by the Conference and submitted for approval there were only two or three carriers

who had minibridge tariffs on file At the present time there are at least 14 All members

in varying degrees are concerned with every rate the Conference publishes

with the adoption of Conference intermodal rates shippers in overland territory will

have a choice of shipping pursuant to either the local the overland or the intermodal

tariff Since these tariffs are necesarily interrelated it would be unthinkable for the

Conference to have a separate group within the Conference whcih would consider and

vote upon the intermodal tariff excluding all others but at the same time having all

members consider and vote upon the overland and local tariffs It is not inconceivable

that such a procedure would result in rate warfare within the Conference upsetting the

stability which conferences are designed to bring about

InMaritime Fruit Carriers Co Ltd and Refrigerated Express Lines

AAsia Pty Ltd Docket No 71 80 mimeo p

6 served May 8 1972

the Commission said

Conference voting mechanisms are at best delicate things presumably arrived at after

due deliberation of alternatives By and large the various procedures and they cover a

wide range work well when considered in the light of the large number and variety of

agreements existing in ourforeign commerce These considerations when taken with

the continuing change in carrier relationships trade conditions and economic and

competitive circumstances makes us on the one hand cautious in the interference with

existing voting procedures absent a showing of need and on the other makes it

extremely difficult to formulate hard and fast rules for the governance of future voting

procedures

The evidence in this proceeding does not suggest that the development

of intermodalism will be hampered or otherwise inhibited by the partici

pation ofnonintermodal carriers in conference voting on intermodal

matters Accordingly no modification ofAgreement No 57 96 is

19 F MC
312 FEDERAL MARITIME COMMISSION

warranted in order to restrict the riahts of members to vote on m

related to intermodal traffic and tariffs However the record estab

that it is not the intent of the conference to vote upon rates contair

member s individual intermodal tariffs which are otherwise perm

j

1

I

1

J

1

19 
FEDERAL MARITIME COMMISSION

DoCKET No 7246

AGREEMENT No 57 96 PACIFIC WESTBOUND CONFERENCE EXTENSION

OF AUTHORITY FOR INTERMODAL SERVICES

ORDER

This proceeding having been instituted by the Federal Maritime

Commission and the Commission having fully considered the matter and

having this date entered its Report which Report is hereby referred to

and made a

part hereof

IT IS ORDERED That pursuant to section 15 of the Shipping Act

1916 Agreement No 57 96 among the members ofthe Pacific Westbound

Conference is approved for a period of 18 months on the condition that

such Agreement be modified to permit the Conference member lines to

individually offer intermodal service as to interior intermodal traffic as

well as to minibridge traffic until such time as the Conference implements

the authority conditionally granted it herein by the filing of appropriate

tariffs

IT IS FURTHER ORDERED That the approval of Agreement No

57 96 is further conditioned upon the submission of the Agreement

modified as required herein within 60 days of this Order The effective

date of this approval shall be the date upon which the Commission shall

receive such modified Agreement

IT IS FURTHER ORDERED That the conditional approval granted

herein is without prejudice to the filing of an application for its extension

Any application for extension ofthe period ofapproval must be filed with

the Commission with certificate ofservice upon all parties to the present

proceeding not later than the 60th day prior to expiration ofthe approval

here given

FURTHER IT IS ORDERED That the Motion to Strike Reply to

Exceptions filed by Seatrain Lines Inc in this proceeding is hereby

granted

19 F M C

313
314 FEDERAL MARITIME COMMISSION

1

FINALLY IT IS ORDERED That this proceeding be disconti

By the Commission

SEAL 8 FRANCIS C HOa

Secre

I

j

I

I

j

j

1

i

j

1
FEDERAL MARITIME COMMISSION

DoCKET No 7639

CATERPILLAR OVERSEAS S A

v

SoUTH AFRICAN MARINE CORPORATION N Y

NOTICE OF ADOPfION OF INITIAL DECISION

October 27 1976

No exceptions having been filed to the initial decision in this proceed

ing and the Commission having determined not to review same notice is

hereby given that the initial decision became the decision of the

Commission on October 27 1976

By the Commission

SEAL S FRANCIS C HURNEY

Secretary

19 F M C 315
1

1

i

j

FEDERAL MARITIME COMMISSION

No 7639

CATERPILLAR OVERSEAS S A

v

SoUTH AFRICAN MARINE CORPORATION N Y

Adopted October 27 1976

A common carrier by water is an indispensable party to a complaint proceeding s

reparation for alleged overcharges Procell served upon a sinaIe respondent a

in the complaint to be a common carrier by water but who in fact is no

nullity The defect is jurisdictional and may not be remedied Complaint dism

William Levenstein for complainant

Seymour KUgler for respondent

INITIAL DECISION OF SEYMOUR GLANZER

ADMINIsrRATIVE LAW JUDGEl

This is a

reparation proceeding in which the complainant Cate

Overseas S A seeks an award of 4 919 53 from the respondent 

African Marine Corporation N Y for alleged overcharges on 

shipments of engines and parts from New Orleans Louisian

Capetown South Africa during the months of June July and A

1975 The request for relief is predicated upon provisions of U

States South and East Africa Conference Southbound Freight Tarif

2 F M C No 3

PROCEDURAL BACKGROUND

The complaint was tiled pursuant to Rule 11 of the Commission s 

of Practice and ProcedureS on July 28 1976 and was served b

Secretary of the Commission on the foUowina day July 29 

Respondent s time to answer expired without an answer having 

flled Consequently an Order on Default was entered on August 25 

directing the complainant to tile an appropriate motion for d

1

This decision became the decision artho Commission October 27 1976

46 CFR n 02 181 et seq Rule II allows complaint proceediqs to be conducted under shortened p

without oral hearina upon consent of all parties and theapproval of the presidlq offtcer

316 19 F 
CATERPILLAR OVERSEAS v SOUTH AFRICAN MARINE 317

judgment Complainant filed a Motion for Default Judgment but thereafter

the respondent moved to vacate the Order on Default

Igranted respondent s motion to vacate the default and directed that

respondent s answer to the complaint which was attached to the motion

be accepted for filing In view of that action it was not necessary to rule

on the complainant s Motion for Default Judgment On September 27

1976 the complainant and respondent filed a Stipulation of Facts and

Motion for Authorization to Settle 4

FACfS

Paragraph IIofthe complaint alleged the following

The respondent above named whose address is One Bankers Trust Plaza New York

New York i a common carrier by water engaged in transportation between New

Orleans Louisiana and Capetown South Africa and as such is subject to the provisions

of the Shipping Act 1916 as amended At the time of the shipments here involved

respondent was a member of the United StatesSouth and East Africa Conference and

was a party to that Conference s South Bound Freight Tariff No 2 F M C No 3

Emphasis supplied

Respondent s answer generally denied the allegations ofthe complaint

but in response to paragraph IIofthe complaint stated

AdmitS that its address is at One Bankers Trust Plaza New York New York that it

acts as agent for three common carriers by water engaged in transportation between

New Orleans Louisiana and Capetown South Africa who are subject to the provisions

of the Shipping Act 1916 as amended who are members of the United States South

and East African Conference who are parties to that Conference s South Bound Tariff

No 2 F M C No 3 and except as so admitted deny the allegations ofParagraph II

of the Complaint Emphasis supplied

The stipulation was signed by counsel for the complainant on Septem

ber 22 1976 and by counsel for the respondent on September 23 1976

Paragraph 2 ofthe stipulation provides

The respondent is the general agent in the United States for three common carriers

by water engaged in transportation between New Orleans Louisiana and Capetown

sicSouth Africa and as such are subject to the provisions of the Shipping Act 1916

as amended these common carriers are South African Marine Corp Ltd Springbok

Lines Ltd and Springbok Shipping Company Ltd herein collectively the Carriers

and respondent and its undersigned attorneys are authorized to act on their behalf in all

matters involved in this proceeding At the time of the shipments here involved each of

the Carriers was a member of the United States South and East Africa Conference and

each was a party to that conference s South Bound Freight Tariff No 2 FM C No 3

Emphasis supplied

An examination of the tariff rued by the United States South and East

Africa Conference Southbound Freight Tariff No 2 F M C No 35

3

Order on Default Vacated served September 9 1976

The answer slated that the respondent did not agree to shortened procedure See n l However by entering into

the stipYlation subsequently respondent is deemed to have consented to shortened procedure See Consolidated

International Corpomtion 1 COli cordia Line Boise Griffin Steamship CompallY Inc as Agents 14 SRR 1259 1260

1975

5 See Original and First Revised Page l

19 F M C
318 FEDERAL MARITIME COMMISSION

confirms that at the times in question South African Marine Corp 

Springbok line Ltd and Springbok Shipping Co Ltd were particip

carriers and that South African Marine Corporation N Y was 

participating carrier in that tariff

DISCUSSION

On the foregoing facts the proceeding must be dismissed as a n

Section 22 ofthe Shipping Act 1916 6

provides in pertinent part

That any person may file with the board a sworn complaint setting forth any vi

of this Act by a common carrier by water or other person subject to this Ac

asking reparation for the injury if any caused thereby The board shall furnish 

of the complaint to such carrier orother person

Paragraph IY of the complaint alleges that the complainant has 

subjected to the payment ofrates and charges for the transport

which were when exacted and still are in excess of those law

applicable in violation of section 18 b 3 of the Shipping Act 1916 

amended As relevant to this proceeding the operative portio

section 18b 3 provides

No common carrier by water in foreign commerce or conference of such carrie

charge or demand orcollect or receive a greater or less or different compensat

the transportation of property or for any service in connection therewith than the 

and charges which are specified in its tariffs on file with the Commission an

published and in effect at the time Emphasis supplied

Thus the complaint in this proceeding suffers the infirmity of na

as the sole party respondent a person who is not a common ca

Clearly only the class of persons specified in section 18 b 3 

amenable to process alleging violations of that section s

The defect is jurisdictional and cannot be remedied in this procee

Certainly the recital in the stipulation that the three common car

agent and the agent s attorney are authorized to act on the carr

behalf ip all matters involved in this proceeding does not make a

those carriers a party Yet that status would be indispensable for re

be afforded under section 22 of the Act Mpreover under the ex

provisions of section 22 it is incumbent on the Commission to furnis

copy of the complaint to such carrier While it may be the intent o

stipulation to indicate that the agent or its attorney informed the ca

ofthe complaint the statute appears to repose exclusive responsibil

the exercise of this function ort the Commission but even i

stipulation were urging that the function could be performed by ano

it does not follow that knowledge of aproceeding commenced again

agent makes the principal a named party to that prOCeeding

46 V S C II817

46 V S C II821

8 It should be remembered that tbe compaint allepd that the named respondent was acommon carrier 

that the reapondent is and was not acommon carrier did not become settled untU thestipulation was ftIed 

complaint identified the respondent sinaly as an aaent it is unlikely that the Secretary of theCommission wo

served process uponthe respondent

19 F 
CATERPILLAR OVERSEAS v SOUTH AFRICAN MARINE 319

CONCLUSION AND ORDER

Ifind that acommon carrier by water is an indispensable party to a

complaint proceeding seeking reparation for alleged overcharges Process

served upon a single respondent alleged in the complaint to be acommon

carrier by water but who in fact is not is a nullity The defect is

jurisdictional and may not be remedied Complaint dismissed

S SEYMOUR GLANZER

Administrative Law Judge

WASHINGTON D C

September 30 1976

19 F M C
FEDERAL MARITIME COMMISSION

SPECIAL DocKET No 476

RIVIANA FOODS

AND OR HENRY E SULLIVAN

v

SEA LAND SERVICE INC

NOTICE OF ADOPTION OF INITIAL DECISION AND ORDE

PERMITTING WAIVER OF CHARGES

September 22 1976

No exceptions having been taken to the initial decision in 

proceeding and the Commission having determined not to review s

notice is hereby given that the initial decision became the decision o

Commission on September 22 1976

It is Ordered that applicant is authorized to waive collectio

2 999 72 of the charges due from Riviana Foods and or Hen

Sullivan

It is Further Ordered that applicant shall promptly publish 

appropriate tariff the following notice

Notice is hereby given as required by the decision of the Federal Ma

Commission on Special Docket No 476 that effective October 16 1975 for purpo

refund orwaiver of freight charges on any shipments which may have been s

during the period from October 16 1975 throuah November 10 1975 the r

Olives in Cases or Cartons is 8100 W subject to all applicable rules regul

terms and conditions of said rate and this tariff

It is Further Ordered that waiver of the charges shall be effect

within 30 days of service ofthis notice and applicant shall withi

days thereafter notify the Commission of the date and mann

effectuating the waiVQr

SEAL S FRANCIS C HURNEY

Secreta

320 19 
FEDERAL MARITIME COMMISSION

SPECIAL DoCKET No 476

RIVIANA FOODS

AND OR HENRY E SULLIVAN

v

SEA LAND SERVICE INC

Adopted September 22 1976

Application granted

INITIAL DECISION OF JOHN E COGRAVE ADMINISTRATIVE

LAW JUDGE1

Sea Land Service Inc seeks permission to waive collection of a

portion of the freight charges on eleven shipments ofolives carried by

Sea Land from Cadiz Spain to Jacksonville Florida The shipments

weighed 213 950 kilos and moved under Sea Land bills oflading dated

October 16 1975

The rate applicable at the time ofthe shipments was 94 75 per 1 000

kilos 2 with aggregate freight charges of 20 677 25 as per revised

attachment 6 to the application Sea Land seeks to apply a rate of 8100

per 1 000 kilos3 with an aggregate freight of 17 330 95 4The application

seeks to waive the collection of 2 999 72

Prior to February 17 1975 Sea Land s rate on olives from Spanish

ports including Cadiz to South Atlantic and Gulfports including

Jacksonville was 94 75 Effective that date Sea Land published a

reduced rate of 81 00 to meet the competition ofLykes Bros Steamship

Co Inc Lykes rate on olives was 1 450 00 per 20foot containers

which at a loading of 18 tons per container works out to 80 55 per 1 000

kilos 5

Sea Land s intention was to maintain the 8100 rate so long as

I

This decision became the decision of the Commission September 22 1976

Sea Land Service Inc Tariff No 1698 PMC 98 Item 6000 13th Revised Page 19 Page 2 of the application

inadvertently states the rate as 94 50

3 Sea Land Service Inc Tariff No 169 8 FMC 98 Item 6000 14th Revised Page 19

A Spanish tax of 2 percent was levied on the ocean freight 346 58 making the total actuallycollected by Sea

Land 17 677 53

Lykes Bros Olive Freight Tariff No I FMC 49 17th Revised Page 8 On April 19 1976 18th Revised Page No

S changed the rate to 80 00 per 1 000 kilos This rate expires May 31 1976

19 F M C 321
1

322 FEDERAL MARITIME COMMISSION

j

Lykes rate remained unchanged and in fact the 8100 rate was re

on 10th thru 13th revised pages 19 However 13th revised page 19 c

an expiration date of October 9 1975 and Sea Land s Genoa office 

the pricing responsibilities for Sea Land s Westbound service 

the Mediterranean to U S ports failed through complete admi

tive oversight to send timely instrUctions to the home office at E

N J to extend or make permanent the 8100 rate The oversigh

discovered sometime shortly before October 22 1975 during a disc

between the stateside pricing division and Genoa on which date G

sent a teletype request to reinstate the 8100 rate without an exp

date Fourteenth revised Page 19 containing the 8100 rate be

effective on November 10 1975 Sea Land states that neither the 

party nor the principals of the shipper Riviana Foods knew o

reason to believe that the 8100 had been allowed to lapse and 

Land again states that the lapse was due to a wholly uninten

oversight In fact when the notify pl rty Henry E Sullivan pa

freight he automatically reduced the rate to 8100

Section 18bX3 of the Shipping Act 1916 46 USC 817 as amend

Public Law 90298 and as further implemented by Rule 6 b S

Docket Applications Rules ofPractice and Procedure 46 CPR 502 

the law sought to be invoked Briefly it provides

The Commission may in Its discretion and for good cause shown pe

common camel by water in the foreign commerce of the United States to r

portion of the freight charges collected from Ii shipper or waive the collllctio

portion of the charges from a shipper where it appears that there is an er

tariffof a clericaloradministrative nature or an errordUll to an Inadvertence in fa

file a new tarlffand that uch refund Ill waiver will no result in dilcrimination 

shippers Furthermore prior to applyins for such authority the carrier must ha

a new tarifl which sets forth the rate on which 8uch refund orwaiver would be 

The appli 1lllion for refund mu8t be flied with the CommiuioMvithinone hundr

eighty daY8 from the date of shipment FinallythecJrrier mU8t agree that if perm

is granted an appropriate notice will be published in Its tariff or such other step

as may be required to sive notice of the r e all which such refund or waiver w

based

The legislative history of the amendnlent to section 18 of the Sh

Act Publfc Law 90298 8

specifies that carriers are authorized to 

voluntary refunds and waive the collection of a portion of their f

charges for good cause such as boria fide mistake The nature o

mistake wasparticularly described

Section 18 b appear8 to prohibit the Commiision from authorlzln relief 

throuihbpna tlde mi8take on the pl lt

of the cafl ier thuhipller is charged more 

understood the rate to be For example 1i carrierafter advisinll a 8hipper that he 

to file a reduced rate and thereafter fails to file the reduced rate with the F

Maritime Commission must charse the shipper under the aforementioned circums

the higher rates

j

i

1

1

6 House Report No 920 November 14 1967 rro aceompany H R 9473 onShipping Act 916 Authorize

ofClrtain Freight Charges Statement of Purpose and Needfar the Bill to Amend Provisions of the Ship

1916 to Authrize the Federalflaritime Commtssloll to Pfrmft aCarrier to Refund a Portion afthe Freight 

19 
RlVIANA FOODS v SEA LAND 323

The Senate Report7 states the Purpose ofthe Bill

Vpluntary refunds to shippers and waiver of the collection of a portion offreight

chaIges are authorized where it appears that there is an error in a tariff of a clerical

nature or where through inadvertence there has been a failure to file a tariff reflecting

an intended rate

The inadvertent failure of Sea Land to extend the 8100 rate when it

clearly intended to do so presents the kind of situation section 18 b 3

wasintended to remedy and the requested waiver should be granted

Itis therefore found that

I There was an inadverte nt failure to extend the intended rate beyond

its then applicable expiration date

2 The waiver requested will not result in discrimination among

shippers

3 Prior to requesting permission for the waiver of collection ofa

portion of the freight charges Sea Land filed a new tariff setting forth the

rate upon which the waiver would be based and

4 The application was filed within 180 days ofthe date of shipment

Accordingly Sea Land will be permitted to waive the collection of

2 999 72 from the notify party Henry E Sullivan

S JOHN E COGRAVE

Administrative Law Judge

WASHINGTON D C

August 31 1976

1 Senate Report No 1078 AprilS 1968 To accompany H R 94731 on Shipping Act 916 Authorized Refund of

Certain Freight Charges under Purpose a the Bill

19 F M C
l

I

j

1

I

u

j

cJ

i

FEDERAL MARITIME COMMISSION

SPECIAL DoCKET No 478

KURTIN WOOL STOCK CORP

v

SEA LAND SERVICE INC

NOTICE OF AOOPrION OF INITIAL DECISION AND ORD

PERMmING WAIVER OF CHARGES

October 6 1976

No exceptions having been taken to the initial decision i

proceeding and the Commission having determined not to review 

notice is hereby given thatthe initial decision became the decision 

Commission onOctober 6 1976

It is Ordered That applicant is authorized to waive collection of 

ofthe charges due from Kurtin Wool Stock Corporation

It is further Ordered That applicant shall promptly publish 

appropriate tariff the following notice

Notice is hereby lliven as required by the decision of the Federal M

Commission in Special Docket No 478 that eftective October 21 1975 for purp

refund or waiver of freijht charaes on any shipments which may have been 

durinll the period from October 21 1975 throullh November 26 1975 the rate o

includinll waste materials from textile fabrics excludinll cotton remnants 

pressed bales in House to House containers minimum 30 000 lbs per conta

Bilbao Spain only is 55 75 W subject to all applicable rules rellulations te

conditions of said rate and this tarlft

It is further Ordered That waiver of the charges shall be effec

within 30 days of service of this notice and applicant shall with

days thereafter notify the Commission of the date and man

effectuating the waiver

By the Commission

SEAL S FRANCIS C HURNEY

Secre

324 19 
FEDERAL MARITIME COMMISSION

SPECIAL DoCKET No 478

KURTIN WOOL STOCK CORP

v

SEA LAND SERVICE INC

Adopted October 6 976

Application granted

INITIAL DECISION OF JOHN E COGRAVE ADMINISTRATIVE

LAW JUDGE

Sea Land is applying for permission to waive collection of a portion of

the freight charges on a shipment by the Kurtin Wool Stock Corporation

The shipment consisted ofRags 2

and weighed 29 723 Ibs It was carried

by Sea Land from Elizabeth New Jersey to Bilbao Spain under a Sea

Land bill of lading dated November I 1975 The rate applicable at the

time of shipment was 55 75 per 2240 Ibs minimum 30 000 Ibs No

Discount contained in Sea Land Freight TariffNo 166 FMC 43 Item

6750 30th Revised Page 110 This rate resulted in aggregate freight

charges of 746 65 The rate sought to be applied is 55 75 per 2240 Ibs

minimum 30 000 Ibs less 10 House to House discount Sea Land

Freight TariffNo 166 FMC 43 Item 6750 32nd Revised Page 110 This

rate would have resulted in total freight charges of 67198 Permission to

waive collection of 74 67 is sought

Prior to October 21 1975 Sea Land s rate on Rags from North

Atlantic ports to Spanish ports was 65 00 per 2240 Ibs minimum 13 tons

per container with a rate of 3100 applying on weight in excess of 13

tons in the same container not subject to the House to House discount

There was at this time however an American Export Lines rate on

Rags of 55 75 per 2240 Ibs less 10 discount in House to House

containers

In order to meet the competition to Bilbao Sea Land s North Atlantic

I

This decision became the decision of the Commission October 6 1976

t

The full description was Rags including waste materials from textile fabrics excluding cotton remnants in

compressed bales in House to House containers

19 F M C 325
I

1 326 FEDEAAL MARITIME COMMISSION

j

1

I

J

I

I

pricing division instructed the tariffpublishing officer to publish the 

rate and conditions by proposal dated October 17 1975 spec

effective date ofOctober 21 1975 The tiling was made by telex w

effective date ofOctober 21 1975 See 30th Revised Page 110 of 

No 166 supra Although the publication instruction specifically o

the reference NSD so that the rate would be subject to th

House to House discount authorized by paragraph 2 a 1 of item 

15th Revised Page 34 of the tariff both the telex and the entry o

Revised Page 34 of the tariff bore the reference NSD thus prec

the application ofthe 10 discount The error was not discovere

after the shipment here and one other 3had moved

Kurtin s freight forwarder Robbins Fleising Forwarding Inc 

learned oferror in the taritl publication deducted the 10disco

74 67 when it paid the freight charges on or about November 20 

In summary Sea Land says

As stated hereinbefore clerical orror by Sea Land s tariffpublishina per80ne

the telex filing of October 21 to QQQtain the reference NSD which made the 

subject to the discount The publication instructions clearly intended that the 

affinnatively subject to the diSCOUnt so that it would be competitively equal to 

applicable via other carriers Reapondent does not believe that any discriminat

result from a waiver of collection pf the under payment here involved

The error was corrected on November 26 1975 by the filin

publication of 32nd Revised Page 110 which made the rate subject 

10 House to House discount

The rate sought to be applied here would appear to cove

shipments of a minimum of 30 000 Ibs The shipment of Kurtin w

29 723 pounds When asked how Kurtin s shipment could qualify 

rate sought Sea Land amended its application

Tariff No 166 FMC 43 as shown on 20th Revised Title Page is subjec

regulations contained in Sea land Tariff No 171 PMC49 Item 160 of that t

shown on original pase 14 is authority for assesslnj charges on the minim

trailer weight of 30 000 Ibs as a maximum onthe 29 723 Ibs here Involved

Under Item 160 the rate sought by Sea Land is 

application otherwise satisfies the criteria of 18b 3

Section 18b 3 ofthe Shipping Act 1916 46 USC 817 as amend

Public Law 90298 and as further implemented by Rule 6b S

DocketApplications Rules of Practice and procedure 46CFR 502 

the law sought tobe invoked Briefly it provides

The Commission may in its discretion and for aood cause shown p

common carrier by water in the foreip commerce of the United States to r

portion of the freight charges collected from a shipper or waive the collect

3

Sea Land has filed another Special Doqket application to take care of the other shipment See Special D

480

4 Tbe lackofdiscrimination is discussed below

5

Item 160 ofTariff No 171 PMC 49 pl Qvides

The charp for a

shipment of lesserwoiaht or measurement quantity shall not exceed the charae for as

aireater weight ormeasurement quantity of the same commodity

19 
KURTIN WOOL STOCK CORP v SEA LAND 327

portion of the charges from a shipper where it appears that there is an error in a

tariff ofaclerical or administrative nature or an errordue to an inadvertence in failing to

file anew tariff and that such refund or waiver will not result indiscrimination among

shippers Furthermore prior to applying for such authority the carrier must have filed

a new tariff which sets forth the rate on which such refund or waiver would be based

The application for refund must be filed with the Commission within one hundred and

eighty days from the date of shipment Finally the carrier must agree that if permission

is granted an appropriate notice will be published in its tariff or such other steps taken

as may be required to give notice of the rate on which such refund or waiver would be

based

The legislative history ofthe amendment to section 18 of the Shipping

Act Public Law 90298 6

specifies that carriers are authorized to make

voluntary refunds and waive the collection of a portion of their freight

charges for good cause such as bona fide mistake The nature of the

mistake was particularly described

Section 18 b appears to prohibit the Commission from authorizing relief where

through bona fide mistake on the part of the carrier the shipper is charged more than he

understood the rate to be For example a carrier after advising a shipper that he intends

to file a reduced rate and thereafter fails to file the reduced rate with the Federal

Maritime Commission must charge the shipperunder the aforementioned circumstances

the higher rates

The Senate Report7 states the Purpose ofthe Bill

Voluntary refunds to shippers and waiver of the collection of a portion of freight

charges are authorized where it appears that there is an error in a tariff of a clerical

nature or where through inadvertence there has been a failure to file a tariff reflecting

an intended rate

It is therefore found that

1 There was an error due to an inadvertence in failing to fIle a new

tariff

2 Such waiver ofcollection of a portion of the freight charges will not

result in discrimination among shippers

3 Prior to applying for authority to waive collection ofa portion ofthe

freight charges Sea Land fIled a new tariff which set forth the rate on

which such waiver would be based

4 The application was filed within one hundred and eighty days from

the date of shipment

Accordingly permission is granted to Sea Land Service Inc to waive

collection of a portion ofthe freight charges represented by 74 67

S JOHN E COGRAVE

Administrative Law Judge

WASHINGTON D C

September 14 1976

House Report No 920 November 14 1967 froaccompany H R 9413 onShipping Act 1916 Authorized Refund

a

Certain Freight Charges Statement of Purpose and Need forthe Bill to Amend Provisions of the Shipping Act

916 toAuthorirethe FederalMaritime Commission to Permit a Carrier to Refund a Portion of theFreight Charges

f Senate Report No 1078 April 5 1968 To accompany H R 9473 onShipping Act 1916 Authorized Refund of

Certain Freight Charges under Purpose ofthe BiI

19 F M C
FEDERAL MARITIME COMMISSION

SPECIAL DoCKET No 480

DoUGLAS MATERIAL COMPANY

v

SEA LAND SERVICE INC

NOTICE OF ADOPIION OF INITIAL DECISION AND ORD

PERMITTING WAIVER OF CHARGES

October 6 1976

No exceptions having been taken to the initial deCision i

proceeding and the Commission having determined not to review 

notice is hereby given that the initial decision became the decision 

Commission on October 6 1976

It is Ordered That applicant is authorized to waive collection of 

ofthe charges due from Douglas Material Company

It is further Ordered That applicant shall prmptly publish 

appropriate tariff the following notice

Notice is hereby given as required by the decision of the Federal M

Commission in Special Docket No 480 that effective October 21 1915 for pur

refund or waiver of freight charges on any shipments which may have been 

durina the period from October 21 1975 through November 26 1975 the ra o

including waste materials from textile fabrics excludinll cotton relnnartts 

pressed bales in House to House containers minimum 30iOOO Ibs per cont

Bilbao Spain only is 55 7S W subjeettoall applicable rules reaulations te

conditions of said rate and this tariff

It is further Ordered That waiver of the charges shall be effec

within 30 days of service of this noti e and applicant shall with

days thereafter notify the Commission of the date and man

effectuating the waiver

By the Commission

SEAL S FRANCIS C HURNEY

Secre

328 19 
19 F MC 329

FEDERAL MARITIME COMMISSION

SPECIAL DoCKET No 480

DoUGLAS MATERIAL COMPANY

v

SEA LAND SERVICE INC

Adopted October 6 976

Application granted

INITIAL DECISION OF JOHN E COGRAVE ADMINISTRATIVE

LAW JUDGE

Sea Land is applying for permission to waive collection of a portion of

the freight charges on a shipment by the Douglas Material Company The

shipment consisted of Rags 2

and weighed 24 642 Ibs It was carried by

Sea Land from Boston Massachusetts to Bilbao Spain under aSea

Land bill of lading dated November 17 1975 The rate applicable at the

time of shipment was 55 75 per 2240 Ibs minimum 30 000 Ibs No

Discount contained in Sea Land Freight Tariff No 166 FMC 43 Item

6750 30th Revised Page llO This rate resulted in aggregate freight

charges of 746 65 The rate sought to be applied is 55 75 per 2240 Ibs

minimum 30 000 Ibs less 10 House to House discount Sea Land

Freight TariffNo 166 FMC 43 Item 6750 32nd Revised Page 110 This

rate would have resulted in total freight charges of 671 98 Permission to

waive collection of 74 67 is sought

Prior to October 21 1975 Sea Land s rate on Rags from North

Atlantic ports to Spanish ports was 65 00 per 2240 Ibs minimum 13 tons

per container with a rate of 3100 applying on weight in excess of 13

tons in the same container not subject to the House to House discount

There was at this time however an American Export Lines rate on

Rags of 55 75 per 2240 Ibs less Icm discount in House to House

containers

In order to meet the competition to Bilbao Sea Land s North Atlantic

I

Thisdedsion became the decision of the Commission October 6 1976

2

The full description was Rags including waste materials from textile fabrics excluding cotton remnants in

compressed bales in House to House containers
330 FEDERAL MARITIME COMMISSION

pricing division instructed the tariff publishing officer to publish the 

rate and conditions by proposal dated October 17 1975 spe

effective date ofOctober 21 1975 The filing was made by telex w

effective date ofOctober 21 1975 See 30th Revised Page 110 o

No 166 supra Although the publication instruction specifically o

the reference NSD so that the rate would be subject to th

House to House discount authorized by paragraph 2 a I of item 

15th Revised Page 34 ofthe tariff both the telex and the entry o

Revised Page 34 ofthe tariff bore the reference NSD thus prec

the application of the 10 discount The error was not discovere

after the shipment here and one other 3had moved In summa

Land says

As stated hereinbefore clerical error by Sea Land s tariffpublishing personne

the telex tiling of October 21 to contain the reference NSD which made the 

subject to the discount The publication instructions clearly intended that the 

affirmatively subject to the discount so that it would be competitively equal to 

applicable via other carriers Respondent does not believe that any discrimina

result from a waiver of collection of the under payment here involved

The error was corrected on November 26 1975 by the filin

publication of 32nd Revised Page 110 which made the rate subject 

10 House to House discount

The rate sought to be applied here would appear to cove

shipments of a minimum of30 000 lbs The shipment of Douglas w

24642 pounds When asked how Douglas shipment could qualify 

rate sOllght Sea Land amended its application

Tariff No 166 FMC43 as shown on 20th Revised Title Palle is subjec

regulations contained in Sea Land Tariff No 17 FMC49 Item 160 of that 

shown on orisinal page 14 is authority for assessing charges on the minim

trailer weight of 30 000 lbs as a maximum on the 24 642 lbs here involved

Under Item 160 the rate sought by Sea Land is applicable 

application otherwise satisfies the criteria of 18b 3

Section 18 b3 of the Shipping Act 1916 46 USC 817 as amen

Public Law 90298 and as further implemented by Rule 6 b S

Docket Applications Rules of Practiceand procedure 46 CPR 502 

the law sought to be invoked Briefly it provides

The Commission may in its discretion and for IIGod cause shown p

common carrier by water in the foreign commerce of the United States to 

portion of the freight charlles col1ected from a shipper or waive the col1ec

portion of the charges from a

shipper where it appears that there is an e

tariffof a clerical or administrative nature or an errordue to an inadvertence in 

file a new tariff and that such refund or waiver will not result in discriminatio

shippers Furthermore prior to applying for such authority the carrier must h

S Sea Land has rued anotherSpecial Docket pplication to take careof the other shipment See Special 

47S

4

The lackof discrimination is discussed below

I

Item 160 ofTariff No 171 FMC 49 provides

The charae for a

shipment oflesser weipt or measurement quantity shall not exceed the charge for a

aBreater weight or measurement quantity of the same commodity

19 
DOUGLAS MATERIAL CO v SEA LAND 331

a new tariff which sets forth the rate on which such refund or waiver would be based

The application for refund must be tiled with the Commission within one hundred and

eighty days from the date of shipment Finally the carrier must agree that if permission

is granted an appropriate notice will he published in its tariff or such other steps taken

as may be required to give notice of the rate on which such refund orwaiver would be

based

The legislative history of the amendment to section 18 ofthe Shipping

Act Public Law 90298 6

specifies that carriers are authorized to make

voluntary refunds and waive the collection of a portion of their freight

charges for good cause such as bona fide mistake The nature of the

mistake was particularly described

Section 18 b appears to prohibit the Commission from authorizing relief where

through bona fide mistake on the part of the carrier the shipper is charged more than he

understood the rate to be For example a carrier after advising a shipperthat he intends

to file a reduced rate and thereafter fails to file the reduced rate with the Federal

Maritime Commission must charge the shipper under the aforementioned circumstances

the higher rates

The Senate Report 7

states the Purpose ofthe Bill

Voluntary refunds to shippers and waiver Qr the collection of a portion of freight

charges are authorized where it appears that there is an error in a tariff of a clerical

nature orwhere through inadvertence there has been a failure to file a tariff reflecting

an intended rate

Itis therefore found that

1 There was an error due to an inadvertence in failing to fIle a new

tariff

2 Such waiver of collection of aportion ofthe freight charges will not

result in discrimination among shippers

3 Prior to applying for authority to waive collection of a portion ofthe

freight charges Sea Land fded a new tariff which set forth the rate on

which such waiver would be based

4 The application was filed within one hundred and eighty days from

the date ofshipment

Accordingly permission is granted to Sea Land Service Inc to waive

collection ofaportion ofthe freight charges represented by 74 67

S JOHN E COGRAVE

Administrative Law Judge

WASHINGTON D C

September 14 1976

8 House Report No 920 November 14 1967 fo accompany H R 9473 on Shipping Act 19 6 Authorized Refund

of Certain Freight Charges Statement of Purpose and Need for the Bill to Amend Provisions of the Shipping Act

1916 10 AUlhorize the FederalMaritime Commission to Permit aCarrier to Refund aPOrion ofthe

7 Freight Charges

Senate Report No 1078 AprilS 1968 rro accompany H R 9473 onShipping AQCT t Authorized Refund of

Certain Freight Charges underPurpose ofthe Bill

19 F M C
FEDERAL MARITIME COMMISSION

DocKET No 7531

CSC INTERNATIONAL INCORPORATED

v

WATERMAN STEAMSHIP CORPORATION

i

ORDER ON REMAND

October8 1976

By complaint fIled August 18 1975 CSC International Incarp

CSC seeks reparation from Waterman Steamship Corporation 

alleged freight overcharge in violatian af sectian 18b 3 af the Sh

Act 1916 the Act on a shipment described in the bill of lad

Chemicals N O S carried by Respondent from New Orleans Lou

to Keeling Taiwan The proceeding was conducted under the sho

procedure set forth in Rule ll a afthe Cammission s Rules af P

and Procedure Rules 46 C F R S02 181 Administrative Law 

Charles E Morgan AU issued an Initial Decisian dismissin

complaint The proceedina is before the Commissian on exceptian

CSC and Respondent s reply thereto

The bill oflading covering CSC scargo is dated August 17 197

complaint asking reparation far the iIVurr caused by the carrier s 

freight avercharges was received at the Office of the Commis

Secretary onAugust 18 1975

The AU after cansidering the date of the bill of lading and th

the camplaint was received by the Commission concluded th

complaint wasfiled ane day after the expiratian af the twoyear lim

aut in sectian 22 ofthe Act and on that ground dismissed the com

far lack ofjurisdiction

CSC cantends that under narmal conditions the complaint mailed 

New York an August 14 1975 would have been received b

Cammissian by August 17 1975 August 17th however fell on a S

when the Commission s offices were closed for business CSC as

under these circumstances the Commission apply the common la

for the computation ofthe two year period af sectian 22af the Ac

it accept the filing of the complaint as timely vacate the Initial De

and remand the case to the AU for a decisian an the merits

I

1

I

1

i

I

1

c

j

j

I

332 19 
CSC INTL INC v WATERMAN CORP 333

The common law rule advocated by CSC

I excludes the day the cause ot action accrued and includes the last day of the period

in the count and

2 permits filing on the succeeding business day when the last day of the period falls

on a Saturday Sunday or legal holiday

Respondent in reply points out that the common law rule referred

to and relied upon by CSC is incorporated in Rule 7 a which

specifically excepts from its coverage complaints filed under Rule 5 C

2

Respondent therefore contends that under its own rules the Commission

should deny CSC s request adopt the Initial Decision and dismiss the

complaint

The only reference in the Commission s Rules to the computation of

the two year statutory period is found in Rule 7 a which by express

terms makes this method ofcomputing time inapplicable to fIlings under

Rule 5 c that is complaints seeking reparation fIled under section 22 of

the Act The Commission however has reserved in Rule 163 the right

to waive any ofits rules except one not relevant here provided such a

waiver

1 is not inconsistent with any statute and

2 is warranted to prevent manifest injustice or undue hardship

Rule l b of the Commission s Rules provides that the Commission

offices are open from 8 30 a m to 5 00 p

m Monday through Friday 46

C F R 502 2 Thus the offices of the Commission were closed not only

on Sunday August 17 1975 the last day of the two year limitation

period but also on the preceding Saturday August 16th

Under these circumstances dismissal ofthe complaint for late filing

would cause undue hardship To avoid this result the Commission in the

exercise of its discretion waives pursuant to Rule 16 the exception of

Rule 5 c contained in Rule 7 a so that by making Rule 7 a applicable to

the computation ofthe two year period herein the fIling ofthe complaint

onMonday August 18 1975 is considered to be timely

I

Filina is not complete until the document is delivered and reeeh cd UnitedStates v Lombardo 241 U S 75

76 1916

TheAU s conclusion that the complaint was filed one day too late must have been basedon such a computation for

by excluding AU8usl 17 1973 the date of the biD of lading and starting the count with August 18th 1973 the last day

for filing the complaint within tbe two year limit would be August 17 1975 The complaint as mentioned was

received by the Commission on Monday August 18th

1 Rule7 a reads in relevant part

In computing any period of time under the Nles of this Part except section 502 63 Rule 5

c the time begins with

the day followin the act and includes the last day of the period unless it is aSaturday Sunday ornational legal

holiday in which event the period runsuntil the end of the next day which is not aSaturday Sunday or legal

holiday 46 C F R502 101 Emphasis added

Rule 5 c

provides in part

Complaints seekina reparation shall be filed within two 2 years after the cause of action accrues section 22

Shippins Act 1916 Notification tothe Commission that a complaint mayor will be filed wiD not constitute

afilina within the two 2 yearperiod 46C F R502 63

Rule lj states

Except tothe extent that such waiver would be inconsistent with any statute any of the rules of this part except

502 153 Rule 100mwhich refers toappeals from rulinas of presidifll officers may be waived by the Commission

in order toprevent undue hardship manifest injustice or if the expeditious conduct of business so requires 46

C F R502 10

19F MC
334 FEDERAL MARITIME COMMISSION

i

i

Consequently the Initial Decision must be vacated and the proc

remanded to the AUfor adjudication on the merits

THEREFORE IT IS ORDERED That the phrase e

502 63 Rule 5 c in Rule 7 a 46 C F R 502 101 is waived

IT IS FURTHER ORDERED That the Initial Decision herein 

January 22 1976 is vacated and the matter is remanded 

Administrative Law Judge for further proceeding not inconsisten

thisOrder

By the Commission

SEAL S FRANCIS C HURNEY

Secret

j

1

c

1

19 
FEDERAL MARITIME COMMISSION

No 7531

CSC INTERNATIONAL INC

v

WATERMAN STEAMSHIP CORP

ORDER ON REMAND DISSENTING OPINION

October8 976

Attached hereto is the dissenting opinion of Vice Chairman Morse in

regard to the Commission s Order on Remand served in this proceeding

October 8 1976

SEAL S FRANCIS C HURNEY

Secretary

Vice Chairman Morse dissenting I

oppose the action ofthe majority for two reasons

I The Congress directed that claims for reparations be filed within

two years after the cause of action accrued The Congress did not say

within two years and one day it said within two years Nor did the

Congress grant us express authority to extend the two year period I

would deny jurisdiction to grant any extension beyond the two years

decreed by the Congress would adopt the reasoning ofthe Administrative

Law Judge and would apply the literal reading ofthe statute

Section 22 of the Shipping Act 1916 has been in effect sixty years

and it has never before been held that the Section 22 time IiInitation may

be extended by us Our own rules Rule 7 a specifically excepts from its

coverage complaints for reparations filed under Rule 5 c

4

thereby

indicating our predecessor s opinion they had no jurisdiction to extend

the two year period specified in Section 22 This is a time limitation

dealing with business and the business community and while the

community may often be inept in protecting its rights nevertheless it is

fully aware ofits rights Here there is no social need to allow flexibility as

is the case in personal injury fraud and other tort situations where the

injured person is often unfaIniliar with his rights and statute ofIiInitations

4 See Footnote2

supra

19 FM C 335
336 FEDERALMARITIME COMMISSION

In my opinion the decision of the majority constitutes but a loos

unnecessary interpretation of a statute which is stated in precise t

2 In my opinion the mlYority erred in applying Commission Rul

There is no hardship on this record let alone undue hards

Claimant by the exercise of ordinary business prudence in auditi

freight bills should have become aware that it had aclaim for repar

months before the expiration of the two year period That it may 

failed to so become aware would be due to sloppy internal au

practices which Ifind it unnecessary to condone Delays in the 

were not a new and unknown factor in August 1975 Hence 

claimant observed as it must have done that the time for min

about to expire on Sunday August 17 1975 ordinary business pru

on the part ofclaimant and its counsel would have called for 

delivery to the Commission on Thursday August 14 or Friday A

15 1975 instead ofposting the complaint from New York on Thu

August 14 1975

Under these circumstances it is a travesty to say that awaiver 

rules was required to prevent undue hardship or manifest iqju

or required in the expeditious conduct ofbusiness

i

19 
19 F MC 337

FEDERAL MARITIME COMMISSION

INFORMAL DOCKET No 341 1

THE FEDERAL MINISTER OF DEFENSE

FEDERAL REPUBLIC OF GERMANY

v

REPUBLIC INTERNATIONAL FORWARDING COMPANY AND REPUBLIC VAN

AND STORAGE OF Los ANGELES INC

ORDER ON REMAND

October 26 976

This proceeding was initiated upon the complaint of the Federal

Minister of Defense Federal Republic of Germany Complainant against

Republic International Forwarding Company Republic and Republic Van

and Storage of Los Angeles Inc Van Storage alleging freight

overcharges in violation of section 18 b3 ofthe Shipping Act 1916 the

Act on the shipment of an automobile from Arleta California to

Hamburg Federal Republic ofGermany The proceeding was conducted

under Subpart SInformal Procedure for the Adjudication of Small

Claims 46 C F R 502 301 et seq The Settlement Officer issued a

decision dismissing the complaint The Commission determined on its

own motion to review the decision ofthe Settlement Officer

By letter dated November 23 1973 Mr Uwe Thele a member ofthe

Armed Forces of the Federal Republic of Germany whose overseas

assignment had come to an end received from Respondent an estimate

ofrates for the transportation of household goods and of an automobile

from Arleta California to Hamburg Federal Republic of Germany The

German Military Representative in the United States Military Represent

ative approved the shipment and paid the bill

The estimate quoted a rate for household goods of 97 00 CWT for

a load of3 042 pounds and 90 00 for a load of4 900 pounds The rate for

the automobile was to be 750 in the first instance and 700 00 when

shipped with the heavier load

The household goods weighing 2 790 pounds were rated at 97 00 per

100 pounds The bilI including 247 50 for insurance amounted to

2 953 80 The automobile which weighed 2 950 pounds was rated at
338 FEDERAL MARITIME COMMISSION

I

75 00 per 100 pounds The bill amounted to 2 212 50 plus 135 0

insurance Total freight charges in the amount of 5 3010 were pa

Complainant

After payment of the bill Complainant discovered that while 

household goods had been rated at the the rate agreed to ie 97 0

100 pounds freight charges for the automobile exceeded by 1 462 

estimate quoted in Respondent s November 23 1973 letter

Complainant s repeated requests for an adjustment of that charge 

to no avail In refusing to honor Complainant s claim Respondent 

the position that the November 23 1973 offer was valid only for 

days and that rates were subsequently increased because of the h

cost offuel and of fluctuations in the money markets Thereafte

complaint wasftled

The Settlement Officer dismissed the complaint noting that as a 

applicable to the shipment could not be located a determinati

whether Van storage had collected the proper charges could n

made

The ru1ing ofthe Settlement Officer must be vacated Dismissal 

complaint under the circumstances presented in the proceeding 

wou1d deprive Complainant from obtaining relief not because it has 

established that it is not entitled to reparation but because ofthe l

information needed to decide the claim on its merits Unanswere

example is

a Whether the rates quoted by Republic and the charges collec

Van Storage were based upon a tariff on file with the Commi

b Who was the underlying ocean carrier and did it have a 

applicable to this shipment on file

c Who appears as shipper on the ocean bill of lading

d Whetb r tbbill oflading identifies Republic and orVan S

as independent ocean freight forwarders

These are some of the questions which must be resolved be

determination can be made as to whether Republic and Van S

violated the statute and whether Complainant is entitled to the 

requested

Further since resolution of these issues may require an evide

hearing which is not available under the informal procedure of sub

ofthe Ru1es the proceeding will be referred to the Office ofAdm

tive Law Judges for acljudication under the formal procedure prov

Subpart T of the Ru1es 46 C F R 502 311

THEREFORE IT IS ORDERED That the decision of the Sett

Officer be and hereby is vacated

IT IS FURTHER ORDERED That the proceeding be remanded 

Office of Administrative Law Judges for acljudication under Subpa

19 F M C
FEDERAL MINISTER OF DEFENSE 339

the Commission s Rules of Practice and Procedure 46 C F R 502 311 et

seq

By the Commission

SEAL S FRANCIS C HURNEY

Secretary

19 F MC
FEDERAL MARITIME COMMISSION

INFORMAL DoCKET No 3501

UNITED DECORATIVE FLOWER CO INC

v

MAERSK LINE

NOTICE OF DETERMINATION NOT TO REVIEW

October 27 1976

Notice is hereby given that the Commission on October 27 

determined not to review the decision of the Settlement Officer 

proceeding served October 14 1976

By the Commission

SEAL S FRANCIS C HURNEY

Secre

340 19 
19 F M C 341

FEDERAL MARITIME COMMISSION

INFORMAL DocKET No 3501

UNITED DECORATIVE FLOWER CO INC

v

MAERSK LINE

October 14 1976

Reparation Denied

DECISION OF WALDO R PUTNAM SETILEMENT OFFICER

By complaint f1Ied April 5 1976 United Decorative Flower Co Inc

complainant alleges that Maersk Line carrier erred in computing the

cubic measurement of a shipment of plastic flowers and foliages from

Bangkok Thailand to Baltimore Maryland resulting in an overcharge of

210 63 While a violation of Shipping Act 1916 is not alleged it is

presumed to be section 18b 3 which prohibits the assessment offreight

charges in excess ofthose lawfully applicable at the time ofthe shipment

In support ofits claim the complainant furnished a

copy ofthe packing

list indicating a total measurement of 798 cubic feet 2

a

copy of the

carrier s bill oflading indicating a total measurement of898 cubic feet

and a

copy ofaletter from the carrier denying the claim on the basis that

it did not have an opportunity to remeasure the cargo while it still was in

the carrier s possession

In response to the complaint the carrier supplied a

copy ofthe Mate s

Receipt showing that the involved cartons were measured upon receipt of

the cargo at the Bangkok dock prior to shipment 3

The bill oflading was

prepared using the cubic measurement inserted on the Mate s Receipt

arrived at through actual measurement ofthe cargo

Here we have a situation where the proper measurement ofthe cargo

was in dispute from the date that the cargo was received by the carrier

According to the facts presented the shipper andor the consignee had

1 Both parties bavin consented to the informal procedure of Rule 19 46 CFR 502 301 304 as amended this

decision will be final unless the Commission elects to review it within 15 days from the dateof service thereof

45 cartons measurina 321 t x 15 t

x 28 and 58 cartons measurina 321 t x 151 2 X 25112

s45 cartons mcuurin l

x 16 x 29 and 58 cartons measurina 331 2 x 16 x 27
342 FEDERAL MARITIME COMMISSION

I

ample opportunity to have requested remeasurement by the car

accordance with the terms of the carrier s bill oflading which re

pertinent part

the Carrier shall be entitled at any time to remeasure any goo

freight shall be paid on the proper measur ment so ascertained The e

of and incidental to remeasuring shall be borne by the carrier if Sh

found to be correct but otherwise such expenses shall be considered as frei

borne and paid by the Shipper Consignee

The responsibilities ofthe Carrier insofar as the contents of the 

lading are concerned are set forth in section 1303 3 of the Carri

Goods by Sea Act 46 USC 1300 et seq This section requires the 

to issue upon demand ofthe shipper a bill oflading showing int

the pertinent information furnished by the shipper in writing as re

by subparagraph b However subparagraph c ofthat section pr

that the carrier shall not be bound to show the information supp

the shipper in the bill of lading in instances where the accuracy 

information is suspect or in cases where reasonable means of ch

such information is unavailable

It is apparent that not only were the cargo measurement f

supplied by the shipper questionable but reasonable means of ch

such figures were available

The issue here is whether the cargo should have been rated acc

to the dimensions set forth on the shipper s packing list or those a

at through an actual measurement on the docks prior to shipment

The fact that the cargo was measured on the dock before ship

and the new measurements inserted on the Mate s Receipt we

contested in time for the carrier to verify the correct measuremen

to delivery of the carJo is prima facie evidence that packin

measurements were incorrect

The Commission has held that where the shipment has left the c

of the carrier and the carrier is thus prevented from verifyin

claimants contentions the claimant has aheavy ultimate burden o

to establish his claim 4

The ord in this proceeding fails to establish that the claima

sustained the necessary heavy burden of pfQOf required for the aw

reparation in this instance and accordinalY the request for repara

hereby denied

5 Waldo R Putnam

Settlement Offi

4

docket no 283 1 We tern Publlshln Co Inc v Hapa Lloyd AG 13 SRR 16 1972

19 
FEDERAL MARITIME COMMISSION

SPECIAL DOCKET No 482

RAYTHEON CO INC

v

SEA LAND SERVICE INC

NOTICE OF ADOPfION OF INITIAL DECISION AND ORDER

PERMITTING WAIVER OF CHARGES

October 27 1976

No exceptions having been filed to the initial decision of the Adminis

trative Law Judge in this proceeding and the Commission having

determined not to review same notice is hereby given that the initial

decision became the decision ofthe Commission on October 27 1976

It is hereby ordered that applicant is permitted to waive collection of

200 70 ofthe charges otherwise due from Raytheon Co Inc

It is further ordered that applicant shall promptly publish the following

notice in its appropriate tariff

Notice is hereby given as required by the decision of the Federal Maritime

Commission in Special Docket 482 that effective July I 1975 for purposes of refund or

waiver of freight charges on any shipments which may have been shipped during the

period from July I 1975 through January 29 1976 the rate on Missile Systems and

Parts non hazardous is 140 00 W Msubject to aU applicable rules regulations terms

and conditions of said rate and this tariff

Itis further ordered that waiver of the charges shall be effectuated

within 30 days ofservice of this notice and applicant shall within five

days thereafter notify the Commission of the date and manner of

effectuating the waiver

By the Commission

SEAL S FRANCIS C HURNEY

Secretary

19 F MC 343
FEDERAL MARITIME COMMISSION

SPECIAL DoCKET No 482

RAYTHEON CO INC

v

SEA LAND SERVICE INC

Adopted October 27 1976

Application granted

j

l

INITIAL DECISION OF JOHN E COGRAVE ADMINISTR

LAW JUDGE

By application filed May 28 1976 Sea Land Service Inc 

permission to waive collection of a

portion of the freight charg

shipment ofmissile systems and parts weighing 14 760 pounds 

kilograms and measuring 1 773 cubic tor 50 176 cubiC meters 

December 3 1975 from Los Ange1es to Naples

Sea Land offers the following as grounds for granting the appli

4 In March 1975 respQndent had neaoliated with Raytheon a rate of 

1000 Kg orcubic meter whichever results In areater revenue on a new c

classification Missile Systems and Parts non hazardous Rate was to ap

Land s railwater minibridae service from Pacific COast ports to ports In C

Europe and the Mediterranean taking Rate Oroups 2

and 5 respectively as p

its Tariff No 193 FMC No 66 and ICC No 69

In compliance with itsobliption under ction 15 Aareement No 10052 

request was made to 1I1e Pacific Coast EitropeanConference for approval of 

lines The conference initially published an all water contract rate of 

telegraphic filinll effective April I and 2 In Its Tariff FMC15 on 6th revise

and 5th revised page 266 respectively Attachment No I In the reissue j

into FMC 16 effective July I 1975 the rate was reduced to the 140 00 soug

Land on orillinal pages 163 and 283 respectively Attachment No 2 The 

date of September 30 1975 attached to thelatter pubUcatlon was subsequently 

and then eUminated The same rate is stIll in effectwithout expiration date

Sea Land concurrently pubUshed the rate of 140 00 in Item No 4330 N

revised PBIle 156 Attachment No 3 of its Tariff No 193 FMC No 66 and lC

effective May 29 1975 on statutory notice However on 8th revised 

Attachment No 4 which was issued effective July I 1975 along with num

pages to incorporate increases into the rates on the tariff paaes Item 4330 

1 This decision became the decision oftheCommission October 27 1976

344 
RAYTHEON CO v SEA LAND 345

exempted the rate in Item 4330 were unaccountably dropped from the page by clerical

mistake in tariff compilation instead of simply carrying the rates forward without

increase

The clerical mistake of dropping the rates from Item 4330 was discovered and a

publication request dated July 10 1975 Attachment No 5 to restore the rate to Rate

Groups 2 and 5 was sent to the tariff publications department Unfortunately another

clerical mistake occurred here when the clerk inserted a rate of 144 00 instead of

140 00 in the Group 5 rate column see Attachment No 5 on the proposed manuscript

Consequently when brought forward on 9th revised page 156 Attachment No 6

effective August 28 1975 the rate of 144 00 became applicable to Group 5 ports but

the previous rate of 140 00 was correctly brought forward to Group 2 ports An

additional clerical error was made when the Group 5 rate was made subject to a

minimum quantity of 40 cubic meters per container this figure was merely the minimum

loadibility that could be achieved by the shipper and was not intended to be published as

a requirement for application of the rate

When the erroneous publication of the 144 00 rate to Group 5 was discovered it was

reduced to the correct figure of 140 00 on 11th revised page 156 Attachment No 7

issued December 23 1975 and effective January 29 1976 Concurrently on the same

page related rates to Groups I 3 4 and 6 were added to correspond to the rates in

Pacific Coast European Conference Tariff FMC I6See Attachment No 2 However in

the interim period the shipments that are the subject of this application were made and

the rate of 144 00 was charged on them Knowing that it was a mistake the shipper s

freight forwarder deducted the excess charges amounting to 200 70 when paying the

freight bills

Attachment No 8 is copy of bill of lading 995 326508 dated December 2 1975

showing the original billed ocean freight charges of 7 225 34 at the then effective Tariff

rate of 144 00 plus surcharge of 244 36 for a total of 7 469 70 In payment a deduction

of 200 70 was made from the ocean freight based on the rate of 140 00 It is the open

unpaid amount of 200 40 collection of which is here sought to be waived

On June 18 1976 Sea Land tiled aSpecial Docket Application for

waiver of collection offreight charges on a similar shipment See Special

Docket No 483 Raytheon Co Inc v Sea Land Service Inc Initial

Decision served September 29 1976

Section 18 b 3 ofthe Shipping Act 1916 46 USC 817 as amended by

Public Law 90298 and as further implemented by Rule 6 b Special

Docket Applications Rules of Practice and procedure 46 CPR 502 92 is

the law sought to be invoked Briefly it provides

The Commission may in its discretion and for good cause shown permit a common

carrier by water in the foreign commerce of the United States to refund a portion of

the freight charges collected from a shipper or waive the collection of a portion of the

charges from a shipper where it appears that there is an error in a tariffof a clerical

or administrative nature oran error due to an inadvertence in failing to file a new tariff

and that such refund or waiver will not result in discrimination among shippers

Furthermore prior to applying for such authority the carrier must have filed a new

tariff which sets forth the rate on which such refund or waiver would be based The

application for refund must be filed with the Commission within one hundred and eighty

days from the date of shipment Finally the carrier must agree that if permission is

granted an appropriate notice will be published in its tariff or such other steps taken as

may be required to give notice of the rate on which such refund or waiver would be

based

The legislative history ofthe amendment to section 18 of the Shipping

19 F MC
346 FEDERAL MARITIME COMMISSION

j

I

Act Public Law 90298 2

specifies that carriers are authorized to 

voluntary refunds and waive the collection of a portion oftheir f

charges for good cause such as bona fide mistake The nature o

mistake was particularly described

Section 18 b appears to prohibit the Commission from authorizing relief 

through bona fide mistake on the part of the carrier the shipper is charged more 

understood the rate to be For example a carrier after advising a shipper that he 

to file a reduced rate and thereafter fails to me the reduced rate with the F

Maritime Commission mustcharge the shipper under the aforementioned circums

the higher rates

The Senate Report 3

states the Purpose of the Bill

Voluntary refunds to shippers and waiver of the collection of a portion of 

charges are authorized where it appears that there is an error in a tariff of a 

nature or where through inadvertence there has been a failure to file a tariff re

an intended rate

The clerical error which led to the failure to file the rate is that wh

within the contemplation of section 18b 3 of the Act It is the

found that

1 There was atarifffiling errordue to inadvertence

2 The granting of the requested waiver will not result in discrimi

among shippers

3 Prior to applying for permission to waive the collection of a p

of the freight charges Sea Land tiled a new tariff setting forth th

upon which the waiver is to be based and

4 The application was ftled within 180 days of the date ofshipme

Accordingly Sea Land is granted to waive the collection of 

from Raytheon Company Inc

An appropriate notice will be published in Sea Land s tariff

S JOHN E COGRAVE

Administrative Law Jud

WASHINGTON D C

September 29 1976

II House Report No 920 November 14 1967 ITa accompany H R 9473 on Shipping Act 1916 Authoriz

of Certain Freight Charges Statement of Purpose and Needfor the Bill to Amend Provisions of the Sh

916 to Authorizethe Federal Maritime Commission to Permit a Carrier to Refund aPortion ofthe Freigh

3 Senate Report No 1078 April S 1968To accompany H R 9473 on Shipping Act 1916 Authorized 

Certain Freight Charges underPurpose ofthe Bill

19 
FEDERAL MARITIME COMMISSION

SPECIAL DoCKET No 483

RAYTHEON CO INC

v

SEA LAND SERVICE INC

NOTICE OF ADOPfION OF INITIAL DECISION AND ORDER

PERMITTING WAIVER OF CHARGES

October 27 1976

No exceptiofls having been tIed to the initial decision of the Adminis

trative Law Judge in this proceeding and the Commission having

determined not to review same notice is hereby given that the initial

decision became the decision ofthe Commission on October 27 1976

It is hereby ordered that applicant is permitted to waive collection of

387 71 ofthe charges otherwise due from Raytheon Co Inc

It is further ordered that applicant shall promptly publish the following

notice in its appropriate tariff

Notice is hereby given as required by the decision of the Federal Maritime

Commission in Special Docket 483 that effective July 1 1975 for purposes of refund or

waiver of freight charges on any shipments which may have been shipped during the

period from July I 1975 through January 29 1976 the rate on Missile Systems and

Parts non hazardous is 140 00 W Msubject to all applicable rules regulations terms

and conditions of said rate and this tariff

Itis further ordered that waiver of the charges shall be effectuated

within 30 days ofservice of this notice and applicant shall within five

days thereafter notify the Commission of the date and manner of

effectuating the waiver

By the Commission

SEAL S FRANCIS C HURNEY

Secretary

19 F MC 347
FEDERAL MARITIME COMMISSION

SPECIAL DocKET No 483

RAYTHEON Co INC

v

SEA LAND SERVICE INC

Adopted October 27 1976

Application granted

INITIAL DECISION OF JOHN E COORAVE ADMINISTRA

LAW JUOOEl

By application filed June 16 1976 Sea Land Service Inc 

permission to waive collection of a portion of the freight charaes 

shipments of missile systems and parts weighing in aggregate 

pounds or 9 054 kilograms and measuring in aggrepte3 42Scpbic 

96 928 cubic meters shipped January 6 and 16 1976 froml os Allie

Naples

Sea Land otTers the following as grounds for arantllll the applica

4 In March 1975 respondent had neaotlated with Raytheon a rate of 14

1000 KlI or cubic meter whichever results in lIreaterrevenue Qn a new co

classification Missile Systems and Parts nQn hazardQus Rate was tQ apply 

Land s rail water minibridge service trom Paelfic eQaS ports to pllrts in Co

Europe and the Mediterranean taklna Rate Groups 2 and 5 respectively as pro

its TariffNo 193 FMC No 66 and ICC No 69

In compliance with its obliption under Section 15 Agreement No 10052 tet

request was made to the Pacific CQast European CQnference for approval of its 

lines The conference initially published anaU watercQntract ra Qf 14

telegraphic tiling effective April I and 2 in its Tariff FMC15 on 6th revised 

and 5th revised page 266 respectively Attachment No I

In the 1Iissue Q th

into FMC16 effective July I 1975 the rate was reduced to the 140 00 sought 

Land on oriainal pages 163 and 283 respectively Attachment No 2 The ex

date of September 30 1975 attached to the latter publication was subsequently e

and then eliminated The same rate is stili in effect without expiration dale

Sea Land concurrently published the rate of 140 00 in Item No 4330 New 

revised page 156 Attachment No 3 of Its TariffNo 193 FMC No 66 and ICC 

effective May 29 1975 on statutory notice However on 8th revised p

Attachment No 4 which was issued effective July I 1975 alonll with numero

I

This decision became thedeciliion of the Commission October 27 1976

348 19 
RAYTHEON CO v SEA LAND 349

pages to incorporate increases into the rates on the tariff pages Item 4330 was to be

exempted the rate in Item 4330 were unaccountably dropped from the page by clerical

mistake in tariff compilation instead of simply carrying the rates forward without

increase

The clerical mistake of dropping the rates from Item 4330 was discovered and a

publication request dated July 10 1975 Attachment No 5 to restore the rate to Rate

Groups 2 and 5 was sent to the tariff publications department Unfortunately another

clerical mistake occurred here when the clerk inserted a rate of 144 00 instead of

140 00 in the Group 5 rate column see Attachment No 5 on the proposed manuscript

Consequently when brought forward on 9th revised page 156 Attachment No 6

effective August 28 1975 the rate of 144 00 became applicable to Group 5 ports but

the previous rate of 140 00 was correctly brought forward to Group 2 ports An

additional clerical error was made when the Group 5 rate was made subject to a

minimum quantity of 40 cubic meters per container this figure was merely the minimum

loadability that could be achieved by the shipper and was not intended to be published

as a requirement for application of the rate

When the erroneous publication of the 144 00 rate to Group 5 was discovered it was

reduced to the correct figure of 140 00 on 11th revised page 156 Attachment No 7

issued December 23 1975 and effective January 29 1976 Concurrently on the same

page related rates to Groups I 3 4 and 6 were added to correspond to the rates in

Pacific Coast European Conference Tariff FMC 16 See Attachment No 2 However

in the interim period the shipments that are the subject of this application were made

and the rate of 144 00 was charged on them Knowing that it was a mistake the

shipper s freight forwarder deducted the excess charges amounting to 200 70 on

Shipment No I and 187 01 on Shipment No 2 a total of 387 71 when paying the

freight bills

Attachmellt No 8 hereto two pages consists of one copy of each bill of ladingfreight

bill Page I is No 995 329837 Shipment No Ishowing sailing date of January 6 1976

actual sailing date was January 8 1976 page 2 is No 995 330878 Shipment No 2

showing sailing date of January 16 1976 actual sailing date was January 21 1976 Each

shows charges as originally calculated and billed at the then effective Tariff rate of

144 00 plus surcharges of 244 36 and 227 68 respectively Underpayments of 200 70

and 187 01 total 387 71 were made on Shipment Nos I and 2 respectively in the

payment of freight charges representing the difference between the rate of 144 00

published in the tariff and the rate of 140 00 that should have been published It is the

open unpaid amount of 387 71 for which permission to waive collection is sought

See Special Docket Application 482 Raytheon Co Inc v Sea Land

Service Inc for another shipment involving this rate situation

Section l8 b 3 ofthe Shipping Act 1916 46 use 817 as amended by

Public Law 90298 and as further implemented by Rule 6 b Special

Docket Applications Rules ofPractice and procedure 46 CFR 502 92 is

the law sought to be invoked Briefly it provides

The Commission may in its discretion and for good cause shown permit a common

carrier by water in the foreign commerce of the United States to refund a portion of

the freight charges collected from a shipper or waive the collection of a portion of the

charges from a shipper where it appears that there is an error in a tariff of a clerical

or administrative nature or an error due to an inadvertence in failing to file a new tariff

and that such refund or waiver will not result in discrimination among shippers

Furthermore prior to applying for such authority the carrier must have filed a new

tariff which sets forth the rate on which such refund or waiver would be based The

application for refund must be filed with the Commission within one hundred and eighty

days from the date of shipment Finally the carrier must agree that if permission is

granted an appropriate notice will be published in its tariff or such other steps taken as

19 F M C
350 FEDERAL MARITIME COMMISSION

J

may be required to give notice of the rate on which such refund or waiver wo

based

The legislative history of the amendment to section 18 of the Shi

Act Public Law 9O298 2specifies that carriers ate authorized to 

voluntary refunds and waive the collection of a portion of their fr

charges for good cause such as bona fide mistake The nature o

mistake wasparticularly described

Section 18b appears to prohibit the Commission from authorizing relief w

through bona fide mistake on the part of the carrier the shipper is charged more t

understood the rate to be For example a carrier after advising a shipper that he i

to file a reduced rate and thereafter fails to file the reduced rate with the F

Maritime Commission must charge the shipper under the aforementioned circums

the higher rates

The Senate Report3 states the Purpose ofthe Bill

Voluntary refunds to shippers and waiver of the collection of a portion of 

charges are authorized where it appears that there is an error in a tariff of a c

nature or where through inadvertence there has been a failure to file a tariff ref

an intended rate

The clerical error which led to the failure to file the rate is that wh

within the contemplation of section 18 b 3 of the Act It is ther

found that

1There was atariff filing error due to inadvertence

2 The granting of the requested waiver will not result in discrimin

among shippers

3 Prior to applying for permission to waive the collection of ap

of the freight charges Sea Land fded a new tariff setting forth the 

upon whichthe waiver is to be based and

4 The application was filed within 180 days of the date of shipme

Accordingly Sea Land is granted to waive the collection of 3

from Raytheon Company Inc

An appropriate notice will be published in Sea Land s tariff

S JOHN E COGRAVE

Administrative Law Jud

WASHINGTON D C

September 29 1976

I

I House Report No 92November 14 1967 rro accompany M a 9473 onShipping Act 9 6 Authorize

of Certain Freight Charges SUdemem of Purpose and Needfor the Bill to Amend Provisions ofthe Ship

19f6 toAuthori1e the Federal Maritime Commission 10 Permit Q Carrier to Refund a Portion o the Freigh

a

Senate Report No 1078 Aprft 5 1968 To accompany H R 9473 onShipping Act 1916 Authorized 

Certain Freiaht Charges underPurpose of the Bill

19 
FEDERAL MARITIME COMMISSION

DoCKET No 7 30

AGREEMENTS Nos 97183 AND 9731 5

The evidence of record is not sufficient to support a

finding that Respondents in 1974

had a monopoly of the trade between Japan and the Pacific Coast to of the United

States

The conduct of Respondents pursuant to their agreements numbered 9718 and 9731 has

not been shown to be unjustly discriminatory or unfair as between carriers

While anticompetitive Agreement Nos 9718 and 9731 have through 1974 tended to

ameliorate the overtonnaged condition of the transpacific trades and have contrib

uted towards keeping a high number of common carriers in those trades Those

results are beneficial to the public and are sufficient to outweigh the anticompetitive

effects of Agreement Nos 9718 and 9731 demonstrated on this record so as to

justify the continuation of Agreement Nos 9718 and 9731 through August 22 1977

The evidence of record does not support a

finding that Respondents have unfairly

deprived employment to the members of the Marine Cooks and Stewards Union

T S LPerlman and William H Fort for Marine Cooks and Stewards

Union Petitioner

Charles F Warren George A Quadrino and John E Ormond Jr

for Japan Line Ltd Kawasaki Kisen Kaisha Ltd Mitsui O S K Lines

Ltd Nippon Yusen Kaisha Ltd Showa Shipping Co Ltd and

Yamashita Shinnihon Steamship Co Ltd Respondents

John Robert Ewers Paul J KaUer and Bert I Weinstein for the

Bureau ofHearing Counsel

REPORT

November 1 1976

By THE COMMISSION Karl E Bakke Chairman Clarence Morse Vice

Chairman Ashton C Barrett Bob Casey and James V Day

Commissioners

This is an investigation commenced by Commission order of August

18 1975 upon petition of the Marine Cooks and Stewards Union

Respondents six common carriers in the foreign commerce of the United

States plying the trades between Japan and the Pacific Coast of the

United States are Japan Line Ltd Kawasaki Kisen Kaisha Ltd

Mitsui O S K Lines Ltd Nippon Yusen Kaisha Ltd Showa Shipping

19 F M C 351
1

1

1

j

i

j

352 FEDERAL MARITIME COMMISSION

Co Ltd and Yamashita Shinnihon Steamship Co Ltd The Bure

Hearing Counsel is party to the proceeding by Commission rule

The suQiects of the investigation are the third and fifth amendm

respectively to Agreement Nos 9718 and 9731 whereby those 

agreements would continue in force and effect through Auaust 22 

Japan Line Ltd Kawasaki Kaisha Ltd Mitsui O S K Lines 

and Yamashita Shinnihon Steamship Co pursuant to Agreement 

9718 cooperate among themselves so as to provide a coordinated 

containerized steamship service between ports in Japan and por

California Similarly Nippon Yusen Kaisha andShowa Shipping 

Ltd pursuant to Agreement No 9731 cooperate between themselv

prd vide acoordinated fully containerized steamship service between 

in Japan and ports in California

The Marine Cooks and Stewards Union is the exclusive colle

bargaining representative of those members of the stewards depart

employed by Amllrican Mail Line American President Line Ma

Navigation Co Pacific Far East Line and States Steamship C

seeking this investigation Petitioner alleged that Agreement Nos 

and 9731 were ulliustiy discriminatory or unfair as between earners 

detrimenlal to the commerce of the United States andwere contra

the public interest in that the implemen tion of the as ements dep

carriers flying the flag of the united States of cargo resulting 

diminution ofjobs for the members of the union

Pursuant to the Commission s Order ofInvestigation and Hearina 

matter was assigned to an Administrative Law Judge for public hea

which was conducted and presided over by Administrative Law J

Marshall Prior to the issuance of an Initial Decision AdJninjstrative 

Judge Marshall becameuilav able to the CQrninission and this proc

ing was reassigned to Al1ministrative Lllw JuFlle Iline wbo issue

Initia Decision on June 21 1976 Thereafter Petitioner Respond

and Hearing Counsel exeeptedto that Initial Decision andsubmittc

matter to the Commission Because of the expeditioil desired in 

proceeding oral argument before the Commission was not granted

The ultimate decision for the Commission in this proceeding is wh

Agreement Nos 97183 and 9731 5 shouldbe approved disapprove

modified pursuant to section IS of the Shipping Act 1916 Both of 

agreements will be approved

Before discussing the merits of the approval or disapproval of 

agreements the Commission will dispose of an ancillary motion file

Petitioner

Petitioner has moved the Commission to consolidate this procee

with Docket No 7614 Agreement No L01J6 1 Extension ofPo

Agreement in the Eastbound and Westbound Trades Between Japa

Ports and Ports in California Oregon and Washington Petitioner a

that the subject matters of the two docketed proceedin s are clo

related in law and fact and that the consolidation of those procee

19 F 
AGREEMENT NOS 97183 9731 5 353

will facilitate the Commission s decision in both proceedings Respondents

have replied in opposition to that motion as has Hearing Counsel

Respondents argue that Petitioner has waited too long to ask for

consolidation of the two proceedings and that the issues oflaw and fact

are not closely related

Petitioner in that motion has also asked for oral argument in this

proceeding whether or not the two proceedings are consolidated but only

if a grant of oral argument would not delay the Commission s decision in

this proceeding beyond November 1 1976 Respondents oppose that

request also The grant oforal argument in this proceeding would delay

decision beyond November 1 1976 Consequently oral argument is not

granted

The decision on whether or not to consolidate two proceedings pending

before this Commission is a matter committed to the discretion of the

Commission In Docket No 7614 Petitioner and Respondents have ftled

affidavits and memoranda and Hearing Counsel have filed a memoran

dum

Ifthe Commission were to consolidate Docket Nos 7530 and 7614

at this late date the Commission would wish to hear oral argument from

the parties regarding the applicability ofthe evidence adduced in each

proceeding Time does not permit the Commission to hear that argument

before November 1 1976 the date upon which both Petitioner and

Respondents request that the Commission decide Docket No 75 30

Consequently the Commission will not consolidate Docket Nos 7530

and 7614

The merits of the approval or disapproval of Agreement Nos 9718 3

and 9731 5 will now be discussed

Petitioner has excepted to the ultimate decision of Administrative Law

Judge Kline that the agreements be approved at all It is the position of

Petitioner that the agreements should be disapproved Respondents have

excepted to the limitation on the number of vessels operated pursuant to

Agreement No 9718 imposed by Administrative Law Judge Kline as a

condition ofapproval ofthe agreements It is the position of Respondents

that the agreements should be approved as submitted Hearing Counsels

position is that ofRespondents

Administrative Law Judge Kline ultimately found that Respondents had

a monopoly by means ofthe agreements in question that the implemen

tation of those agreements by Respondents resulted in unfair competition

with adverse consequences to certain U S flag carriers and that the

agreements secured important public benefits Administrative Law Judge

Kline ultimately concluded that the agreements unless modified so as to

reduce the number of vessels operated pursuant to Agreement No 9718

from eight to six were unjustly discriminatory or unfair as between

carriers detrimental to the commerce ofthe United States and contrary

to the public interest

In making those findings and conclusions the Presiding Officer erred

19 F M C
i

I

I

l

J

C1

j

1

354 FEDERALMARITIME COMMISSION

The Initial Decision is reversed and this eport is entered in lieu o

decision

Of some importance to the disposition of this case is Petitio

exception to the rulings by Alministrative Law Judge Marshall prohi

Petitioner from discovering evidence directly bearing upon Respond

intention to monopolize

On September 2 1975 Petitioner serve iupon Respondents w

interrogatories and anotice of examination upon oral deposition 

interrogatories and notice were directed to each Respondent The n

of deposition provided for the examination of the six office

Respondents who signed Agreement Nos 9718 and 9731 at the ince

of those agreements The deposition was to include matters pertain

the making amending modifying administering implementing 

carrying out of those two agreements and other agreements The w

interrogatories and the motion for production of documents requ

Respondents to identify describe and provide all communications w

or oral made by Respondents or by anybody on Respondents beh

governmental officials or agencies of the United States or Japan 

respect to the agreements and similarly communications to Respon

from such officials

Respondents objected to the oral depositions and so much o

written interrogatorie s and motion for production of documen

inquired into communications prior to the request for approval o

amendments under consideration in this proceeding On Septemb

and 18 1975 Administrative Law Judge Marshall ruled that

The requested information which concerns respondents communications w

U S and Japanese governments regardlna the approval of or operati ln under 

ments 9718 and 9731 will be furnished as allegedly bearing on the impllct 

IlIreements on Americanfig shipplna in the trade between California Hawaii 

and Japan

RuHngs on Interrogatories

In similar m er Administrative Jaw Judge Marshall required Res

ents to produce documents which were communications as ator 

However on September 15 1975 Administrative Law Judge Ma

ruled that Petitioner wol1ld not be permitted to take the depositio

Respondents chief e cutive officers because

Their testimony as to the pUPOses of respondents in making these agreeme

their illtentions and objectives ln cllrryi la them Qut WQuld pear irrelevant as the 

meaningful evidence should concern the actual results Since these agreement

been in operation for more than seven years intentions and objectives ate o

interest when compared to established facts Tbe remaining matter concerni

relationship of other agreements ill the U SJapan trade does not appear to be 

the scope of the issues

Rulings on Depositions

In the view of Administrative Law Judie Marshall because o

distance which the deponents would have to travel the taking o

depositions would constitute an undue annoyance and inconvenience

19 F 
AGREEMENT NOS 97183 9731 5 355

Thereafter on October 8 1975 Petitioner ftled a second motion to

compel Respondents to produce documents constituting communications

among Respondents concerning the agreements under investigation

Before Administrative Law Judge Marshall ruled upon that motion the

Commission modified its Order of Investigation and informed the

Administrative Law Judge that he had too narrowly interpreted the

Commission s Order of Investigation On October 30 1975 Administra

tive Law Judge Marshall announced that he waswithholding ruling on

Petitioner s Motion to Compel Production of Documents and provided

that Petitioner could include discovery requests remaining unsatisfied in

its discovery requests to be tiled by November 3 1975

On that latter date Petitioner served Respondents with ritten interro

gatories substantially the same as Petitioner s first interrogatories except

that in November Petitioner only requested communications made by

Respondents regarding Agreement Nos 9835 and 10116 the Pacific

Northwest space charter and the revenue pool among Respondents in the

transpacific trades respectively and communications made to Respond

ents regarding all ofthe agreements Petitioner requested copies of any

documents evidencing such communications Petitioner excluded from its

request any documents theretofore provided to Petitioner Petitioner did

not again seek to take the deposition of Respondents chief executive

officers

Respondents now argue that Administrative Law Judge Marshall was

correct in his ruling However an intention to monopolize is an element

ofa violation of section 2 ofthe Sherman Act 15 D S C 2 Inquiry of

those persons responsible for the negotiation of and the policy determi

nations made in the implementation of Agreement Nos 9718 and 9731

would be relevant to the subject matter of this proceeding Further in

such delicate matters as an intention to monopolize written interrogato

ries are not an adequate method of discovering evidence Therefore

Administrative Law Judge Marshall erred by refusing to permit the

deposition by oral examination of Respondents chief executive officers

Respondents alternatively argue that Petitioner abandoned this discov

ery effort Of the several arguments regarding abandonment advanced by

Respondents only the last is persuasive Inthat argument Respondents

assert that Petitioner evidenced its abandonment ofthis discovery request

by

5 Failure to subpoena at the hearing either respondents officials or other employees

or representatives Respondents Reply to Exceptions p 43

46 C F R 502 136 provides for the issuance of subpoenas for the

attendance of witnesses located in a foreign country That rule directs

that all requests for the issuance ofsuch subpoenas shall be directed to

the Commission Petitioner did not request the Commission to issue a

subpoena for the attendance ofRespondents chief executive officers at

the hearing Had it done so Petitioner would have been able to avoid

19 F MC
356 FEDERAL MARITIME COMMISSION

1

Administrative Law Judge Marshall s restrictive interpretation o

Commission s Order of Investigation Failure to exhaust that re

evidences that Petitioner abandoned its attempt to interrogate those 

executive officers Therefore this exception is denied

Petitioner has also excepted to rulings by Administrative Law 

Marshall wherein he prohibited Petitioner from discovering evid

regarding the service offered by Respondents in the Japan Atlantic 

of the United States trades pursuant to Agreement No 997

agreement similar to those at issue here and the ruling by Administ

Law Judge Marshall wherein he prohibited Petitioner from add

evidence at the hearing regarding that service In view of the dispo

made of this case regarding the question of monopoly as is here

more fully explained and assuming Administrative Law Judge Ma

was in error in prohibiting that discovery and in refusing to re

evidence regarding the Japan Atlantic Coast of United States service 

error is harmless Even if Petitioner had been permitted to ad

evidence showing the nature of and extent of Respondents s

between Japan and the Atlantic Coast ofthe United States that evi

would not be a substitute for the lack of proofof the totality of the 

inthe Pacific Therefore this exception is denied

During the entire period covered by this investigation there has e

in the transpacific trades several agreements among carriers serving 

trades whereby those carriers fix the rates atwhich cargo will be ca

Two of those agreements include the Japan U S Pacific Coast t

They are the Trans Pacific Freight Conference of Japan Korea TPF

and the Pacific Westbound Conference PWC The former cove

trade from Japan and Korea to Alaska Hawaii and the Pacific co

the U S and Canada The latter covers the trade from the Pacific co

the U S and Canada to Japan Korea Taiwan Hong Kong Philip

Viet Nam Cambodia Laos and Thailand

Each RespOndent is and has been a ll1ember of both conferenc

addition to Respondents there were 12 to 15 other members 

TPFCJ K and 8 to 13 other members of the PWC during the p

under investigation

Administrative Law Judge Kline found that Respondents taken 

group have amonopoly of the Japlijl to California and the Japan 

United States Pacific Coast conference trades In order to fin

Respondents have amonopoly it is necessary first to define the re

market in which the monopoly is said to exist Although the Pre

Officer did not define the relevant market specif1cally it appears t

found that market to be the inbound conference trades from Jap

California and from Japan to the United States Pacific Coast 

definition is not correct

In order to determine the relevant market it is necessary to co

the services affected and the geographic areas involved In determ

those services it is necessary to identify market alternatives that b

1

1I

i

j

I

19 
AGREEMENT NOS 97183 9731 5 357

may reasonably use for their purposes a concept of functional mter

changeability United States v E I DuPont de Nemours and Co 351

U S 377 394 399 1956 The concept of substitutes applied to the instant

case compels a conclusion that the relevant market is greater than the

inbound conference trades

The ports ofLos Angeles Long Beach Oakland Portland and Seattle

are gateways for shippers and consignees located in areas well beyond

the states in which those ports are located A large quantity of cargo

could move alternatively through any of those ports For that reason the

relevant market cannot be geographically less than the U S Pacific Coast

Respondents are liner operators In addition to the liner operators

which are members ofthe Trans Pacific Freight Conference ofJapan

Korea and or the Pacific Westbound Conference at least ten other

steamship companies provide liner services between Japan and the U S

Pacific Coast Those nonconference liner operators provide an alternative

which shippers and consignees may also use for their purposes In order

to determine the share which Respondents have ofthe relevant market it

is necessary to consider the carryings ofall liner operators in that market

both conference and nonconference The Presiding Officer erred there

fore when he found that Respondents have a monopoly of the inbound

conference trades because he incorrectly defined those trades as tpe

relevant market

The record is insufficient to support a finding that Respondents have a

monopoly of the relevant market because it is not possible on this

record to determine the share which Respondents have of any market

greater than the inbound conference trades Nonconference operators in

the Japan U S Pacific Coast trades include Far Eastern Shipping Co

Maersk Lines Orient Overseas Line Orient Overseas Container Line

Oyama Cutlass RetIa Seaway Express Scindia Steam Navigation Co

and Shipping Corporation of India

This record does not contain probative reliable evidence ofthe volume

of cargo carried by those nonconference steamship companies Exhibit

23 pages 2a23 purport to show the liner service in the Japan California

trades for the calendar years 1971 through 1974 inbound and outbound

The statistics on that Exhibit are given in long tons whereas the cargo

carryings of Respondents are given in revenue tons There is no means

provided to convert those long tons into revenue tons The data contained

on those pages are not consistent with other information in the record

and those differences are not explained The data purports to be derived

from statistics of the Maritime Administration of the Department of

Commerce There is substantial doubt that liner service on those pages of

Exhibit 23 is the same service as the liner service understood by the

Commission

Of similar unreliability is Exhibit 23 page 24 which purports to be the

revenue tons carried by each member line of the Pacific Westbound

Conference in the CaliforniaJapan Korea trade The data contained on

19 F M C
358 FEDERAL MARITIME COMMISSION

that page are not consistent with the cargo statistics provide

individual lines such as American President Line Pacific Far East 

United States Lines and Sea Land Service Inc and there is test

in the record to the effect that the data on that table include 

carryings and tramp carryings at rates other than those set by the P

Westbound Conference Those inconsistencies indicate that that doc

is not a reliable indicator of the quantities of cargo carried in the J

California trade by members of the Pacific Westbound Conference

Further what purports to be the cargo statistics of the Trans P

Freight Conference of JapanKorea for the years 1972 through 

found at Exhibit 23 pages 57 and 19 do not separately identify 

originating in Korea as compared to Japan or separately identify 

destined to Canada Alaska and Hawaii as compared to Californ

the Pacific Northwest

The deficiencies in evidence indicated above often result when as 

an exhibit such as Exhibit 23 consisting of67 pages of tables is o

and admitted in evidence without a witness to explain the source 

data contained in the exhibit how those data were presented 

exhibit and the differences between the data contained in the exhib

data contained in other exhibits

In any event on this record Petitioner has failed to prove 

Respondents have a monopoly

The Presiding Officer also found that the decision in 1972 by Res

ents to double the fleet of ships operating under Agreement Nos 

and 9731 coupled with the provision by Respondents of twice w

service between Japan and California and the practice by Responde

multiple solicitation of cargo each member soliciting for a single 

on each sailing has resulted in unfair and destructive comp

among conference carriers especiaIIy American carriers excep

Land 10 p

42

About 1966 MatsonNavigation Company approached Nippon 

Kaisha with a proposal that those two carriers share a container te

in Japan NYK approached the Ministry of Transport of the Gover

of Japan in order to determine if was permissible for NYK to ente

such an agreement with Matson Naviption Company That inquiry 

rise to a general inquiry into the containerization ofthe Japan U S 

Coast trade The whole matter was referred by the Ministry 

Shipping and Shipbuilding Rationalization Council an advisory gr

the Ministry of Transport Thereafter that council recommended th

tmdes be containerized and that Respondents develop amethod to 

efficiently Thereupon Respondents conferred among themselve

devised the agreements which came to be known as Agreement 

9718 and 9731 Those agreements were approved by the Minis

Transport in 1967

Upon that approval the Development Bank of Japan loan

Respondents sufficient monies to permit the building ofthe fully co

19 
AGREEMENT NOS 97183 9731 5 359

erized vessels to be IJsed in the Japan U S Pacific trades The

Development Bank of Japan is an instrumentality of the Government of

Japan and provided subsidy to the Japanese flag shipping companies in

the nature of construction loans at a rate of interest below the rates

commercially available The percentage of the cost of any particular

vessel which the Bank would loan was directly related to the desirability

ofthe construction ofthat vessel in the view ofthe Government ofJapan

In the case of the vessels employed by Respondents in the Japan U S

Pacific Coast trade the percentage was quite high For example the

Bank loaned 80 percent ofthe cost of construction ofthe Hakusan Maru

employed pursuant to Agreement No 9731

Upon receipt ofthe loans Respondents negotiated with shipbuilding

companies for the construction ofthe containerships Respondents let

contracts for the construction ofthe vessels one to one and one half years

before the vessels were delivered to Respondents At the inception of

these two agreements it was determined that Japan Line Kawasaki

Kisen Kaisha Mitsui O S K Line and Yamashita Shinnihon Steamship

Company would operate four vessels pursuant to Agreement No 9718

and that Nippon Yusen Kaisha and Showa Shipping Company would

operate two vessels pursuant to Agreement No 9731 Those six vessels

were delivered to Respondents and placed in service in the Japan

California trades in the period August through November 1968

In 1968 an arrangement similar to Agreement Nos 9718 and 9731 was

devised for the Japan Pacific Northwest trades It is Agreement No 9835

At its inception it was decided that the six Respondents would operate

three vessels in the Japan Pacific Northwest trades

As of 1974 Respondents had 18 containerships inthe Japan U S Pacific

Coast trades Those vessels were put in service over several years

Sometime before March of 1970 Respondents agreed to build three more

containerships to be used in the Japan California trades Sometime before

April of 1971 Respondents agreed to build three additional vessels to be

used in the Japan California trades and three additional vessels to be used

in the Japan Pacific Northwest trades Those vessels were placed in

service in the Japan Californiatrades as follows to be employed pursuant

to Agreement No 9718 one vessel in November 1971 one vessel in

February 1972 one vessel in May 1973 and one vessel in June 1973 to

be operated pursuant to Agreement No 9731 one vessel in April 1972

and one vessel in June 1973 The vessels operated pursuant to Agreement

No 9835 in the Japan Pacific Northwest trades were placed in service as

follows one vessel in May 1970 one vessel in September 1970 one in

December 1971 which was removed in February 1972 and not replaced

until August of 1973 and one each in April May and October 1974

The consortium offour Respondents operating pursuant to Agreement

No 9718 provides twice weekly service between Japan and California

The consortium of two Respondents operating pursuant to Agreement

No 9731 provides weekly service between Japan and California The

19 F MC
360 FEDERAL MARITIME COMMISSION

1

consortium ofall six Respondents operating pursuant to Agreemen

9835 provides weekly service between Japan and the Pacific Nort

Coast of the United States Those service levels were as of the d

hearing in January 1976

In 1969 the utilization of Respondents vessels in the inbound 

employed pursuant to Agreement No 9718 ranged from a low 

percent for the Kashu Maru to a high of 87 percent for the Japan 

with an average of 765

percent Similarly the vessels operated pu

to Agreement No 9731 were utilized in 1969 in the inbound J

California trade to the extent of 77 6 percent oftheir capacity In 19

leveJ of utilization for the 9718 group inbound averaged 83 percen

the utilization for the 9731 group inbound averaged 82 percent In 

the utilization inbound averaged 95 3 percent for the 9718 group 

averaged 93 3 percent for the 9731 group IIi all instances the utili

westbound was less than the utilization eastbound In the years 

through 1974 the utilization of the vessels employed by Responde

the Japan California trades declined In that latter period as 

former the utilization was better eastbound than westbound

As Respondents constructed and added new fully containerized v

to the Japan U S Pacific Coast trades they gradually eIimir ated the 

vessels previously employed by Respondents in the liner service be

Japan and the U S Pacific Coast During that period the percenta

all cargo moving on conference vessels which moved in conta

increased from 25 6 percent in 1968 to94 6percent in 1974

Pursuant to all three agreements Nos 9718 9731 and 9835 Res

ents charter from each other blocks of space on all the vessels emp

pursuant to these agreements which as of the end of 1974 were 

vessels pursuant to Agreement No 9718 four vessels pursua

Agreement No 9731 and six vessels pursuant to Agreement No 

Consequently each Respondent may advertise sailings at a freq

greater than that actually performed by the vessel owned by 

Respondent For example when the Japan Ace owned by Japan 

calls at Oakland California not only does Japan Line advertise the 

of that vessel under its flag but Kawasaki Kisen Kaisha Mitsui O 

Lines and Yamashita Shinnihon Steamship Company also advertis

sailing ofthat vessel under their respective banners each of those 

Respondents having chartered one fourth of the Japan Ace S

arrangements are followed for each of the other vessels operated pu

to Agreement Nos 9718 9731 and 9835 Consequently four of Res

ents solicit cargo for each sailing of each vessel operated pursu

Agreement No 9718 two Respondents solicit cargo for each sail

each vessel operated pursuant to Agreement No 9731 and a

Rllspondents solicit cargo for each sailing of each vessel ope

pursuant to Agreement No 9835 That solicitation by each Respond

only for the account of the Respondeni performing the solicitatio

example Mitsui is only seeking to fill that quarter of theJapan Ace 

19 
AGREEMENT NOS 97183 9731 5 361

Mitsui has chartered The Presiding Officer referred to that practice as

multiple solicitation

In addition to Respondents several U S flag carriers and several third

flag carriers serve the Japan U S Pacific Coast trades The U S flag

carriers during the period 19681974 were American Mail Line AML

American President Line APL Matson Navigation Company Pacific

Far East Line PFEL Sea Land Service States Steamship Company

and United States Lines USL

In the period 1968 through 1974 American President Line substantially

altered the consist ofits fleet In 1968 all APL vessels were breakbulk In

1968 APL contracted for the construction offour containerships In 1971

APL determined to make its fleet a totally containerized operation APL

converted vessels acquired in 1966 and 1968 to containerships by the

addition of cellularized midbodies That conversion was largely accom

plished in the latter part of 1973 and the beginning of 1974 In 1974 the

four containerships contracted for in 1968 were delivered By the end of

1974 all of the vessels operated by American President Line were fully

containerized American President Line served only California on the

Pacific Coast of the United States American Mail Line which merged

with American President Line in 1973 served only the Pacific Northwest

on the Pacific Coast of the United States The consist of the American

Mail Line fleet is essentially the same as that of American President Line

In the period 1968 through 1974 the Pacific Far East Line also altered

the consist of its fleet In 1968 it operated breakbulk vessels exclusively

with modest ondeck container capacity That consist continued through

the latter part of 1971 when two LASH vessels were added to the fleet

In 1972 66 percent of PFELs voyages were by LASH vessels In 1973

the Japan California service of Pacific Far East Line used LASH vessels

exclusively The LASH vessel as it was introduced in the latter part of

1971 carried 50 LASH barges and 550 containers high cube Those

vessels were later modified so as to increase the number of barges and

reduce the number of containers carried on each vessel to 63 barges and

334 containers In 1968 PFEL decided to commit itself to the LASH type

ofvessel The phenomenal growth of containerization in the eastbound

transpacific trade was not anticipated by PFEL at that time As of

January 1976 PFEL was considering the addition ofcontainerships to its

fleet PFEL sold two ofits LASH vessels to Farrell Lines

In 1968 States Steamship Company operated only breakbulk vessels

which were capable ofalso carrying some containers on deck Of the 13

vessels operated by States in 1968 four ofthem could carry no containers

at all By 1974 States had reduced the number of vessels operated in the

I

Lighter Aboard Ship A vessel which carries cargo in barges which may be removed from the vessel and towed

through the water A LASH barge contains 19500 cubic feet ofspace as compared to 1050 cubic feet of space in a20

foot container TEU or 1200 cubic feet in a high cube 20 foot container acontainer which is 8 5 feet in height

rather thanthe fool height of the standard TEU Cargo carried in aLASH barge is breakbulk cargo so aLASH

vessel is acombination breakbulk container vessel and is particularly useful in areas with undeveloped or

unsophisticated port facilities

19 F MC
transpacific trade to 10 vessels all breakbulk As of September 

States was in the process of constructing four roll onroll off ve

States did not appreciably alter the consist of its fleet in the period 

through 1974

United States lines entered the Japan California trade in earn

1970 That line had carried negligible amounts of cargo in that tra

1968 and 1969 according to Trans Pacific Freight Conference of 

Korea statistics In 1971 United States Lines carried a large quan

cargo between Japan including Okinawa and California for the M

Sealift Command MSC As the U S involvement in Viet Na

creased so too did the quantity of cargo which USL carried f

Military Sealift Command In 1971 U S Lines carried 35 762 re

tons ofMSC cargo inbound In 1972 it was 22 619 revenue tons i

it was 17 498 revenue tons and in 1974 USL carried only 4 904 re

tons of MSC cargo inbound Since 1970 United States Lines has 

fully containerized in the Japan California trades The Japan Cal

service of United States lines is part of the service it provides be

Japan and the East Coast ofthe United States

With rare exception Sea Land Service Inc has operated on

containerships in the trade between Japan and the Pacific Coast 

United States Sea Land introduced the first ofits large vessels 

type SL7 to the Japan Pacific Coast trade in May of 1973 

September of 1975 Sea Land provided a Japan California servic

five SL7 vessels

The following table indicates the share of conference cargoes e

the U S and Japanese flacarriers had in the years 19681974

PERCENT OF TPFCJIK CARGO CARRIED BY RESPONDENTS AND U S 

CARRIERS

1968 1969

8 8 8

7 4 7 3

3 5 3 0

6 7 6 7

0 2 5 6

7 3 6 7

Carrier

America Mail Line n

American President Line

Matson Naviaation Company n

Pacific Far East Line

Sea Land Service

States Steamship Company

United States Lines

Japan Line 113 10 3

Kawasaki Kisen Kaisha n n 8 5 8 8

Mitsui O S K Line n nn n n 110 9 8

Nippon Yusen Kaisha n n n n 9 9 110

Showa Shipping Co n n nnn4 6 5 5

Yamashila Shinnihon Steampship

Company n nn

n 14 9 5 7 0 7 2 5 5 7 6 

The aggregate share of those conference cargoes carried by 

Respondents in 1968 was 56 7 percent The aggregate share 

inbound conference cargoes carried by all six ResportElents in 19

362 FEDERAL MARITIME COMMISSION

a

JncJudes share ofAML not separately IItated in 1974 conference tatiStiC8

1970

9 6

8 6

3 3

6 1

13 2

81

0 2

7 8

7 8

8 7

9 7

5 1

1971

9 5

8 1

5 2

14 7

6 8

3 7

8 3

7 2

7 8

9 1

5 6

1972

9 4

8 9

1973 

4 4

7 3 

7 0

14 2

5 7

3 3

9 3

8 9

6 7

6 8

5 0

3 8

14 6

4 0

2 3

104

11

7 9

9 0

5 8

19 
AGREEMENT NOS 97183 9731 5 363

59 3 percent The following Respondents did not carry as great a share of

the conference cargoes in 1974 as they did in 1968 Japan Line Mitsui

O S K tines and Yamashita Shinnihon Steamship Company The other

three Respondents carried a

greater share in 1974 than they did in 1 8

Of Respondents Yamashita Shinnihon carried the greatest share in 1 8

In 1974 it was Kawasaki and NYK who each carried 11 percent

The Presiding Officer found that in 1972 Respondents doubled the size

ofthe fleet operated pursuant to Agreement Nos 9718 and 9731 He

further found that that decision coupled with the other advantages

enjoyed by Respondents by reason ofthose agreements to be unfair and

destructive competition within the conference particularly in regard to

U S flag carriers The Presiding Officer was in error when he found that

Respondents in 1972 doubled the size of the fleet operated pursuant to

those agreements The record clearly shows that the decisions were made

in early 1970 and 1971 and that the vessels were added to the service in

the period between late 1971 and late 1973 Further as these new

containerships were added to the Japan California trades Respondents

gradually eliminated their older vessels from those trades

Respondents entered into these agreements so that Respondents could

efficiently convert their service in the Japan U S Pacific Coast trades to

afully containerized operation It was intended from the outset to replace

existing vessels with new fully containerized vessels At the time

Respondents decided to build the additional containerships they had

available to them the data concerning the utilization ofthe containerships

then in service during the years 1969 and 1970 Those figures showed a

high and increasing level of utilization of those vessels That utilization

continued to increase through 1971 Thus in the process ofphasing out

older vessels and phasing in newer vessels Respondents prudently

provided for potential trade growth and demand for their vessels which

was reasonable in light of the utilization of those vessels which Respond

ents had experienced in the earlier years That the volume ofcargo

carried in the trade did not increase through 1974 to a degree sufficient to

fill Respondents vessels does not render these agreements unfair

Respondents have individually and collectively after transitioning to a

fully containerized operation brought themselves back to the approximate

position in the conference which they enjoyed in 1968 prior to the

addition ofthe new fully containerized vessels That position in the trade

alone does not render these agreements unfair

While it would appear that the efficiency and success ofRespondents

coordinated fully containerized service between Japan and the U S

Pacific Coast and in particular between Japan and California had some

effect upon the conference shares held by American President Line

American Mail Line Pacific Far East Line States Steamship Company

and United States Lines Respondents operations were notthe paramount

cause ofthe declining shares ofthose carriers In 1968 when the trade

was largely breakbulk APL AML PFEL and States eJ1ioyed on the

19 F MC
364 FEDERAL MARITIME COMMISSION

1

average 7 4percent each of the conference cargoes eastbound But 

1968 the conference trade has become 94 6 percent containerized 

and AML started to containerize theirfleets much later than Respon

PFEL committed itself to the LASH concept largely abrea

concept Through 1974 States still adhered to the breakbulk co

U S Unes entered the trades in 1970 and relief heavily upon m

cargoes during the Viet Nam contlict When the availability of 

cargoes was sharply curtailed United States Unes was required 

cargoes elsewhere Even so USL had a 2 percent share in 19

compared to its 4 percent share in 1968 and Sea Land increas

share from 2 percent in 1968 to 13 2 percent in 1970 to 14 7 perc

1974 All of those factors had an effect upon the share of confe

cargoes carried by AML APL PFEL and States

This proceeding has been miscast as a contlict between U 

carriers and Japanese flag carriers There is no evidence that Respo

concentrated their competitive activities upon U S tlagcarriers 

contrary one U S flag carrier providing a

fully containerized co

cially oriented efficient service Sea Land Service Inc acquired b

a greater share of the inbound conference cargoes than any other 

in the conference As of 1974 Sea Land had increased that share 

percent of the conference carryings inbound stiR the greatest share

The record does not contain any evidence that Respondents pra

any deceits or supplanted economic power for the quality o

service The record does not contain any evidence that any carr

been excluded from the Japan U S Pacific Coast trades sin

inception of Agreement Nos 9718 9731 and 9835

Consequently the Commission finds that Respondents entere

these agreements to facilitate the transition from a breakbulk to 

containerized service that Respondents have recaptured the sh

conference Clllioes which Respondentsel ioyed prior to commenc

transition and that the conduct of Respondents pursuant to Agre

Nos 9718 and 9131 in the period 1968 tbrouahl974hasnotbeen 

to have been ul iuatly discriminatoryot unfair as between carriers

By the means of Agreement Nos 9718 and 9731 Respondents 

reduced the level of competition among themselves As suc

agreements run counter to the policies enunciated in the United 

antitrust laws in favor of free and open competition in the marke

It is necessary therefore to examine what benefits if any 

agreements confer upon the public for the Commission will not a

an agreement if it invades the policies enunciated inthe antitrus

more than is necessary to serve the regulatory purposes of the S

Act

Pursuant to Agreement No 9718 Japan Line Kawasaki Kisen K

Mitsui O S K Unes and Yamashita Shinnihon Steamship Compan

advertise twice weekly sailings between Oakland and Los Angeles 

one hand and Kobe Tokyo Yokohama and Shimizu on the ot

j

1

u

I

i

1

J

i

19 
AGREEMENT NOS 97183 9731 5 365

level of service deemed competitively necessary by those carriers That

offering of service is accomplished by the use of two vessels by each

carrier a total of eight vessels Absent Agreement No 9718 each of

those four carriers in order individually to offer that level of service

would have to employ eight vessels in the trade

Pursuant to Agreement No 9731 Nippon Yusen Kaisha and Showa

Shipping Co each advertise weekly sailings between Oakland and Long

Beach on the one hand and Kobe Tokyo Yokohama and Shimizu on

the other a level of service deemed competitively necessary by those

carriers That level of service is accomplished by the use of two vessels

by each carrier a total of four vessels Absent Agreement No 9731 in

order individually to maintain that level of service each of the carriers

would have to employ four vessels in the trade

Contrary to the argument ofPetitioner this record evidences that the

competition among Respondents although diminished is still real Except

for Showa Shipping Company in the years 1968 through 1974 both

eastbound and westbound with rare exception each Respondent carried

more revenue tons ofits own cargo on its own ships than it did the cargo

of any other single party to the agreements Each Respondent resists

allotting to any ofthe other Respondents any space on its own vessel

beyond the standard uniform allotment Each Respondent vigorously

avoids the use ofthe containers ofany other Respondent for the carriage

ofits cargo One Respondent s cargo is carried in the container of another

Respondent only when an error is made at the terminal and cargo is

mistakenly placed in the wrong container

Further Respondents compete with all other carriers in the trades

The record shows that the transpacific trades through 1974 had a

significant excess ofcapacity over cargo offered for carriage These

agreements permit Respondents to offer the level of service which they

consider competitively necessary a determination not unreasonable on

this record with substantially less capacity than would be required for

each Respondent to individually offer that level of service The agree

ments therefore tend to ameliorate the overtonnaging problem in the

transpacific trades and tend to keep a high number of common carriers in

those trades Both ofthose results are beneficial to the public and

outweigh the anticompetitive effects of these agreements demonstrated

on this record sufficiently to justify the continued implementation of

these agreements until August 22 1977 the date upon which Agreement

Nos 9718 and 9731 will terminate in accordance with the amendments

now before the Commission for approval

Consequently the Commission finds that Agreement Nos 9718 3 and

9731 5 are not contrary to the public interest or detrimental to the

commerce ofthe United States

Petitioner alleged at the outset of this investigation that the subject

agreements deprived its members ofemployment It alleged that depriva

tion was effected by depriving the steamship companies which employed

19 F M C
1

366 FEDERALMARITIME COMMISSION

the members of Petitioner of cargo by the unfair method of comp

employed by Respondents pursuant to the subject agreements

Petitioner is a union which represents the cooks bakers bu

pastrymen dining stewards storekeepers waiters waitresses barte

bedroom stewards bellmen tailors photographers beauticians 

ians and telephone operators employed by U S flag steamship com

based on the Pacific Coast of the United States Steamship com

involved in this proceeding which employ Petitioner s membe

American Mail Line American President Line Pacific Far Eas

States Steamship Company and for the years 1968 and 1969 M

Navigation Company Matson Navigation Company left the Japa

Pacific Coast trade in 1970 The reason why that company left the 

not evidenced in this record

The number of man days worked by union members has subst

decreased between 1968 and 1974 The extent of that decrease ha

estimated at 37 8 percent by Petitioner and 48 percent by Respon

The decline in union employment is the result of several factors in

the modernization of the equipment utilized by the steamship com

employing Petitioner s members the transfer of vessels prev

employing Petitioner s members to trades other than the Japa

Pacific Coast trades and the decline in the share of conference 

carried by the steamship companies employing Petitioner s me

The decline in the share of conference cargo carried by the ste

companies employing Petitioner s members was attributable in lar

to the increase in the share carried by Sea Land which does not 

Petitioner s members Further all seafaring positions on privately 

U S flag vessels declined by 57 5 percent between January 1 19

January 1 1975 This record does not demonstrate that Agreemen

9718 9731 and 9835 are the predominant cause of the decline in 

employment

Even though the success enjoyed by Respondents has contribu

the decline in union employment Petitioner has not proven 

record that Respondents agreements have been unjustly discrim

or unfair as between carriers so Petitioner has not proven that Re

ents agreements have unfairly deprived Petitioner s members of e

ment

Both Petitionerand Respondents have moved the Commission to 

portions of each other s briefs in this proceeding Respondents w

Commission to strike those portions oinotes 1 and 29 of Petit

Reply to Exceptions wherein Petitioner alleges error on the par

Presiding Officer for admitting Exhibit 2 into evidence in this proce

A reading of those notes indicates that Petitioner merely pointed o

it had no opportunity to cross examine the author of and the p

referred to in the letter admitted as Exhibit 2 and that Petition

excepted to the erroneous ruling of the Presiding Officer It is pro

Petitioner to point out to the Commission that it had no opportu

JI

I

1

1

1

1

19 
AGREEMENT NOS 97183 9731 5 367

cross examine the author ofExhibit 2 Petitioner made that point in its

arguments advanced against those proffered by Respondents in Respond

ents Exceptions The fact that Petitioner was unable to crossexamine

the author ofthat Exhibit 2 is a factor for the Commission in determining

what weight to give to Exhibit 2 Of course Petitioner was incorrect in

stating that it had excepted to the alleged errorof the Presiding Officer in

admitting Exhibit 2 over its objections Notes 1 and 29 to Petitioner s

Reply to Exceptions will not be stricken

Respondents also moved to strike five references in Petitioner s Reply

to Exceptions on the grounds that the references are to matters not in

evidence 3Three oftile references are to the record in Docket No 7614

one is to the tiles of the Commission and one is to the vote of the

Japanese Government in UNCTAD regarding the Code ofConduct for

Liner Conferences Petitioner argued in response that the Commission

could take official notice ofthese matters

Litigants before the Commission are required to limit their arguments

to evidence ofrecord in the proceeding to which those arguments are

directed Requests for official notice of some fact should be made at a

time early enough to permit other litigants to a proceeding to argue the

weight of the facts to be officially noticed

Petitioner s extra record references in its reply were improper and its

request that the Commission officially notice the records of other

proceedings the tiles ofthe Commission and facts generally known was

too late Therefore those references in Petitioner s Reply to Exceptions

will be stricken It is worthy of note that while those references are

stricken from the reply of Petitioner they are stricken in order to preserve

fairness in the proceedings before the Commission The Commission is

aware of the records in other proceedings and the contents ofits meso

That knowledge is used by the Commission in determining the persuasive

ness of arguments made by litigants to the Commission That is one of

the reasons why cases such as this are determined by an administrative

agency The knowledge ofarguments made in different proceedings that

conflict one with the other is part of the expertise of the Commission

Petitioner has also moved to strike references in Respondents Reply

Brief before the Administrative Law Judge and Respondents Reply to

Exceptions 4

The comments regarding the pleadings of Petitioner apply

with equal force to the pleadings of Respondents The references

complained of by Petitioner except for the references in Respondents

Reply to Exceptions at page 30 note 22 and the first sentence of page

20 note 11 will be stricken The former reference is an objection by

Respondents to the reference by Petitioner in its exceptions to the data

S The specific references wished stricken are page 14 note 9

page21 note 14 page36 lines 11 15 commencing

with As the Japanese Government

It

psses 401 commencing with Yet in the affidavit of and page 44

note 34 last sentence

fo Reply Brief page 16 notes 1 and 8 pages 17 18 page 26 note 15 and Reply toExceptions page 20 note 11

page 30 note 22 and pages 3 lS

19 F M C
368 FEDERAL MARITIME COMMISSION

contained in Docket No 7614 and the latter is a citation 

Commission decision approving an agreement assertedly similar to 

at issue in this proceeding Those two references are proper and w

be stricken

Respondents also filed a motion requesting the Commission to 

official notice of an affidavit executed by S Suzuki awitness i

proceeding wherein Mr Suzuki sets forth selected Trans Pacific F

Conference of JapanKorea cargo statistics for portions of1968 197

1976 The Commission will not officially notice the affidavit of aw

in a proceeding filed at the eleventh hour which contains exc

selected by the witness from a

great mass of statistical data

Lastly Petitioner has filed a motion requesting the Commiss

order Respondents to show cause why their Exceptions and Re

Exceptions should not be stricken that Respondents be ordered to 

memorandum with the Commission stating the substance of each ex 

communication made to the Commission regarding this proceeding 

that Petitioner be allowed to reply to such amemorandum The gr

for Petitioner s motion are an allegation that Respondents have ma

parte communications to the Commission regarding this proce

either directly or indirectly Petitioner attached to its motion a doc

alleged to be a true copy of a telegraphic message sent by the Sec

General of the Council of European and Japanese National Shipo

Associations CENSA to CENSA s Washington representative q

from a telegraphic message purported to be from the Japanese Sh

ers Association to CENSA I

representing that Respondents 

appreciate it if CENSA members would cooperate in submitting 

Commission an informal protest ofthe Initial Decision in this proce

2 representing that the Government of Japan had decided to su

diplomatic representation and 3 requesting that the members of C

approach their respective governments with the view to having 

governments make protest to the Commission via diplomatic cha

The Secretary General of CENSA further reported in that messag

opportunity has been taken at luncheon today July 30 1976 between Cha

CENSA and Bakke Chairman of this Commission to raise a marker on b

CENSA as suggested by Japanese Bakke fully aware of sItuation and p

implications However could of course give no commitment as matter is sub ju

Also attached to Petitioner s motion was a

copy of an Aide Me

from the Governments ofBelgium Denmark Finland France 

Japan the Netherlands Norway Sweden and the United Kin

objecting to the Initial Decision in this proceeding insofar as itrelie

the promotion of U S flag carriers as a factor in the approval 

agreements at issue here and insofar as the Initial Decision 

require as a condition of approval ofAgreement No 9718

Respondents reduce the number of vessels operated pursuant to 

ment No 9718 from eight to six

Respondents replied in opposition to the motion and attached af

19 
AGREEMENT NOS 97183 9731 5 369

from the Chairman of CENSA James Gladstone Payne and the General

Manager International Affairs Division of the Japanese Shipowners

Association Seishiro Miyamoto Those two affidavits represent that

while the Chairman of CENSA lunched with the Chairman of this

Commission on July 30 1976 that luncheon was arranged on June 12

1976 that Respondents did not ask the Chairman of CENSA to approach

the Chairman of this Commission and that the Chairman of this

Commission declined to discuss Docket No 7530 with the Chairman of

CENSA as the matter was before the Commission for decision

In addition to the affidavits referred to above the Chairman of this

Commission Karl E Bakke has informed the Commission that at a

luncheon with the Chairman ofCENSA on July 30 1976 the Chairman

ofCENSA indicated to the Chairman ofthis Commission that CENSA

was concerned about the Initial Decision in Docket No 7530 that the

Chairman of this Commission immediately replied to the Chairman of

CENSA that he could not discuss the merits of nor give any commitment

regarding a docketed proceeding before the Commission and that the

matter was immediately dismissed without any further comment from the

Chairman ofCENSA

The Aide Memoire referred to above was transmitted to the Commis

sion by the United States Department of State as was a similar Aide

Memoire from the Government of Japan Those two documents were

placed in the correspondence section of the docket binder for this

proceeding the action required by the Rules of Practice and Procedure of

this Commission 46 C F R 502 170 Those two documents have not

been and are not now part ofthe record for decision in this proceeding

Neither the Commission nor any ofthe Commissioners have received any

communications extraneous to the record in this proceeding except as

identified above and those identified as communications 1 through 3

below

Since the Chairman ofCENSA did not communicate anything on the

merits of this proceeding to the Chairman of this Commission his

discussion with the Chairman ofthis Commission on July 30 1976 did not

contravene Rule 502 170 bXl of the Commission s Rules of Practice and

Procedure The two Aide Memoires referred to above are ex parte

communications and received proper disposition at the Commission

Since this Report completely discloses to Petitioner the substance of

each and every representation made to the Commission regarding this

case extraneous to the record it is not necessary to require Respondents

to fIle a detailed memorandum regarding those representations Therefore

the second request for relief by Petitioner will be denied

Because the two Aide Memoires referred to above are part of the

public docket file of this proceeding in accordance with the rules ofthe

Commission and because the Commission has not relied upon or given

favorable consideration to those Aide Memoires in deciding this case

and because Petitioner was aware ofthe July 30 1976 luncheon between

19 F M C
370 FEDERAL MARITIME COMMISSION

i

the Chairman of CENSA and the Chairman of this Commission 

time Petitioner tiled the instant motion it is not necessary that Pe

be allowed an opportunity to reply to the formal disclosures conta

this Report Therefore Petitioner s third request for relief containe

motion will be denied

Tn first item of relief requested by Petitioner in its motion to w

Respondents Exceptions and Reply to Exceptions be stricken w

be denied It is not necessary to decide in this proceeding relying o

the affidavits filed by Petitioner and Respondents what part 

Respondents or their counsel had in causing the two Aide Me

referred to above to be transmitted to this Commission IfRespo

had caused ex parte communications to be made to the Comm

regarding this proceeding the Government in tn Sunshine Act P 

409 would permit the Commission to disapprove Respondents 

ments or to strike Respondents Exceptions and Reply to Exce

However that statute changes the law and will not be effectiv

March of 1977 There being no other authority cited to the Comm

Petitioner s motion for an order to show cause will be denied

In the final hours of the effort to prepare this Report the Comm

received

1 A letter dated September 27 1976 from executives of Am

Export Line Inc American President Line Lykes Brothers Ste

Company Inc Pacific Far East Line Inc Sea Land Service 

States Steamship Company United States Lines Inc and Wat

Steamship Corporation all U S flag carriers not party to this proce

urging the Commission to extendits interim approval of Agreemen

97183 9731 5 and 9835 2 to March 6 1977 so as to permit 

carriers to more effectively negotiate with Respondents with a 

towards establishing a revenue pool in the transpacific trades

2 A letter dated October 18 1976 from executives of e

Respondents complaining of the September 27 1976 letter from th

flag carriers referred to above and urging the Commission to dis

that letter

3 A letter dated October 22 1976 from counsel for Petitioner 

that the Commission not continue its interim approval of Respon

agreements as urged by the U S flag carriers in their September 27 

letter and in tnalternative urging the Commission if it should a

Respondents agreements on November 1 1976 to stay the effectiv

ofthat order pending the outcome of negotiations regarding a re

pool in the Pacific

4 A document filed October 26 1976 from counsel for Respo

entitled Reply to Petitioner s Requests to Stay Final Approval P

Negotiation Of ABilateral Pool Or To Aqjudge The Rights Of Non

Contingent Upon Reconsideration

5 A document filed October 26 1976 entitled Reply to Petit

I Request To Treat Respondents Motion Entitled Modification Of 

i

1I

I

1

1

i

j

i

19 
AGREEMENT NOS 97183 9731 5 371

tion Relative To 1975 Data EtcAs aMotion to Reopen the Record

Under Commission RuIe 136

Communications I

through 4 are extra record unacceptable an

abuse ofthe adininistrative process are rtjected by the Commission and

have not been considered by the Commission in arriving at the decision

in this proceeding Communication number 5 is frivolous approaches

abuse ofthe administrative process and is rejected

The Commission ultimately fmds and concludes that on this record

Respondents do not have amonopoly in the Japan U S Pacific Coast

trades Agreement Nos 9718 and 9731 have not been unjustly discrimi

natory or unfair as between carriers Respondents have not unfairly

deprived the members of the Marine Cooks and Stewards Union of

employment and Agreement Nos 9718 and 9731 secure benefits to the

public which outweigh the demonstrated anticompetitive effect sufficiently

to justify the continuation of those agreements until August 22 1977

Consequently Agreements Nos 97183 and 9731 5 will be approved An

appropriate order will be entered

SEAL S FRANCIS C HURNEY

Secretary

19 F MC
FEDERAL MARITIME COMMISSION

DoCKET No 7530

AGREEMENTS Nos 97183 AND 9731 5

ORDER

This proceeding having been initiated by the Federal Maritime Co

sion and the Commission having fully considered the matter and h

this date made and entered of record a Report containing its finding

conclusions thereon which Report is hereby referred to and made 

hereof

IT IS ORDERED That pursuant to section 15 of the Shipping 

1916 Agreement Nos 97183 and 9731 5 are approved

IT IS FURTHER ORDERED That Petitioner s September 30 

Motion for Consolidation and Request for Oral Argument is den

IT IS FURTHER ORDERED That Petitioner s September 16 

Motion for Orderto Show Cause and for other Relief is denied

IT IS FURTHER ORDERED That the following referenc

Petitioner s Reply to Exceptions filed July 29 1976 are stricken

I Page 14 note 9

2 Page 21 note 14

3 Page 36 lines 11 15 commencing with As the Japanese G

ment

4 Page 40 commencing with Yet in the affidavit of

5 Page 41 lines 1 13 and

6 Page 44 note 34 last sentence

and that except to the extent herein expressly granted Respon

July 29 1976 Motion to Strike and for other Relief is denied

IT IS FURTHER ORDERED That the following referen

Respondents Reply Brief before the Administrative Law Judge 

March 24 1976 are stricken

I Page 16 notes 7 and 8

2 Page 17 second paragraph last sentence commencing 

Maritime Subsidy Board

3 Page 18 quoted paragraph commencing In 1970 the Jap

flag

372 19 
AGREEMENT NOS 97183 9731 5 373

4 Page 26 note 15 last sentence

and that the following reference in Respondents Reply to Exceptions

filed July 28 1976 is stricken Page 20 note II second and third

sentences and that except insofar as herein expressly granted Peti

tioner s August 2 1976 Motion to Strike is denied and

IT IS FURTHER ORDERED That Respondents October 18 1976

Motion To Take Official Notice is denied

By the Commission

SEAL S FRANCIS C HURNEY

Secretary

19 FM C
FEDERAL MARITIME COMMISSION

No 7625

TRANE COMPANY

v

SoUTH AFRICAN MARINE CORP N Y

NOTICE OF ADOPfION OF INITIAL DECISION

November 4 1976

No exceptions having been filed to the initial decision ofthe Ad

trative Law Judge in this proceeding and the Commission 

determined not to review same notice is hereby given that the 

decision became the decision of the Commission on November 4 

By the Commission

SEAL S FRANCIS C HURNEY

Secre

1

1

1

1

I

374 19 
19 F M C 375

FEDERAL MARITIME COMMISSION

No 7625

TRANE COMPANY

v

SOUTH AFRICAN MARINE CORP N Y

Adopted November 4 1976

A complaint which fails to name as respondent a common carrier by water orother

person subject to the Shipping Act 1916 or to allege violation of section 18 b 3 of

that Act by a common carrier by water or conference of such carriers the only

persons liable under that law is jurisdi tionally defective and must be dismissed

The naming of a carrier s agent as respondent in a complaint which alleges a violation of

section 18 b 3 of the Act without naming the carrier principal involved is

jurisdictionally defective regardless of the agent s authority to act on behalf of its

principals located overseas

A

complainant in a case seeking reparation for overcharges mustshow either that it paid

the freight or that it has succeeded to the claim by assignment or other legitimate

means The mere fact that the complainant is the owner of the party paying the

freight without more does not confer standing to seek reparation

Amendments to complaints to cure non jurisdictional defects or defects unrelated to the

substance and gravamen of the complaint are permitted under the Commission s

rules Substantial changes to complaints which notmerely add parties but substitute

different and indispensable parties are in reality new complaints

William Levenstein for complainant

DavidA Brauner for respondent

INITIAL DECISION OF NORMAN D KLINE ADMINISTRATIVE

LAW JUDGE 1

The Original Complaint

By complaint filed and served May 7 1976 complainant Trane

Company alleged that respondent South African Marine Corp N Y was

paid freight in excess of that provided in respondent s tariff on two

shipments ofair conditioning equipment allegedly transported by respond

ent from New York to Capetown South Africa in the years 1974 and

1975 Complainant alleged that it had been subjected to the payment of

I

This decision became the decision ofthe Commission November 4 1976
1

1

i

1

4

I

376 FEDERAL MARITIME COMMISSION

charges for transportation which were in excess of those law

applicable in violation ofsection 18b 3 of the Shipping Act 19

U S C 817 the Act 2

Complainant sought reparation in the su

1 989 07 or such other proper sum together with any other appro

order warranted in the premises

The complaint alleged that the Trane Company is a company inc

rated in the State of Wisconsin and located in La Crosse Wisco

whose principal business is the marketing of air conditioning 

refrigeration equipment Complainant furthermore alleged that respo

is a common carrier by water engaged in the transportation of c

sic between the United States and South and East Africa Compl

furthermore alleged that alt the time of the shipments here invo

respondent was amember of the United States South and East A

Conference and aparty to that conference s tariffs

The facts concerning the two shipments which gave rise to 

controversy are as follows Under bill of ladina No 128 dated Ju

1974 there occurred a shipment described on the bill of lading a

Bxs Air Conditioning Machinery weighing 40 431 pounds whic

carried from New York to Capetown on the vessel S A Nederburg 

this shipment payment was made on the basis of a rate plus surc

published in the Conference tariffapplicable to Machinery Air C

tioning amounting to 3 1536 8 Complainant alleged that the shi

actually consisted of 98 boxes of copper tube and should have 

charged the commodity rate for that item under the tariff w

according to complainant s calculation would have required only 

in freight Therefore complainant claimed anovercharpin the Ilftount 

364 16 on this shipment 3 1536 llss 2 789 This calculati

corrected however should be 364 514

On the second shipment under bill of lading No 238 dated 

28 1975 the shipment was described as 0 Qxs Air Condit

Machinery Copper Tube for the Local Manufacture of Trane H

and Cooling Soils sic Not Domestic weiahing20 339 P9unds 

New York to Capetown on the vessel Aegis Faith Payment was 

on the basis of the published rate plus two surcharges applica

Section 18b3 provid08ln pertinont part that

No c ommo nearlier by water infortip commerce shall charordemand or col1c9t orreceivo aana

ordflerent cOJ11 nlBt1on for tbe tranlPortation of property orlbr IUlY lor ri in QOftlltction therewith tha

and chall which ar peoIO dIn IlIlarlfro on 01 withthe C4nunl lon and dilly publishedand in flect 

Th rate cllUjod was 109 per 40 cubl reet plu a or of 17 for40 cO II S Sootb and B

Conf ren South Bound Prel hl Tari lNo I F M C No 12 lQth revis d 276 ltem No 2130 I 

5 1974 At 1001 0 ft hown 0tho bUI of hullna fortho shipment plo the oroharp tho total freJaht 

3 153 16 2727 73 plUI 425 4

4 The rate for lcopper tube wu 137 50 per welaht ton 2 lbl ConferenCe tarUl elted above fou

pap 186 It m No 930 Ioeuv March 5 1974 At 40 431 lbo hown on th bUl of lad for tho hipm 

uroh8l1 17 per 2 240 lbo thetotal frelaht would amount to 2 78865 2481 81 plu 306 84 The

av roh would b 364 51 3153 161 2788 65

19 
TRANE CO v SOUTH AFRICAN MARINE 377

Machinery Air Conditioning amounting to 3 575 39 5

Complainant

alleged that the shipment actually consisted of 50 boxes of copper tube

and should have been rated as such in accordance with the specific

commodity rate published for that item in the tariff If so the freight

would have been only 1 950 48 Therefore complainant claims an

overcharge in the amount of 1 624 91 3 575 39 less 1 950 48

The total overcharge for the two shipments alleged by complainant

amounted to 1 989 07 364 16 plus 1 624 91 As corrected the amount

would be 1 989 42 364 51 plus 1 624 91

Complainant requested with respondent s subsequent concurrence that

this controversy be decided under the Commission s shortened proce

dures as provided by Rule 11 46 CFR 502 181 et seq that is on the basis

of memoranda of facts and arguments submitted in writing without oral

hearing In support ofits claims that both shipments consisted solely of

copper tubes complainant submitted for the first shipment bill oflading

No 128 a

copy of the original invoice and the pertinent export

declaration in addition to the bill oflading itself For the second shipment

bill oflading No 238 complainant submitted a

copy ofTrane s export

packing tally in addition to the bill oflading

Respondents Original Answering Memorandum

In its original answering memorandum respondent did not dispute

complainants allegations regarding the nature of complainants business

nor the fact that the shipments were made and billed as complainant

alleged nor even that the shipments consisted of copper tubes Nor did

respondent dispute complainant s allegation that respondent South African

Marine Corporation N Y was a common carrier by water a member of

the United States South and East Africa Conference and a party to that

conference s tariff Respondent made no mention of the fact that

complainant did not establish that complainant had paid the freight

although the bills oflading themselves suggested that the consignee not

the shipper complainant had paid 7 Nor did respondent challenge the

allegation that respondent carried complainant s shipment in both

instances 8

5

The rate charged was 125 25 per40 cubic feet plus a

17 per40 cubic foot surcharge and a25 percent surcharge

applied to the base rate See United States South and East Africa Conference South Bound Freight Tariff No 2

F M C No 3 original page 237 Item No 2130 effective January I

1975 At 824 cubic feet shown on the bill of

lading the totalfreJght amounts to 3 575 39

6

Therate for copper tube was 158 25 per 2 240 lbs phls two surcharges 17 per 2 240 1bs and 25 percent of

the base rate See Conference tariff cited in previous footnote original page 174 Item No 930 effective January 1

1975 At 20 339 Ibs shown on the bill of lading the total freight amounts to 1 950 48

7

In both shipments the complaint alleged that respondent billed and was paid charges without specifying

who paid the charges Further on the complaint alleged that complainant has been subjected to the payment of

charges Paragraph IV The bills of lading submitted with the complaint however contain the notation ocean

freight collect which suggests that theconsignee in South Africa paid the freightrather than the shipper complainant

located in the United States Subsequently it was asserted with the filing of an amended complaint that the consignee

did indeed pay the freight

8

Respondent s defenses consisted of avariety of arguments relating to tariffrules barring claims or requiring

19 F M C
378 FEDERAL MARITIME COMMISSION

The Amended Complaint

Altbougb Rule 11 procedures are designed to enable the presiding 

to issue a decision on the basis of pleadings and supporting f

memoranda and materials my initial examination of these ma

revealed obvious deficiencies which inexplicably escaped tbe no

the parties Accordingly I conducted a special conference witb the 

in order to explain these deficiencies and discrepancies and allo

parties an opportunity to remedy tbe situation Since one 

deficiencies involved a jurisdictional type problem which might we

barred any award of reparation the chief beneficiary of this confe

was obviously complainant

The problem of ajurisdictional nature concerned the failure 

original complaint to establish that complainant had paid the frei

had otherwise validly succeeded to the claim This goes to the is

standing to recover reparation although not to standing to file acom

not seeking reparation See Ace Machinery Company v Hapag 

AG Docket No 765 Order Denying Motion to Vacate August 4 

pp 6 7 Colgate Palmolive Co v GraceLines Inc 11 SRR 982 

Isthmian S S Co v United States 53 F 2d 251 253 S D N Y 

Ocean Freight Consultants Inc v The Bank Line Ltd 9 F M 

1966 9

There were additional problems and discrepancies in the ma

submitted however For example regarding the first shipmen

description of the commodity shipped differed as between the invoic

the export declaration and weight and measurementfigures on the 

declaration did not correspond with such figures on the bill If l

Furthermore regarding the second shipment complainant furnish

export declaration which might bave explained the discrepancy be

the bill of lading and export packing tally descriptions See Not

Rulings Made During Special Conference cited above pp 2 3 

1

adherence to bUl of ladina dC8 reipdon8 sbippor s neaUsenceand unwarranted attempt to valtbeterms of 

of carriap encoul 8lcment of condnued Ihlpper Rc lIaonce and of an cadre JadUltfy pJOOOIsin JJtall 

claiOUl excessiYe COsta bath to carriera and the ComuU uoD to boar and determine those cas and unfalm

carrier who is unable to determine what moved 80 lona after thefact Complainant oriainal reply to these 

cited decisions invalidaUng thetariff rules l

lted by respondent and charal terizod the remainder of res

ar umonts 88 constitutina atlclear demonstration of the arropnce with which this carrier approaches 

claims Complainant also araued that the bill of ladina was thecarrier own documentrequired to be Iss

the r Act 46 U S C 193 miaclled hY complalnant 49 U S C and tbortho hlll of ladillll on t

shJpmentJtaelf shows that coPRtr tubol wer shipped aB cOmpte inant 8l lIpd

Ithas lon boen recopizod the casell cited Ihow that Uanypenon may 81e a

complaint under se

the Act whether ornot such penon has suffered irijury However to ek reparation aperson must show 

proof ofpecuniary lOll Oaldand MotorCar CO Y Juat Lab3 TraNlt Corp 1 U S S BiB 308 310 U

Indies Fruit Co v Flota Mercante Grancolomblana 7 F MiC 66 70 1962 Alia thecomplainant must ahow 

has suffered real damaae Ballmlll Lumber Sales Corp v The Port of New York Authority 11 P M C 4

1968 In aclaim for refund qf overcbaraea such as inthis eale tho complainant must show that he ha

fr iaht orhu lucc ecded to the claim in avalid fllhion 8ucb IUi by a ip1ment OcearLFrelght Confultan

The Bank Line Ltd e oited abe9 P M C 01 pp 212213 21 216 No IIlJtboriU have e cited to m

that a

parent corporation without more haa tandina to stek recovery of damq08 suffered by its who

subsidiary corporation 811 the orlainal parent corporate complainant 80ems to believ One wonders would 

also be wUlin to stand trial forits wholly owned subsidiary corporation ifthat subsidiary were accused o

the law and would the parent be wWina to suffer the penalties required by law on bebalf ofita subsidiary

j

19 

j
TRANE CO v SOUTH AFRICAN MARINE 379

were also minor arithmetic errors in computation ofthe alleged over

charge as discussed above 10

As a result of the special conference Igranted complainant leave to

filean amended complaint naming the real party in interest as complainant

and to explain the various discrepancies discussed above In so doing I

overruled respondent s objections that complainant had submitted his

case and was not entitled to further opportunity to fortify and clarify it I

explained my reasons and cited appropriate authorities for these rulings

See Notice ofRulings Made During Special Conference cited above pp

4 5

Pursuant to these rulings an amended complaint was file4 and served

onSeptember 2 1976 in the name ofTrane Southern Africa Pty Ltd as

complainant This time complainant seeks 1 989 04 in reparation instead

of 1 989 07 requested in the original complaint However as in the first

complaint there are again errors in computation 12

The amended complaint alleges that complainant Trane Southern Africa

Pty Ltd is a corporation organized under the laws ofSouth Africa

located in Johannesburg South Africa and that it is awholly owned

subsidiary ofthe Trane Company of La Crosse Wisconsin the original

complainant In an attached memorandum offacts it is stated that Trane

Southern Africa was the consignee ofthe two shipments involved herein

and paid respondent the ocean freight charges it billed In addition to

the export declaration and invoice originally submitted complainant has

now submitted an export packing tally as well as other materials For the

second shipment in addition to the export packing tally and bill oflading

originally submitted complainant has submitted the pertinent export

declaration the invoice and declaration of value an affidavit ofthe traffic

manager of the shipper Trane Company and a notarized certificate by

the same man stating that the export declaration had listed an incorrect

10 There was in addition a typographical error in the complaint with regard to the second shipment This related to

tbe listing ofa 25 surcharge The correct entry should have been 25 percent surcharge II

nthe rulings cited I acknowledged tbat there comes atime when the record in an administrative proceeding

must be closed and reopening canno longer be tolerated citing Fiola Mercante Grancolombiana v F M C 373 F

2d 674 679 D C Cir 1961 and I C C v Jersey City 322 U S 503 51415 1943 However boththis Commission

and the courts have stated that they expect trial judges to help ascertain the truth and not merely sit by passively

calling balls and strikes I cited numerous casesfor this proposition such as Madep ac S4 Industria de Madeiras v

Figueiredo Navegaco SA alkla Frota Amazonica S A Docket No 7445 Order on Remand July 20 1976

European Trade Specialists Inc et al v Prudential Grace Lines Inc et al Docket No 748 May 28 1976 p24

Scenic Hudson Preservation Con vFederal Power Commission 354 F 2d 608 620 2d Cir 1965 Isbrandtsen Co

v United States 96 F Supp 883 892 S D NY 1951

11 As 1 pointed out earlier for the first shipment the correct computation for overcharge would be 364 51 not

364 16 which latter amount is shown on both the original and amended complaints For the second shipment the

correct computation for overcharge would be 1 624 91 not 1 624 88 shown on the amended complaint The original

complaint had actually shown the correct calculation of the overcharge for this shipment 3 575 39 less 1 950 48

original complaint p 3 The correct total overcharge for bothshipments would be 1 989 42 not 1 989 07 shown in

tbe original complaint nor 1 989 04 in the amended complaint 364 51 plus 1 624 91 Although minor errors tbe

continued appearance in the amensled complaint ofsuch mistakes isnot commendable especially since some of these

mistakes are obvious on the face of the complaint For example on page three of the amended complaint wherethe

allegedly proper charge for the second shipment is calculated the figures 1 439 90 359 25 and 154 36 are shown

as totalling 1 950 51 instead of 1 953 51 and 25 of 1 439 90 isshown as 359 25 instead of 359 98 In acase

arising under section 18bX3 of the Act it is important to make surethatacarrier charges no more orless than what

is specified in its tariffs and practitioners before the Commission ought to exercise some care before submitting or

agreeing tocalculations which may form the basis for an award ofreparation

19 F MC
j

380 FEDERAL MARITIME COMMISSION

Schedule B number All of these materials complainant alleges sup

its contention that copper tubes were the sole commodity involved in 

two shipments at issue

Respondent s Answering Memorandum to Amended Complaint

To a large extent respondent repeats its earlier arguments regardin

reliance on tariff rules to deny the claims as well as the shipp

negligence and attempts to vary the terms of its contract costs 

burdens on carriers and the Commission to process and hear such cla

etc Again respondent does not deny that the shipments were made 

billed as complainant describes them and has no comment to m

regarding the complainants allegations that respondent is a com

carrier by water a member ofthe United States South and East A

Conference and a party to that conference s tariffs Respondent 

argue however that the original complaint shpuld have been dism

for lack of standing of the original complainant to recover repar

since as is now acknowledged the original complainant did not pa

freight At best argues respondent the amended complaint shou

treated as a new proceeding in which case the first claim involv

shipment occurring in June 1974 shOuld be dismissed as having a

beyond the two year period oflimitations contained in section 22 6

Act Respondent also argues on the merits of the controversy tha

supporting evidentiary materials are in effect unreliable and do not s

the heavy burden of proof that complainants in such cases as this 

Complainant s

reply memorandum again cites Commission dec

denying the validity of defenses based upon timebased tarift rules 

permitting shippers to show what actually moved regardless of b

lading descriptions Complainant again contends that the bill of lad

the carrier s document required by the Harter Act again miscite

complainant as 49 U S C 193 instead of 46 U S C 193 Compla

furthermore disputes respondent s contention that the Commission s 

do not permit the filing of amended complaints citing Rules j 

C F R 502 70 Amended Complaint p

2

13 Complainant dis

respondent s contention that the original complaint should have 

dismissed for lack of standinicon the ground that as the sole owner 

corporate consignee who paid the freight the original complaina

indeed have standing which could have been shown if Ihad not perm

the filing of an amended complaint

Although as Inoted previously it appears to me that a person 

has not paid the freight or who is not a valid assignee of aclaim h

standing to recover reparation although he may file a complaint a

The correcl cilallon should be 10 Rule 0 46 CFR 02 70 ThIa rule provides In pertinent pori

Amendmentl or supplements to any pleadlnp wiD be permitted or lQted in tho discretion of the 

the case has not been a

sianed to apresWin ollcerfor heirl

c otherwise In the dilcretlon of the otJ lcer d

to conduot the homoa The pretidlna oMcer may direct aparty to tate his Cle morefully and in more 

way of amendment

19 
TRANE CO v SOUTH AFRICAN MARINE 381

violations ofthe Act in view of the fatal flaw in both the original and

amended complaints both of which it now appears fail to name a

common carrier as respondent it is unnecessary to decide the issue of

complainants respective standings In short it appears that the original

complaint was filed by a shipper complainant having no standing to be

awarded reparation against a carrier s agent with no cognizable status

under section 18 b 3 or 22 of the Act thus as far as reparation claims

under the Act are concerned the controversy involved nobody vs

nobody The amended complaint while appearing to give standing to a

consignee complainant who at least paid the freight again names a

carrier s agent as respondent in other words as far as reparation claims

under the Act are concerned it involves somebody vs nobody I now

elaborate

DISCUSSION

The critical issue for decision which will determine whether I can

consider the merits ofthis controversy and determine ifreparation should

be awarded in any amount is whether the failure of a complaint to allege

that a common carrier by water su ect to the jurisdiction of the Act has

violated section 18 b 3 ofthe Act is a basic defeat which deprives the

Commission ofjurisdiction to determine the controversy A subsidiary

issue is whether the naming of an agent of such common carrier suffices

to conferjurisdiction For the following reasons Imust conclude that the

complaint is jurisdictionally defective and that both the original and

amended complaints should have been dismissed at the outset for that

reason

The basic authority of the Commission to entertain complaints stems

from section 22 ofthe Act which states in pertinent part

That any person may file with the Commission a sworn complaint setting forth any

violaIion of this Act by a common carrier by water or other person subject to this Act

and asking reparation for the injury if any caused thereby The Commission shall

furnish a

copy of the complaint to such carrier or other person 46 U S C 821

Emphasis added

Both the original and amended complaints name South African Marine

Corp N Y as respondent and allege that this company is a common

carrier by water amember ofa named Conference of such carriers and

evena party to that Conference s tariffs In both the original and amended

answering memoranda the named respondent does not dispute these

allegations The only problem of ajurisdictional nature that appeared

obvious from the pleadings and materials submitted as Ihave discussed

was that the shipper complainant named in the original complaint did not

appear to have paid the freight and therefore lacked standing to seek

reparation This problem wascured by permitting the filing of an amended

complaint in which it was confirmed that the original shipper complainant

had not paid the freight which was paid by the consignee in whose name

19 F MC
382 FEDERAL MARITIME COMMISSION

the amended complaint was now filed There was no further indicatio

any otherjurisdictional defect and considering the fact that respon

did not dispute the erroneous allegations regarding the status of 

named respondent Ihad no cause to question the status of S

African Marine Corp N Y It was only after complainant s final r

was filed that Ibecame aware that this named respondent is n

common carrier at all but the general agent of three common car

s 

wit South African Marine Corporation Ltd Springbok Line Ltd 

Springbok Shipping Company Ltd 14

Not only therefore do both complaints not name or allege a viola

by a common carrier as required by section 22 ofthe Act but they as

a finding of violation of section 18b 3 of the Act which by its term

limited to common carriers or conferences of such carriers statin

pertinent part

Nocommon carrier by water inforeign commerce orconference ofsuch carriers 

charge or demand or collect a greater or less or different compensation fo

transportation of property than the rates and charges which are specified 

tariffs on tile with the Commission 46 U S C 817 Emphasis added

A carrier s agent such as the named respondent in both compl

does not transport property is not a

party to a Conference agree

consisting of carriers and has no tariff of its own It is the ca

principal not the agent that does these things and stands liabl

violations of section 18b 3 or for any section of the Act for w

standards of conduct are imposed on such carriers There is no doc

that the carrier may stand aloof while the agent assumes full respons

for violation of the carrier s duties under the Act See Helle ic L

Ltd ection 16 First and 17 Violations 7 F M C 673 1964 C

Distrib g Co Inc v Cia Nacional De Nav 2 U S M C 724 

1945 I

Indeed the very bills of lading submitted in this case stat

theirfaee aclear disclaimer by South African Marine Corporation N 

14 These tacts were stipulated by the panies in Caterpillar Overseas SA v South Niican Marine Corp 

Docket No 7639 inadocument filed in that case siJned by counsel forthe Parties on September 22 and 

The names of the troc carriers are also shown on the pertinent tariftsand on the back ofthe bills of ladina i

behalf of these carrien by South African Marine Corporation N Y as aaenta These facts are therefore 

noticeable Rule 13f46CFR 502 226 The bUls of1aclina submitted inthe present case were xerox copics of

only which did not show the names 01the carriers on the back side The front paae oltbe bW olladina h

does contain the notation Ship operated for account of and shows abarely lqible aroup of stamped let

numbers which on close inspection shows that the 8rst shipment bill ofladina No 128 WBS carried by ca

2 Springbok Une Ltd accordina to the back side of the bills of lading filed in Docket No 7639 Th

shipment billof lacUna No 238 was carried by JCarrier no I South African Marine Corporation Ltd a

to the same source South African Marine Corporation Ltd tiie carrier is not to be confused with South 

Marine Corporation N Y the agent and named respondent in the present case See Docket No 7639 cite

Initial Decision September 30 1976

Since counsel for complainant who slaned the abovementioned stipulation is also counsel lor complaina

present case and tbe same firm represents the named respondent In bOth casesbut thesefacts reaardina the 

the named respofl1ent was notbrouabt to my attention by counsel apparenUy counael foresaw no legal sip

to these facts Otherwise I presume they would bave brouaht luch facts to my attention

18 In the Hellenic case the carrier unsucccssfully tried to avoid Uability for violatioRs ofsectioRs 16 First 

the Act by araulna that its aaent in Djibouti Frencb Somallland had been responsible Tbe carrier of cou

named as respondent In Cont Dlsuib llCo Inc the Commission flatly held that two companies n

respondents were aaents and as such are not sutUect to the act 2 U S M C at p

725

19 F 
TRANE CO v SOUTH AFRICAN MARINE 383

the agent named as respondent in this case of any carrier liabilities the

agent stating

Neither South African Marine Corporation N Y nor any other person firm or

corporation other than the carrier whether or not the name is stated elsewhere herein

assumes any of the duties responsibilities and liabilities stated herein as being those of

the carrier

Whatever may be the authority of the general agent named as

respondent in this case to act on behalf of its principals therefore I

cannot find such an agent in violation of a statute which names only

earners and conferences ofcarners nor can I

find acarrier in violation of

such statute who has not been named in the complaint and indeed has

been nowhere identified in any of the pleadings or materials submitted in

the case Whatever the consequences of dismissal of the subject com

plaints the defect is basic and jurisdictional and justifies dismissal

The Reasonfor Dismissal Rather than Further Amendment

Iam aware of the fact that the Commission is an administrative agency

and not a court and that the Commission has recognized that it ought

not to be hampered in its proceedings by the hard and fast rules as to

pleading and practice which govern courts of law and that inquiries

should not be too narrowly constrained by technicalities Oakland Motor

Car Co v Great Lakes Transit Corp 1 D S S B B 308 311 1934 In

this spirit the Commission has permitted acomplainant to cure a defective

complaint which failed to contain the seal of a notary public to attached

affidavits without being barred by the two year period of limitations in

section 22 and even permitted complainants to cure a defective complaint

which had not even been verified or sworn to when initially fded so as

not to lose their rights under the two year period of limitations Oakland

Motor Car Co v Great Lakes Transit Corp cited above Gillen s Sons

Lighterage v American Stevedores 12 F M C 325 331 note 6 1969

refernng to the Examiner s rulings reported in 10 SRR 195 1968 The

Commission has also held that a complaint which was originally defective

because it chose an incorrect remedy but correctly stated the substance

or gravamen ofthe claim could be cured subsequently even ifthe period

oflimitations had meanwhile expired Heterochemical Corp v Port Line

18 In the nilinp refened to the Examiner had held that the requirement that acomplaint be verified and swom to

as provided by section 22 of the Actwas not ajurisdictional one inthe strict sense but adefectwhich could be cured

subsequently even if the tw year period of limitations had run in the meantime He distinguished this type of

requirement as being designed to protect the Commission from pursuing reckless or false claims as distinct from non

waivable jurisdictional requirements such as the two year period for filing which extinguishes claims and is designed

to cut oft liability for stale claims 10SRR at p 198 See also U S Borax Chem Corp Y Pac Coast European

Conf H F M C 451 471 72 1968 Aleutian Homes Inc y Coastwise Line 5 F M B 602 612 1959 Curiously

his ruling is contrary to that of the Commission S predecessor in Reliance Motor Car CO Y Great Lakes Transit

Corp 1 U S M C 794 1938 which held that the sworn to requirement is jurisdictional and cannot be cured

subsequently if the statutory two year period has expired in the meantime The Examiner recognized his departure

from Reliance Motor and suggested that this Commission is not bound by its predecessor s decision 10 SRR at p

197 He cited numerous authorities for his ruling In adopting the Examiner s

decision the Commission made no

mention of this roling which was referred to in a footnote in the Examiner s decision In any event there was no

dispute that the twoyear period of limitations is jurisdictional and the issues did not involve the failure to name an

indispensablejurisdictional party

19 FM C
384 FEDERAL MARlTIMECOMMISSION

I

Ltd 12 SRR 223 1971 In all of the above cases howeve

respondents named in the complaints were carriers or persons subj

the Act capable ofviolating the various provisions of that Act involv

is one thing to permit anamendrnentto a complaint which merely a

a notary s seal adds a

supporting swomstatement or alters the ty

relief requested without changing the essential nature of the cal

action or the respondents involved Itis quite something else to na

totally different res Xndent The latter amendment in my op

constitutes a new proceeding and goes beyond the type of amend

permitted by Rule 50 46 CPR 502 70 Cf the recent chanles t

Commissien s rules which now authorize presiding jud es to am

Commission orders of investigation but which clearly state that 

authority cannot be used to add parties to the proceeding Rul

Practice and Procedure Docket No 7627 16 SRR 1387 1388 

amending Rule 10g

46 CFR 502 147 a Cf also Carolina Cott

Woolen Mills Co v Southern Ry Co 195 IC C 6S4 658 1933 

the IC C held that a complaint which failed to name as complaina

who had paid the charges or had a valid assignment of the claim 

improperly filed and 110t cognizable by that Commission u

For these reasons as well as those discussed above Iconclude 

dismissal is the appropriate action rather than leave to file a fu

amended complaint

I

j

i

ULTIMATE CONCLUSION

The original complaint filed in this pI Keedina alleging an overcha

violation of section 18b 3 oftheActfailed to establish even wit

supportina documentation that complainant had paid the freiaht o

validly sueceeded to the claim prerequisites to the seekillWofrepar

The amended complaint substituted a new complainant which i

asserted had paid the freiaht In both complaints however neit

common carrier by water orotherpel 8On su1 8ect to the Act was n

as respondent the named respendent btingthe alent of three unn

carriers TlUsfailure to name a jwildictionally indispensable pa

fatally defective and requires dismissal of both complaints lCllardless 

the authority of the carrier s general agent to acton behalf 

i

1

4

17 Since both t orJclnal and amended complaints in UUI c mUlt be dt millOd beeaud of tdure to 

indl pen abl juriadictlonal party sponde t my endlrullll plrmi tlnltbe flU 0 nded cO

mic How ver line ho nde4 complafnt dldnot m mly oxplliln tho alUl 0

complalnOi1 orco

alandln to kreparatlo butrather replacld the colal t withawhOlly e

party It ow ppoar t m

use of Rule 0 was inapproprl tCl In cuolnwhich new eompl lnan 1 e Ramia wtlo have receiv

ulianmentl of clalml the corrected compl nt ate treatod I ffnew orlupplemental t the tim 01 

COlTlcted compl lnt and iftha tetute o lImltattona b meanwlllle expiretbe w complaint may be 11m 

ct Carolina Cotton Woolen MUIs Co V Southern By Co olted above whore the IC C reattd Jh

complaint In whicb complainant hod hber paid the Deilbt norheld an lInm t oUhe clallll ot 

19 I C C at pp 658 69 In cean Freight COultan Inc Th BankLln Dd 5 IRR 609 1964 

1963 tblo Commi lo Imllndy l tedthe fillof I

t

ltartlni new complafn lIU 

no chaRle in complainants Even In Chr Sall e Co Ltd v WQt Mlchf an D elM Corp g SIR 

where the Examiner seems to 10 the other way the amondid Qomple lnt elllntlally only clar11led tho Ilat

ori inally named comJalnant manaaor who bad shown that he had authority to prosecute tho clafm at 

beginning on behalf of theowner of the vels 1 involved

19 
TRANE CO v SOUTH AFRICAN MARINE 385

principals Furthermore the mere fact that a complainant is the sole

owner of a subsidiary corporation which paid the freight is not enough to

confer standing to recover reparation

Amendments to complaints are liberally permitted under the Commis

sion s rules so as to protect rights which might expire under the two year

period of limitations contained in section 22 ofthe Act Amendments

which have corrected defects such as omitting signatures seals or sworn

statements or selecting incorrect remedies or measures ofdamages have

been permitted by the Commission in the interest ofjustice and in the

spirit of administrative flexibility However amendments which do not

merely add parties having a community of interest with an original

complainant to a suit properly brought but substitute different parties

especially when such parties are jurisdictionally indispensable are not

merely clarifying amendments but new complaints which should be so

treated despite the possible effects of the period oflimitations contained

in section 22 of the Act Cf Kam Koon Wan v E E Black Limited 75

F Supp 553 56465 D Hawaii 1948 affirmed 188 F 2d 558 cert

denied 342 U S 826

Accordingly the subject complaints are hereby dismissed

WASHINGTON D C

October 7 1976

S NORMAN D KLINE

Administrative Law Judge

19 F M C
1

1

1

1

l

I

i

j

FEDERAL MARmME COMMISSION

INFORMAL DoCKET No 3301

CUMMINS ENOINE CO INC

v

UNITED STATES LINES INC

NOTICE OFADOPIION

March 10 1976

The Commission by notice served March 10 1976 indicated i

determined to review the initial decision of the settlement officer i

proceeding served July 22 1976 Upon completion ofour review we 

determined that the decision of the settlement officer should be ad

as the decision ofthe Commission

By the Commission

SEAL S FRANCIS C HURNEY

Secreta

386 19 F 
FEDERAL MARITIME COMMISSION

INFORMAL DocKET No 330 I

CUMMINS ENGINE CO INC

v

UNITED STATES LINES INC

Adopted March 10 1976

Reparation granted

DECISION OF CAREY E BRADY SETTLEMENT OFFICER

Cummins Engine Company Inc claims 55108 as reparation from

United States Lines Inc USL for alleged overcharges on three

shipments which moved on USL s vessels during March 1973 The first

shipment moved on USL s bill of lading No 631 7301 dated March 23

1973 from Yokahama Japan to New York aboard the American Liberty

The second sbjpment moved on USL s bill oflading No 631 7304 dated

March 3 1973 from Yokohama Japan to New York aboard the

American Archer

The fIrSt and second shipments were described on each respective bill

of lading as 50 Cases Connecting Rod Assembly The Bureau of

Customs Special Customs Invoice Form 5515 and the shipper s invoice

both described the respective cargoes as 50 Cases Connecting Rod

Assembly Bureau ofCustoms Consumption Entry Form 7501 described

the cargoes as 50 Cases Diesel Engine Parts

Respondent rated the shipments on the basis of 67 25 per 2 000 Ibs

which was the applicable rate for Automobile Bus and Truck Parts viz

Other Parts according to 532025 ofthe respondent s tariff in effect at

that time 2

Total charges on the first shipment were assessed in the

amount of 568 06 which included currency surcharges and CFS charge

Total charges were assessed on the second shipment in the amount of

458 39 which included aCY discount of5

The third shipment was described on the bill oflading as 36 Pkgs K

engine component sets Bureau of Customs Special Customs Invoice

I

This decision became the decision of the ComnUssion on March 10 1976

S

Japan Atlantic Oulf Frei ht Conference Tariff No 34 FMC 3 14th Revised Paae No 234

I9F M C 387
388 FEDERAL MARITIME COMMISSION

I

i

Form 5515 described the cargo as 36 Pkgs K engine component 

The shipper s invoice and packing list described the cargo as 36 

K engine component sets and details the commodities to be 

Assembly Gear Cover Camshafts Cylinder Block and Crank

Bureau of Customs Consumption Entry Form 7501 described the ca

36 Pkgs Diesel Engine Parts

Respondent rated the shipment on the same basis as the firs

shipments resulting in total charges being assessed in the amo

1 578 53 including a5 CY discount

Complainant contends that the respondent misclassified the sh

and should have applied the rate of 53 50 per 2 000 lbs the ra

Automobile Bus and Truck Parts viz Cylinder Block Assemblie

orwithout Crankshafts as per Item 53207

3

Such aclassification 

have saved the complainant a combined total of 55108 on all ship

Complainant argues in support of its position that the Cylinder 

Assemblies description is broad enough and ambiguous enough to 

any type of a

part that goes into or is attached to acyclinder 

Further that description is published without qualification other tha

orwithout crankshafts

Respondent maintains that in classifying the cargo it relied 

description on the three bills of lading namely Connecting Rod A

bly an K engine c01l1ponentsets respectively Respondent f

states that it is regretted that the shipper did not identify his shi

for what they actually were namely parts for engine block asse

As far as we here are concerned we have no objection to this rate 

granted but unfortunately we feel the fmal decision because ofthe 

description placed on the bills of lading may rest with the Confe

Headquarters in Tokyo The record indicates the Conference do

interpret the cargo shipped to fall in the category of cylinder 

assemblies

The test the Commission applies on claims of reparation inv

alleged error of a commodity tariff classification is what the comp 

can prove based on all the evidence as to what was actually sh

even if the actual shipment differed from the bill of lading descr

However the complainant has a heavy burden ofproof once the sh

has left the custody ofthe carrier 5

From the documentation ofrecord it is clear the commodities a

shipped were unquestionably parts for engines i

e

connectin

assembly head assembly gear cover camshaft cylinder bloc

crankshaft The Conference tariff discloses no specific commodi

for connecting rod assembly head assembly gear cover or cam

Ibid

4 We tern PubUlhina Company Inorporated v HapaaLloyd A G Infonnal docketNo 283 1Commi

lerved May 4 1m

Ii Colpte PIlmolive Co v United Fruit Co informal ket No 115 Comrrullion Order Hrved Sep

1970

19 
CUMMINS ENGINE CO v U S LINES 389

Cylinder blocks and crankshafts are named in the disputed tariff item

53207

Complainant s contention that the commodities shipped are parts ofa

cylinder block assembly appears to be a reasonable one

Webster s Third New International Dictionary ofthe English Language

Unabridged 1964 defmes an assembly as

5a the act or process of building up a complete unit as a motor vehicle using parts

already in themselves finished manufacture products b a collection of parts so

assembled as to form a complete machine structure orunit of a machine

Webster s New World Dictionary College Edition 1968 defines

assembly as

4 a fittingtogether of parts to make a whole as in making automobiles

5 the parts to be thus fitted together

From the above definitions of an assembly it can reasonably be

concluded that cylinder block assemblies include those parts of an engine

that go into or are attached to the cylinder block to make up the end

product which can be reasonably considered directly related to the

construction of an engine An exploded view of an engine readily shows

a connecting rod gear cover and camshaft go into or are directly

attached to the cylinder block

Tariff Item No 532007 is not at all specific as to what component

parts constitute a cylinder block assembly aside from indicating such

assembly may be with or without crankshafts Such a description is so

unclear that reasonable men could differ on its application Where an

ambiguity does exist then the tariff must be construed in such a marmer

so as to resolve such ambiguity in favor ofthe shipper 6

In addition the Commission has long recognized that tariff terms

should be interpreted reasonably In National Cable and Metal Co v

American Hawaii S S Co 2 U S M C 471 1941 the Commission s

predecessor stated

In interpreting a tariff the terms used must be taken in the sense in which they are

generally understood and accepted commercially and neither carriers nor shippers

should be permitted to urge for their own purposes a strained and unnatural

construction Tariffs are to be interpreted according to the reasonable construction of

their language neither to the intent of the framers nor the practice of the carrier

controls for the shipper cannot be charged with knowledge of such intent or with

carrier s canons of instruction A proper test is whether the article may be reasonably

identified by the tariffdescription underlining supplied

Since connecting rod assembly head assembly gear cover and

camshaft are not specifically excluded by Item 53207 it can only be

concluded that they reasonably fall within the general description of

cylinder block assemblies and should have been so rated A proper case

1I United Nations Children Fund v Blue Sea Line 15 FMC 206 209 1972

1 Alsosee Johns Manville ProductsCorporation 13 FMC 194 1970 and Bulkley Dunton Overseas SA v

Blue

Star Shipping Corp 8 FMC 137 140 1964

19 F M C
1

j

i

i

J

I

1

l

I

1

j

ci

t

1

390 FEDERAL MARITIME COMMISSION

for the recovery of reparation having been made on the three shipm

arefund in the amount of 55108 is due the complainant and it 

ordered

8 CARBY R BRADY

Settlement Offi

19 
19 EM C 391

FEDERAL MARITIME COMMISSION

DoCKET No 72 64

AMERICAN EXPORT LINES INC SEA LAND SERVICE INC AND

UNITED STATES LINES INC PoSSIBLE VIOLATIONS OF SECTION

18bX5 OF THE SHIPPING CT 1916 IN CONNECTION WITH RATES ON

MILITARY CARGO

DoCKET No 7265

AMERICAN MAIL LINES INC AMERICAN PREsIDENT LINES LTD AND

SEA LAND SERVICE INC PoSSIBLE VIOLATIONS OF SECTION 18b 5

OF THE SHIPPING ACT 1916 IN CONNECTION WITH RATES ON MILITARY

CARGO

DISMISSAL OF PROCEEDINGS

November 17 1976

The Commission instituted Docket No 72 65 in December 1972 to

determine the lawfulness under section 18bX5 ofthe Shipping Act 1916

and Commission s General Order 29

of certain rates bid by American Mail Lines Ltd AML American

President Lines Ltd APL and Sea Land Service Inc for the carriage

of containerized military cargo between the West Coast of the United

States and Japan pursuant to the Military Sealift Command Request For

Proposal RFP 700 Second Cycle The Military Sealift Command and

American Export Lines Inc AEL intervened in the proceeding

Concurrently with the issuance of an Order of Investigation in Docket

No 72 65 a similar proceeding Docket No 7264was also instituted

to investigate the rates offered by Sea Land United States Lines USL

and AEL in the trade between the East Coast of the United States and

the United Kingdom and Europe APL and AML intervened in that

1 General Order 29 promulgated on November 28 1972 sets forth standards fordetermining the level below which

rates quoted for the transportation of U S Department of Defensecargoes pursuant to the militarysealift procurement

system and ffied with the Commission pursuant to section 18 b l ofthe Shipping Act 1916 would be deemed to be

so low 88 to be detrimental to the commerce of the United States within the meaning of section 18b 5 of the Act

and to establish rules and regulations governing the accounting and allocation procedures which are utilized by the

U S flag carriers in arriving at military ratequotations
392 FEDERAL MARITIME COMMISSION

proceeding Docket No 72 64 never advanced to the hearing 

instead it was detennined to pursue Docket No 7265 and hold 

No 7264 in abeyance pending the outcome ofDocket No 7265

Of the nine military cargo rates placed under investigation in 

No 7265 only APLs Cargo N O S rate was ultimately challeng

actively litigated by Commission Hearing Counsel in hearings 

connection with this proceeding All other rates originally set do

investigation were for reasons of compliance admitted noncom

or cancellation not put at issue in the hearings held before the P

Officer At the conclusion ofthe hearings the Presiding Officer c

the record to the Commission for decision

The stated purpose for continuing Docket No 7265 beyond th

the challenged rates was to establish prospective guidelines regard

application of G O 29 rather than to make any specific fin

violations However in view of the time that has elapsed since 

proceedings were institutedz and the imminent introduction of 

standardized cost information system which when fully implem

will necessitate a further revision of G O 29 the establishm

guidelines at this time would appear to serve little regulatory p

Accordingly Docket Nos 7264and 7265 will be discontinued A

currently pending aMotion to Dismiss Docket No 7265 on the 

of mootness In light of our action herein we need not consider the 

ofAPLs motion

THEREFORE IT IS ORDERED That Docket No 7264and 

No 7265 are hereby discontinued without prejudice to the issues 

therein by any party

By the Commission

SEAL s FRANCIS C HURNEY

Secre

t The Commission determined not to iS8ue a decision in Docket No 72 6 pe ina areview by 

Appeals of0 0 29 See Sea Land Service Inc v

Federal Maritime Commission Case No 731204 D

1974 Thematter is now before a

Commission Administrative Law Judie upon remand from the court

1
SEAL

FEDERAL MARITIME COMMISSION

INFORMAL DOCKET NO 360 1

NATIONAL STARCH

CHEMICAL CORPORATION

V

ATLANTIC CONTAINER LINE LTD

NOTICE OF DETERMINATION NOT TO REVIEW

November 12 1976

Notice is hereby given that the Commission on November 12 1976

determined not to review the decision of the settlement officer in this

proceeding served November 1 1976

By the Commission

S FRANCIS C HURNEY

Secretuty

393
1

I

1

FEDERAL MARITIME COMMISSION

INFORMAL DoCKET No 360 I

NATIONAL STARCH CHEMICAL CORPORATION

v

ATLANTIC CONTAINER LINE LTOj

Reparation Awarded

J

DECISION OF WALOO R PUTNAM SETILEMENT OFFIC

By complaint fded September 9 1976 National Starch Ch

Corporation complainant allelles that Atlantic Container Line 

carrier applied an incorrect rate on a container of liquid sy

resin weighing 31 569 pounds resulting in an overcharge of 

While a violation of Shipping Act 1916 is not alleged it is presu

be section 18 b 3 wbiCb prohibits the assessment of freight cha

excess 0ftheselaWftJ1lY4 ppHeable atthe time ofthe shipment

The carrier denied the claim solely on the basis of Rule 9 

tariffswhich prohibits tho payment of overchaIlJe claims not prese

the carrier within six months after the date ofthe shipment

According to the complainant the carrier under bill of ladin

A91402 dated August 22 1975 transported a container of liquid sy

resin valued at less than 1 000 per 2 240 pounds net weight on a 

to house basis from New York to LeHavre France The carrier a

a rate of 98 25 per 2 240 pounds on 31 569 pounds in accordanc

Item No 5810001220 1st Revised Palle 167 of the Conference 

The cargo should have been rated under tariff Item No 5810

which provides for a rate of 72 00 subject to aminimum of 

pounds per container 30n the basis of an incorrect application of 

J

I

1

1

1

j

4

1

I Both parties havina CORlented to the infor a1 procedure of Rule 19 46 CPR 02 301 30481 am

decision will be ftnal unless the Commtuion elects to review it within U days from thedate of service the

Note Notice ofdetermination not to review November 12 1976

North AdandcFrencb AdandcFrel8l1l Con rence Tarll lNo 3 FMC4

3 Rule 4 althaConference tariftprovidos the foUowin

B Rat Applicable on ClIfIO Sbipped to Stipulated Minima

1 Where inthis tariff two rates are listed foracommodity that ratenoted alonpide a

qualificatio

a

required minimum quantity oither wei llt or mauunmant perContainer or in ContainoR WUl b

to thecontents of theContainerls provided theminimum let forth is met orexceeded Atthe StUpp

a

quantity less than the minimum may be freiahted at the lower rate provided the weIght or m

declaredfor rating purposes is increased tothe minimum level underscorina supplied

394 19 
S WALDO R PuTNAM

Settlement Officer

NATIONAL STARCH CHEMICAL v ATLANTIC LINE 395

charges the complainant paid 1 446 95 1 384 64 plus a 45 percent

currency surcharge of 62 3 The correct charges should have been

1 354 32 1 296 00 plus a45 percent currency surcharge of 58 32 The

resultant overcharge is 92 63 1 446 95 less 1 354 32

In response to the served complaint the canier stated that it does not

dispute the complainants contention that the rate was incorrectly applied

however it had no option but to deny the claim in accordance with its

lawfully filed tariff 4

The Commission in Informal Docket No 115 1 Colgate Palmolive

Company v United Fruit Company reiterated wtat is specifically stated

in Proposed Rules Time Limit on Filing Overcharge Claims 12 F M C

298 308 1969 that

once a claim has finally been denied by a carrier the shipper may still seek and in

a proper case recover reparation before the Commission at any time within two years of

the alleged injury and this is true whether the claim has been denied on the merits or on

the basis of a time limitation rule

The Conference tariff clearly provides that the actual weight of a

shipment may be increased to aspecified minimum weight for the purpose

of providing lower freight charges for the shipper It is obvious that the

higher rate assessed by the canier in this instance can not apply and the

canier has so admitted Section 18b 3 ofthe Shipping Act 1916 makes

it unlawful for a carrier to charge demand collect or receive a greater

compensation than the rates or charges which are specified in its tariff

The filing of a timely complaint has effectively eliminated the tariff

technicality under which the claim originally was denied and inasmuch as

a proper case for the recovery of reparation has been made a refund of

92 63 is due the claimant and it is so ordered

4

Theshipment was dated August 22 1975 the claim was filed June 28 1976 and denied on July 1 1976

19 F M C
1I

FEDERAL MARITIME COMMISSION

INFORMAL DoCKET No 345 1

VANDOR IMPORTS

v

ORIENT OVERSEAS CONTAINER LINES

NOTICE OF DETERMINATION NOT TO REVIEW

November 12 1976

Notice is hereby given thai the Commission onNovember 12 

determined not to review the deoision of the settlement office 

proceeding served November 3 1976

By the Commission

SEAL S FRANCIS C HURNEY

Secre

I

j

I

I

ej

j

I

j 396
FEDERAL MARITIME COMMISSION

INFORMAL DOCKET NO 34S I

VANDOR IMPORS

V

ORIENT OVERSEAS CONTAINER LINES

Repa2tion awarded

DECISION OF JUAN E PINE SBTTLEMENT OFFICER

By complaint filed on January 23 1976 Vandor Imports complainant

alleges that Ocient Oveiseas Container Lines OOCL overeharged it in

violation of Section 18b3of the Shipping Act 191 by failing to pay

14 port equalizaUOn claims covering 21 shipments of cargo moving from

Hong Kong to complainant located in San Francisco California The

shipments were unloaded at OOCL s

port of delivery at Oakland

California and moved ovedand truck collect to San Ftancisco to port of

dischazge shown on the ocean bflls oflading The claims were Sled with

the Commission within two yea from the date when the cause ofaction

azose from February 28 1974 to January 10 197 Reparation of 946 59

is being sought

The equalization claims are based on the excess ofthe trucking rates

from Oakland to San Fiancisco zpaid by complainant over the diayage

rates within San Francisco The trucking rates are published in Califomia

Public Utility Commission TariffNo 2 and the drayage rates in California

PubGc Utility Commission TariffNo 19

The claims are based on Rule 28 of OOCL sHong Kong Eastbound

Pacific Coast TariffNo 1FMGl whichprovides

Bm partie hevina onsentcd w teinformal procedirte ot Rule 19aotthe Commission f

RWee of PracticeW

PmcWum 16 CFR 502J01 30tttis decision will h finW uNee IM1e Commueion elech lo revicw it within ISdaya

rom Ihe da4 0 service therto

NOm Naice of Delamination na w review Navember 13 1976

Complninav hss sumktedfrcigH bdls wvenng Ne trvck movement via D A 1 Trmsportatioe o he eubjea

nAipmenG homOakland oSan Fnnceco

i9FMc 397
398 FEDERAL MARITIME COMMISSION

Ifthe carrier diacharges cargo at a diacharge port other than the port of d

named in the bill of lading the carrier may arrange at ita option to move the 

from actual port of discharge as followa

To the poR of deatination atated in the bill oY lading alternatively the ca

fonvard the cagodirect to a point deaignated by the conaignee provided the c

pays the coats which the consignee normally would have incurred to move the 

such point had the cargo been discharged at tda port of deatination stated on t

Iading

Rule 28 was amended slightly effective October 1 1974 to 

follows

Ifthe carrier discharges cargo at a discharQe port other than the port of 

named in the bill of lading the carrier C ahall arranBe at ita C expense to 

shipment finm actual poR of diacharge as foUows To the port of deetination 

the bill of lading altematively the carrier may forward the cargo direct to 

deaignated by the consignee provided the consiptee pays the coata which the c

normally would have incurred to move the cargo to such point had the ca

diacharged at the port of destination statad on the bill of lading

OOCL advised complainant that prior to October 1974 San FY

Oakland and Alameda were considered to be one bill of lading p

i

that the above rule did not apply

In its partial adoption of the decision in Konwal Co Inc v 

Overseas Container Line in Informal Docket No 327 nserved 

ber 12 1975 the Commission held

It ie cleaz theiefore that OOCL had diacharged its cargo at a diacharQe p

than that apecitiad in the bill of lading The carrier than had only two lawfu

Both of theae optione ware provided by Rule 28 Under ita tarma the carrier co

1 move the cagoto the port of diecher oapec fiadin the bill of

2

lading or

fonvard the cargo direct to a point deaignated by tha conai nee

From tha rocord the carrier apparontly availad iteelfof both options with r

the various ahipmanta It ie ourconcluaion that having elected to act undar Ru

carriarbecame bound by the proviaions theroof

OOCL also advised complainant that it has determined from 

trucking companies thatrepoaitioning costs are approzimately 1

5

container which is that amount it agreea to reimburse consignees 

container loads

This allegadon was laid to rest in Konwal supra atpage 5 foo

ofthe SetdementOcer sdecision

I Allegedly the poHcy of OOCL with reapect w full container loada being de

San Francisco is to give 1650allowaace percontainer to t4e wnaignee to 

approximate coat of retuming the empty container to OOCL stemtinal in 

Raparation of 1650ia danied as the tariff containa no such allowance aad pa

such allowance would violate Section 18bof the Shipp vmg Act 1916 KON

agreed to cancelthe 1650claim

This finding

decision in Konwal

was not

addressed

reviewed

itself

by the

only

Commisaion

to the sharing

The

of the

Comms

pay

truck transportation rates in Rule 28 ofOOCL stariff on file w

Commiasion at the time ofthe shipments That is all that is 

here Page 4 Partial Adoption of Decision November 12 197

1
VANUtIIt IMPORTS v ORIENTOVERSEAS LINES 399

the Setdement Officer sfinding stands unreviewed by the Commission

and is of precedential value it is deemed disposiGve of the issue also

Complainant has carefully documented its claim by submitting ocean

bills oflading and local freight bills or memorandum of local bills of

lading covering the truck movements from Oakland to San Francisco

indicating local trucking and drayage rates assessed thereon

The subject claims are fisted below

Loca Rare

Caim Freighl Equalizalion egy

and Trans oilafion

BiII Drayage Charges

Dqte Cos s

VOl

F

274 Oakland to SF 2 vans 75C10 150 00

B14354

SFto SFFqualization 2 vans 4500 900

F

600

B14261 Oakland to SF 832 15 1306

1800 196 3528

weight deficit

2368 157 3718

sc 250

3 257

9059

SFtoSF 832 915

10 248

1800 102 3501

138

3

Equalization

558

V02

F

4 574 Oakland to SF 1 van 7500 7500

B11906

SFtoSFEqualization 1 van 4500 3500

300

V03

F

2574 Oakland to SF 1 container 7500 7500

B10403

SFto SFFqualization 1 container 4500 4500

300

V04 6 674 Oaklandto SF 1632 431 7034

FlB12563 3 211

sc 150

7395

SFtoSF 1632 as 2200

2000

10

3 66 2266s

Equalization 5129

19FMC
I

I

4OO FEDERAL MARITIME COMMISSION

Local Rate

Cla7m

Freight

Bill Equallzalion Wtigh

and

Drayage

Trana

Ch

Date Cosfs

VOS lr 674 Oakland to SF 3 vane 7500 F25 00

a FB12564

1 SFtoSF 3 vana 4300 135 00

Equatization 

V06

F

274 Oakland to SF 9257 as

B15289 10000 120 120 00

1 120

sc 340

a 1Z4 60

SFtoSF 9257 as

10000iY

i 82 8200

1 82 82

j EquaHzation 

V07

F

8274 Oakland Zo SF 2 containers 7500 150 00

B15343

SFtoSF 2 containere 4500 900

F

Equalization 

B15041 Oakland to SF 1960 462 5821

I 59

sc 150

6031

SFto SF 1960 ae

2000

18 2360

1 24 2384

Equalization 

V08

F

92374 Oakland to SF 1 container 7300 7500

B9731

SFto SF i container 4500 4500

F

Equalization 

B9752 Oakland to SF 1300 462 S 6006

sc 150

i

1 62

6278

SFtoSF 1300 as

2OOO

18 a 2360

1 24 2384

Equalization 

1
VANDORIMPORTS v ORIENTOVERSEAS LINES 4O 1

Lornl Rale

Gnim

Freighr

Bil EqimliZnJion yPBn

and

Draynge

Tanspartation

Charges

Oqre Cosls

V09 FB3239 Oakland toSF 1 container 7500 7500

SFto SF 4500 4500

F

Equalization 300

B2950 Oakland toSF 1000 462 4620

sc 100

1 47

47

SFto SF 1000

192 1920

I

19 193

EquaGzation 28

V0 1247 Oakland oSF 3630 as

FB3819 5000 252 126 00

sc 250

1 129

129 79

SFto SF 3630as

4000

138 5520

1 55 557

FquaGzation 740

FB4233 Oakland to SF 1 container 7500 7500

SFto SF 1 container 4500 4500

EquaGzation 300

V11 10374 Oakland to SF 2 vans 7500 150 00

FB3824

SFtoSF 2 vans 4500 900

Equaliza ion 600

V12 112C74

F

Oakland to SF t container 800 800

B4060

SFtcSF

1 container 500 500

Equalization 300

V13 12ll74 Oakland to SF 955 693 6618

FB4766 sc 100

1 67

68858

SFtoSF 955 288 2750

1 28 2778

Equalization 4107

19 FMC
402

Clatm

i

V14

I

FEDERAL MARITIME COMMISSION

Local

Frefghr

Bill Equallzatian

Dafe

174 Oaklandto SF

FB4694

SFtoSF

1

EquaGzation

F

1a75 Oakland to SF

B11646

SFtoSF

F

Equalization

B11483 Oakland to SF

Ra e

e8n

and Transp

Drqyage Cha

Costs

1 container 800 500

1 container 500 500

1 van 800 800

1 van 500 500

1476 693 102 29

sc 150

1 104

104 83

SFtoSF 1476 as

2000

17 3540

1 35 357

Equalization 

Total 

The local drayeQe computation ie 2266roeWdny in aclaim for5139 Cieimant erroneously errive

dreyepe computedon of522 60claiminp 55135 due

Correct Preight cherQen woWd be 1960M 5462590 35 IS9q acS1 30or592 96 How

Tranaportation only aseesaW cheryes oPS6031 Clelment atatee thatD7nevereu6mitted abelance due 

additionel aum of 532 65Ae 560 31ie what was actuelly peid by clsimant the clalm wilt not be chenged

Should ba 562 18 Howavor ee the claim is arrived at by ualnp lhe locel VeneporteNon cherpa of 5

7

peid by daimentthe 60 ceMa ovorcherge paid by claiment forlocal traneportatlon willnot be chenped

Slwuld be 567 83 Howavar as the claim is artived at by ueiny thelocal tranaporte ioncharpe actu

cleimant ttw 568 83iocel transportetlon cherpe will not be cAanped

Exact emount indicated by compleinant laee the eix cant error in Claim V04computatlone as 

foatnole 3

From the foregoing OOCL is in violation of Section 18b3

Shipping Act 1916 for receiving adifferent compensation for tran

tion or any service in connection therewith than the rates and c

specified in its tariff and by its failure to remit in any manner any 

ofthe rates or charges so and by its failure to remit in any man

portion of the rates or charges so specified in accordance with it

Therefore complainant is awarded reparadon of 946 53 with int

the rate ofsix percent per annum if not paid within 30 days oft

hereof

S IUAN E PINE

Settlement O

1
19 F MC 403

FEDERAL MARITIME COMMISSION

INFORMAL DoCKET No 347 1

WILMOT ENGINEERING COMPANY

v

UNITED STATES LINES INC

DISMISSAL OF COMPLAINT

November 18 1976

Settlement Officer Waldo Putnam served his decision in this proceeding

November 8 1976 wherein he determined that complainants claim for

reparation on an alleged overcharge of ocean freight should be denied

Our review ofthis decision discloses that the claim was tiled by Traffic

Service Bureau Inc as agents for complainant The Commission s Rules

of Practice provide that practice before the Commission is limited to

attorneys persons admitted to practice or officers or regular employees

ofa party to aproceeding 46 CPR 502 26 and 502 27 Practice before

the Commission by firms or corporations on behalf ofothers is specifically

prohibited 46 CFR 502 28

There is nothing in the Commission s ftles to indicate that the person

filing this claim is an attorney or admitted to practice before the agency

Neither does it appear that he is an officer or regular employee of

complainant Rather the claim was submitted by one firm on behalf of

another In view ofthese circumstances it is concluded that the complaint

was not properly submitted under the Rules of Practice and cannot be

considered on its merits

Accordingly it is ordered that the complaint in this proceeding is

dismissed without prejudice to resubmission within the two year statutory

time period for filing of such claims

By the Commission

SEAL S FRANCIS C HURNEY

Secretary
j

I

1

FEDERAL MARITIME COMMISSION

INFORMAL DocKET No 3421

CELESTIAL MERCANTILE CORPORATION

v

M GoLODETZ CO INC

As AOENTS FOR TELFAIR SHIPPINO CORP

NOTICE OF AOOPTION

November 24 1976

The Commission by notice served August 6 1976 determi

review the decision of the SettleQlent Officer in this proceeding 

July 22 1916 Upon completion ofreview it has been determined t

decision ofthe Settlement Officer should be adopted as the decis

the Commission

By the Commission

SEAL S FRANCISC HURNEY

Secre

1

1

I

j

404 19 
FEDERAL MARITIME COMMISSION

INFORMAL DoCKET No 3421

CELESTIAL MERCANTILE CORPORATION

v

M GOLODETZ CO INC

As AGENTS FOR TELFAIR SHIPPING CORP

Adopted November 24 1976

Reparation Denied

DECISION OF CAREY R BRADY SETILEMENT OFFICER 1

Complainant seeks reparation in the amount of 1 466 27 from respond

ent 2

claiming a freight overcharge on a shipment from Philadelphia

Pennsylvania to Dubai United Arab Emirates carried aboard the Nego

May on bill oflading dated September 29 1975 pursuant to the terms of

Triton International Carriers Ltd United KingdomContinental Europe

MediterraneanRed SeaEast Africa and Persian Gulf Tariff FMC No 2

The shipment consisted of 900 cartons of motor 011 weighing 54 000

pounds and measuring 1170 cubic feet The shipment was rated by the

respondent on the basis of 129 25 per cubic feet the applicable rate for

Oil Lube Total charges were assessed in the amount of 3 780 56

Complainant maintains the proper rate is 96 00 per 2240 pounds but

does not indicate the tariffauthority

Both parties agree that the claimant booked a shipment of 900 cartons

ofmotor oil and was originally quoted arate of 96 00 per 2240 pounds

by Triton s agent F M Clifford Agencies and was billed at that quoted

rate When the bill oflading was to be picked up from the Timechartered

Owners agent M Golodetz Co Inc complainant was advised

Triton s agent quotation was erroneous and the appropriate rate was

129 25 per measurement ton Complainant paid the new quoted rate

under protest

1

This decision was adopted as the decision of the Commission November 24 1976

t

Theoriginal charterer Triton International Carriers Ltd through default in payments of hire breached the terms

of the charter agreement TheTimechartered Owners Telfair Shipping Corporation and theiragents M Golodetz

Co Inc continued to prosecute the voyagein consideration of the freight monies being l ollected by M Golodetz

Co Inc and applied in satisfaction of TelfairShipping Corporation s lien against the cargo and freight monies

19 F M C 405
J

I

1

j

I

1

J

1

i

406 FEDERAL MARITIME COMMISSION

A review of Triton s tariff discloses the two rates in question a

rated under Oil Lube found on Page 20 second revision ef

September 24 1975 The commodity rate is in two parts The first 

the rate of 129 25 W M from Searsport MeBrownsville Texas 

to Ports of Call in the MediterraneanRed SeaEast AfricaPersian 

The second rate quoted is atemporary rate of 96 00 W from Phila

to Aqaba Jeddah Abu Dubai and Doha effective September 24 

through October 27 1975 The specific temporary rate does not i

Dubai as a

port eligible for the reduced rate hence the shipment m

rated under the general commodity rate of 129 25 WIM Therefo

reparation is denied

S CAREY R BRADY

Settlement Off

1
19 F M C 407

FEDERAL MARITIME COMMISSION

DoCKET No 7344

KRAFT FOODS

v

MOORE MCCORMACK LINES INC

Carrier tariff rule requiring claim for adjustment of freight charges to be filed with the

carrier before shipment leaves custody of the carrier cannot be used to defeat a

claim filed with the Commission within the two year statute of limitation period

Where shipment has left custody of the carrier before a claim for adjustment in

measurement is filed a heavy burden of proof is imposed

Reparation awarded

John J Lavaggi William Levenstein for complainant J D Stratton

for respondent

REPORT ON REMAND

November 24 976

By THE COMMISSION Karl E Bakke Chairman Clarence Morse Vice

Chairman Ashton C Barrett and James V Day Commissioners

PROCEEDINGS

This proceeding involves a claim by Kraft Foods for reparation from

Moore McCormack Lines Inc for alleged overcharge of ocean freight

The proceeding is before us on remand from the United States Court of

Appeals for the District of Columbia Circuit Kraft Foods v Federal

Maritime Commission decided July 13 1976 We previously denied the

claim by decision served March 26 1974 and denied a petition for

reconsideration by order served December 13 1974 Our denial was

based solely on the fact that respondent s applicable tariff contained a

provision Rule 16 which would not permit it to make adjustments in

freight charges based on alleged error in weight or measurement if the

shipment involved had left the custody of the carrier So far as pertinent

Rule 16 provides as follows

Commissioner Bob Casey not participating
i

1

1

i

I

1

1

j

1

408 FEDERALMARITIME COMMISSION

16 OVERCHARGES

Claims for adjustment of freight charges if based on alleged errors in desc

weight andor measurement will not be considered unless presented to the ca

writing before shipment involved leaves the custody of the carrier

We had determined that the tariff rule was not shown to be un

and inasmuch as section 18b 3 of the Shipping Act 1916 required 

adherence to lawful tariff rules the claim must be denied since 

brought well after the shipment had left the custody of the carrier

The Court ofAppeals on review has determined that Rule 16 is 

valid tariff provision insofar as it conflicts with section 22 ofthe Sh

Act 1916 Section 22 provides for filing of complaints befo

Commission and permits such filing within two years of an a

violation of the Shipping Act The Court found that while Rule 1

not prevent the filing of a claim for reparation based on weig

measurements it does require that such a claim be rejected 

presented to the carrier before the shipment leaves its custody Th

to file a claim becomes illusory once the carrier has delivere

shipment In effect therefore the Rule sets up as aperiOd of limit

the time during which the shipment remains in the custody ofthe c

which limitation was viewed by the Court as infringing on the 

granted by section 22 ofthe Shipping Act The case was remanded 

Commission for further proceedings on the merits ofthe claim

FACTS

This proceeding was conducted under the Commission s sho

procedure by agreement of the parties The evidence of record is 

to those materials included with the complaint and subsequently sub

on exception

The shiptnentfrom which the complaint arose was transported 

S S Mormacbay ofMoore McCormack which sailed from New Y

December 31 1972 arrived in MOmbasa on February 3 1973 a

Mombasa on February 10 1973 Between February 3 and Februa

1973 the disputed cargo was unloaded and accepted by the cons

customer ofKraft Foods

The transportation charges levied in this case were based u

measurement of 284 cubic feet shown on the bill of lading and 

reverse side of the dock receipt As a result of these charge

consignee notified Kraft Foods by letter of February 12 1973 

seemed that the freight had been overchatged Thereafter on Fe

23 1973 complainant Kraft Foods notified Moore McCormack

suspected overcha rieand Kraft Foods challenge to 

which the charies were bllSed Complainant contended that the ac

measurement of the shipment was 146 cubic feet as shown on v

documents including the face of the dock receipt Respondent cou

by asserting that the 146 cubic foot measurement was not that ob

19 
KRAFr FOODS v MOORE McCORMACK LINES 409

upon delivery of the cargo to the loading pier but that the 284 cubic foot

measure shown on the bill of lading and the reverse side of the dock

receipt was the measure observed upon delivery

In support ofits claim complainant has submitted the following

IA copy of its sales invoice No 01186 indicates that a shipment was

to be delivered to Moore McCormack on December 28 1972 to be

shipped on the S S Mormacbay to Nairobi Supermarket via Mombasa

The invoice indicates that the shipment was to consist of

15 cases 5862 12 6 I oz Noodles Romanoff

25 cases 5873 16 1 lb 313 oz Spag W MT See

15 cases 6073 24 10 foz Min Col F1av Marsh

20 cases 6080 611 lb Min Marshmallow W

40 cases 6100 24 10 oz Jet PuffMarshmallow

2 A copy of Moore McCormack Lines bill of lading No 126 dated

December 29 1972 covering a shipment on the S S Mormacbay by

complainant to Nairobi Supermarket via Mombasa The bill of lading

indicates that the shipment consisted of 40 cases of Noodle Dinner

Spaghetti Dinner measuring 67 cu ft and 75 cases of Marshmallows

measuring 217 cu ft for atotal of284 cu ft

3 A copy ofMoore McCormack Lines dock receipt which indicates it

covers complainant s invoice No 01186 and BL 126 delivery date

December 28 1972 The front ofthe dock receipt describes the shipment

the same as the bill of lading except the measurement for the Noodle

Spaghetti Dinner is stated as 32 cu ft and for the Marshmallows is stated

as 114 cu ft with a total of 146 cu ftThe back of the dock receipt

contains handwritten notations listing the measurements ofundescribed

lots of30 10 20 30 and 25 packages The total measurement is stated as

283 50 cu ft

4 Copies of complainant s price list pages which indicate the standard

measurement ofcomplainant s products identified by Product Nos which

coincide to those listed in complainant s Invoice No 01186

5 A reconstructed packing list dated March 9 1973 which totals the

cubic measurement for the number and type of products listed in the

shippers invoice using the standard cube listed in the shippers price list

The total cubic measurement computes to 145 01 cu ft

DISCUSSION

The lesson of the Court ofAppeals opinion in Kraft is clear Tariff

provisions ofthe type involved here Rule 16 cannot be used before the

Commission to defeat a claim for reparation which was otherwise properly

ftled within the two year statute of limitation period Notwithstanding the

existence of such a tariff provision properly filed claims must be

considered on their merits

In considering such claims determination ofthe applicable rate shall be

based on what can be shown is the true nature ofthe commodity shipped

19 F MC
410 FEDERAL MARITIME COMMISSION

Such a determination will be based on all the evidence of record w

single document orpiece ofevidence necessarily being controlling 

said in Informal Docket 283 1 Western Publishing Company I

Hapag Lloyd A G order served May 4 1972

the test is what claimant can now prove based on all the evidence as to w

actually shipped even if the actual shipment differed from the bill of lading des

In rating a shipment the carrier is not bound by shipper s misdescription appe

the bill of lading Likewise claimant is not bound as least where the misdes

results from shipper s unintentional mistake or inadvertence But where the s

has left the custody of the carrier and the carrier is thereby prevented from pe

verifying claimant s contentions the claimant has Ii heavy ultimate burden of 

establish his claim

I

As indicated above in considering claims involving disputes as 

nature of cargo either weight measurement or description if the 

has left the custody of the carrier before the claim is brought a

cargo cannot be reexamined the Commission has traditionally imp

heavy burden ofproof on complainant Nothing in the Court s opi

Kraft should change this

In the instant case complainant seeks an aqjustment in the measu

of the cargo and the cargo was not reexamined before the clai

brought Accordingly the heavy burden ofproofrequirement appli

think it has been met

Complainant has provided rather detailed information which ind

the type quantity and size of the components ofthe shipm

question The sales invoice the bill of lading and the dock rec

indicate that the shipment consisted of 40 cases of Noodle D

Spaghetti Dinner and 7S cases of Marshmallows The sales invoice 

breaks down the shipment into lots of IS Noodles Romanoff 

Spaghetti with meat sauce to comprise the 40 cases of noodlessp

and lots of IS miniature colored flavored marshmallows 20 min

marshmallows and 40 jet puff marshmallows to comprise the 70 c

marshmallows Each ofthese lots is identified by a four digit n

The identification numbers coincide with the numbers contai

complainant s price list which indicates the standard measurem

complainant s products From all of this information it is demon

that a shipment consisting of the number of cases and types of pr

listed when checked against complainant s sales brochure would 

standard cubic measurement of 146 cu ft the me urement for 

complainant argues the shipment should have been rated As ind

above this measurement is also the amount shown on the front 

dock receipt

The evidence to the contrary consists of the handwritten entries 

of lading and computations onthe back ofthe dock receipt which 

I

The

actual ftjure onwhich complainant bases its claim is153 cu ftThis fiaure iscalculated employina 

s

applicable tariffrule which governs roundina of ottracdollllncomputln cubic measurements19

F 
KRAFT FOODS v MOORE McCORMACK LINES 411

would indicate the shipment measured 284 cu ftThese figures are said

by respondent to represent the actual measurements taken at the pier

Generally it is difficult to overcome evidence regarding measurement of

cargo which measurement is actually recorded by measuring at the pier

However the measurements on the back ofthe dock receipt in this case

have absolutely no relation to what are shown to be the standard

measurements ofthe cargo shipped Additionally the number ofpackages

of various sizes recorded on the back of the dock receipt and said to

represent this shipment bear no relation to the number of packages of

various sizes which are otherwise shown by complainant s evidence to

comprise this shipment We can only conclude that the preponderance of

evidence is such that the measurements said to be recorded at the pier at

the time ofshipment cannot be the measurements for the shipment in

question Such a variance in quantities and measurement might have been

occasioned by mistake in matching shipment with dock receipt or by

some other similar mistake We need not speculate further as to the

reason or explanation for the recording of such measurements

We conclude therefore that complainant has satisfied its burden of

proof in this proceeding and is entitled to reparation in the amount of

364 46 It is so ordered

By the Commission

SEAL S FRANCIS C HURNEY

Secretary

19 F MC
FEDERAL MARITIME COMMISSION

DoCKET No 7630

PAN AMERICAN HEALTH ORGANIZATION

v

PRUDENTIAL LINES INC

NOTICE OFADOPTION

September 23 1976

The Commission by notice served October 28 1976 determi

review the initial decision of the Administrative Law Judge 

proceeding served September 23 1976 Upon review the Comm

has determined to adopt the ultimate conclusions of the initial dec

the effect that Commission precedent provides a legitimate ba

awarding reparation in this proceeding and that it be awarded

By the Commission

SEAL S FRANCIS C HURNEY

Secre

412 19 
19 F M C 413

FEDERAL MARITIME COMMISSION

No 7630

PAN AMERICAN HEALTH ORGANIZATION

v

PRUDENTIAL LINES INC

Adopted September 23 1976

Shipment described by shipper as Cyanogas A Dust Calcium Cyanide 42 ICC Class

B Poison should have been charged rate under Insecticides NOS class 10

rather than at higher tariffrate for Chemicals NOS Reparation awarded

William Levenstein for Pan American Health Organization complain

ant

John J Purcell of Lilly Sullivan Purcell for Prudential Lines Inc

respondent

INITIAL DECISION OF THOMAS W REILLY

ADMINISTRATIVE LAW JUDGE

INTRODUCTION

By complaint filed May 24 1976 the complainant alleges that an

inapplicable rate was charged on a shipment of 640 drums of a dry

chemical used as a pesticide from the port of New York to Guayaquil

Ecuador The bill of lading was dated June 27 1975 The shortened

procedure was followed

Freight charges of 6 34139 were paid based on the rate of 148 25

per 40 cubic feet W M for Chemicals N O S non hazardous actual

value over 700 per freight ton Atlantic GulfWest Coast of So

Amer Freight Tariff F MC No I page 47 8th rev effec Dec 1

1975 The complainant asserts that the 640 drums of Cyanogas A Dust

Calcium Cyanide 42 ICC Class B Poison as described in the bill of

lading should have been charged 4 320 28 based on the rate of 101 per

40 cubic feet W M for Insecticides N O S dry liquid or paste actual

value over 600 per freight ton Atlantic GulfWest Coast of So

Amer Freight Tariff F M C No 1 page 179 5th rev effec June 2

I

This decision became the decision of the Commission September 23 1976
J

J

j

1

I

j

1

I

1

j

l

414 FEDERAL MARITIME COMMISSION

1975 page 168 10th rev effec April 7 1975 and page 137 9th 

effec September 16 1974 The parties do not dispute the propr

the additional charges for port congestion and bunker surcharge

DISCUSSION AND CONCLUSIONS

The shipper has established by documentary evidence2 attached 

pleadings that the subject commodity shipped was in fact a pes

which by commodity index listing under the appropriate and 

effective tariff should properly have been rated under the comm

description for Insecticides N O S class 10

It is undisputed that neither term pesticide nor insect

appeared on the bill of lading 3

The complainant points out 

Memorandum that the bill of lading is their document the car

not the shipper s citing the Harter Act thus placing the respon

for the incorrectness of the bill of lading description on the carrie

argument ignores the fact that it is the shipper who provide

description on the bill of lading and not the carrier in the section 

form specifically designated as follows PARTlCULARS FURNI

BY SHIPPER Shipper s Description Of Packages And Goods 

fact of life is not changed by the legal event that transforms the com

document into adocument issued by the carrier

Where the shipment has left the custody ofthe carrier and the ca

thus prevented from personally verifying the complainant s new d

tion the Commission has held that the complainant has a heavy 

ofproof and must establish with reasonable certainty and definit

the validity ofthe claim We Ytern Publishing Co v Hapag Lloyd 

13 SRR 16 17 1973 Johnson Johnson Inti v Venezuelan Lin

F MC 87 94 1973 Colgate Palmolive Peet Co v United Fru

II SRR 979 981 1970 It is usually the case as it is here th

carrier in classifying and raqashipment must look to the infor

suppliec him by the shipper or freight forwarder Elementary fa

would seem to dictate that the carrier should be entitled to rely o

information and to charge and collect freightin accordance w

description supplied by the shipper To require the respondent 

other carrier to inquire ofa

shipper as to whether the supplied desc

of cargo is correct would place an undue burden on the carrie

cannot expect the carrier to be a mind reader n b sealed drum

chemical analyst Thus we cannot qUlU RI with the appropriateness 

carrier s initial reliance on Item r on paaeIO of the tiled tariff 4

The importance of declaring in bills of lading the correct descrip

I Extracts from Condensed Chomical DtcUonary cJllanufacturers brochures mIbill oftacUna

a

The record a1lo dllcloSlI that noneofthe documentation wbichthe 8hipper now producel to ihow tha

A Dust ii in fact a peltiOtdO andorinlecticide waa everpresented to tho carrior at orboloro the lu oo

r Bills of Jadina descrl ina articles by trade name are notacceptable forcommodity ratina S

required to describe their merchandise by its common name to conform to morchal ldile delcriptions 

herein Bill ofladinl reflectlnll only trade names wiU be automatically 8u ect to application of the rat

herein forCaraOt N O S as minimum

It

19 
PAN AMERICAN HEALTH ORGANIZATION v PRUDENTIAL 415

the cargo shipped cannot be overemphasized The carrier has the right to

expect that a shipper will properly identify his shipment just as the

shipper has the right to expect the carrier to charge the proper rate for

the type of goods actually carried Cj recent Initial Decision in

Commercial Solvents Corp v Moore McCormack Lines Docket No

7550 served September 16 1976 The now prevalent practice of some

shippers to provide trade name descriptions for their cargoes or vague

descriptions that do not comport with anything listed on filed tariff

commodity index lists and then a year or more later to play the rating

game by newly arguing with documentation never before presented to

the carrier that some other tariff rate lower of course should have been

used should be discouraged The fact that there are firms that offer to

audit shippers records in the hopes of finding just such potential

conflicts with regard to long cmpleted shipments does not make the

practice any more palatable 5

A more equitable rule would seem to limit

reparations to those cases where the actuailanguage used on the face of

the bill of lading indicates an improper misclassification or obvious

disregard by the carrier ofthe descriptive language used by the shipper

Furthermore a shipper who insists upon using a trade name rather than

an appropriate and readily available commodity index description in the

tiled tariff should be held to do so at his peril especially in view of the

duly tiled trade name caveat expressed in Item r page 10 ofthe

instant tariff Supra fn 4

Having said this however we must return to what the law is under

present Commission policy and case interpretation and this requires a

finding for the complainant See Ludwig Mueller Co v Peralta Shipping

Corp 8 F M C 361 1965 Ocean Freight Consultants Inc v Bank

Line Ltd 9 F M C 211 1966 Corn Products Co v Hamburg Amerika

Lines 10 F MC 388 1 7 On the unavailability ofItem rpage 10 of

the tariff as a defense to claims such as these see Abbott Laboratories v

Prudential Grace Lines 17 F M C 186 1973

Past Commission policy and precedent have unquestionably declared

shipper s misdescriptions of cargo to be legitimate bases to award relief

even without fault on the part of the carrier In cases involving alleged

overcharges under section 18 b 3 of the Act the Commission has

determined that the controlling test is what the complainant shipper can

prove was actually shipped Union Carbide Inter America v Venezuelan

Line 17 F M C 181 182 1973 Abbot Laboratories v Moore Mc

Cormack Lines Inc 17 F M C 191 192 1973 Western Publishing Co

v Hapag Lloyd A G 13 SRR 16 17 1973

Accordingly Imust conclude and so find that the complainant is

entitled to the reparation requested albeit in the slightly smaller amount

Ct dissenting remarks of Commissioner Hearn in Ocean Freight Consultants Inc v Bank Line Ltd 9 F M C

211 216218 1966

19 F M C
416 FEDERAL MARITIME COMMISSION

of 2 021 11 the port congestion charge was mis stated by 3 ce

page 2 of the complaint

IT IS SO ORDERED

8 THOMAS W REILLY

Administrative Law Ju

WASHINGTON D C

September 23 1976

1

i

e1

1

1

j

j

I

19 
19 F M C

417

FEDERAL MARITIME COMMISSION

INFORMAL DoCKET No 355 1

SCM CORPORATION

v

SEATRAIN INTERNATIONAL S A

SEATRAIN U K LTD

NOTICE OF AOOPfION

December 3 1976

The Commission by notice served August 12 1976 determined to

review the decision of the Settlement Officer in this proceeding served

July 30 1976 Upon completion ofreview it has been determined that the

decision of the Settlement Officer shOllld be adopted as the decision of

the Commission

By the Commission

SEAL S FRANCIS C HURNEY

Secretary
FEDERAL MARITIME COMMISSION

IFORMAL DoCKET No 355 1

SCM CORPORATION

v

SEATRAIN INTERNATIONAL S A

SEATRAIN U K LTD

Adopted December 3 1976

j

Reparation Awarded

1

DECISION OF WALDO R PUTNAM SETTLEMENT OFFIC

By complaint tiled with the Commission under date ofMay 28 

SCM Corporation complainant alleges that Seatrain Internationa

and Seatrain U K Ltd carrier assessed incorrect emergency 

surcharges resulting in a collective overcharge of 328 84 on 

shipments transported during June and July 1974 The claims or

were denied solely on the basis of the carriers socalled six mont

which limits the filing of overcharge claims to a period of wit

months from the date of shipment

The carrier s

response to the served complaint merely consiste

copy ofa notice to the complainant advising that the claim ha

reviewed and payment would be forthcoming 3The notice also co

arequest to the Settlement Officer to discontinue this docket base

payment of the claim 4

Unfortunately discontinuance ofthis proceeding without first de

ing the merits of the claims is not possible without also finding the 

in violation of its governing tariff and as a

consequence the Co

sion s statutes Accordingly in order to prevent the carrier from 

1

1

4

i

I

J

I

Both partios havina CORsonted to the informal procedure of Rule 19 of the Commiuloo s Rules ofP

Procedure 46 CPR 02 301 304 this decision will be final un1ethe Commission elects to review it wit

from thedate of service thereof

I North AtlanticWestbound Fre1aht Associations Tar1ft No 33 Rule 12

a Soe Footnote I General Order 16 Amendment 12 section 02 304 0

provides in pertinent part tha

the carrier to indicate refusal orconsent in its response will be conclusively deemed to in

consent

By letter dated July 20 1976 claimant edvlsed that theclaim has been paid In full

j

418 19 
SCM CORP v SEATRAIN INTL 419

charged with a violation of section 18b 3 of the Shipping Act 1916 as

amended 3I find that the complainant has made a case for the recovery

of the excess bunker surcharge and I hereby authorize and order

reparation in the amount of 328 84

However the carrier in this instance was perfectly within its rights to

deny the subject claim and in fact it was required to do so under the

terms ofits tariff The unauthorized payment of an otherwise legitimate

claim in response to the application of stimuli while denying all other

similar claims absent such stimuli represents precisely the type of

discriminatory practices proscribed by section 16 First of the Shipping

Act 1916 I am not here attempting to determine the justness of

reasonableness ofthe carrier s past claims handling practices nor am I

at this time alleging any impropriety on the part of the carrier in its

handling of such claims Ido however feel duty bound to remind the

carrier that future tariff violations could carry with them the attendant

penalties imposed as a result of concurrent violations of the shipping

statutes administered by this Commission

S WALDO R PuTNAM

Settlement Officer

II Section 18 b3 oftheShipping Act 1916 as amended forbids acarrier toretain freight charges in excess ofthose

authorized under its effective tariff That section also makes it unlawful for acarrier to extend ordeny toany person

any privilege or facilityexcept in accordance with its tariffs

19 F M C
FEDERAL MARITIME COMMISSION

DocKET No 7 37

AMERICAN CRUISE LINES INC PETITION FOR DECLARATORY O

I

DENIAL OF PETITION

December 14 1976

This proceeding was initiated as a result of a Petition for Decl

Order filed by American Cruise Lines Inc ACL or Petit

Specifically ACL requests that the Commission declare that the r

ments of section 3 Public Law 89777 46 U S C A 817e do no

to its operations 1

Notice of ACLs Petition was published in the Federal Regis

Commission Hearing Counsel submitted a response opposing th

petition The American Society ofTravel Agents indicated their 

tion to the ACL Petition and requested additional time to submit 

but they failed to do so

ACL aDelaware Corporation is engaged in the transporta

passengers for hire between various points on the Atlantic Coas

United States under operating authority granted by the Int

Commerce Commission ICC to wit Certificate of Public Conve

and Necessity No W 1283 ACL presently provides service utilizi

vessels the MIV American Eagle and the M V Independence 

which have berth or stateroom accommodations for SO or more p

gers Although ACL has complied with the provisions ofsections 

of P L89777 and the Commission s Regulations 46 C F R 540 

it has done so under protest with respect to section 3

S

ACL takes the position that its status as an ICC certificated 

J

1 Section 3 ofP L 89777 provides in pertinent part that

No person in the United States shall arranae ofrer advertll orprovide palla eon avellel hav

stateroom accommodation for so or more p8lsenpl t and which i to embark p Slenpr at United 

without there B t hav heen Bled withthe Federal Maritime Commluion uch Inlormatlon as theComm

deem necetlary to establish the financial fClptslbUlty of the penon manila offerlna adverti ina o

such transportation or in lieu thereof a

copy ofabond orother security In such form u the Commission 

reauIation may require and accept for indemniftcatlon of pllsenaen for nonperformance ofthe transport

a

ACLdoes not protest the applicability of section z ofP L 89m to It operation Section 2provid

Bach owner orcharterer of an Americanorforeian vellel havin berth orstateroom accommodation

more pallenaera and embarkina plUJsenaen at United State portl Ihall establllh under reauJationl pr

theFederal Maritime Commillion hil ftnancial relponlibUfty to meet any liabWty he may inour for d ath 

pallenaen orother penonl on vayaael to or tram United Statel porta In an amount bued upon the 

passenger accommodations aboard theveal 1

420 19 
AMERICANCRUISE LINES INC 421

precludes the application of section 3 ofP LffJ777 to its operations It

is Petitioner s opinion that its status as an ICe certificated carrier suQiects

it only to ICC jurisdiction which Commission has not seen fit to

promulgate insurance requirements for water carriers although it has

imposed such requirements for carriers by other modes oftransportation

Furthermore ACL argues that as an ICC carrier section 33 of the

Shipping Act 1916 46 U S C A 832 precludes the applicability of section

3 ofP L89777 to its operations That section provides that the Shipping

Act

shall not be construed to affect the power orjurisdiction of the Interstate Commerce

Commission nor to confirm upon the Federal Maritime board concurrent power or

jurisdiction over any matter within the power or jurisdiction of such commission nor

shall this Act be construed to apply to intrastate commerce Emphasis addefi

While ACL acknowledges that P L 89777 was not enacted as part of

the Shipping Act 1916 it nevertheless argues that section 33 of the 1916

Act precludes the application of section 3 ofP L 89777 to its operations

ACL takes the position that this Commission s

jurisdiction with respect to

section 3 is limited by the spirit if not the strict provisions of section 33 of

the Shipping Act 1916

ACL also argues that because section 3 prohibits a carrier from

providing transportation without the required showing offinancial respon

sibility it is inconsistent with the provisions of49 U S C A 905 a which

imposes a duty upon an ICC water carrier to provide transportation

Additionally ACL argues that passengers who suffer damages for non

performance are adequately protected by the provisions of 49 U S C A

908 That section provides for reparation in the event of any illegal act

including the failure to do anything required by the Interstate Commerce

Act but it does not require insurance or bond in the event ofinsolvency

Hearing Counsel s opinion is that the plain meaning of the language

contained in P L 89777 and its legislative history make it evident that

Congress intended to include ICC certificated carriers within the provi

sions ofthat law and this Commission s jurisdiction

Hearing Counsel further argue that the provisions of section 33 of the

Shipping Act 1916 do not preclude the application of P L 89 777

requirements to ACL They reason that since P L 89777 was not

enacted as part ofthe Shipping Act 1916 section 33 ofthat Act does not

apply Furthermore it is pointed out that even ifP LffJ777 were part of

the Shipping Act it would not bar this Commission from regulating ACL

since section 33 precludes the exercise of concurrent jurisdiction only as

to matter and not as to persons Hearing Counsel argue that inasmuch as

Part III of the Interstate Commerce Act 49 U S C A 901 et seq which

applies solely to water carriers contains no provision similar to those of

section 3 of P L 89777 or for that matter section 2 there is no

conflicting suQject matter jurisdiction between the two sister agencies In

this regard we are reminded that businesses are frequently subject to

19 F MC
422 FEDERAL MARITIME COMMISSION

j

regulation by several agencies We agree with the position advoca

Hearing Counsel and are accordingly denying ACL s petition

The language of P L89777 is clear and unambiguous and lea

doubt that its provisions apply to all vessels which embark passen

U S ports and which have stateroom accommodations for 50 o

persons even if the operations of that vessel otherwise fall with

jurisdiction ofthe Interstate Commerce Commission While the leg

history of P L 89777 does not reveal any congressional concer

jurisdictional overlapping it does reveal Congress intent to p

passengers from default by any passenger vessel and to avoid evas

law U S Congo and Admin News 4182 1966 As originally intro

H R 10327 which became P L89777 applied to operators of 

cruises The House bill defined ocean cruises as an ocean voya

hire ofpassengers other than common carrier service The 

rejected the House provision and substituted the present language o

89777 In conference the managers of the House bill in accept

Senate amendment noted that the House version excluded co

carrier service from the provisions ofthe bill Therefore while Co

did not specifically address the matter of jurisdictional overlappin

legislative history of P L 89777 evidences a congressional in

include all earners within its scope without regard to whether the

be otherwise regulated

Nor does section 33 of the Shipping Act 1916 preclude this Co

sion s exercise ofjurisdiction overACL pursuant to P L 8977

only was P L 89777 not enacted as part of the Shipping Act 19

as Hearing Counsel have correctly stated section 33 only pre

concurrent subject matter jurisdiction While ACL as an int

common carrier by water is suQiect to Part IIIofthe Interstate Com

Act 49 U S C A 901 et seq none of its provisions are even sim

the provisions of section 3 of P L 89777 46 U S C A 817e

InAlabama Great Southern Railroad Company V Federal M

Commission 379 F 2d 100 19673

the United States Court of Appe

the District of Columbia in resolving a similar issue held

Where a person performs functions some of which are subject to regulation u

Shipping Act and others under the Interstate Commerce Act the same person 

subject to the jurisdiction of one or the other Commissions depending on the 

matter to be regulated

As noted earlier Part III ofthe Interstate Commerce Act to whic

is subject does not contain a provision requiring parties subject 

Part to establish financial responsibility for passenger indemnifica

required by P L 89777 Accordingly this Commission in exe

jurisdiction over ACL under that Public Law is in no way exe

concurrent jurisdiction with the ICC Not only does the Inte

3 That businesses are often rcau1ated by several aovemment aaencies is further supported by Greater B

Port Comm sion v

The United States 287 F 2d 86 5thelr 1961

19 
AMERICAN CRUISE LINES INC 423

Commerce Act not prohibit carriers subject to it from complying with the

rules and regulations of other agencies but it specifically provides in Part

IIIthereof that

Nothing in this chapter shall be construed to affect any law of navigation the

admiralty jurisdiction of the courts of the United States liabilities of vessels and their

owners for loss or damage or for laws respecting seamen or any other law regulation

or custom not in conflict with the provisions of this chapter 49 U S C A 92Od

THEREFORE IT IS ORDERED That the Petition for Declaratory

Order made subject ofthis proceeding is denied

By the Commission

SEAL S FRANCIS C HURNEY

Secretary

19 F MC
FEDERAL MARITIME COMMISSION

DoCKET No 7550

COMMERCIAL SoLVENTS CORPORATION INTERNATIONAL IN

v

MOORE MCCORMACK LINES INC

Complaint dismissed as untimely filed

William Levenstein for Commercial Solvents Corporation Inter

Inc Complainant

J D Straton Jr for Moore McCormack Lines Inc Responde

REPORT

January 4 977

J

Karl E Bakke Chairman Ashton C Barrett Bob Casey andJa

Day Commissioners

By THE COMMISSION This proceeding is before the Commis

exceptions from Complainant Commercial Solvents Corp

International Inc CSC to the Initial Decision of Admini

Law Judge Thomas W Reilly in which he found that Resp

Moore McCormack lines Inc collected freight charges in ex

those provided in its tariff on five shipments described in the 

lading as Chemicals NOP 2 Amin o2 Methyl l Prop

carried by Respondent from New York to Buenos Aires Arg

The Presiding Officer issued an Initial Decision awarding re

in the amount of 165 00 to which CSC excepts No reply to 

exceptions was received

Before considering the merits ofthe case the Commissio

ascertain that it has the authority to grant the relief requested

Section 22 ofthe Act reads in part

j

i

j

i

The board if the complaint is filed within two years after the cause 

accrued may direct the payment of full reparation to the complainant

NotOtherwiseldentlfted

Federal Maritime Board predeccllor to thePederal Maritime Commillion

3

A cause of action arises under seUon l8 b3 of the Act either upon delivery of the CrJO to the ca

payment of the freiaht eharaes whichever I later United States of America v Hellenic Lines Limited 

2 26O197I

424 19 
SEAL S FRANCIS C HURNEY

Secretary

COMMERCIAL SOLVENTS v MOORE McCORMACK LINES 425

The complaint was filed on November 12 1975 Freight on the five

shipments was prepaid The date the cargo was delivered to the carrier

as per each bill oflading is as follows bill oflading No l00November

9 1973 bills of lading nos 123 125 126 and 128November 12 1973

Starting the count with November 9 and 12 1973 the last days for

filing the complaint were November 8 1975 with respect to the claim

arising under bill oflading no 100 and November 11 1975 for the claims

arising under bills oflading nos 123 125 126 and 128

In CSC International Inc v Waterman Steamship Corp Docket No

7531 Order on Remand served October 8 1976 the Commission waived

pursuant to Rule 10 4

the exception in Rule 7 a so as to make the

method of computing time provided therein applicable to the two year

period of section 22 There the last two days ofthe period oflimitation

fell on Saturday and Sunday when the Commission s offices were closed

The Commission determined that under those circumstances rejecting the

filing ofthe complaint on the following Monday as untimely would cause

undue hardship which warranted the issuance ofawaiver

However the undue hardship which must be shown to support a

waiver under Rule 10 and which was found to exist in CSC Interna

tional has not been established here November 11 1975 fell on a

Tuesday that is on a day when the Commission s offices were open for

business and while November 8 1975 fell on aSaturday applying the

rationale ofCSC International to the claim arising under bill oflading no

100 the last day for flling would have been Monday November 10 1975

and not November 12 Accordingly we find that the complaint was flled

after the expiration of the two year statutory period provided in section

22 ofthe Act and must therefore be dismissed

The disposition of this case renders unnecessary a discussion of the

exceptions raised by CSC

The complaint is dismissed

Vice Chairman Clarence Morse concurring and dissenting

Iconcur in the result but not for the reasons stated in the majority s

report See my dissent in CSC International v Waterman Steamship

Corp supra

4 Rule Ifj reads in part

Except tothe extent that such waiver would be inconsistent with any statute any of the rules in this part may

be waived by the Commission orthe presiding officer to prevent undue hardship manifest injustice or if the

expeditious conduct of business so requires 46 C F R 502 10

5 Rule 7 a of the Commission sRules ofPractice and Procedure 46 C F R 502 101 provides in part

In computing any period of time under the rules in this part except 502 63 Rule 5 c the time begins with the

day following the act event ordefault and includes the last day of the period Emphasis added

Section 502 63 Rule 5crefers tothe filing of complaints seeking reparation moo under section 22 ofthe Act

19 F M C
FEDERAL MARITIME COMMISSION

Docxer No 7527

ABBOTI LABORATORIES

v

VENEZUELAN LINE

Cartier tardi mle requiring rating asNOS when bill of lading description is by trade

name is not applicable where irade name did not appear on bill of ading Same

tariffrule cannot in any event be sed to preclude consideration by the Commission

of nature of cagowhen timely complaint is filed

Section IBb3of the Shipping Act 19J6 states it is wlawful for a came to assess

charges greater less or different from those spec edin its tariff Unlawfulness

dces ro depend on whether improper assessment was knowing orinadveRent

Reparation awacded

William Levensteinfor complarnant

G E McNamara for respondenr

REPORT

January 5 l9T7

BY THE COMMISSION K3lI E BBICICB Chairman Ashton C Barrett

James V Day and Bob Casey Commissioners

PROCEEDINGS

This proceeding was instituted by acomplairtt filed by Abbott Iabota

tories against Venezuelan Line Complainant alleges that respondent has

sutrjected it to an ocean freight rate which is unjust unreasonable and in

violation ofsection 18b3of the Shipping Act 1916 Administrative

Law Judge William Beasley Harris called for a hearing in the matter

which

onty appearance

was attended

in the

only

proceeding

by counsel

was

for

in

the

the

complainant

form oftwo

Respondent s

letters to the

Administcalive Law Iudge

Initial decision was served November 11 1975 wherein the Administra

tive Law Judge determined that the claim for repazations should be

denied The matter is before us on excep6ons to the initial decision

426 19FMC
ABBOTT LABORATORIES v VENEZUELAN LINE 427

FACTS

Complainant is a corporation incorporated in the State ofIllinois and its

principal business is marketing ofchemicals drugs medicines pharrna

ceuticals and products similar and related thereto Respondent is a

common carrier by water engaged in transportadon of cargo between U

S Aflantic and GulfPorts and Ports in Venezuela and Netherland Antilles

and as such is subject to the provisions of the Shipping Act

The complaint seeks recovery of overcharges on six shipments from

Baltimore to La Guaira which were transported during the period of

August through December 1973 The cargo in question was described on

the bill oflading as Raw Drugs Respondent applied the rate applicable

to Drugs Harniless Complainant seeks to have the rate for Dex

trose applied to these shipments

In support of its claim complainant has submitted for each shipment

copies of the bill oflading export declaration and Abbott Laboratories

invoices and packing lists For each shipment the export declazation

describes the commodities in question either as Cerelose Powder or

Cerelose Powder Anhydrous Dextrose with a Schedule B Commodity

No of 061 9010 The Commerce Department Schedule B listing for No

061 9010 is Dextrose Complainant has also provided a chemical

dictionary extract which defines Cerelose as a trademark for a white

crystallized refined dextrose

Complainant originally submitted the claim to respondent through a

freight auditing company The freight auditing company sought to have

the Raw Drugs description changed to Cerelose Powder Dextrose

and also sought to have the billing for the shipment changed so that the

rate on dextrose would be applied

Respondent denied these claims for overcharge on the basis of Item

2nofits tariff which reads as follows

nBills of lading describing aRicles by trade name are notacceptable for commodity

rating Shippers are required to describe their merchandise by its common name to

confoan to merchandise descriptions herein Bills of lading reflecting only trade names

will be automa icallysubject W appGcation of the rate specified herein for CargoNOS

as minimum

In reply to the complaint before the Commission respondent acknowl

edged that the product shipped Cerelose is indeed dextrose and had

the bill of lading described the true nature ofthe commodity being

shipped it would have been rated in accordance with the tariff

Respondent then states that allegations of complainant that an unlawful

rate was assessed are refuted by the fact that the charges werebased on

bills of lading prepared by and submitted by complainant awell known

fum which reasonably may be judged qualified to determine the correct

nature ofthe items proffered for shipment

US Atla rticand GWf Venezuela arMNetherlanda Mtilles Conference Tariff No VEN 11FMC 2

FMC
42H FEDERAL MARITIME COMMISSION

DISCU3SION

The presiding Administrative Law Judge denied the claim in q

based on the proposition that the carrier has the right to exp

shipper will propedy idendfy the slripment He concluded that a

an error as to Raw Divgs on the bills Qf ladin the use of the trad

Cerelose on the requeats for correetion entitled recognidon of th

name and the application of the tariffrate

Complainant has excepted to the conclusions of the Admini

Law Judge Complainant suggeats that the Administrative Law 

reliance on Item 2nas a basis for denial of the claim is wro

agree Item 2nprovides how bills of lading will be rated by the c

the bill of lading describes articlas bytrade name The bill ofladin

case did not deacribe the arrticle by trade name but described it a

Drugs Complainant did however refer to the trade name 

commodity in later seeking to grove its exact composition ie

the carrier that Cerelose Powder ia a trade name for dextros

however dces not bring the trade name rule into play Inasmuch 

trade name rule only governs rating of cargo based on dascription 

oflading it could have no application to t6ia proceeding Addition

have recently reaffirmed the pmposition that trade name rules 

only the rating ofcargo by the carrier at the time of stripment and 

be invoked as a bar to a later showing in a proper proceeding be

Commission as to the exact nature of the commodity shipp

Carborundum Company v Royal Netherlands Steamship Co 

751Report served Janudry 5 1977

As indicated above the Adminiatrat veLaw udge also supp

denial of the claim on the proposidon tlrtthe carriar has s

right to 

the shigper will properly id@ntify the ahipment The Administrati

Judge cites Ocean Freight Consultants Inc v Italpac icLine 

314 319 1972 to support this conclusion Wtdle we cannot qua

this general proposition it ahould be noted that the Ocean 

Consultant scase itself qualifies this proposition by atating 

shipper similarly has the right to expact the carrier to charge the 

rate for the actual goods carried and that where a mistake occ

party who commits it has the heavy burden of proof to support 

for rectification

Inasmuch as there is no technical bar to consideration of the c

its merits we turnthen to the queation of whether complainant w

in describing the shipment has proven that the commodity in q

qualiftes for the tariff rate applicabla to dextrose It is clsar o

documentation submitted that the shipments in question were ofC

powder It has also been amply demonstrated that Cerelose Powd

fact a form of dextrose Respondent has in fact admitted in alette

Administradve Law Judge that technical data received from t

pany reveala beyond doubt that Cerelose is indeed dextroae

1
ABBOTT LABORATORIES v VENEZUELAN LINES 429

It is concluded from the evidence of record that complainant has

sufSciendy demonstrated that an overcharge occurred on these shipments

Respondent suggests however that it should not be found to have

collected unlawful charges when the rate it assessed was based on

information supplied by the party most informed about the nature ofthe

commodity The fact that respondent

a

relied on information submitted by

knowledgeable shipper dces not detract from the conclusion that a

misradng occurred Section 18bx3 ofthe Shipping Act 1916 prohibits a

carrier from assessing a charge greater less or different than the rates

specified in its tariff for a particular commodity or service This section

dces not disdnguish between knowing and inadvertent misratings Either

type is unlawful Whether or not an unlawful charge is assessed knowingly

may be a matter for consideration in determining whether to seek

penalties for a violation but not in determining whether a violation

occurred

Itis ordered that reparation in the amount of1396 56be awarded

complainant as a result of the overcharges found in this proceeding to

have been assessed

Vice Chairman Morse concurring and dissenting

Iconcur in the report in respect to the finding and conclusion that the

tariff trade nam rule was inapplicable because the shipment was not

described by trade name in the bill oflading Hence this case is one only

ofdetermining under which taziff commodity description the shipment

propedy falls

Idissent as to the balance ofthe report on the basis ofmy dissenting

opinion in Docket No 751 The Carborundum Company v Royal

Netherlands Stearreship Company Antilles N V

SEAL S FRANCIS C HURNEY

Secretary

FMC
I FEDERAL MARITIME COMMISSION

DOCKET NO Z

Aaaorr LnsoxnTO ues

v

VENEZUELAN LINE

I

ORDER

The Federal Maritime Commission has this day served its R

subject proceeding which we hereby incorporate herein in w

found that an inapplicable rate had been assessed for compla

shipment

Therefore for the reasons enunciated in the Report it is orde

respondent Venezuelan Line be required to refund to complainant 

Laboratories the amount of overcharges in the sum of1396 56 

interest at six percent per annurrt ifnot paid within thirty days f

j date ofthis Order

By the Commission

SEAL S FRANCIS C HURNEY

Secre

430 19 
FEDERAL MARITIME COMMISSION

DOCKET NO SIS

THE CARBORUNDUM COMPANY

V

ROYAL NETHERLANDS STEAMSHIP COMPANY ANTILLES NV

Ques ionof applicabili y

of Commissiods Kraft deGision to case seeking chan

description of commodity declared on bill of lading need not be determined in 

of Court of Appeals vacation of Commission decision in Kraft

Caaier tarill cule requiring rating asNOSwhen bili of lading description is by 

name is not applicabie whero trade name did not appear in bill of lading Same 

ruecannot in any event be uxd to preclude consideration by the Commissio

tumof cargo wh enclaim is filed

Burden of proof is met where rmative evidence is not refuted due to respond

failule to answer orothecwise appear

Reparation awarded

Harrison A Harrington Manager Traffic The Carborundum C

pany attomey William Levenstein for complainant

No response by or appearance for respondent

REPORT

January S 1977

BY THE COMMISSION K2rI E B3IfIC0 Chairman Ashton C Barrett 

James V Day Commissioners

PROCEEDINGS

This proceeding was instituted by a complaint filed by The Carbo

dum Company against Royal Netherlands Steamship Company AnU

N V Complainant alleges that respondent has subjected it to an oc

freight rate which is unjust and unreasonable and in violation of sec

18b3of the Shipping Act 1916 Respondent neither answered 

complaint nor othenvise pleaded or appeared Administrafive Iaw 7

Wdliam Beasley Hazris called for a heazing in the matter which 

attended only by counsel for complainant Complainant moved 

judgment on the pleadings Motion was denied Complainant electe

Commnsboer Bob Cascy mt pettkipazing

l9FMC

431
432 FEDERAL MARITIME COMMISSION

stand on the matters already submitted presented no witness

opted for no brief

Initial decision was served by the Administrative Law Judge on 

19 1975 wherein he determined that the claim for reparation sh

denied The matter is before us on exceptions to the initial decisio

FACTS

Complainant is incorporated in Delaware with its place ofbus

Niagara Falls New York Its principal business is marketing ab

refractories electronics and related products

j Respondent is a common carrier by water engaged in transp

between New York New York and Kingston Jamaica and as 

subject to the provisions of the Shipping Act 1916

Complainant shipped the cargo in question on October 14 1974 

Respondent sbilt of lading no 147 for shipment from New Yor

York to Kingston Jamaica The shipment is described in this bill o

as Drums Silicon Carbide Crude Fused The Respondent cl

the shipment as Chemicals NOS Class 2 and assessed arate o

per2000 Ibs

i

Ocean Freight Consultants InaOFCJon behalf of Comp

filed

O

a claim with Respondent dated December 24 1974 In this 

FCrequested that the Respondent correct the freight classifica

amending the bill of lading description to read Abrasive Gra

refund the difference between the Chemicals NOSrate of9

0

2000 lbs and the abrasive grain rate of700per2000 lbs2Res

denied the claim stating that the bill of lading description contr

applicable rate OFCreplied to the denial by letter asserting 

claim on the ComplainanYs behalf was impmperly denied and off

submit Foim 7403 a U S Department of Commerce and U S C

i form used for correcting descriptions on the Export Declaration 

letter OFCreferred to the Chemic lDictionary definition of S

Carbide whieh lists as its uses Abrasive for cutting and g

meials grinding wheels refractory in nonferrous metallurgy c

industry and boiler furnaces and cross referenced Carboru

which is defined asaTrademark for abrasives and refractories o

carbide fused alumina and other materials

Respondent again denied the claim and in so doing relied on I

m

116 page 133of the U S Atlantic Gulf 7amaica Conference 

which reads

U3 AUantic and 6Wf 7amaicaCdnfaronce Tariff oJAM 8Ihhroviaed paye 46FMCNo 1

i Conftrence Teriff No JAM 89th revieed pepe53

19 
CARBORUNDUM COvROYALNETHERLANDS 43

aClaims by shippers for adjustment of freight charges will be considered only when

submitted in writing to the carrier within six months of date of shipment Adjustment of

freight based on alleged error inweight measurement ordescription will be declined

unless application is submitted in writing sufficiently in advance to pennit reweighing

remeasuring or verification of description before the cargo leaves the carrier s

possession any expense incurred to be bome by the party responsible for the error or

by the applicant if no error is found

On May 6 1975 Carborundum filed this complaint with the Commis

sion

The complaint includes the above mentioned information regarding the

nature of the cargo Additionally the complaint includes a copy of a

January 21 1975 letter from complainant toOFCtransmitting respond

ent sinvoice for the shipment in question In this letter complainant

states

The commodity covered by this bill of lading is SiGcon Carbide Abrasive Grains This

material is not to be confused with SiGcon Carbide Fused Crude as the crude material

in itself is not synonymous with Silicon Carbide except that Aluminum Oxide like

Silicon Carbide may be either crude or ingrains Again the material in this

shipment was Silicon Carbide Abrasive Gcains and we must concur with your claim for

reclassification as Abrasive Grain

The attached invoice is dated September 27 1973 lists as consignee

Gore Bros Ltd ofHalf WayTreeJamaica and describes the shipment

as 77 drums of Sic Grain to be shipped per stupment 09443 Bill of

Lading No 147 covering the shipment also refers to shipment 09443

and lists Gore Bros Ltd under the heading Address arrival notice to

DISCUSSION

The presiding Administrative Law Judge denied the claim in question

both on the basis of respondent stariff rules and on the basis offailure to

meet the burden ofproof

The Administrative Law Judge found the ciaim should be denied

because the claim is based on a change in description of commodity

shipped and respondent stariff Rule 116 quoted above prohibits adjust

ment in rates based on error in description unless the request for

adjustment is brought prior to the cargo leaving the carrier spossession

The Administrative Law Judge discusses at some

contention that this claim does not involve a change

length

in description

complainant s

but

merely involves a question ofwhich tariff item more properly applies to

the given description The Administrative Law Judge aiso discusses

whether the Commission sdecision in Kraft Foods vMoore McCormack

Lines lnc U FMC 320 I974 is applicable and whether it would

preclude recovery here In Kraft the Commission had found that a tariff

rule similar to Rule 116 would preclude recovery of a claim which was

based on alleged error in weight or measurement The Administrative

Law Judge found that the import ofKraft was such that it should logically

be extended to also prohibit adjustments based on error in description

where the tariff rule speciSes that weight measurement and description

FMC
434 FEDERAL MARITIME COMMISSION

claims must be brought prior to shipment leaving the custody 

i carrier

The U S Court of Appeals for the District of Columbia Circ

recently rendered an opinion vacating our order in Krc t

see Kraft 

v FMC decided July 13 1976 The Court has stated that a pro

virtually identical to Rule 116 is not a valid tariff provision inasmu

sets up a period of limitation for consideration of a claim befo

Commission which infringes on the rights granted by section 22 

Shipping Act In view of the Court sopinion inKrc ftit is not ne

for us to consider whether our earlier decision in Kraft sho

interpreted to cover changes in description It is clear from the 

opinion that such a rule cannot act as a bar to our consideration 

claim on its merits

The Administrative Law Judge also found that the claim sho

denied because ofthe existence in respondenYs tariff ofItem 10h

provides

Bills of lading describing articles by trade names are not acceptable for co

ratings Shippers are required to describe their merchandise by its common 

conform to me chandise description appesring herein Bills of lading reflect

trade names will be automatically subject to application of the rate specified h

Cargo NOSas minimum

The Administrative Law Judge found that Item 10his a lawf

rule applicable to ra6ng bills oflading which reflect only trade nam

i

further found that since it is now contended by complainant that 

Carbide isaCarborundum a trademark ofcomplainant then 

more the shipment is found to come under Item 10hofthe tarif

have warrantedNOSrating

Complainant on exception correctly points out that Item 1

h

absolutely nothing to do with this case The shipment was descr

the bill of lading as Silicon Carbide not as a CarborunSllico

Carbide is not a trade name but is the common name for the 

j shipped Item 10hby its own wording can only be invoked w

article was described on the bill oflading by trade name Emphasis 

According ythe Administrative Law Judge was in error in b

denial ofthe claim on Item 10h

Further comment on Item 10h

is appropriate in view of the 

opinion in Krr ft As indicated above the Court in Krqft determin

a tariffrule which in effect infringes on the rights granted by sectio

the Act is invalid insofar as it governs ling of claims befo

Commission The rule in Krqft did not by its language prevent th

of aclaim for reparation but did require claims to be rejected unle

before the shipment left the custody of the carrier The Court fou

under such circumstances the right to file a claim becomes illuso

j

the carrier has delivered the shipment Similarly Item 19hif 

enforced would make the right to file a claim illusory Item 10hr

cargo described by trade name to be rated as CargoNOSL

19 
CARBORUNDUM COvROYALNETHERLANDS 43S

enfodno further examination into the nature of the cargo would be

pemtitted once the slupment is delivered and no claim for adjustment of

the rate to a more applicable specific commodity tariff item could be

considered Such a rule if used before the Commission to automatically

defeat a claim like the rule in Kraft infringes on the rights granted by

section 22 of the Shipping Act to have claims considered which are

brought within two years Accordingly we think an Item 10htype

provision should be treated just as the Kraft rule provisions ieclaims

cannot be defeated by simple reference to the rule but must be determined

on the basis of the evidence as to the true nature of the cazgo Ifthe

evidence shows that a more specific tariff item fits the commodity

shipped claimant is entided to be rated under that item Logic fairness

and the message ofKraft so require

Much is made by carriers and their representatives however that rules

ofthis type are reasonable attempts to require diligence on the part of a

shipper or his representatives in describing the cargo on the bill oflading

This was exactly our earlier position in Kraft We have also stated in the

past that a carrier has a right to expect that a shipper will properly

describe his cargo So too we have stated that the shipper has the right to

expect the carrier to charge the proper rate for the type ofgoods actually

carried However the fact remains that even assuming good faith effort

on the part of both parties mistakes will be made and shippers will seek

to bring claims before the Commission The law specifically permits filing

of such claims and the Court ofAppeals in Kraft has specifically pointed

out the previous error of our ways and has shown that a tariff provision

howeverwell intended cannot be used to defeat that right to have a claim

considered if brought within the statutory period oflimitation

The Commission has previously refused on other grounds to allow

trade name rules ofthis nature to be invoked as a bar to Commission

consideration of a claim In Ocean Freight Consultants v Royal

Netherlands Steamship Company 14SR1485 1975 a majority of

the Commission found a 10htype provision unenforceable inasmuch as

it requires bills oflading using trade names to be rated as Cargo NOS

as minimum The as minimum provision was found to allow a

standard which was too flexible and which presented the opportunity for

discrimination between shippers s

We now turn to the question of whether complainant has satisfied its

burden ofproof in this proceeding We think it has The Administrative

Law Judge sdecision to the contrary does not discuss the specific

elements of proof presented by complainant Rather the Administrative

Law Judge sconclusion is based on a discussion ofequities regarding size

RWes of teriffconstmction also require hatthe more specific of two possible applicable tariff icems mus appty

Com Producfs Company vHamburg AmerikaLines 10 FMC 388 196 n

Ocean FreighJ Consultpn sv

Italpac icLine IS FMC 314 1972

See alao A66ott Labaafories vPrudential Grace Lines 17 FMC l86 p973 for Ihe proposition that under Ihe

language of such rWes the bBl oflading ahoWd not have been accepted by the carrier and having accepted it he

cartier cannot latercomplain

FMC
436 FEDERAL MARITIME COMMISSION

and experience of shipper and frequency of shipments made 

considerations have nothing to do with proof of the naturt 

commodity shipped and in any event the Commission has pre

disavowed equity theories regarding overcharge claims 6

The evidence shows that Silicon Catbide was shipped The 

lading so states and further indicates that it was crude f

ComplainanYs letter of January 21 1473 to OFCsuggeats t

commodity covered by the bill of lading was silicon carbide a

grains and is not to be confuaed with silicon cazbide fused 

The letter further stressea that silicon carbide may be either cru

in grains but that this shipment was an abrasive grain Co

anYs invoice substantiates the contondon that the slripmont cons

sllicon grain Chemical dictionary provisions eatabliah that the g

forms of silicon carbide are in fact abrasivea It is concluded th

that the shipment in question conaiated of silicon carbide abrasiv

and is entitled to be rated under reapondent stariff provision 

Abrasive We think complainant has carrled its burden und

standard of proof eapecially inasmuch as respond entfailed to 

plead or otherwise appear throughout the courae of the proceedin

Having determined that the shipment itt queation consisted of 

grains the applicable charges ahould be computed at the rate s

therefor Complainant suggests that reparation in the amount of40

due based on an applicabte iate of 70 per2000 lbs Reapondes

however indicates that this rate is applicable only tovolume sh

which are defined as those in minimum lots of 21 measurement to

weight tons The shipment in question consiated af279201bs w

less than 14 weight tons and 348 au ft which is lesa than 21 meas

tons Accordingly the shiptnent does notqualify for the volum

Rather it muat be rated at the less volum rate far this commodit

is 8350 per2Q601bs Based on the applicable eate the prope

for the shipment including bunker surcharge and L and L cha

e

12788 This represents a difference of216 38 from the total 

asseased 1494 56

Accordingly complainant is entitled to reparation in the am

216 38It is so ordered

Vice Chairman Clarence Morse dissenting Idisaent In my 

Krc tCADC1976 is not controlling

Tariffs frequently cantain rules describing how shipments 

described and provitling penalties tugher rates for failin to desc

shipment according to tariff commodity descriptions

s Unlon Car6lde lnteramerlca v Venezuelan Llne 17 FMC IBI p993

ComdeinenCo euercompletely rePote 7tt awrtcontendon that thie alaim doe1wt involve achanye In 

Crude and ineina erd diReront typee ot elilcon onrbide and a

shenp hom ona to the other eeR

e chanye indeeoription In vlew of ourdiepodNon of tlJt ceethle ealRretutetlon ic wt btd lo wmpW

See Rule S d46CFR 302 64oP the Commhdon RWe ofPracdce wNch leteetApt in the ave

ehould Pail to 61e and eerve en enewer the CommUdon msy anter euch rWe ororder as may be Jmt 

complainent salbyatione of fact mey ha deemed to he atabliehad

1
CARBORUNDUM COvROYALNETAERLANDS 437

The trade name rule 9in this tariff is such a rule These rules serve

to establish two lawful rates for a shipment one being the commodity

rate when the shipment is described to match the tariff commodity

description and the second being theNOSrate when the shipment is

described in the bill of lading by trade name In principle this is no

different than a tariff rule which provides a given rate for a palletized

shipment and a higher rate for the identical shipment if shipped not

palledzed In each case the shipper has an option in the one case as to

the manner in which he describes his goods by tariff commodity

description orby trade name and in the second case as to the method he

chooses to make his shipment palletized or not palletized Having

exercised his option the rate thereby applicable according to the tariff

rules is the only lawful rate

Let us consider another exampi high valued cargo Tariffs usually

provide two rates for high valued shipments one being a rate of say 50

WMwith a ceiling legal liability of 500 per package or the declared

value whichever is the higher 46USC 1304 5Assume a situation

where a shipper makes a shipment and declares its true nature and value

and therefore is charged a freight rate computed on the 50WMplus 5

of the declared value Assume that the shipment is made and the goods

are delivered at destination in sound condition Assume that thereafter

the shipper comes to us and asserts his shipping clerk or freight forwarder

made a mistake in deciaring the nature and value ofthe goods for it was

the shipper sinitial intention to ship under the flat 50 WMrate basis

Surely the majority would not hold it is a violation ofthe Shipping Act

1916 for the carrier now to refuse to permit the shipper to retroactively

amend his description of the shipment and upon the carrier srefusal

order reparations in an amount reflecting the difference between the 50

WMrate and the 50WMplus 5of the declared value rate Here

again the tariff provided two options to the shipper and having exercised

his option the shipper is bound by that election In principle there is no

difference between the foregoing example and the trade namrule

In my opinion these aze valid lawful rules and assure proper rating of

shipments

The effect ofthe majority sdecision absent perhaps fraud on the part

of the shipper is that despite such tariff rules and no matter how

carelessly the shipper describes his goods to the carrier the shipper can

come to this Commission prove that what was actually shipped but

described to the carrier for example by its trade name when properly

described matched a lower ratedtariff commodity description and obtain

a reparation award Such a holding will provide little or no incentive to

shippers or their freight forwarders to properly conduct their shipping

activi6es

In my opinion absent a finding by us that the tariff rule trade nam

9

See Footnote suprn

FMC
i

1

438 FEDERAL MARITIME COMMISSION

rule as an emple is unlawful themjority decision is contrary 

i

intent and plain language ofsection 18b3Shipping Act 1916 

directs that a carrier shall charge the rates and harges wh

specified in its tariff on file with the Commission and duly publish

in effect at the time The trade nam rule and its derivative rate s

fit that statutory directive

SEAL S FRANCIS C HURNEY

Secre

i

i

j
FEDERAL MARITIME COMMISSION

DOCKET NO I

THE CARBORUNDUM COMPANY

V

ROYAL NETHERLANDS STEAMSHIP COMPANY ANTILLES NV

ORDER

The Federal Maritime Commission has this day served its Report in

subject proceeding which we hereby incorporate herein in which we

found that

shipment

Therefore

an inapplicable rate had been assessed for complainant s

for the reasons enunciated in the Report it is ordered that

respondent Royal Netherlands Steamship Company Antiltes N V be

required to refund to complainant The Carborundum Company the

amount of overcharges in the sum of216 38 with interest at six percent

per annum if not paid within thirty days from the date ofthis Order

By the Commission

SEAL S FRANCIS C HURNEY

Secretary

FMc 439
FEDERAL MARITIME COMMISSION

DOCKET No 7535

AGREEMENT No T 1685 AS AMENDED AND T l68S BETWEE

CITY OF ANCHORAGE AND SEA LAND SERVICE INC AND AGRE

No T 3130 BETWEEN THE CITY OFANCHORAGE AND TOTEM O

TRAILER EXPRESS INC

j

Agreement Nos T 168S as amended by T 168S 6 and T 3130 as submi

ambiguous and cannot be approved until the parties modify the agree

clarify the ambiguous language

Agreement Nos T 168S as amended by T 168S 6and T 3130 should be mo

ensure that Coastal Barge Lines Inc has sufficient terminal space available 

cement discharging operations

Agreement No T 3130 should be modified to provide that Tote will h

preferential call per week at Anchorage except under certain specified em

situations

Agreement Nos T 168S as amended by T 168S 6 and T 3130 as modified 

unjustly discriminatory or unfair as between carriers shippers exp

importers noroperate to the detriment of the commerce of the United S

are they contrary to the public interest or otherwise in violation of the 

Act 1916

Totem TrailerExpress Inc and the City of Anchoraae have violated section IS 

implementation of Aareement No T3130 prior to approval

Violation of section IS by construction and use of trestles prior to approval doe

itself warrant disapproval of Agreement No T 3130

Leases to certain back up areas are notsubject to section IS

Environmental issues in this proceeding do notconstitute a major Feder

sianificantly affeclinll the quality of the human environment within the m

the National Environmental Policy Act of 1969

Peter J Nickles and John Michael Clear for The City of Anc

Respondent

Gerald A Malia and Edward A McDermott Jr for Sea Land S

Inc Respondent

Stanley O Sher Jacob P Billig and David Shonka for Totem 

Trailer Express Inc Respondent

James E Wesner for Tesoro Alaskan Petroleum Corporation 

tioner

Alan F Wohlstetter and Edward A Ryan for Coastal Barge 

Inc Petitioner

John Robert Ewers and Joseph B Slunt Hearing Counsel

I

440 1
AGREEMENT NOS T 1685 T I68 T 3130 441

REPORT

January 6 1977

BY THE COMMISSION Karl E Bakke Chairman Ashton C Barrett

Bob Casey and James V Day Commissioners

By Order of Investigation and Hearing dated September 15 1975 the

Commission instituted this proceeding to determine 1 whether terminal

Agreement No T 3130 between Totem Ocean Trailer Express Inc

Tote and the City of Anchorage Alaska Anchorage and terminal

Agreement Nos T I685 as amended and T 1685 between Sea Land

Service Inc Sea Land and Anchorage are unjustly discriminatory or

unfair as between carriers shippers exporters or importers or operate to

the detriment ofthe commerce ofthe United States or are contrary to the

public interest or are otherwise in violation ofthe Shipping Act 1916

within the meaning of section 15 ofthat Act 2 whether said agreements

should be approved disapproved or modified pursuant to section 15 and

3 whether section 15 has been violated by Tote andorAnchorage by the

construction offacilities provided for in Agreement No T 3130 prior to

the approval of said agreement by the Commission

The Commission s Order ofInvestigation named Anchorage Sea Land

and Tote as Respondents Standard Oil Company of California Western

Operations Inc Coastal Barge Lines Inc Coastal Puget Sound Tug

and Barge Company Tesoro Alaskan Petroleum Corporation Tesoro 1

and Shell Oil Company were made Petitioners in the proceeding 2

Hearing

Counsel also participated in the proceeding

On January 30 1976 the Commission issued an Interim Order

disapproving Agreement No T 1685 as amended through T 1685

effective February 5 1976 unless the parties on orprior to that date fued

an amendment suspending Sea Land s preferential berthing rights during

the months ofFebruary March and April 1976 The need for such interim

action stemmed from the fact that severe winter conditions at Anchorage

posed a risk to Tote s vessel and crew at certain terminal facilities and

that the only safe berthing areas were assigned to Sea Land under the

terms ofits existing preferential berthing agreement with Anchorage The

parties failed to submit such a modification and Sea Land s basic

Agreement No T 1685 as amended was disapproved by the Commis

sion 3The net effect of the Commission s interim decision was to plac

both Sea Land and Tote on an equal footing with respect to their

operations at Anchorage i e on afrrst come frrst served basis

I

Tesoro an active and vigorous opponent against approval of both agreements advised the Commission on

November 3 1976 that it no longer has an interest in the matters at issue in this proceeding

S

Standard Oil Company subsequently withdrew its protest and was dismissed from the proceeding Shell Oil

Company andPuget Sound Tug and Barge Company did not actively participate in the hearing

3

Since Agreement No T 1685 6 does not stand alone but can only be considered as an integral part of the

agreement which it amends we consider the basic Agreement No T I68 5 as amended throughT I68 5 6tobe now

before us for approval

19 F M C
442 FEDERAL MARITIME COMMISSION

BACKGROUND

Anchorage s port facility consist of a single linear pier approxi

2200 feet in length divided into two and a half cargo terminals 

Petroleum Off Loading POL terminal 4

The POL facility at the so

end of the pier consists of a 196 foot mooring dolphin a 17

petroleum offloading dock and a 237 foot bridge connecting this st

with Terminall The POL terminal has four manifold connections 

transfer of petroleum

Adjoining the POL facility is Terminal Iwhich is 600 feet long 

feet wide Terminal 1 has two manifold connections for the tran

pertroleum Between Terminals 1 and 2 are headers which are u

the receipt ofbulk cement These headers are used in the summer m

by Coastal s cement barge which occupies approximately 440 

Terminal 2 when it is engaged in offloading cement

Terminal 2 is 610 feet long and 69 feet wide It has no facilit

either offloading petroleum products orbulk cement

Terminal 3 is presently 366 feet long however there is a 

improvement plan underway whcih would extend Terminal 3 an ad

325 feet Contracts have been let for the completion of Term

construction of Trestle No 3 and a new Transit Area C imme

behind the terminal This work is proposed to be completed by O

1976 Anchorage is also planning a further northward extens

Terminal 3 and construction of additional trestles at that facility 

anticipated that this expansion will be completed by October 

although it could be completed as early as October 1977 if Anch

construction schedules were accelerated

Sea Land has been serving Anchorage under a preferential b

agreement since 1964 Currently Sea Land has four vessels in 

service with a fIfth added in the summer to accommodate the h

traffic Sea Land operates container vessels which are not su

carrying outsized cargoes such as mobile homes which Tote will 

to transport on its vessel Pursuant to Agreement No T 16855 Se

had preferential berthing rights at Terminal 1 for 104 calls per agr

year Agreement No T 1685 6placed at issue in this proceeding 

shift Sea Land s preferential berthing rights to Terminal 2 and incre

preferential calls from 104 to 156 calls per year In addition 

agreement permits Sea Land an additional 50 feet extending nor

into Terminal 3 if it introduces larger vessels in the trade and esta

a need for the additional space

Tote has initiated a regularly scheduled year round water carrier 

between Seattle and Anchorage in direct competition with Sea 

Tote s vessel the S S Great Land is a 790 foot long Ro Ro 

which requires about oneand ahalfof the Port s berths as well as 

ramps and shore facilities to load and discharge its cargo effic

4 See Appendix for asketch ofthe physical layout of theareas under discussion

19 
AGREEMENT NOS T 1685 T l685 T 3130 443

Agreement No T 3130 allows Tote preferential berthing at the POU

Terminal 1 location for 52 calls per year and also provides Tote with

preferential rights to Transit Area B for 5 days per voyage

POsmON OF THE PARTIES BEFORE THE PRESIDING OFFICER

Anchorage which owns and through its Port operates the Anchorage

City Dock requests approval of both Agreement Nos T1685 6and T

3130

Tote requests approval ofits own Agreement No T 3130 and does not

oppose Agreement No T I685 However Tote opposes any approval

of Agreement No T 1685 6without concurrent approval of its own

agreement

Sea Land seeks approval ofAgreement No T I685 but protests any

approval ofAgreement No T 3130 on the grounds that it will increase

land and water congestion at the Port deprive Sea Land of back up

areas and because it was implemented prior to Commission approval in

violation ofsection 15

Coastal originally protested both agreements on the ground that it

would not have access to cement headers located between Terminals 1

and 2 ifSea Land was to occupy Terminal 2 and Tote Terminal 1 During

the course of the proceeding an accommodation was reached between

Sea Land Tote and Coastal with the concurrence of Anchorage which

would permit the simultaneous berthing ofall three carriers at Anchorage

A further accommodation between Tote and Coastal would allow Coastal

preferential use of a portion ofTransit Area B

Tesoro opposes approval ofboth agreements principally on the grounds

that Tote s utilization ofthe POUTerminall1ocation will not increase the

availability of the facility to petroleum carriers as indicated by the

proponents of the agreements that neither Sea Land nor Tote has

demonstrated a serious transportation need to justify their preferences at

the two facilities and that Tote d Anchorage have violated section 15

by implementation ofAgreement No T 3130 prior to approval

Hearing Counsel support approval ofboth agreements only if modifica

tions are made in the agreements to clarify certain problem areas raised

during the proceeding These are 1 the charges that would apply if the

number of preferential voyages allowed under each agreement is ex

ceeded 2 the emergency powers ofthe Port Director 3 the Coastal

accommodation 4 a firm commitment that Tote will be moved when

Terminal 3 is completed and 5 improvements in the petroleum handling

capability of Terminal 1 In addition Hearing Counsel is ofthe opinion

that Tote and Anchonige have violated section 15 through prior implemen

tation of Agreement No T 3130 and that leases to certain back up areas

are possible section 15 agreements which should be itled for determina

tion

19 F MC
444 FEDERAL MARITIME COMMISSION

DISCUSSION

In his Initial Decision the Presiding Officer concluded that

I Agreement Nos T 168S as amended T 168S 6 and T 3130 are not u

discriminatory or unfair as between carriers shippers exporters or importe

operate to the detriment of the commerce of the United States norare they con

the public interest or otherwise in violation of the Shipping Act 1916

2 Agreement Nos T 168S as amended T 168S 6 and T 3130should be m

and as modified approved

3 Tote and the City of Anchorage have violated section IS by construction 

of facilities at Anchorage without submission to and prior approval by the Com

of an agreement for construction of facUities at Anchorage

4 Violation of section IS by construction and use of trestles prior to approv

not in itself warrant disapprovallfAgreement No T 3130

In so holding the Presiding Officer found inter alia as follows

I The modifications of the agreements are necessary to clarify that annual 

fees are applicable only against the specified number of annual preferential c

forth in the agreements that the Port Director may suspend preferential berthin

when Port and vessel safety so necessitate that space will be made available in 

Area B for parking mobile homes that space be available for off loading ceme

that certain improvements be made for offloading petroleum products

2 A serious transportation need exists for year round general cargo wate

service into the Port of Anchorage

3 A serious and important public interest exists in the transportation service 

by Sea Land and Tote

4 Preferential berthing rights are vital to the proper performance of the s

offered by Sea Land and Tote to meet the transportation need of the Port and t

the public interest

S The agreements taken together have a

pro competitive effect

6 Neither agreement as modified will materially affect the operations of othe

of the Port

7 The random theory in determining the probabilities of congestion at the 

not applicable to regularly scheduled arrivals

8 The limited facilities at the Port warrant approval of these preferent

agreements to assist in attaining a more effective utilization of the Port

9 The preferential use agreements will help reduce delays to Sea Land an

thereby reducil18 costs of their operation and aiding in maintaining regular schedu

10 Any delays to other carriers caused by preferential use of berths by Sea La

Tote are not likely to be material or result in substantial increase in costs to suc

carriers

II Leases of back up areas except Transit Area B are not seeton IS agreem

Finally the Presiding Officer detennined that the planned constr

in the near future of a pipeline will materially reduce utilizati

petroleum offloading facilities and this coupled with improved fac

for petroleum offloading will help relieve any delay in use of petr

offloading facilities which may be occasioned by the berthing ofT

vessel

Exceptions wererued by all the active participants in the procee

The positions ofthe parties on l118jor findings and conclusions reach

the Presiding Officer in his Initial Decision are discussed below

19 
AGREEMENT NOS T 1685 T 1685 ti T 3130 445

A Modification and Approval ofAgreement T 1685 j5

Sea Land takes issue with the Presiding Officer s determination that

T he annual tonnage fees are applicable only against the specified number of annual

preferential calls set forth in the agreement Any calls during such year which exceed

the number set forth in the agreement are otherwise deemed within the agreement but

the fees for such calls shall be as otherwise set forth in the Port tariff

Despite the Presiding Officer s finding that the proposed modification

would have no bearing on any prior understanding of the parties Sea

Land submits that the modification will affect and possibly prejudice a

dispute between Sea Land and Anchorage now pending before this

Commission in Docket Nos 7548Sea Land Service Inc v The City

ofAnchorage Alaska and Totem Ocean Trailer Express Inc and 76

The City ofAnchorage Alaska v Sea Land Service lnc s

It is our opinion that the Presiding Officer s interpretation of the

tonnage fees clause must be set aside We fmd little support in the record

for the Presiding Officer s

interpretation that any calls in excess of the

preferential number will be at the tariff rate We also consider any

ambiguity in a newly filed agreement a matter to be resolved by the

parties to that agreement prior to any approval by this Commission 7

An ambiguity does exist in both agreements There is no agreement

between the parties as to what charges are to be paid once the preferential

calls provided in the agreements are exceeded Infact and as heretofore

indicated Sea Land and Anchorage are presently litigating this very issue

before the Commission in other proceedings We cannot approve the

agreements as presently submitted As long as the ambiguity exists the

agreements are contrary to the public interest and cannot be approved 8

Therefore before approval can be accorded to the agreements under

consideration the parties will be required to modify the agreements to

clarify the ambiguous language in the tonnage clauses The clarification is

to be submitted in conjunction with other modifications required herein

We wish to emphasize that the parties modification of the tonnage

clauses in this proceeding will in no way prejudice their rights orpositions

in other litigation now before us involving similar issues

Certain of the following modifications also apply to Agreement No T 3130 and where applicable both

agreements are treated together

e Docket No 7548 is a complaint proceeding rded by Sea Land against Anchorage and Tote involving alleged

violations of sections 15 and 16 Firstby Anchorage and Tote in connection with bothagreements

Docket No 764is a complaint med by Anchorage against Sea Land alleging that Sea Land has violated section 15

by attempting toinduce Anchorage to grant it special and preferential privileges not available toother carriers which

are not granted by an agreement approved pursuant tosection 15 One of the key issues for determination in both

proceedings is the interpretation of the clause in the agreements relating to the charges to be assessed when either

Sea Land orTote have exhausted theirnumber of preferential calls under their respectiveagreements with Anchorage

1 While it may be argued that the Commission canresolve an ambiguity in apreviously approved agreement such as

Agreement No T I685 this rationale does not apply to Agreement No T 3130which isbefore us for the ftrst time

8 On several occasions the Commission has pointed out that all agreements should be complete and the language

used should be so clear as to eliminate all necessity for interpretation as to tbe intent of the parties In the Matter

of Agreement 6510 1 U S M C 715 778 2 U S M C 22 See also Beaumont Port Commission v Seatrain Lines

Inc 3 F M B 56 581 and In the Matter ofAgreement FF 71 7 Cooperative Working Arrangement 14 S RR

609 where the Commission concurred in the Presiding Officer s conclusion that it would be contrary to effective

regulation to approve an agreement which is subject to various interpretations and involves uncertainties at p 614

19 F M C
i

I

l

1

1

1

j

i

d

1

0 J

I

446 FEDERAL MARITIME COMMISSION

Coastal excepts to the Presiding Officer s failure to adopt a sp

modification to Agreement No T I68S which would rmit Co

barge to remain berthed at Terminal 2 while engaged in ce

discharging operations Coastal contends that although the Pre

Officer recognized a need for modification of both agreemen

accommodate Coastal s off loading cement operations and did m

Tote s agreement he failed to discuss or adopt any modification 

respect to the Sea Land agreement Accordingly Coastal requests 

condition be attached to the approval ofAgreement No T 168S 6

would ensure that Sea Land would not interfere or interrupt Coa

discharge of bulk cement at Terminal No 2 In the altel1lative C

requests that the agreement be amended to specifically require tha

Land berth its vessels at Terminal Nos 2 and 3 in such amanne

leave at least 237 feet ofthe southern portion of Terminal No 2 av

for Coastal s use during such times as bulk cement discharging ope

require barge utilization of the facilities at that facility This pro

would allegedly permit the simultaneous berthing of Coastal Sea 

and Tote vessels

Sea Land in its response to Coastal s exceptions is agreeable 

alternative condition requested by Coastal provided that Coasta

Sea Land advance notice of any intended calls to minimize any be

problem and provided aspace onTerminal No 3 is available

We agree with Coastal s request concurred in by Sea Land 

Agreement No T 1685 6should be modified to make 237 feet 

southern portion of Terminal No 2 available for Coastal s use 

such time as bulk cement disc operations require barge utili

of the facilities at Terminal No 2 Such space need be made ava

however only to the extent that sufficient berthing space is o

Terminal 3 for use by Sea Land vessels Coastal will be expec

provide Sea Land with reasonable advance notice of its intention 

at the facility but in no event shoUld this notice be less than seven 

Since Coastal provides aweekly service to Anchorage it should 

seven days in advance when it will call at the Port

Unless Agreement No T 168S 6is modified in accordance wi

conditions specified herein it would be contrary to the public intere

not approvable inasmuch as it would severely limit Coastal s ab

call atAnchorage Coastal needs access to the cement headers a

utilization of Terminals 1 and 2 by Tote and SeaLand respec

coupled with the time required to service Coastal s barge woUld re

substantial detriment to Coastal in the discharging of bulk cem

Anchorage

For the same reasons we agree with the modifications of Agre

No T 3130proposed by the Presiding Officer with respect to the be

ofCoastal s barge in aportion ofTerminal 1

19 
AGREEMENT NOS T 168S T I685 6 T 3130 447

B Modification andApproval ofAgreement No T 3130

Sea Land excepts to the finding of the Presiding Officer that the

preferential use of Transit Area B by Tote should not result in any

detriment to other users ofthe port Sea Land argues that it should have

access to back up areas adjacent to its preferential berths As approved

by the Presiding Officer Agreement No T 3130 gives Tote Transit Area

B which is directly behind Terminal 2 while under Agreement No T

168 Sea Land s marshalling area is directly behind Terminal 1 This

ofcourse results from the fact that when Sea Land was at Terminal 1 its

back up area was adjacent to its berth Sea Land believes that Transit

Area B should be reallocated to it and in turn Sea Land would turn over

Lot 12A which is behind Terminal 1 to Tote in exchange for Lot 3A

which is behind Terminal 2

Both Anchorage and Tote oppose Sea Land s suggestion Tote argues

that certain of the areas in question are not included in the pending

agreements and the Commission properly has no interest in the mannerin

which the Port leases these properties 9

Both Anchorage and Tote believe

that Sea Land s proposal would work adisadvantage to Tote inasmuch as

Lot 12A from an operational point of view is marshy and only about

one third the size ofTransit Area B

Tesoro the only party still opposed to approval of both agreements

filed lengthy exceptions to the Presiding Officer s Initial Decision

Tesoro s major objection is addressed to the Presiding Officer s rejection

ofTesoro s queing theory Tesoro s queing theory is a statistical

technique used to predict the degree of port congestion which would

result if the Tote and Sea Land preferential agreements were approved

The theory employs a formula based on the relationship between the

frequency with which the users of a given facility arrive at that facility

and the average length of time needed to serve them This theory assumes

that arrival and service rates are random that arrivals will conform to the

poisson probability distribution and that service rates will conform to

the exponential probability distribution Tesoro s testimony in connection

with the use ofthe queing theory is both extensive and complex

The Presiding Officer rejected the testimony ofTesoro s witness on the

grounds that the queing theory assumed both random service time and

arrival rates The Presiding Officer specifically found that as regards

Tote s potential operation under the preferential agreement its service

time and arrival rate should not be considered random The Presiding

Officer found that Tote s proposal to operate aregular scheduled service

coupled with the requirement that it notify the Port 15 days in advance of

scheduled arrival times destroys the validity of the queing theory

espoused by Tesoro

Tesoro s

response to these arguments is that there was a total

misstatement on Judge Levy s part ofwhat the testimony actually was

Theissue of whether these latteragreements should be fled for section 15 approval is discussed later

19 F M C
j

i

1

j

I

j

J

j

448 FEDERAL MARITIME COMMISSION

Tesoro contends that its expert witness did not ignore the effe

scheduling in his analysis of the Anchorage situation and indeed 

aqjustments in his results to account for scheduling

Also at issue is the Presiding Officer s

finding that paradoxic

Tesoro treats Tote s operations as random but does not apply the 

to Sea Land s operations which are also conducted on ascheduled 

Tesoro explains that the queing theory was not applied to Sea 

because there was no point in doing so inasmuch as the objective w

ascertain the impact of the preferential agreements on other users 

Sea Land would because of the number of preferential calls provid

its agreement with Anchorage in effect completely occupy the te

to which it is assigned Tesoro explains that there was no purpo

applying the queing theory to Sea Land because whatever conflicts 

result at that terminal would only affect Sea Land

Tesoro also disputes the Presiding Officer s

findings that other us

the Port can schedule their operations around Tote s arrivals so 

avoid berthing conflicts when Tote is at berth Allegedly Tesoro is u

to maintain a

regular schedule because of navigational problems w

ized conditions and tide conditions at Nikiski The Presiding Off

conclusion that Tesoro has the ability to improve the efficiency of it

operation is according to Tesoro completely at variance with hi

earlier rmdings and must be disregarded

Various arguments are also raised by Tesoro in opposition 

Presiding Officer s conclusion that approval of both agreements 

serve aserious transportation need Thll position taken by Tesoro o

point is essentially a

reargument of contentions advanced befo

Presiding Officer In short Tesoro s position is that efficient utiliza

Anchorage s facilities would be promoted if all preferences were 

Tesoro submits that TQte s service is nOt unique and hat 

fails to show that there is any substantial demlUld for additional serV

Anchorage There has been allegedly no showina by the propone

Agreement No T 3130 that the public would benefit more from 

uninterrupted receipt of dry cargo than from uninterrupted acce

petroleum products or other goods

Tesoro also opposes any approval ofAareement No T l68S T

is ofthe opinion that the Presidina omer s conclusion that Sea L

agreement isjustified because the consiaeratiqris which led the Co

sion to approve the initial preferential USe aareement between Sea 

and Anchorage are unchanged is erroneoUs Tesoro argue

everything has changed at the Port Increasedtraftic and anew cat

the Port have allegedly plac d unprecedented demands on Ancho

facilities Tesoro submits that the Presiding Officer failed to co

whether Sea Land s agreement was in the public interest in view o

changed circumstances

Finally Tesoro contends that the Presiding Officer improperly fa

incorporate two of Tesoro s proposed modifications into his app

19 
AGREEMENT NOS T 1685 T 1685 6 T 3130 449

Tesoro had urged that if the proposed agreements are approved such

approval should be subject to the following conditions

1 Agreement No T 3130 should be amended to require immediate improvement of

the petroleum offloading facilities at Terminal I

2 Both agreements should be suspended between November and April

3 Agreement No T 3130 should be approved for only one year subject to renewal if

Tote s relocation to Terminal 3 is not feasible

The Presiding Officer accepted the first condition but rejected the latter

two

Tesoro maintains that because of ice conditions its barge service is

restricted during winter months and in order to keep up oil supplies it

must make as many deliveries as possible during periods ofgood weather

Tesoro s ability to do this will allegedly be severly hampered if Tote is at

Terminal I on a preferential basis during the winter For this reason

Tesoro requests an annual suspension ofAgreement No T 3130 from

November to April

Tesoro argues that limiting whatever approval is accorded Agreement

No T 3130 to one year will ensure that a temporary location does not

become apermanent arrangement

Anchorage in response to Tesoro s Exceptions is ofthe opinion that

Tesoro will be affected less by the preferential berthing rights under

Agreement No T 3130 than it was under Agreement No T I685 While

acknowledging that Tote will restrict access to both the POL and

Terminal I

facilities when it is on berth Anchorage concurs in the

Presiding Officer s fmding that the total time available to petroleum users

at both the Pol Terminal and Terminal I will be significantly increased lo

Tote and Hearing Counsel advance similar arguments supporting the

Presiding Officer s fmding that Tesoro will be affected less under the new

arrangement than with Sea Land at Terminal 1 Tote argues that this is

especially true when one considers that Nikiski where Tesoro has its

refming facility is only 60 miles from Anchorage Tote has obligated itself

to notify carriers of its schedule and any variations therefrom and Tote

has agreed to cooperate in resolving any conflicts that may arise

According to Tote Agreement No T 3130 will minimize delays for all

petroleum users and particularly Tesoro

Tote and Anchorage both challenge Tesoro s attempts to supplement

its evidence with what it calls utilization analysis While Tote objects

to the new and unsupported material on procedural grounds it does

address Tesoro s arguments on exception Thus Tote argues that one of

Tesoro s major propositions i e that users ofTerminals 2 and 3 will flock

to Terminal I is directly contrary to the testimony of Tesoro s expert

10 The Presiding Officer found that the potential time the POL facility andTerminal 1 will be occupied because of

Tote s agreement would be 25 percent leaving each facility free 75 percent of the time for petroleum users Under

Agreement No T I68 5 Sea Land blocked access to Terminal I 60 percent of the time and with the proposed

amendment Sea Land would block Terminal I 80 percent ofthe time

19 F M C
i

JI

1

I

450 FEDERAL MARITIME COMMISSION

witness at the hearing Both Anchorage an Tote conclude that there 

basis in the recordfor Tesoro s assumption in this regard

The Presiding Officer s rejection ofTesoro s queingtheory 

supported by Tote and Anchorage One of the Presiding Off

criticisms of Tesoro s theory was that it is not applicable to Sea L

operations because Sea Land operates on a scheduled basis On 

tion Tesoro argues that the Presiding Officer misinterpreted the 

mony Both Anchorage and Tote seize on this point contending th

transcript clearly shows that Tesoro s witness specifically state

since Sea Land can schedule itself its arrivals its operation 

compatible with queing theory Tote argues that since it plans to o

on a regular scheduled basis the queing theory is also not applicable 

operations

Tote details other alleged deficiencies in Tesoro s queing t

including its failure to take into consideration the impact resulting 

the disapproval of both agreements While Tesoro has set forth the 

impact of three berthing alternatives it failed to weigh the imp

Tesoro ofdisapproval of both agreements The benefit even to T

from this approach cannot be determined and for this reason 

believes that Tesoro s

request for disapproval must be rejected

We find no basis to set aside the Presiding Officer s reject

Tesoro s queing theory As stated the classic queing th

assumes both random service times and arrival rates Tesoro s w

recognized that Tote would operate on a reasonably regular bas

reduced his theoretical calculations by one half However this red

was completely arbitrary and evidences the di1fuu1ty of adopting a

complex theory to arelatively practical termina1 operation

Even assuming arguendo that the conclusions reached by T

through utilization of the queing theory were valid they do no

us toa finding that Agreement No T 3130 should be disapp

Tesoro s bottom line figure for adjusted waiting times for oil 

and tankers with Tote having a

preferem e at POUferminal 1 an

Land at Terminal 2 is an increase ofthree hours over the adjusted w

times in the base Case where Sea Landremains atTerminal 1 Acc

to Tesoro this delay translates into additional costs of 505 000

The calculations used to derive the three hour figure are all theo

and do not provide a sufficient basis for disapproving Agreement N

3130 An example is the arbitrary reduction of one half taken by T

to account for Tote s scheduled operations Also in computin

alleged cost resulting from the additional delay Tesoro used tr

costs exclusively and ignored the alternate method of tankers whi

significantly less expenive than trucks While the tankers would als

been delayed this is still aviable alternative open to Tesoro Teso

fails to consider the costs to Tote if its preference at POUfermin

denied

The critical determination with respect to approvability of both 

19 
AGREEMENT NOS T I685 T 1685 6 T 3130 451

ments is whether they are unjustly discriminatory or unfair as between

carriers shippers exporters or importers or operate to the detriment of

the commerce ofthe United States or are contrary to the public interest

or are otherwise in violation of the Shipping Act 1916 within the

meaning of section 15 ofthat Act While we do not necessarily agree with

all the conclusions reached by the Presiding Officer it is our opinion that

there is no basis in the present record for disapproval ofeither agreement

Certainly Tote s service is in the public interest in that it provides a

fast and alternative viable service to the shippers in Anchorage The

question then becomes whether the granting of apreferential berthing

arrangement to Tote and Sea Land is contrary to the public interest or

otherwise contrary to the standards in section 15 because ofits effect on

nonpreferential users While admittedly both agreements will result in

certain delays and disruption of operations of other carriers such as

Tesoro it is our opinion that overall these delays and disruptions will be

minimal and certainly not of such magnitude to preclude approval ofthe

agreements

In considering the positions of the various parties and reaching a

determination of where the public interest lies we must weigh the shorl

range objections of Tesoro against the long range impact of both

agreements on the Anchorage community Tesoro has admitted that it

will utilize the oil pipeline linking Nikiski and Anchorage which is now

under construction While afrrm date for completion ofthe pipeline has

not been set the record indicates that it will probably be within the next

six months Our consideration ofboth agreements must take into account

the public interest factor as it exists at the time of our approval however

we cannot ignore the fact that Tesoro the only party still vigorously

opposed to approval will have significantly less dependency upon the

Anchorage docking facilities once the pipeline is completed Again with

the exception of the evidence relating to the modifications discussed

herein the record will not support a finding that either agreements is

contrary to the public interest and therefor not approvable

Tesoro s remaining exceptions relating to the Presiding Officer s failure

to incorporate two proposed modifications in the agreement must also be

set aside for the reasons discussed above In our review of both

agreements we took into consideration weather conditions and their effect

on all users ofthe Port s facilities Tesoro s request for a suspension of

both agreements between November and April because ofthe impact of

weather conditions on its operations is not sufficiently supported in the

record to warrant the modification as a condition of approval We also

find no basis upon which to limit the approval ofAgreement No T 3130

to one year That the Port intends to relocate Tote to Terminal 3 when

that facility is completed is insufficient in and of itself to support a

finding that approval for a period of more than one year would be

contrary to the public interest

19 F MC
452 FEDERAL MARITIME COMMISSION

C Violations ofSection 15 by Tote andAnchorage

Both Anchorage and Tote excepted to the Presiding Officer s 

that they violated section IS by carrying out an agreement f

construction and use of facilities at Anchorage without prior appro

the Commission However the Presiding Officer also determintld th

violation of section 15 did not in itself warrant disapproval ofAgre

No T 3130

The Presiding Officer based his determination of a violation prin

on the rmding that the trestle agreement is so much apart and pa

the preferential use agreement as to be inseparable therefrom an

but for use by Tote in connection with preferential berthing there 

be no sense in its undertaking

Anchorage on exception takes the position that the trestles 

necessary for Tote s nonpreferential use of the Port s facilitie

without the trestles Tote s ability to remain in the trade on a non

ential basis would have been materially prejudiced Thus Anch

submits that the construction agreement is not tied to the prefe

berthing agreement and the construction agreement standing alone 

subject to section 15 The agreement allegedly confers ho spec

preferential privileges upon Tote and could be utilized by other u

the port

In support oftheir contention that construction and use of the 

does not violate section IS Anchorage and Tote rely on the Commi

pronouncement in Agreement Nos T2108 and T 2108 4 12 F 

110 125 1968 that

I f

a port is prohibited from improving its facilities in contemplation of ente

and obtaining Commission approval of anasreement providing for a return to the 

its investment progress would be unnecessarily and severely limited The cons

of improvements is not carryinll out the agreement It Is the commencing 

preferential use that causes the asreementto be In effect p

125

The Presiding Officer found that Anchorage and Tote s reliance 

case was misplaced In his view the instant situation could be 

distinguished on the basis that Anchorage did not construct the 

as a preliminary to leasing The potential user undertook the co

tion

Both Tote and Anchorage are ofthe opinion that the Presiding O

attempt to distinguish the case on the basi that it Was Tote that p

and constructed the trestles as opposed to the Port is truly adist

without adifference According to Tote the decision in Agreeme

T2108 supra stands for two propositions

I

mere construction without preferential use does not constitute carryin

the asreement and 2 construction without preferential use is in any event ju

when delay would deter progress

The parties argue that the trestle construction agreement is not 

to section 15 for two reasons First the actual agreement betwe

j

19 
AGREEMENT NOS T 168S T 168S 6 T 3130 453

parties relating to the construction ofthe trestles is allegedly set out in a

distinct separate agreement As such it is submitted that no preferential

rights or special privileges are conferred upon Tote by the trestle

construction agreement and therefore that agreement by itself is not

subject to section 15 Second Tote and Anchorage contend that if it is

determined that the construction of the trestles is included within

Agreement No T 3130 and a part thereof there has allegedly been no

violation of section 15 because Tote has not exercised apreference to the

facilities

Hearing Counsel and Tesoro support the Presiding Officer sfindings

with respect to the violations of section 15 Hearing Counsel point out

that Anchorage and Tote admit that the trestles were constructed under

the same terms and conditions set forth in Agreement No T 3130 and

that Tote had exclusive use of the trestles In this regard Hearing

Counsel cite Docket No 7261 In the Matter ofAgreement Nos T

2455 T 25531974 wherein the Commission affrrmed the Presiding Offi

cers

fmding that

once it is determined that a particular part requires that the agreement be filed

pursuant to that section the statute is clear that the entire agreement must be filed not

only the clause giving rise to jurisdiction And that before approval no part of that

agreement may be implemented p 20 mimeo opinion

The Presiding Officer determined that the parties violated section 15 in

either of two ways I by considering that the construction of facilities

are provided for in Agreement No T 3130 and that the actual construc

tion prior to approval is a violation ofsection 15 or 2 by considering the

construction agreement as a separate and distinct agreement which has

been implemented prior to filling and approval by the Commission

While either approach would be acceptable to Hearing Counsel they

favor the former i e that the construction ofthe trestles was an integral

part of Agreement No T 3130 and that the arrangement between the

parties relating thereto should be filed as an amendment to that

Agreement

Tesoro while agreeing generally with Hearing Counsel takes issue

with the Presiding Officer s finding that the violations do not warrant

disapproval of Agreement No T 3130 Tesoro would distinguish those

cases cited by the Presiding Officer in support of his finding that a

violation of section 15 does not necessarily preclude approval by the

Commission ofthe Agreement

Equally without merit according to Tesoro is Tote s contention that

the Commission has no jurisdiction over the construction agreement

because it does not create on going rights which require continuous

Commission supervision F M C v Seatrain Lines Inc 411 U S 726

731 1973 Tesoro points out that the indemnification provisions set forth

in the construction agreement create on going rights which survive the

completion of construction and which should be of concern to the

19 F M C
454 FEDERAL MARITIME COMMISSION

I

1

Commission because they purport to insulate Anchorage fro

consequences ofprior implementation ofthe Agreement

We affirm the Presiding Officer s findings of section 15 violati

the part of Tote and Anchorage The construction agreement sh

considered a part and parcel of Agreement No T 313011 a

construction and use ofthe trestles prior to approval of the Agree

a clear violation of section 15 The construction and preferential 

the trestles is described with sufficient particularity to include it 

Agreement No T 3130 That agreement is replete with references 

trestles and whole sections of the trestle construction agreem

repeated verbatim therein

The Presiding Officer correctly found Anchorage s and Tote s r

onAgreement Nos T2108 and T 2108 A supra was inappropr

that case the Port of Los Angeles undertook certain improve

contemplated in the agreement before Commission approval Ho

those improvements were only part of the extensive construction 

taken by the Port In addition the initial construction by Los A

was a unilateral action by the Port Here the construction ofthe 

was specifically geared to Tote s operations and Tote was respons

the construction ofthe trestles at Anchorage s terminal under the 

supervision

Finally Agreement No T 3130 provides that Tote shall have pr

tial use of the trestles The record herein shows that Tote h

exclusive use ofthe trestles since they were completed Despite A

age s assertion on exception that other carriers at the Port coul

used the trestles upon request there is testimony that Tote sto

ramps on the trestles thereby restricting their availabiltity to othe

Tote argues that our Order of Investigation phrased the issue 

trestles in terms of their construction not use but surely it 

be seriously argued that there is less of aviolation when it is dete

that they were not only constructed but actually used on an ex

basis prior to approval We conclude therefore that both To

Anchorage have violated section IS through the construction and 

the trestles set forth in Agreement No T 3130 prior to approval 

Commission

This conclusion does not however contrary to the assert

Tesoro preclude the approval of Agreement No T 3130 if it is oth

approvable under the standards of section 15 See Agreement No 

Port of Seattle and Alaska S S Co 7 F MC 792 799 1964 

Matters ofAgreement Nos T 245553 supra p 458 and Agre

No T2598 14 S R R 573 581 1974 Also Carnation Co v 

Westbound Conference 383 U S 213 221 1966

j

I

1i

11 While we are basinJ OUf flndinl of aviolation of soction 15 herein on adetermination that the c

aareomont I included within Aareement No T 3130 it is also ouropinion that the construction qreemen

itself would be sulUcct to section Greater Baton Rouge PorI Commission v UnitedStates 287 F 2d 86 

19 
AGREEMENT NOS T I685 T 168 T 3130 455

D Introduction ofaSecond Tote Vessel

On exception Hearing Counsel point out tha Agreement No T 3130 is

not limited to a single vessel and does not limit Tote to one preferential

call per week but refers instead to 52 vessel calls per agreement year

In this connection Hearing Counsel request the Commission to take

official notice ofareport appearing in Traffic World May 3 1976 to the

effect that Tote planned to place a second vessel in the Alaskan trade In

order to avoid any future misunderstandings Hearing Counsel recom

mend that Agreement No T 3130 be modified to specify that Tote will

have the right to one preferential vessel call per week rather than 52 per

year

Tesoro requests that the proceeding be reopened to receive additional

evidence concering Tote s plans for the introduction of a second vessel

According to Tesoro the introduction of a new vessel into the trade

would invalidate most if not all of the Presiding Officer s conclusions

and necessitate reconsideration ofthe entire preferential berthing issue

Both Tote and Anchorage consider Tesoro s

request to reopen the

proceeding as an attempt to delay approval of the agreements and to be

without merit While Anchorage generally supports the modification

suggested by Hearing Counsel Tote does not Tote admits the introduc

tion of a second vessel and explains that while it has no intention of

bunching preferential voyages some flexibiity is needed to compete

and serve the needs of the shipping public Furthermore there are

allegedly numerous events beyond its control such as weather vessel

repairs etc which could occasionally cause a delay and which could

result in Tote s losing a preferential voyage Tote argues that because its

agreement requires 15 days notice for a preferential call it would be

impOssible for a replacement vessel to make that preferential call within

the same week in the event that the primary vessel broke down or was

delayed by weather For these reasons Tote has advised that a concrete

limitation of one call per week is not reasonable for it is far too harsh and

results in total inflexibility

The testimony in the record relating to approval ofAgreement No T

3130 is premised on the understanding that Tote would serve Anchorage

with one preferential call per week The Initial Decision ofthe Presiding

Officer was also based on this assumption Tote now states that it intends

to exercise its right to make its 52 preferential calls as demand merits

The impact ofwhat Tote now proposes is not determinable on the present

record and would require a complete evidentiary review We see no

reason to burden the parties by remanding the proceeding for further

hearings on this limited point instead we intend to hold Tote to the

terms ofAgreement No T 3130 and require that it berth its vessels on a

preferential basis approximately one time per week Approximately

means that Tote will be limited to one preferential call per week unless it

is unable by reason of weather conditions an emergency to its scheduled

19 F M C
456 FEDERAL MARITIME COMMISSION

j

vessel or other conditions beyond Tote s control to make a prefe

call at Anchorage during a given week Only in the event that T

unable to make a preferential vessel call during a particular week b

of circumstances beyond its control will it be permitted to dou

preferential calls in a subsequent week As an alternative to 

doubling its preferential calls because of unforeseen circumstanc

scribed above Tote may employ a replacement vessel to m

scheduled preferential call without providing the IS days notice F

Tote will provide Anchorage with prompt notice of its inability to 

preferential call as scheduled and its intent to either 1 double its 

a subsequent week or 2 utilize a

replacement vessel to make the 

preferential call

E Unflled Section 15 Agreements

Hearing Counsel excepts to the Presiding Officer s determinatio

certain leases to back up areas at Anchorage are not section 15 

ments The leases in question were never introduced into the he

Hearing Counsel s attempt to enter the leases as late filed exhibi

rejected by the Presiding Officer On brief Hearing Counsel onc

raised the question ofthe leases and their subjectivity to section 15 

Initial Decision the Presiding Officer noted that the Commission 

instituting this proceeding did not include as an issue the matter 

back up leases and that a serious question now arises wheth

introduction ofthis issue at the briefing stage by Hearing Counsel v

the notice provisions for due process

However to avoid a subsequent remand on this issue the Pr

Officer considered the leases to the back up areas and found the

subject to section 15 This determination was based on afinding t

leases appeared to be routine real estate transactions involving n

more than a landlord tenant relationship Citing the Commission 

pretative rulings 46 C P R 530 5 he concluded that such agre

are not subject to section 15 and that in order to bring s

agreement under section 15 some ofthe activities described in that 

must be covered by the agreement in the back up leases In so 

he rejected Hearing Counsel s argument that the leases are part 

same integrated operation as the subject Agreements and may 

Anchorage s operations

The Presiding Officer was also not persuaded by Hearing Co

arguments that similar leases between Sea Land and Anchorag

filed and approved by the Commission pursuant to section 1

Presiding Officer is of the opinion that the Sea Land leases were a

within the scope or purview of section 15 and the Commission s 

approval thereofis not to be considered adefinitive ruling that the

required section 15 submissions

It is our opinion that the Presiding Officer erred in his disposition 

matter Since the Presiding Officer refused to allow Hearing Cou

19 
AGREEMENT NOS T 1685 T 1685 6 T 3130 457

enter the leases into evidence as late filed exhibits his subsequent

consideration of the merits of the agreements was improper However

with two exceptions we do not disagree with his ultimate conclusion that

the back up leases are not section 15 agreements

Our Order of Investigation while not specifically addressing the issue

of back up leases was sufficiently broad enough to encompass not only

the preferential berthing aspects ofthe two agreements but any other

agreements which comprised the complete understanding between the

parties

Hearing Counsel s allegations raised the issue ofwhether the complete

agreements were before the Commission These substantive allegations

should have been considered by the Presiding Officer He should have

admitted the back up leases into evidence and his refusal to do so was

error

2

However a resolution of this particular issue does not require our

remanding the proceeding to the Presiding Officer The existing record is

sufficient to permit the Commission to make a determination regarding

the back up leases

Notwithstanding the Presiding Officer s refusal to permit the subject

leases to be introduced into evidence the matter ofwhether such leases

are subject to section 15 was discussed by Hearing Counsel and

Anchorage in their briefs The matter wall also addressed by Hearing

Counsel in their exceptions to the Initial Decision to which Anchorage

and Tote responded Further there is testimony in the record relating to

the back up leases

Therefore the following agreements are admitted as late fIled exhibits

and designated as follows 13

lLease between Sea Land and Anchorage dated December 10 1970

pertaining to the lease of Lots 5A and 5B now redesignated 5C at the

Port ofAnchorageExhibit No 124

2 Assignment of a lease from Jack E Cole and Donald D Emmal to

Sea Land with the consent of Anchorage alease dated September 28

1973 pertaining to the lease ofLot 5F now redesignated 6D at the Port

ofAnchorageExhibit No 125

3 Lease between Tote and Anchorage dated July 24 1975 pertaining to

the lease ofLots 3A and 2B at the Port ofAnchorageExhibit No 126

Upon examination ofthe above leases and review ofthe record in this

proceeding as it relates to those leases we fmd that the Presiding Officer

was correct in fmding that these back up leases are not subject to section

15 This determination is based not only on a review of the agreements

standing alone but on a consideration ofthe interrelationship between the

IJNo objections were raised by the parties to the introduction of the leases when they were originally submitted by

Hearing Counsel

13 The two Sea Land back up leases executed with Anchorage in 196411965 Agreement Nos T 1685 A and T

1685A I were routinely filed and approved as section 15 agreements when originally submitted Whatever prompted

thatapproval in 196411965 there is nothing in the record in Docket No 75 35 which necessitates ourdisturbing that

action here

19 F M C
preferential leases and the leases for the back up areas Ther

proper basis in this record upon which we can fmd that the b

leases were part of the total understanding between the parties

Of the leases in question only the lease between Tote and Anc

covering Lots 3A and 2B was negotiated after 1974 and there is tes

regarding the sequence of events leading up to the effectuation 

lease While the preferential berthing and the back up areas cove

in the same locale as discussed inAgreement No T4supra 

no adequate showing that the activities accomplished in this p

are essential to Tote s

integrated containerized operations Ba

prior Commission determinations the two Sea Land leases exec

1970 Exhibit No 124 and 1973 Exhibit No 125 standing alo

not subject to section 15 Moreover we fmd no evidence in this 

that these leases are so related to the preferential berthing agree

bring them within the purview of section 15

For these reasons we concur in the fmdings of the Presiding 

that on the facts before us in the record the particular leases to b

areas described above are not sbject to section 15

F Pipeline Construction

Tesoro takes issue with the Presiding Officer s conclusion as 

probable abandonment ofbarge service by Tesoro in the not too 

future because of construction of an oil pipeline linking Nik

Anchorage Tesoro argues that the Commission should reje

conclusion because it is not supported by the record and the futur

pipeline is uncertain because ofthe lack of adequate fmancing

Whatever merit there may have been to Tesoro s exception h

mooted by Tesoro s admission durina oral argument that Tes

purchased the pipeline which is now under construction It isinco

ble that Tesoro will not utilize the pipeline once it is completed 

Tesoro s vicepresident testified that his company would use the 

for transporting its products from Nikiski to Anchorage Howeve

the effect of the pipeline on Tesoro s operations is of some relev

our consideration of the pendingqreements there is adequate e

in the record to reach a determination with respect to both agre

without undue resort to the pipeline issue

G Other Modifications

The Presiding Officer conditioned his approval of the agreem

the parties modifing them in certain other respects The majority 

modifications reflect accommodations reached between the parti

example under Agreement No T 3130 Tote is to clear space in 

Area B to accommodate Coastal s cargoes Coastal in turn is 

five days notice to Tote and must clear the assianed area as ra

possible There is no fmding by the Presiding Officer that Coasta

harmed by its non preferential use of Transit Area B or t

458

1

j

j

I

1

i

I

1

i

j

l

FEDERAL MARITIME COMMISSION

1
AGREEMENT NOS T I685 T 1685 6 T 3130 459

agreement as presently drafted in this regard fails to meet the approval

standards ofsection 15 nor is there any proper basis in the record in this

proceeding to so conclude Itis our opinion therefore that we cannot

legally impose this modification as acondition to approval of Agreement

No T 3130

The same holds true for the Presiding Officer s modification requiring

the installation of additional piping and a crane at Terminal I While

Tesoro had requested the imposition of such arequirement and Anchor

age has already agreed that if Agreements No T 1685 and T 3130 are

approved it will make the necessary improvements at Terminal 1 there

is no evidence that such improvements are necessary for approval The

Presiding Officer merely found that it appears appropriate that Agree

ment No T 3130 be modified to require such improvements

Similarly the modifications relating to the Port Director s authority to

suspend preferential rights for safety reasons and to order Tote to vacate

Transit Area B after five days cannot legally be made conditions of

approval While such modifications might clarify the Port Director s

authority there is no basis in this record to conclude that the Agreements

without the modifications cannot be approved

For the most part the various modifications proposed by the Presiding

Officer are basically the result ofunderstandings reached by the parties

during the proceeding The fact that these accommodations were arrived

at in this manner may explain the absence of any extensive discussion of

these matters on the record Nevertheless there is no basis upon which

the Commission may impose the modifications as a condition for

approval

To the extent however that these modifications reflect the understand

ing of the parties with regard to the future implementation of the

agreements at issue herein they should be fIled for approval pursuant to

section 15 before they are implemented Accordingly in order to provide

the parties every opportunity to process a complete agreement we will

withhold the issuance of our fmal order in this proceeding pending their

submission

Environmental Issues

The Commission s Office ofEnvironmental Analysis OEA prepared a

Threshold Assessment Survey TAS and reached the conclusion that the

environmental issues relative to this proceeding did not constitute amajor

Federal action significantly affecting the quality ofthe human environment

within the meaning of the National Environmental Policy Act of 1969

NEPA 42 D S C 4321 et seq and that the preparation of a detailed

environmental impact statement was not required under Section

4332 2Xc ofNEPA

A notice of Environmental Negative Declaration was published in the

Pederal Register on May 3 1976 Exceptions to the Declaration and basic

TAS werefIled by Anchorage Sea Land and Tesoro We have examined

19 F MC
460 FEDERAL MARITIME COMMISSION

each of these exceptions the OEA s response thereto Adden

TAS as well as the underlying TAS and conclude that there is 

which would cause us to reverse the TAS s finding of environmen

significance Accordingly we adopt the Environmental Negative 

ration prepared by OEA and make it apart of our decision here

TAS and the Addendum thereto are availlible for inspection on req

the Public Information Office Room 11413 Federal Maritime C

sion 1100 L Street N W Washington D C 20 73

J

i

CONCLUSION

4

Required Modifications

Agreement No T 3130 is approvable subject to the parties su

modifications requiring that Tote tie up its vesselatPOUferminal 

to leave available for the berthing of Coastal s Barge 201 aminim

125 feet measured from the northern boundary of Terminal 

modification should further provide that 1 if 12 feet is insuftcientto

berth simultaneously Tote s vessel at POUferminal1 Coastal 

201 at Terminals 1 2 and aSea Land vessel at Terminals 23 bec

Sea Land s Inability to berth and offload at Terminal 3 from a d

point north of the southern boundary of Stevedore Building No 

Tote will berth its vessel so that Coastal s Barge 201 may b

Terminal 1 in space in excess of 125 feet provided that rote s ves

not have to move from its tamp locations and that the aft mooring 

Tote s vessel has a clear run to a safe ballard and 2 immediate

to arrival of Tote s vessel at the POUferminal I any vessel at T

Iwill vacate said Terminal in ordeI to permit Tote s vessel to ber

her arrival except that Coasta1 sBarge 20hvill not be required t

disoharging operations and vaeawi berth unlessth Pilot and 

of Tote s vessel determine that Coaatal s Barge 201 must vacate 

to permit the safedocking of the vessel

With respect to the preferential berthing of Tote s vessel a

mately one time per week the parties are further required to 

Agreement No T 3130 to speoifically indicate that approxim

means that Tote will be limited to one preferential call per week u

is unaBle by reason ofweather conditions an emergency to its sc

vessel or other conditions beyond its contrOl to male a prefere

at Anchorage d a given week Inthat event Tote will be p

to double its preferentiBl calls in a subsequent week or in the 

employ a replacement vessel to make a scheduled preferential call 

providing the 15 days notice The modification shall also prov

Tote will fIlnUsh Anchorage with prompt notiee of its ility to 

preferential call as scheduled and its intent to either 1 dou le it

asubsequent week or 2 utilize a replaCementvesseltomake the 

preferential call

Agreement No T 168 is approvable if it is modified to requ

j

J

1

j

j

j

i

1

1

i

0 J

I

1
AGREEMENT NOS T I685 T 168 T 3130 461

Land to berth its vessels at Terminals 2 and 3 in such a manner as to

leave 237 feet ofthe southern portion of Terminal 2 available for Coastal s

use during such times as bulk cement discharging operations require barge

utilization ofthe facilities at Terminal 2 with the understanding that such

space shall be made available to the extent sufficient space is available at

Terminal 3 for the berthing of Sea Land vessels The modification shall

require Coastal to give reasonable notice to Sea Land in advance to

minimize any problem in connection with the cement barge

In addition as a condition for approval both agreements shall be

modified to indicate specifically whether tonnage fees assessed against

Sea Land and Tote upon completion ofthe stated number of preferential

calls in their respective agreements will be at the rates set forth in

Anchorage s tariff or at the rates specified in the agreements

The Commission s approval is further conditioned on the required

modifications to both agreements being submitted to the Commission

within 30 days from the date ofthisReport

Other Modifications

During the 30 day period the parties are also asked to submit any

further amendments reflecting various accommodations reached among

themselves during the proceeding We intend to notice any amendments

in the Federal Register and allow interested persons to comment thereon

Our final order with respect to both agreements will be held in abeyance

pending submission of the required modifications and review of any

additional amendments presented

Vice Chairman Clarence Morse concurring and dissenting

Ido not agree that the back up leases are not subject to section 15

Considering the geographical limitations of the port and the absolute

necessity for container and Ro carriers to have container yards etc

it is not conceivable that we lack subject matter jurisdiction The leases

involve ongoing relationships between Anchorage and the carriers for the

sole purpose as stated in each lease ofproviding indispensable facilities

for the conduct of ocean carrier operations Also the carriers will have

preferential rights to the piers thereby making their leases similarly

restrictive ofcompetition

Consequently in view ofthe need for prompt action by the Commis

sion Iwould grant interim approval to the back up leases pending further

proceedings

Inall other respects Iconcur

SEAL S FRANCIS C HURNEY

Secretary

19 F MC
FEDERAL MARITIME COMMISSION

DOCKET No 7655

PETITION FOR DECLARATORY ORDER OF MATSON NAVIGATIO

COMPANY

ORDER

January 7 1977

Matson Navigation Company Matson a common carrier by w

interstate commerce subject to the Shipping Act 1916 has petitio

Commission for a Declaratory Order pursuant to 46 C F R 502 6

Petition was noticed in the Federal Register on October 8 19

Replies were received from the Military Sealift Command Depart

the Navy MSC and the Commission s Bureau of Hearing C

Hearing Counsel Z

The Petition seeks authority for Matson to capitalize the cost of

used to acquire a new 071 containership now under construc

Bath Iron Works Corporation 3This cost would include net intere

on borrowed funds actual interest and income foregone as a r

using existing company funds foregone interest 4 Matson also r

the Commission to state that such capitalizedinterest will be rec

as part of Matson s vessel investment account in all rate 

proceedings involving the new 071 vessel and future vesse

structed by Matson In support ofthis request Matson states t

maintenance of an Allowance For Funds Used During Constr

account and the inclusion of interest paid on capital investmen

during construction in a carrier s rate base is consistent with the 

utility rate making practices ofthe Federal Power Commission an

state agencies regulating electric gas water and telephone com

Matson also finds support in certain practices ofthe Maritime Adm

tion United States Department ofCommerce MARAD No info

is provided as to why Matson s 071 project differs from othe

l

Petition of Matson Navigation Company for Issuance of aDeclaratory Order Authorizing Capi

Funds Used Durina Vessel Construction Petition

2 Matson has submitted a Reply to MSC s Reply apleadina not permitted under the Commission 

Practico and Procedure 46C F R 502 74

The first of 27 monthly progress payments was made on Aprill 1976

4 Matson wishes the Commission to defer rulina on whether it should be allowed to capitalize incom

on funds derived from deferred federal incometaxes

462 19 
MSC v MATSON NAVIGATION CO 463

acquisitions orwhy this question could not better be resolved by industry

wide rule making or case bycase adjudication

MSC opposes the issuance of a Declaratory Order and states that

Matson s propositions should be examined in one of the Commission s

current investigations into Matson rate increases Docket Nos 7322 75

57 and 7643 In any event MSC opposes the capitalization offoregone

interest Italso believes Matson should not capitalize actual interest

expense until it divulges how it would treat such interest for federal

income tax purposes MSC requests an evidentiary hearing if the

Commission wereto consider the Petition on the merits

Hearing Counsel argue that the instant proposal entails too many

variables for the Commission to grant a carte blanche authorization to

capitalize either actual interest or foregone interest They claim a carrier

has numerous options in financing ship construction all of which can

significantly affect its operating results and that it would be impossible to

assess Matson s proposal without first determining the affects of such an

authorization on Matson s actual operations Hearing Counsel also states

that the Commission should expressly rule on the propriety ofcapitalizing

interest foregone on funds derived from deferred federal income taxes if

Matson s

request were to be treated on the merits

The Petition presents involved questions ofpolicy and fact which are

not effectively treated by the issuance of a Declaratory Order and shall

therefore be denied Matson does not request the resolution of a particular

controversy oruncertainty arising from past Commission actions or even

allege that a controversy exists Instead Matson desires a personal

exemption from the Commission s ordinary approach to rate base

valuation Before a conclusion could be reached on such a Petition for

Special Relief it would be necessary to closely examine the carrier s

mancial position and rate structure Matson has furnished us with no

public interest reasons for conducting such an examination at this time

The accounting regulations of the Federal Maritime Commission are

not in issue here 5

Indeed the Commission does not require carriers to

maintain particular types of acounts or an uniform accounting system

General Order 5 46 C F R Part 511 and General Order 11 46 C F R

Part 512 provide only that carriers using the uniform system of accounts

prescribed by MARAD must file annual financial reports based upon the

MARAD system

6

A carrier employing a different accounting system

must thorougWy describe that system to the Commission Whether the

capitalization of interest expended for vessel construction reflects gen

5

The two regulations cited in Matson s Petition are those of the MARAD an agency which requires subsidized

carriers to adhere to an uniform accounting system The first 46 C F R 282 1 359 provides forthe maintenance of

a Construction Work in Progress account showing all payments incident to the costs of vessels in process of

construction which are capitalized in accordance with generally accepted accounting procedures The second 46

C F R 284 2b requires the capitalization of interest incurred during periods of construction borrowed funds only

less interest earned thereon for the purpose of paying operating differential subsidies in those relatively rare

situations whereMARAD permits carriers torecapture capital investment

6 46C F R 511 15 and 512 7

19 FM C
464 FEDERAL MARITIME COMMISSION

erally accepted accounting procedures within the meaning of 46 

Part 282 1 359 is a matter for MARAD to determine

Accounts or accounting methods acceptable to MARAD may 

with us Our General Order 5 and 11 regulations do not state w

interest expenditures incurred during vessel construction sho

capitalized or whether Interest During Construction Accounts sh

maintained 7The annual financial reports merely guide the Comm

staff in its regulatory responsibilities and do not themselves estab

validity ofany revenue account vessel investment account or to

base calculation Our mllior concern is that the methodology emp

preparing the reports including interest capita1izationpractices be 

identified

Reasonable rates are determined by establishing a fair rate of re

the fair value of the carrier s property devoted to public servic

return on rate base should be sufficient to cover operating expen

the cost ofattracting capital It would affect the determination of M

fair rate of return in pending Commission dockets were 

separately decide whether it may capitalize interest expenses fo

used to construct the 071 containership IfMatson wishes to 

the issues connected with interest capitalization it should do so 

complete record being compiled in the present alljudicatory proce

Accordingly IT IS ORDERED That the Petition ofMatson 

tion Company for Issuance of a Declaratory Order Authorizing C

zation of the Cost of Funds Used During Vessel Construct

DENIED

By the Commission

I

1

I SEAL S FRANCIS C HURNEY

Secre

j

7

TheCommill ion has accepted annual financial reports which included entities for capitalized interest 

capital and those which did not

1
19 F M C 465

FEDERAL MARITIME COMMISSION

DOCKET No 761

CSC INTERNATIONAL INC

v

ORIENT OVERSEAS CONTAINER LINE INC

NOTICE OF ADOPTION OF INITIAL DECISION

January 5 1977

Noexceptions having been f1ed to the initial decision in this proceeding

and the Commission having determined not to review same notice is

hereby given that the initial decision became the decision of the

Commission on January 5 19J7

By the Commission

SEAL S FRANCIS C HURNEY

Secretary
FEDERAL MARITIME COMMISSION

No 761

CSC INTERNATIONAL INC

v

ORIENT OVERSEAS CONTAINER LINE INC

December 13 1976

ERRATA

Initial Decision on Remand served December 9 1976

Page 3 Line 13 change evicence to evidence

Page SLine 21 delete 16 SRR 1575

Page SLine 29 add 16 SRR 1575

S WILLIAM BEASLEY HARRIS

Administrative law J

466 1
19 F MC 467

FEDERAL MARITIME COMMISSION

No 761

CSC INTERNATIONAL INC

v

ORIENT OVERSEAS CONTAINER lINE INC

Reparation denied

From the record in this case the description of the complainant s product Trimet a

resin raw material rather than a synthetic resin itself is properly any of the

following

Trimet complainant s trademark on polytrimethylolethane or

Trimet Technical Trimethylolethane or

Technical Trimethylolethane Trimethylolethane is a trifunctional polyhydric

alcohol with all of the hydroxic groups being primary alcohol functions

The claim for reparation is for alleged overcharge in violation of section 18b 3 of the

Shipping Act 1916 for transportation of goods from New York to Keelung under

two Bills of Lading B L NYCT 56 dated December 21 1973 and B L NYCT ll

dated January 28 1974 each was for the shipment of Trimet however it was

described on BL NYCT 56 Exh I as Synthetic Resin and on B L NYCT ll

Exh 2 as Chemicals Nor Organic Chemicals Technical Trimethylolethane

Under Rule 4 of the respondent s tariff the carrier must compare the commodity

description on the bill of lading with the description on the shipper s Export

Declaration The description on B L NYCT 56 compared with shipper s Export

Declaration reflected a Schedule B number 512 0917 which defines the cargo as

Synthetic Alcohols chemically defined Monohydric NFC The description on

B L NYCT ll in comparison with shipper s Export Declaration Trimethylole

thane checked in commodity description in Schedule B number 512 0917 was

specified Respondent applied oceanfreight rate of 9125 W orM as covered by

Item 575 of its tariff to B L NYCT 56 Alcohol N O S not dangerous or

hazardous On B L NYCT ll respondent through clerical error applied ocean

freight rate of 8100 W or M as covered by Item 2187 of its tariff Chemicals

Organic N O S when correct assessment of Item 575 Alcohols N O S 9125

W or M should have been made Under the circumstances of this case Rule 4 of

respondent s tariffwas and should have been used to aid in testing what can now be

proved was actually shipped based on all the evidence Alcohol N O S not

dangerous or hazardous Item 575 of tariff seems to be proper There is no

overcharge but an undercharge which respondent should seek from claimant and

keep Commission posted as to such endeavors

It is well settled that a cause of action based upon a claim for reparation accrues at the

time of shipment or upon payment of freight charges whichever is later The freight

charges in this instance were collected on April 2 1974 as to B L NYCT ll and on
468 FEDERAL MARITIME COMMISSION

i

July 2 1974 as to B L NYCT 56 at which time respectively the cause o

accrued

The complaint seeking reparation was filed with the Commission on December 2

and is within the two year statutory period of section 22 of the Shlppina Ac

William Levenstein for complainant

Robert G Jufer a practitioner before the Commission for resp

1

INITIAL DECISION ON REMAND OF WILLIAM BEASL

HARRIS ADMINISTRATIVE LAW JUDGEl

The Commission s July 12 1976 remand of this proceeding 

Presiding Administrative Law Judge was for such action inclu

hearing as he deemed necessary Order on Remand p

4 The 

proceedings in which the March 9 1976 Initial Decision issue

conducted under the Shortened Procedure provided for in the Co

sion s Rules of Practice and Procedure 46 CFR 502 151 et seq 

Presiding Administrative Law Judge deemed it best that this r

proceeding be given full hearing and briefing treatment

J

4

PROCEDURAL BACKGROUND SINCE REMAND

Pursuant to Rule 6 d of the Commission s Rules of Practi

Procedure 46 CFR 502 94 notice was served July 14 1976 

prehearing conference to be held August 5 1976 The respondf11t a

the August 5 1976 prehearing conference however no one appea

the complainant The respondent moved for dismissal of the com

Prehearing Conference transcript p

5 The Presiding Adminis

Law Judge took the motion under advisement at the same time d

the respondent to reduce the motion towriting with reasons in sup

copy to the complainant Therespondcmt never submitted the mo

writing The motion to dismissthe complain was denied without p

eiu

Notice served August 11 1976 The spondent srequest thatah

in this proceeding he held within thirty 30 days was gran h

were scheduled to commence onSeptember 2 1976 Ibid

Hearing in this remanded proceeding commenced and conclu

Washington D C on September 2 1976 The official stenQ8

transcript of testimony thereof consists of twenty five 25 page

witness Was presented Four 4 exhibits were received in evi

numbered 1 2 3 and 4

In accordance with Rule 10cc of th Commission s Rules ofP

and Procedure 46 CFR 502 169 the abqve mentioned transe

testimony and exhibits together with all papers and requests tiled 

proceeding constitute the exclusive record for facts and decision

The parties at the hearing Th 24 agreedtaantt adhered to ab

schedule of an opening brieffile lby the complainant on or 

October 4 1976 a

reply brief filed by the respondent on or 

Cl

I

1

I

1i

1

I

I This decision became the decision of tho CommJllion January 1977

1
CSC INTL INC v ORIENTOVERSEAS LINE 469

November 4 1976 a closing brief f1Ied by the complainant on or before

November 22 1976

FACTS

From the record herein the Presiding Administrative Law Judge finds

the following facts

1 The complainant CSC International Inc CSC is aDelaware

corporation located in New York whose principal business is the

manufacture and distribution of chemicals and chemical products CSC

alleges it has been subjected to payment of a freight rate for transporta

tion under two Bills of Lading which is uqjust and unreasonable and in

violation of section 18 b 3 of the Shipping Act 1916 for which

reparation is sought from the respondent

2 The respondent Orient Overseas Container Line Inc OOCL is a

common carrier by water engaged in transportation of cargo between

U S North Atlantic ports and ports in Taiwan and as such is subject to

the provisions ofthe Shipping Act 1916 as amended

3 Under Bill ofLading No NYTC 56 dated December 21 1973 CSC

shipped at New York on OOCL s vessel SS Taeho for transportation to

Keelund 6 Pallets said to contain 220 bags Synthetic Resin of agross

weight of 11 165 pounds measuring 354 cft The goods were consigned

to the order ofHua Nan Commercial Bank Ltd Taipei Taiwan Exh I

4 The respondent carrier as to BIL NYCT 56 after comparing the

shipper s commodity description thereon with the shipper s Export

Declaration commodity description per the tariff Rule 4 applied Ocean

Freight rate of 91 25 W or M as covered by Item 575 ofits U S Atlantic

and GulfPortslFar East Tariff OOCL TariffFMC 6 Alcohol N O S

not dangerous or hazardous The total freight paid by CSC was 807 56

5 The respondent admits that the charges for the freight under BIL

NYCT 56 were collected July 2 1974 Tr 15 16 The cause ofaction as

to it accrued as ofJuly 2 1974

6 Under Bill ofLading No NYTC 11 dated January 28 1974 CSC

shipped at New York on OOCL s vessel SS Oriental Leader for

transportation to Keelung 22 Pallets said to contain 860 Bags Chemicals

NO organic chemicals Technical Trimethylolethane of a gross weight

of43 645 pounds measuring 1 299 cft The goods were consigned to the

order ofthe First Commercial Bank ofTaiwan Exh 2

7 The respondent carrier as to BIL NYCT 11 after comparing the

shipper s commodity description thereon with the shipper s Export

Declaration commodity description per respondent s tariff Rule 4

through clerical error applied Ocean Freight rate of 8100 W or M as

covered by Item 2187 ofthe tariff Chemicals Organic N O S when

correct assessment ofItem 575 Alcohol N O S 9125 W orM should

have been made The total freight paid by CSC was 2 630 48 21129

Bunker S C equals 2 84157

19 F MC
470 FEDERAL MARITIME COMMISSION

8 The respondent admits that the charges for the freight unde

NYCT ll were collected April 2 1974 Tr 15 16 The cause of 

as to it accrued as ofApril 2 1974

9 Synthetic resin is a polymer produced by the chemical reac

one or more monomers which react together and form a mole

weight product

10 Trimethylolethane is atrifunctional polyhydric alcohol with 

the hydroxic groups being primary alcohol functions the primary 

this material is areal material making polyester Polyester will be a 

11 Trimet a resin raw material Tr 10 rather than a synthetic 

itself Tr 11 is CSC s trademark on the polytrimethylolethane 

general process for using Trimet to make a polyester resin i

polyhydric alcohol is combined in a certain molecular proportion 

polycarboxylic acid and with other polyalcohols and with po

monocarboxylic acid heated together the water reaction is remove

the product is the polyester

1

DISCUSSION

The Commission s July 12 1976 order remanded this proceeding 

Presiding Officer to issue supplemental fmdings and conclusions on

1 When the cause of action accrued

2 Whether the parties did apply or if not why the parties shou

apply Rule 4 of the carrier s North Atlantic Far East Tariff FM

6

3 What is the proper description of complainant s product

WHEN THE CAUSE OF ACTION ACCRUED

The respondent OOCL admits and concedes the claim for repa

filed December 29 1975 2

as to each Bill of Lading was filed with

two 2 year statutory period provided in seetion 22 of thtrShippin

1916 Tr 15 16 Charges for the B L NYTC 56 dated Decemb

1973 were collected July 2 1974 and for BIL NYTCll dated J

28 1974 charges were collected April 2 1974 The Commission p

out in its July 12 1976 order remanding the proceeding it is well 

that acause ofaction based upon a claim for reparation accrues 

time of shipment or payment of freight charges whiGheveds later 

instance the payment of freight charges was later than the ti

shipment of the goods so the cause of action accrued when the c

were collected

Whether the parties did apply or ifnot why the parties shou

j

I

1

1

I The Jacket in this docket contains part of awrapplns pparently that inwhich the complaint a8 maile

a

po tmark of Now York N

Y

Iloombor 23 1975 Tho complaint boara tamp aocolood Iloombor 

Fodora Maritlmo Commi lon and a tamp a lood lI75 Doc 30 P M 3 40 PocloralMaritlmo Commla

of the Secretary The Commission notted in its July 12 1976 Order on Remand that theMarch 9 19

Decision atatod the complaint was filed with the Commf iQD on December 30 1975 howover the date 

stamped on the complaint is December 29 1975 Henceforth thefirst date of receiptsu mped shall be repr

filing da o

19 
CSC INTL INC v ORIENTOVERSEAS LINE 471

apply Rule 4ofthe carrier s North AtlanticFar East Tariff FMC 6Rule

4 of the tariff in question provides Description of commodities on all

copies ofthe Bill of Lading shall be verified by acomparison with the

description on the corresponding shipper s expOrt declaration which shall

determine the rate to be applied CSC argues that since the respondent

did not adduce any evidence on that question CSC is in no position to

comment on the effect ofthe application ornonapplication ofthat rule by

the carrier CSC s opening brief p3 OOCL on the other hand argues

that under provisions ofRule 4 of OOCL Tariff FMC 6the carrier must

compare the shipper s commodity description in the bill oflading with the

description in the shipper s Export Declaration OOCL repeats at p

3 of

its brief its letter dated January 14 1976 which was subsequently served

January 22 1976 as its answer to the complaint that On BIL NYTC 56

shipper described cargo as Synthetic Resin however the U S Customs

Export Declaration also prepared by the shipper reflected aSchedule B

number 512 0917 which defines the cargo as Synthetic Alcohols

Chemically Defmed Monohydric N E C We accordingly applied the

ocean freight rate of 9125 W or M as covered by Item 575 OOCL

Tariff FMC 6under description of Alcohol N O S not dangerous or

hazardous And that On bill of lading NYTC ll shipper described

cargo as Chemicals N O Iorganic chemicals fechnical Trimethylole

thane and the U S Customs Export Declaration reflected Schedule B

number 512 0917 also upon checking commodity description Trimethy

lolethane in Schedule B classification no 512 0917 was specified

Through clerical error Item 2187 covering Chemicals Organic N O S

was assessed at 8100 W or M when correct application would have

resulted in assessment of 91 25 W or M rate of Item 575 Alcohols

N O S

OOCL argues that with the detailed information required on the Export

Declaration and the penalty involved for intentionally stating false

information thereon OOCL feels that the application ofRille 4ofOOCL

Tariff FMC 6requiring the carrier to verify the bill of lading commodity

description with the Shipper s Export Declaration and to assess charges

based on such description would eliminate violations of section 18b of

the Shipping Act 1916

CSC in giving its views in general on such rules as Rule 4 contends the

carrier s bill of lading is the contract ofaffreightment that the export

declaration is prepared for a reason other than the transportation

transaction between the shipper and carrier and that there is no authority

to use Export Declarations as extensions ofthe bill oflading CSC argues

it is really immaterial that the bill of lading description and the Export
1

I

J

J

I

j

i

472 FEDERAL MARITIME COMMISSION

While CSC argues the respondent adduced no evidence on the s

question on remand the record herein shows that the respondent ea

showed comparison had been made by it with the Export Declara

CSC and the bills oflading as evidenced by OOCLs letter ofJanua

1976 and the Answer to the Complaint At no time did the comp

dispute the comparison and the results thereof Unfortunately neith

complainant nor the respondent submitted or offered for rece

evidence the Export Declaration Perhaps CSC did not want the E

Declaration in this record since CSC argues there is no authority 

Export Declarations as extensions of the bill of lading CSC well m

right if the use of the Export Declaration was an extension of the 

lading The use as described in the Tariffs Rule 4 is not an extens

the bill of lading but a check and balance similar to the check

balances the various branches of Government exercise under the 

Constitution 16 SRR 1575

It seems that some check and balance is desirable especially 

age of containerization and the test is what claimant can now p

based on all the evidence as to what was actually shipped even 

actual shipment differed from the bill of lading description In ra

shipment the carrier is not bound by shipper s misdescription app

on the bill oflading See Kraft Foods v Moore McCormack 

Inc Docket No 7344 Commission Report on Remand served N

ber 24 1976

The Presiding Administrative Law Judge finds and concludes f

above reasons that the respondent did apply and should have app

the shipments in question Rule 4 ofits tariff The application of sai

4 seems to have conformed with its provisions

THE PROPER DESCRIPTION OF COMPLAINANT S PRODU

CSC says The evidence in this case is clear and uncontrov

Trimet complainants trade name for Trimethylolethane is used to 

polyester asynthetic resin and is aresin raw material CSC s o

brief p

4

According to CSC the freight rate as to B LNYTC56 assess

OOCL was 9125 per SO cft at an undesianated tariff provision 

covers presumably movements classified as Chemicals N D S und

Far East North Atlantic Port Tariff of OOCL The total freight p

CSC was 807 56

CSC claims the shipment should have been described on BIL N

56 as 5 B L says 6 pallets said to contain 220 Bags Synthetic 

Technical Trlmet and rated 7150 per 2000Ibs as pel the provis

Synthetic Resin compound or powder non hazardous N O S Sy

Resin in raw material form for a total freight of 399 15 

overcharge claim is derived from the 807 56 paid as freight charge

2 1974 subtracting 399 15 which CSC claims as the correct f

19 
CSC INTL INC v ORIENTOVERSEAS LINE 473

charge which leaves 4081 for which CSC seeks reparation as to B L

No NVCf 56

According to CSC the freight rate assessed as to B L NYCT I1 by

aaCL was 8100 per 40 cft as per provision for Chemicals NO under

the North Atlantic Far East TariffofaaCL This is Item 2187 lIth

Rev Page 83 effective January 15 1974 of arient overseas Container

Line Tariff Far EastINorth Atlantic Ports FMC 6Chemicals organic

NaS not hazardous or dangerous W M to Keelung 8100 The total

freight paid by CSC was 2 630 48 21129 Bunker SIC 2 84157

CSC claims the shipment should have been described on B L NYTC

11 as 22 pallets said to contain 860 bags Synthetic Resin N a S

Technical Trimet and rated as 7150 per 2000 Ibs as per the provision

for Synthetic Resin compound or powder non hazardous N aS

Synthetic Resin in raw material form of the aaCL North Atlantic Far

East Tariff for a total freight of 1 560 31 14185 Bunker SIC

1 702 16 CSC s overcharge claim is derived by subtracting from the

2 84157 paid April 2 1974 1 702 16 leaving 1 139 41 for which CSC

seeks reparation as to B L NYCT l1

aaCL argues that Technical Trimet CSC s trade name for Trimethy

lolethane described by CSC as Trifunctional polyhydric alcohol with all

ofthe hydroxic groups being primary alcohol functions and it is a raw

material used in the manufacture of these synthetic resins rather than a

synthetic resin itself is not a synthetic resin aaCL contends that

trimethylolethane is not defmed in the Chemical Dictionary as aSynthetic

Resin that CSC in its complaint herein defines Technical Trimet as the

raw material base for polyester and alkyd resins aaCL also quotes from

CSes brochure attachment 4 to complaint Trimet technical is used

also in other areas such as synthetic lubricants oil modified polyme

thanes plasticizers and in organic synthesis aaCL contends that

Technical Trimet is a chemical or component part of synthetic resin as

well as a component used in manufacture ofother products aaCLbrief

p

7

CSC presented the only witness in this proceeding Dr Philip J Baker

Jr a holder of a PH D degree in organic chemistry who was originally

hired in the research department of CSC in September of 1940 and

worked in the Research and Development Division for 25 years then

transferred to his present employment in the technical staff of the

Corporate Marketing Services Inc Chemical Group Incorporated Terre

Haute Indiana Tr 7 8 Dr Baker defined trimethylolethane as a

trifunctional polyhydric alcohol with all of the hydroxic groups being

primary alcohol functions whose principal use is a real material making

polyesters Tr 9 aresin Trimet CSes tradename on polytrimethylole

thane a resin raw material rather than a synthetic resin itself Tr 11 is

used to make a polyester resin In the general process for using Trimet to

make a polyester resin the polyhydric alcohol is combined in a certain

molecular proportion with polycarboxylic acid and with other poly

19 F M C
474 FEDERAL MARITIME COMMISSION

alcohols and with possibly monocarboxylic acid heated togethe

water reaction is removed and the product is the polyester Tr 10

The Presiding Administrative Law Judge finds and concludes fro

record in this case that the proper description ofcomplainant s p

is

Trimet its registered tradename or

Trimet Technical Trimethylolethane or

Technical Trimethylolethane

Trimethylolethane is a trifunctional polyhydric alcohol with all 

hydroxic groups being primary alcohol functions It and Trimet are 

raw materials rather than a synthetic resin itself combined in a 

molecular proportion with polycarboxylic acid and with othe

alcohols heated together the water reaction removed and the pro

the polyester

CSC in its Reply Brief Closing Brief argues the evidence show

the respondent concedes that the product is a synthetic res

material CSC does not point to where in this record OOCL has 

such a concession OOCL disputes that the commodity shippe

synthetic resin saying the commodity is merely aproduct which is u

the manufacture ofsynthetic resin as well as other products

CSC argues that respondent s tariff provides a rate for 

Synthetic and that the Note in Item 1650 sic Exh 3 refers t

No 7650 of the tariff states that that description and rate refers o

the raw material And that the product is such a raw material I

2 On the other hand OOCL says regarding application of this no

that CSC has changed the meaning by quoting OOCL s tariff 

context As used in this item synthetic resin refers only to th

material OOCL says when reading this notation it must be cons

in its entirety and that raw material must be interpreted as sy

resin material still in its original state before processing or manu

and does not refer to the components or ingredients of synthetic 

OOCL Brief p8

OOCL argues that on B L No NYTC 56 Exh I the s

described the cargo as Synthetic Resin However the Export D

tion also prepared by the shipper reflected aSchedule B number 51

whichdefmes the cargo as Synthetic Alcohols Chemically De

MonOhydric N E C that OOCL applied the ocean freight r

9125 W or M as covered by Item 575 OOCL Tariff FMC 6 

description of Alcohol N O S not dangerous or hazardous O

NYTCll Exh 2 the shipper described the cargo as Chemicals 

Organic Chemicals Technical Trimenthylolethane Howeve

Export Declaration reflected Schedule B number 512 0917 00C

through clerical error Item 2187 covering Chemicals Organic N 

was assessed at 8100 W or M when correct application would 

resulted in assessment of 9125 W or M rate of Item 575 Alc

N O S

1

J

J

j

19 
CSC INT L INC v ORIENTOVERSEAS LINE 475

CSC proposed as finding of fact No 6 opening brief p 2 At the

time these shipments moved the respondent s tariff Orient Overseas

Container Line Tariff FMC jpublished in Item 1650 sic Item 1650

refers to Brooms corn a rate of 4850 for the December 21 1973

shipment and 55 W for the January 28 1974 shipment on Resin

Synthetic Bunker surcharges of 2 and 650 per ton respectively are

provided on 3rd Rev Page lA and 4th Rev Page I A respectively

Exh 3 is a

copy ofOOCLs tariff 6th Rev Page 133 A effective June I

1973 covering Item No 7650 CSC contends that from the evidence and

the tariff the proper charges should be computed as follows

BL NYTC 5611 165 pounds at 4850 per 2000 pounds plus 2

per

2000 pounds 281 70 Paid 807 56 Should be 28170 Carrier paid

525 86

B L NYTC Il43 645 pounds at 55 per 2000 pounds plus 650 per

2000 pounds 1 34193 Paid 2 841 57 Should be 1 34193 Carrier

paid 1 499 64 Total amount overpaid 2 025 50

The Presiding Administrative Law Judge upon consideration of the

above finds and concludes that he agrees with OOCL s contention that

Trimet is an ingredient of synthetic resin and is not raw material that

OOCL s tariff Item 7650 contemplates and CSC would have applied As

Dr Baker testified Trimet is a resin raw material rather than a synthetic

resin itself The description stated to be on the Export Declaration of

Synthetic Alcohols and the testimony that trimethylolethane is a trifunc

tional polyhydric alcohol with all of the hydroxic groups being primary

alcohol functions does not compare favorably with the B L NYTC 56

Exh 1 description ofthe goods as synthetic resin and seems to justify

the application by OOCL of the ocean freight rate of 9125 W or M as

covered by Item 575 of the tariff in question under Alcohol N O S

not dangerous or hazardous Thus it is concluded as to BL NYTC 56

there should be no reparation

The Presiding Administrative Law Judge also is in agreement with

OOCL that the same Item 575 ofthe tariff should have been applied to B

L NYTC ll Exh 2 OOCL asserts Item 2187 was applied through

clerical error Application ofItem 575 would be a revision upward the

shipper having paid less under Item 2187 then Item 575 of the tariff

requires However the carrier must pursue collection ofthe undercharge

other than in the Commission At the same time the carrier must report

to the Commission what steps it takes to collect the undercharge and the

results thereof

FINDINGS AND CONCLUSIONS

Upon consideration of all the aforesaid the Presiding Administrative

Law Judgefinds and concludes in addition to the fmdings and conclu

sions hereinbefore stated that

19 F MC
476 FEDERAL MARITIME COMMISSION

CSC is not entitled to an award of reparation and its reque

reparation should be denied

Wherefore it is ordered subject to review by the Commiss

provided in the Commission s Rules ofPractice and Procedure tha

A CSC s claim for reparation be and hereby is denied

B OOCL shall promptly and fully inform and advise the Comm

of the receipt or non receipt of payments due it by virtue 

undercharge herein and if necessary shall pursue to collect the s

the appropriate legal form again keeping the Commission prompt

fully advised so that OOCL and the Commission can meet the on 

responsibility imposed by the Shipping Act 1916

C This proceeding is discontinued

S WILLIAM BEASLEY HARRIS

Administrative LAw Jud

WASHINGTON D C

December 9 1976

19 
19 F M C 477

FEDERAL MARITIME COMMISSION

DOCKET No 7240

PUBLICATION OF DISCRIMINATORY RATES IN THE U S NORTH

ATLANTIC CONTINENTAL EUROPEAN TRADE

ORDER OF DISCONTINUANCE

January 10 1977

This proceeding was instituted in August 1972 by order to show cause

for the purpose ofeliminating inboundoutbound ocean rate disparities in

the U S North Atlantic Continental European trade Pursuant to

subsequently adopted procedures many ofthe items of alleged disparity

were eliminated from the proceeding either through rate changes by

conference respondents orby satisfactory demonstration that no meaning

ful disparity existed However in spite of the length of time these

procedures have been followed the proceeding has not been concluded as

to all items ofdisparity

Considering the length of time since institution ofthis proceeding and

the very real possibility that subsequent rate actions have either eroded

previous remedial rate actions created new disparities on other items or

eliminated disparities it appears that continuation ofthis proceeding in its

present posture would serve little useful purpose We have reexamined

our approach to the disparity problem and have determined that other

approaches should be used whereby meaningful disparities can be

identified and eliminated

Accordingly it is ordered that proceedings in this matter are hereby

discontinued

By the Commission

SEAL S FRANCIS C HURNEY

Secretary
FEDERAL MARITIME COMMISSION

DOCKET No 7616

MSA INTERNATIONAL

v

CHILEAN LINE

Reparation awarded

William Levenstein for the Complainant

Roger Quinones for the Respondent

REPORT

January 13 1977

By THE COMMISSION Karl E Bakke Chairman Clarence Mors

Chairman Ashton C Barrett Bob Casey and James V 

Commissioners

This proceeding is before the Commission on exceptions fi

Complainant MSA International to the Initial Decision of Admini

Law Judge Charles E Morgan denying reparation for alleged 

overcharges by the Respondent Chilean Line on three shipm

mine safety hats carried by Respondent from New York to Antof

under bill of lading dated November 1 1974 and from New Y

Valparaiso under bills of lading dated Jaunary 13 and January 23 

respectively

The three shipments described in the shipping documents as 

hats Topgard hats and V Gard caps respectively were a

the Class 1 rate of 153 75 per metric ton applicable to Hats N 

Aggregate freight charges amounted to 4 869 64

Complainant contends that the safety hats were protective 

coverings for miners and should have been classified as H

N D S for which Respondent s tariff provided aclass 7 rate of 

per metric ton 1

and that by collecting charges in excess ofthose pr

in the appliCable tariffRespondent violated section 18b 3 ofthe S

Act 1916 the Act

CJ

i

j

1

j

I

I Ninth Rev paae 166 of the Atlantic andGulflWest Coast ofSouth AmericaConference Frciaht TariffF

478 19 
MSA INTL v CHILEAN LINE 479

Respondent denies it had rated the shipments incorrectly and points to

a dictionary definition which in describing safety hats makes no

reference to helmets

The Presiding Officer reviewed the descriptions of the goods in the

shipping documents and concluded that the great preponderance of the

evidence showed that the shipment consisted of safety hats He accord

ingly dismissed the complaint

While there is no doubt that the articles shipped were safety hats the

question here is whether they should have been classified and rated as

helmets By dictionary definition ahat is a covering for the head 2

a safety hat is a hat of steel or similar material worn as by miners or

sandhogs to protect the top ofthe head3

and a helmet is described

as any of the various protective head coverings made ofhard material

to resist impact 4

Thus as distinguished from hats described

simply as head coverings safety hats and helmets share the common

characteristic of being protectiv head coverings made of materials

capable ofresisting impact to avoid injury to the wearer

Mine Safety Applicances Company the shipper describes its Topgard

hats and V Gard caps as Rugged economical head protection Built

for use in industries where protection from falling objects or

overhead hazards is necessary This illustrates the purpose for which

these safety hats were to be used

A reasonable reading and comparison ofthese definitions and descrip

tions lead us to conclude that for tariff purposes these safety hats are

more akin to helmets than to hats and should have been classified and

rated as helmets By failing to so classify and rate the shipments and by

assessing the rate applicable to Hats N O S Respondent violated section

18bX3 of the Shipping Act 1916

Inlight of the foregoing the Initial Decision in this proceeding is hereby

reversed and Complainant is awarded reparation in the amount of 752 22

which represents the difference between freight based on the rates

applicable to Hats N O S and Helmets N O S

No interest on that amount is awarded as the carrier s misclassification

of the cargo was due to agreat extent to the shipper s failure to properly

describe its product in the shipping documents prepared by it or by its

agents on its behalf

SEAL S FRANCIS C HURNEY

Secretary

t WebsterNew World Dictionary p

640 1970

3 Webster International Dictionary Unabridged p1998 1964

Idem p1052

19 F M C
I

1

FEDERAL MARITIME COMMISSION

DOCKET No 7544

E S B INCORPORATED

v

MOORE MCCORMACK LINES INC

I

1

ADOPfION OF INITIAL DECISION

January 17 1977

This proceeding is before the Commission on exception from Co

ant E S B Incorporated to the Initial Decision of Administrativ

Judge William Beasley Harris in which he determined that Resp

Moore McCormack Lines Inc had not violated section 18b 3 

Shipping Act 1916 by collecting freight charges in excess o

provided in its tariff for the transportation of synthetic resi

Philadelphia to Santos Brazil No reply to the exception was rece

Complainant excepts to I the denial of its motion forjudgment 

pleading and 2 the denial ofreparation

After a careful examination of the record we concur with the P

Officer s

findings and ultimate conclusions and adopt his Initial D

subject to the discussion below

As to Complainant s first contention on exception d1e record 

that the complaint was served on Respondent by mail on Octo

1975 The Commission s cover letter although stating that Comp

had requested the shortened procedure provided in Rule 11 46 

502 181 ofthe Commission s Rules ofPractice and Procedure the 

referred by error to the informal procedure under which the an

the complaint should be fIled In reply Respondent fIled an a

received by the Commission on November 20 1975 consentina 

informal procedure under Subpart S of the Rules 46 C F R 502 

As the amount claimed exceeded 5 000 00 the Presiding Officer 

Respondent by letter of November 21 1975 that the informal pro

was inapplicable and that Complainant had requested the sho

procedure This was a necessary clarification ofthe misunderstan

1

I

I

Subpart S 46 C F R 502 301 etseq of tbeCommilllon Rule of Practice and Procedure prov

informal proceedtna conducted by asettlement oft icer tor the udicatJon ofc1alm not in excelsof 00

480 19 
E S B INC v MOORE McCORMACK LINES 481

to what procedure Respondent was asked to consent to The Presiding

Officer also urged Respondent to enter an appearance in the case We

consider this a grant of an extension of time for Respondent to state

whether it consented to the shortened procedure and to answer the

complaint The Presiding Officer had such power under Rule 10 g

502 147 and once Respondent consented to the shortened procedure

Rule 5 was inapplicable so that permission from the Commission or the

ChiefAdministrative Law Judge to grant the extension was unnecessary

2

By letter dated December 2 1975 Respondent fded its answer to the

complaint and consent to the shortened procedure which was received at

the Commission on December 4 1975 and thereafter upon request from

the Secretary fded the additional number ofcopies required

We have recognized and courts have long held that even when acting

in quasi judicial capacity the strict rules which prevail in suits between

private parties and the hard and fast rules as to pleadings which govern

courts of law do not apply to administrative proceedings where

inquiries should not be too narrowly constrained by technicalities

Oakland Motor Co v Great Lakes Transit Corp I U S S B B 308 311

1934

As the Presiding Officer noted Respondent was unaware of the

procedural requirements but when instructed how to proceed Respond

ent did make what appears to be a good faith effort to comply with the

Commission s rules Moreover the complaint here alleging as it does a

violation ofthe statute by the carrier raises issues offact which may not

be resolved by default but must be properly established on the basis ofall

the evidence available Under these circumstances we find that the

Presiding Officer had the authority to grant an extension of time and did

not act arbitrarily in accepting the fding ofRespondent s answer

Turning to the question of whether the Gaylord cartons in which the

synthetic resin was packed were crated in wood Complainant contends

that the Presiding Officer held the bills of lading to be the sole proof of

the transaction between the parties to the exclusion ofall other evidence

The Commission has said in Western Publishing Co v Hapag Lloyd

A G 13 S R R 16 1972 that even though the bill of lading sets forth

the terms and conditions of the contract of affreightment it is not

conclusive as to the description of the goods shipped so that a shipper

who challenges that description may introduce whatever evidence he has

to prove his allegations as to what actually moved even where the bills

of lading and other shipping documents were prepared by the shipper or

his agent This the Presiding Officer recognized and although it appears

that he took notice ofthe various descriptions ofthe cargo in all ofthe

shipping documents introduced in evidence the emphasis placed on the

importance ofthe bill oflading couId be misleading

I Rule lli 46 C F R S02 183 reads in part If the respondent does not consent tothe proceeding being conducted

under the shortened procedure provided in this subpart the matter will be governed by Subpart E of this part Rule

5 Emphasis added

19 F MC
482 FEDERAL MARITIME COMMISSION

oi

I

Complainant relies principally on letters from the packers and 

annotation wood box on one of the packing lists to show th

cartons were in fact crated and thus quaJified for the lower rate cl

The three letters from the Shipside Packing and Consolidation Co 

all dated September 11 1975 assert that the shipments of G

cartons werepacked in wooden crates There is no reference in 

letters to any records prepared at the time the cartons were pac

upon which the statements in the letters are based or any mention 

date the packaging was done Furthermore Complainant did not 

Respondents argument that had the cartons been crated the me

ments on the packing lists and those shown in the Shipside Com

letters and on the bills of lading could not have been identical 

Reply to Respondent s answer Complainant merely states th

measurements on the bills of lading reflect those in the Sh

Company s letters

Furthermore Complainant s three packing lists which bear the 

of June 21 and 28 1974 and July 25 1974 respectively Sdescr

shipments as 40 box 40 wood box and 4O Pallet Box In

there any mention ofcrated cartons or boxes

Moreover in referring to the photograph in the record show

skidded Gaylord carton Complainant states that since this was 

time order no photograph of the completed crates were made T

no explanation why this one time order required special packagi

In light of the foregoing and Complainant s failure to mention 

crating in any ofthe shipping documents prepared at the time ofsh

we agree with the Presiding Officer s finding that there is insu

evidence to sustain the claim that the Gaylord cartons were in f

only skidded but also externally crated on all sides We therefore 

with the Presiding Officer s ultimate conclusion that Complainant h

met its burden of proof Having so found it is not necessary to 

whether packing in wooden crates would satisfy the tariff requirem

in wooden cases or whether the tariff is ambiguous in this resp

Exceptions not specifically discussed have nevertheless been re

and found to be a rearaument of contentions considered and pr

disposed of by the Presiding Officer or to be without merit

Accordingly we adopt the Initial Decision acopy of which is a

hereto and made a part hereof

By the Commission

i

i SEAL S FRANCIS C HURNEY

Secre

8 Tho packina liats bear astamp ahowinl that tbey were received at Complainant sTroffic Department o

dates As evidenced by thebills of lacUna theshipments were delivered to the carrier on September ZOo 19

19 
19 F MC 483

FEDERAL MARITIME COMMISSION

No 7544

E S B INCORPORATED

v

MOORE MCCORMACK LINES INC

Adopted January 17 1977

Reparation denied

William Levenstein for the Complainant

John D Straton Jr Respondents Manager Rates Conferences

for the Respondent

INITIAL DECISION OF WILLIAM BEASLEY HARRIS

ADMINISTRATIVE LAW JUDGE 1

This is acomplaint case in which the sum of 16 489 58 plus interest

from the date of payment thereof is sought by E S B Incorporated

E S B from Moore McCormack Lines Inc McCormack a common

carrier by water in foreign commerce as reparation for payment by

E S B to McCormack of freight charges allegedly in excess of those

chargeable under Inter American Freight Conference Section A Tariff

No 3 FMC No 7 in violation ofSection 18b 3 ofthe Shipping Act

1916 as amended for transportation of three shipments of Synthetic

Resin under Bills ofLading dated September 20 1974 on McCormack s

vessel Mormacrigel from Philadelphia Pennsylvania to Santoz Brazil

This proceeding was conducted under the Shortened Procedure Rule

ll a of the Commission s Rules of Practice and Procedure 46 CFR

502 181 The procedural background herein is hereinafter set forth to aid

in the understanding of what occurred in this instance as well as to

indicate upon what material the found facts are based for the fmdings and

conclusions herein

PROCEDURAL BACKGROUND

Counsel for E S B signed the complaint herein dated and filed October

22 1975 Under Rule 8b a of the Commission s Rules ofPractice and

1

This decision became the decision of the Commission January 17 1977
J

I

484 FEDERAL MARITIME COMMISSION

Procedure 46 CPR 502 112 the signing of the complaint by the at

constitutes a certificate by him that he has read the pleading doc

or paper that he is authorized to tile it that to the best of his know

information and belief there is good ground to support it except 

otherwise specifically provided by role or statute the pleading doc

or paper so signed need not be verified or accompanied by affi

Counsel attached to the complaint his verification sworn to under 

October 24 1975 The complaint was served October 29 1975 and 

thereof was published in the Federal Register November 4 1975 

51224 Vol 40 No 213 The complaint page 5 asked for applica

the Shortened Procedure pursuant to the Commission s Rule 11

The Respondent McCormack in a letter dated November 18 

received November 20 1975 stated We enclose herewith our a

zation for informal procedure by the Commission of the above 

subject The said authorization notorized was to determine t

claim in accordance with Subpart S 46 CPR 502 ofthe Commis

informal procedure for alljudication of small claims subject to disc

ary Commission review The Presiding Administrative Law Judg

letter dated November 21 1975 to the respondent copy to all p

pointed out the inconsistency of the authorization for the Small 

procedure Small Claims are for 5 000 or less 46 CPR 502 301 

this claim is for 16 489 58 for which the complainant requested 

the Shortened Procedure under Rule l1 a of the Commission s R

Practice and Procedure 46 CPR 502 181

Those representing the parties telephoned the Presidini Adminis

Law Judge on or about November 26 1975 anent having receiv

letter aforementioned

The Complainant on December I 1975 filed amotion pursu

Rule 5 d of the Commission s Rules ofPractice and Procedure 4

502 64 for judgment on the pleadings on the grounds that no ans

the complaint had been tiled or served upon the complainant 

twenty 20 days after October 29 1975 the date of service 

Complaint Under Rule l1 c

46 CPR 502 183 if the respondent co

to the shortened procedure the answering memorandum of the re

ent is to be served within twenty five 25 days after date of serv

this instance by November 24 1975

A letter dated December 2 l S was received from the resp

December 4 1975 stating With teference to your letter of Nov

21 1975 and our telephone conversation of November 26 1975 jln

is our answering memorandum to the above complaint The 

apologizes for any delay that may have been incurred Under th

of December 11 1975 the Secretary of the Commission wrote 

respondent acknowledging receipt of the answer and requesting s

sion by the respondent ofadditional copies thereof as directed by 4

503 118

On December 10 1975 B S B tiled a memorandum in re

19 
E S B INC v MOORE McCORMACK LINES 485

McCormack s answer in which E S B renewed its motion for judgment

on the pleadings took issue with the answering memorandum calling it

patently deficient in a number of respects also objected that the

respondent did not request an extension oftime to answer as provided in

Rule 5 d or had permission been granted to the filing of a delayed

answer

By order served December 11 1975 E S Bs motion and renewal

thereof for judgment on the pleadings was denied by the Presiding

Administrative Law Judge the order stating inter alia In view ofthe

above background it is deemed most inequitable to allow judgment on the

pleadings There is an apparent unawareness by the respondent of the

Commission s Rules ofPractice and Procedure that could be interpreted

as a somewhat cavalier approach to this serious claim for reparations

The held up answering memorandum indicates a willingness to proceed

under the Shortened Procedure The complainant would have astrict

application ofrules to provide for the basis ofrecovery of 16 489 58 and

he urges that there has been no extension of time granted to the

respondent to answer While this is technically true the circumstances as

related herein obviate aformal granting ofextension oftime to answer

since fairness and justness cry out for the respondent to be given

opportunity to promptly set forth its defense

On December 31 1975 a

copy ofthe respondent s answer was received

by the Presiding Administrative Law Judge from which he deduced that

the respondent was in compliance with the aforementioned December II

1975 letter ofthe Secretary ofthe Commission for additional copies

The respondent s answering memorandum having indicated its willing

ness to proceed under the shortened procedure as requested by E S B

approval to so proceed was granted by order served January 7 1976 and

the record closed for decision since E S B had already filed its reply

thereto December 10 1975

MATERIALS SUPPLIED BY THE PARTIES AND CONSIDERED

BY THE PRESIDING ADMINISTRATIVE LAW JUDGE IN

FINDING THE FACTS HEREIN ON WHICH TO BASE THE

DECISION

The Complainant submitted

The complaint 6 pages to which was attached

IMemorandum of Facts and Arguments 5 pages

2 Copy of Bills of Lading No I 2 and 15

3 Copy of E S B s Packing List

a Dated June 21 1974 as to E S B Order No TN I 1530

b Dated June 28 1974 as to E S B Order No TN 1531 1

c Dated July 25 1974 as to E S B Order No TN I 15312c

4 Copies of 3 Invoice Sight Drafts all dated September 5 1974 as to E S B orders

No TN I 1530 TN I 153 II and TN I 1531 2c

5 Copy of 3 Letters all dated September II 1975 from Shipside Packing and

19 F M C
486 FEDERAL MARITIME COMMISSION

1

Consolidating CoRe packing as to E S B Order Nos TN I 1530 TN I 1

TN I 1531 2c

6 A photograph of a Gaylord Carton

7 A copy of the 4th Revised Page 158A effective September I 1974 o

American Freight

8 Complainant s Memorandum in Reply 8 pages

The Respondent submitted

Answering Memorandum to complaint so identified in November 18 1975 le

memorandum itself simply bears this Docket number 7544 and the title of th

The Answering Memorandum consists of 4 pages to which is attached

1 History pages 5 7

2 Copies of Shipper s Export Declaration

3 Copies of Bills of Lading No 1 2 and 15

4 Copies of E S B s Packing List

a Dated June 21 1974 as to B S B Order No TN I 1530

b Dated June 28 1974 as to E SB Order No TN I 1531 1

c Dated July 25 1974 as to E S B Order No TN I 1531 2c

5 Copies of 3 Invoice SiBht Drafts all dated September 5 1974 as to E S B 

No TN I 1530 TN I 153 I I and TN I 1531 2c

6 Copies of claims made on behalf of E S B to McCormack by Ocean 

Consultants OFC dated December 23 1974 concerning the shipments involved

7 Copies of correspondence of respondent with OFC

8 Copy of March 5 1975 letter from E S B to OFC

9 Copy of May I 1975 letter from OFC to McCormack

From these materials the Presiding Administrative Law Judge fin

following facts

i

FACTS

The Complainant B S B is a Delaware Corporation loca

Philadelphia Pennsylvania whose principal business is the marke

batteries and battery products

The Respondent McCormack is a common carrier by water e

in the transportation of cargo between U S Atlantic Ports and P

Argentine Uraguay and Brazil including Santos Brazil and as 

subject to the Shipping Act 1916

McCormack is amember of the Inter American Freight Confe

and at the times involved in this proceeding operated under 

American Freight Conference Section A Tariff No 3 FMC No 

The parties agree that Synthetic Resins were shipped from Philad

Pennsylvania to Santos Brazil under Bills of Lading number 1 2 

respectively all dated September 20 1974 on the respondent s 

Mormacrigel The parties also agree that the freight rate assess

125 00 per 40 cubic feet as per rate item 1 4th Revised Page 

effective September 1 1974 of Inter American Freight Confe

Section A Tariff No 3 FMC No 7 that the charge inclu

bunker surcharge of 10 00 per 40 cubic feet and a port surcharge 

was 7 115 04 as to BL 1 7 938 81 as to B L 2 and 8492 8

BL 15 a total of 23 546 76 was paid by the complainant

j

1

I

j

1

I

1

19 
E S B INC v MOORE McCORMACK LINES 487

Fourth Revised page 158A of the said tariff reads in the part under

which the freight rate was assessed

Resin Synthetic sheets plates shapes or N O S Rate Basis WfM 1 Rate 125 00 1

Rate Item I 1

EXCEPTION Resin Synthetic N O S In Wooden cases or fibre or metal drums or

in 20 ft or in 40 ft House to House containers Rule 28 to apply

Re Billof Lading No I

B L 1 shows the shipment measured 1952 cubic feet

B L 1 under export references refers to Order No TN I 1531 2c The description

of Order No TN I 1531 2c appears on the following documents as indicated

Document

BL 1

Export Declaration n n nnnn

Dock Receipt

Packing List dated July 25 1974

OFC December 23 1974 claim

Shipside Packing Co letter dated Sep

tember II 1975

Description

40 Skidded Cartons Synthetic Resin

40 Skidded Cartons Synthetic Resin

40 SKIDS Ctns Synthetic Resin SKIDS

is in lettering above the typing of the descrip

tion

40 Box 1000 lbs each Amoco Polypropyl

ene with dimensions in inches of 47 x 39 x

46

would correct from 40 Skidded Cartons to

Synthetic Resin Polypropylene packed in car

tons

Reason for correction Cargo subject to spe

cial rate of 94 50 2240 as the Resin shipped

consisted of Polypropylene indicated in this

commercial Invoice

40 Gaylord Cartons of impact resin were

packed in wooden crates 46 x 39 x 46 inches

These crates were constructed with I x 6

yellow pine 7 inches apart with 3 x 4 inch skid

each weighed II88 gross Ibs

Re Billof Lading No 2

B L 2 shows the shipment measured 2178 cubic feet

B L 2 under export references lists Order No TN I 1530 The description of Order

No TN I 1530 appears on the following documents as indicated

Document Description

B L 2 nn n nn nnn nnn 40 Skidded Cartons Synthetic Resin

Export Declaration n h h

n 40 Skidded Cartons Synthetic Resin

Document Description

DockReceipt dated September 9 1974 40 SKIDS ctns Synthetic Resin SKIDS

is in lettering below the type of the descrip

tion

Packing List dated June 21 1974 40 Wood Box 1000 Ibs ea Amoco Poly

propylene with dimensions in inches of 48 x 40

x 49

OFC December 23 1974 claim would correct from 40 Skids Pallets

Synthetic Resin to Resin Synthetic Polypro

pylene Packed in Cartons

Reason for correction Cargo subject to spe

cial rate of 92 50 per 2240 lbs in Synthetic

Resin consisting of polypropylene and should

be rated accordingly

Document Description

19 F MC
488 FEDERAL MARITIME COMMISSION

J

40Gaylord cartons sic of impact re

packed in wooden crates 48 x 40 x 49 

These crates were constructed with I 

Shipside Packing Co letter dated yellow pine 7 inches apart with 3 x 3 

September II 1975 skids each weighed 1160 gross Ibs

Re Billof Lading No 15

B L 15 shows the shipment measured 2330 cubic feet

B L 15 under Export References lists Order No TN I 153The descr

Order No TN I 1531 appears on the followina documents as indicated

B L 15 nn n

nn 40 Skidded Cartons Synthetic Res

Export Declaration nn

nn n 40 Skidded Cartons Synthetic Res

Dock Receipt n nn

nn nnn 40 SKIDS Ctns Synthetic Resin 

is in lettering above the typing of the 

tion

Packing List dated June 28 1974 40 Pallet Box 1000 Ibs ea Amoco 

pylene with dimensions 51 x 42 x 47

OFC December 23 1974 claim n n would correct from 40 Pallets S

Resin to Synthetic Resin Polypropy

Reason for correction Cargo subjec

cial rate of 92 50 2240 as it was pallet

packed in cartons

40 Gaylord cartons of impact res

packed in wooden crates 51 x 42 x 47 

These crates were constructed wi

Shipside Packing Co letter dated Sep yellow pine 7 inches apartwith 3 x 4 i

tember II 1975 each weillhed 1222 aross Ibs

1

ISSUES

The complainant admittedly trying to prove only that the cart

shown in the Bill ofLading were enclosed in acratecase which p

has an applicable rate different from the rate applied Compla

Memorandum in Reply p

4 posed the question herein to be w

the polypropylene resin packed in Gaylord Cartons which were 

and skidded is the sort of package which complies with the ca

requirement for in wooden cases Memo of Facts and Arg

attached to complaint page m

At the same time the complainant contends that no alleged e

description is involved in this cause Memorandum in Reply p

4

The Respondent did not pose any issues McCormack does as

cargoes were correctly rated based on the Bill of Lading descript

the packaging used And the Respondent mentioned Rule 3 of th

involved to the effect that claims for adjustment in Freight cha

based on alleged error in description weight andor measurement 

to be considered unless presented to the carrier in writing bef

shipment involved leaves the custody of the carrier that the sh

lllrived in Santos Brazil on October 14 1974 and left the custod

carrier before correction was sought and that the shipper did no

about the shipment until March 10 1975 and that Since March 1

cargoes packing has from Skidded Carton grown to alleged S

j

j

I

j

1
E S B INC v MOORE McCORMACK LINES 489

Cartons Reinforced by Wood Crating to alleged Skidded Cartons Crated

implying Wood Crating on all sides top and bottom to by synonym

Skidded Cases

The issue is where there is no dispute the commodity shipped was

Synthetic Resin which was delivered by the carrier as per the Bill of

Lading and after the shipment had left the custody of the carrier the

shipper asserts the packaging not the description ofthe commodity was

otherwise than as stated in the bill of lading the claimant under the

circumstances herein has met its heavy ultimate burden of proof to

establish his claim to warrant rmding the carrier in violation ofSection

l8b 3 ofthe Shipping Act 1916 and subject to the paying ofreparations

to the shipper

HOLDING

The claimant has failed to meet its heavy ultimate burden ofproof that

the carrier has violated the Shipping Act 1916 and that the claimant is

entitled to reparations Reparation should be denied

DISCUSSION

E S B argues that the shipments involved consisted of polypropylene

resin packed in Gaylord Cartons which were then crated and skidded

Argument P II for easy handling by both the shipper and the carrier

Ibid p V

McCormack argues the easy handling by the shipper to avoid

puncturing the Gaylord with fork lift equipment would be packing the

1000 pounds of synthetic resins into a skidded internally reinforced

empty Gaylord container which when filled could easily be moved

without fear ofpuncture p

5 answering memo that the complainant

erroneously assumes the claimed wooden reinforcement to be full external

wood crating p 7 and that the complainant has failed to support external

crating on all six sides of the carton and has not supported beyond a

reasonable doubt that external reinforcement existed Ibid

E S B replied Memorandum in reply p6 even if as argued by

respondent the crating was internal which seems incredible the tariff

requirements for in wooden cases would be satisfied E S B thus

pooh poohs the idea of internal crating but does not deny that such

internal crating is possible As to McCormack s contention that E S B

has not shown the cartons were crated on all six sides E S B answers

that contention is as wrong as all its McCormack s other arguments

Ibid p 7

E S B asserts the resin was packed in Gaylord cartons which were

then crated and skidded and the tariff that should apply is also on 4th

Revised Page l58 a ofthe tariff at a rate of 9250 per 2240 pounds for

Resin Synthetic Viz Polyethylene Polypropylene orPolyviny1chloride

in wooden cases or fibre or metal drums or in 20 ft or in 40 ft House to

19 F M C
1

490 FEDERAL MARITIME COMMISSION

House containers Rule 28 to apply was omitted by E S B 

argues that the carrier does not define wooden cases in its tar

the crates were wooden is shown by the letters from the packers 

what remains is to show that a crate is a case E S B then 

definitions of case and crate from Webster s Seventh New 

giate Dictionary and from the Random House Dictionary and argu

having shown the shipment moved crated that as amatter oflaw t

for Resin Synthetic in wooden cases is the only lawful rate app

for these shipments Argument p V E S B argues further that 

the Harter Act 46 USCA 193 the Bill ofLading is that ofthe car

that the carrier should not be heard to say that it did not know t

shipments moved in cratescases

Inthis instance when the dispute arose the cargo had left the c

of the carrier having been delivered Once there has been a 

delivery of cargo the Harter Act no longer applies to the relation

the parties See J Kinderman Sons v Nippon Yusen Kaisha 

322 F Supp 939 941 942 1971

The Bill of Lading sets forth the contract between the shipper a

owner of the vessel describing the merchandise by its quant

markings the names ofthe shipper and consignee the place ofde

and discharge the name of the master and vessel and the price to 

for transportation Each bill of lading is a

separate transaction a

merits ofeach claim must be considered in toto and independent o

under any other bill oflading Colgate Palmolive Co v The Grac

Docket No 194 1 dated March 18 1974 pages 23 The bu

proving that the facts were otherwise than as stated in the bill o

must be on the claimant in any proceeding But where the shipm

left the custody of the carrier and the carrier is thereby prevente

personally verifying claimant s contention the claimant has a 

ultimate burden of proof to establish his claim Western Publishi

Inc v Hapag Lloyd A G Docket No 283 1 13 SRR 16 1972

Looking at the bills of lading involved the cargo is described o

as 40 Skidded cartons Synthetic Resin E S B would use t

of the Western Publishing Co case supra which says the des

on the bill oflading should not be the single controlling factor in c

this nature Rather the test is what claimant can now prove base

the evidence as to whatwas actQally shipped even if the actual sh

differed from the bill oflading description

An examination ofthe description of the cargo as shown for e

ofladingabove under Materials Supplied by the Parties and Facts 

the various descriptions of the cargo given or accepted by 

representing the complainant at various stages and tends to supp

respondenfs comment quoted above under Issues and leaves un

that the shipment was not properly rated

The dock receipt packing list invoice letters from packers 

documents submitted are neither contracts of affreightment nor ne

1
ES B INC v MOORE McCORMACK LINES 491

ily adelivery to ship and as respects shipments in which bills of lading

are issued the bill of lading is as between shipowner and shipper the

statement ofthe contract between them The Capt Faure 10 F 2d 950

954 CA 2 1926 The carrier has a right to expect the shipper will

properly identify the shipment Ocean Freight Consultants Inc v

Italpacific Line Docket No 718 15 FMC 314 319 1972 The shipper

in this instance has not justified changing the description of the bill of

lading

FINDINGS AND CONCLUSIONS

Upon consideration of the entire record in these proceedings the

Presiding Administrative Law Judgefinds and concludes in addition to

the findings and conclusions hereinbefore stated

1 Complainant has failed to meet heavy burden of proof that respondent has violated

Section 18b 3 of the Act

2 Reparation should be denied

Wherefore it is ordered subject to review by the Commission on

appeal or upon its own motion as provided in the Commission s Rilles of

Practice and Procedure that

A E S Bs claim for reparation be and hereby is denied

B The proceeding be and hereby is discontinued

S WILLIAM BEASLEY HARRIS

Administrative Law Judge

WASHINGTON D C

January 26 1976

19 F MC
FEDERAL MARITIME COMMISSION

No 7626

TRANSCONEX INC PROPOSED GENERAL RATE INCREASE IN THE 

ISLANDS DOMESTIC OFFSHORE TRADE

NOTICE OF DETERMINATION NOT TO REVIEW

January 12 1977

Notice is hereby given that the Commission on January 12 

determined not to review the order of the Administrative Law J

this proceeding served December IS 1976 finding responden

increase not uiust or unreasonable and discontinuing the proceedi

By the Commission

SEAL S FRANCIS C HURNEY

Secre

1

j

c

j

I

1

1

492 19 
FEDERALMARITIME COMMISSION

No 7C26

TRANSCONEXINC PROPOSEDGENERAL RATEINCREASEIN THE VIRGIN

ISLANDS DOMES7IC OFFSHORE IYtADE

PRESIDING ADMINISTRATIVE LAW JUDGE

ORDER 1 FINDING RATE INCREASE

NOT UNJUST OR UNREASONABLE

2

DISCONTINUING PROCEEDING

December I5 976

Revised ariff pages filed in April 1976 by Transconex Inc Transco

nex in its Virgin Island trade reflecting a general rate increase this

increase did not affect the rates on commodities moving in the Puerto

Rico trade Exh 1 p 2 of 12 percent went into effect soon after the

Commission sJune 3 1976 Order published in the Federal Registe

June 9 1976 page 23228 Vol 41 No 112 lifedthe suspension imposed

by the Commission sOrder of Investigation and Suspension herein

served May 11 1976 published in ffie Federal Register May 14 1976

Page 20016 Vol 41 No 9 Those increased rates are still in effec

under afiling by Ttansconex of a new tariff FMGFNo 2 which became

ellective on August 21 1976 Although this new tariff cancels FMGF

No 1 there is no change in rates applicable to commodities transported

in the Virgin Islands tradeFxh Ip 2 And the May 11 1976

Commission Order of Investigation and Suspension rovides p 2 In

the event the tariff matter is further changed amended or reissued suc

changes are hereby ordered to be included in this investigation

Transconex the named respondent herein is a non vessel operating

common carrier NVOCC by water in the domestic offshore rade

rozoFaemra

FmNo

latn Rcvi capaee Is

Rh Revised paye 7I

Ilth Revieed paye 25

12th Rcvised

pvae 35

IIXh AcviaeA pae26

1 LLh Revi edpye 27

I lt Revieed pye7

13tA RevieM pae38

UtM1 Revi edpsye 38

Itth Rcvi edpyeJ9

I2tp Reviaed Pee10

9FMc 493
494 TRANSCONEXINC

between Miami and Jacksonville Florida on the one hand an

other Puerto Rico and the Virgin Islands

The Commission pursaant to section l8aand 22 of the Ship

i 1916 and sections 3 and 4 ofthe Intercoastal Act 1933 direct

May 11 1976 Order of Investigation and Suspension this inv

into the lawfulness ofthe above mentioned revised tariffpages

Transconex points out the rate increases are not opposed 

shipper consignee other person Exh 2 p 2 Itis the po

j

Transconex that the testimony on behalf of Transconex as w

i testimony submitted by Hearing Counsel considered by the c

operating ratio as well as the criterion of rate ofreturn on rate b

the rate increases under investigation are reasonable and s

permitted to remain in effect Exh 2 p 4

Hearing Counsel took the position Hearing Counsel sStat

Applicable Lega1 Principles and Notice of Proposed Witnesse

July 12 1976 that its approach in testing the reasonableness o

nex srate increases in this proceeding ia not confined to a

standard but will be based on anumber ofcriteria p5

1

Bureau

Witness

of Industry

Thomas

Economics

J Stilling

in

an

his

economist

testimony

with

Exh

the

3

Coms

poin

operating ratio is apoor measure of a company sfinancial w

be

4 and gives little insight into the profitability of an enter

therefore the reasonableness of rate levels p 3 that when a 

1 has invested a nonegligible amount of capital rate of retur

base and an owner sequity are more appropriate measures t

when determining the fairness ofrates p 4

Bureau

Witness

of

Larry

Industry

E

Economics

Valker a staff

Office

accountant

of FinanCial

with

Analysis

the Coms

the various accounting data pt ovided by Transconex and relate

i nies Lxh 4 p 1 and compared these results with rates ofre

earned by other companies which are comparable in terms of 

industry which he found has many of the same characte

NVOCC sia the riotor carrier induatry another industry which 

is the domestic freight forwarding industry which is regulate

Interatate Commerce Commission ICC The wifness concl

Transconex should be in the highest rate of return bracket 

i

continue to be able to attract capital at reasonable rates The 

showed the freight forwarding industry regulated by the ICC a

I

rate ofreturn of241percent from 196574 as part of his a

the witneas judgment a 267percent rate ofreturn on rate b

excessive

Operating Ratio is costs divided by revenue Transconex sho

period 4175to 3176Operating Expenses of43925 76and 

Revenues of455992for an operating ratio of9637 an

period 4176to 3176Operating Expensea of486969 00and 

Revenues of460512 00for an operating ratio of9460Ex 
FEDERAL MARITIME COMMISSION 495

DISCUSSION

The participants in this proceeding especially their attorneys namely

Edward A Ryan and Alan F Wohlstetter for respondent and Martin

McAlwee C Douglass Miller Acting Deputy Director and John Robert

Ewers Director Bureau of Hearing Counsel deserve and hereby are

commended and thanked for making cooperatively a record in this

proceeding containing supporting and underlying records and accounts by

which the accuracy and sufficiency ofthe evidence may be tested as to

its probativeness reliableness and substantialness for fmdings as to the

lawfulness ofthe instant rates under section 18 ofthe Shipping Act 1916

and the Intercoastal Shipping Act 1933

From the first prehearing conference held June 29 1976 an interim

meeting between the parties on July 12 1976 the further prehearing

conference held September 30 1976 and through the hearing held

November 30 1976 all efforts were bent to going forward with the intent

of presenting a case that will enable those interested to scrutinize the

material which has been utilized in these proceedings The economists

and accounts cooperated well

The respondent submitted its testimony for its case in chief on August

18 1976 to show the lawfulness of the rate increase Hearing Counsel

and its technical staff reviewed that testimony conferred with the

respondent and submitted the testimony ofits witnesses Exhs 3 and 4

Transconex gave its statement ofposition Exh 2 And in aletter dated

November 22 1976 stated interaig Transconex will not file any

rebuttal testimony in response to the direct written testimony of the

witnesses ofHearing Counsel

All ofthe testimony with attachments is part ofthis record All ofthis

has been closely examined by the Presiding Administrative Law Judge It

shows that the respondent has experienced increased costs of operation

that the respondent apparendy operates efficiently Some indication of

need for the increases has been shown and no computation made with

respect to the increases shows them to be improper

Upon consideration of the above and the entire record herein the

Presiding Admiriistrative Law Judge finds and concludes the rate increase

now in effect in Transconex Inc sTariff FMFF No 2 effective August

21 1976 which cancelled FMC No 1 as to rates applicable to

commodities in the Virgin Islands trade is not unjust or unreasonable

The increased rates withstand the test ofoperating ratio and rate ofreturn

on rate base Thus tested by several criteria as properly they should be

the rates herein are found just and reasonable

Wherefore it is ordered subject to review by the Commission per its

Rules ofPractice and Procedure

A The rate increases in this investigation be and hereby are found just

and reasonable and shall continue in effect until or unless otherwise

changed orordered

BThis proceeding be and hereby is discontinued

S WILLIAM BEASLEY HARRIS
FEDERAL MARITIME COMMISSION

SPECIAL DOCKET No S03

SHUMAN PLASTICS INTERNATIONAL Lm

v

SEA LAND SERVICE INC

I

I

NOTICE OF ADOPTION OF INITIAL DECISION AND OR

PERMlTIING WAIVER OF CHARGES

February 22 1977

No exceptions having been taken to the initial decision 

proceeding and the Commission having determined not to review 

notice is hereby given that the initial decision became the decision 

Commission on February 22 1977

It is Ordered That applicant is authorized to waive collec

4 330 60 of the charges previously assessed Shuman Plastics I

tional Ltd

It is further Ordered That applicant shall publish promptly 

appropriate tariff the following notice

Notice is hereby siven as required by the decision of the Federal M

Commission in Special Docket 503 that effective May 1 1976 for purposes of r

waiver of freisht charses on any shipments which may have been shipped d

period from May 1 1976 throuSh Ausust 25 1976 the special rate to Hons 

Synthetic Resin Product Scrap measurins up to 80 cu ft2000 lbs is 7

subject to all applicable rules regulations terms and conditions of said rate 

tariff

It is further Ordered That waiver of the charges shall be effe

within 30 days ofservice of this notice and applicant shall with

days thereafter notify the Commission of the date and man

effectuating the waiver

By the Commission

j

S JOSEPH C PoLKING

Acting Secre

496 19 
19 F M C 497

FEDERAL MARITIME COMMISSION

SPECIAL DOCKET No 503

SHUMAN PLASTICS INTERNATIONAL LTD

v

SEA LAND SERVICE INC

January 26 1977

Application granted

INITIAL DECISION OF THOMAS W REILLY

ADMINISTRATIVE LAW JUDGE

Pursuant to section 18b 3

2

ofthe Shipping Act 1916 as amended by

P L9028 and section 502 92 ofthe Commission s Rules ofPractice and

Procedure 46 CFR 502 92 Sea Land Service Inc Sea Land or

Applicant has applied for permission to waive collection of a portion of

the freight charges on three shipments of synthetic resin scrap that

moved from New York N Y to Hong Kong P R C under Sea Land

bills oflading dated June 24 1976 July 9 1976 and August 13 1976 The

application was initially ftIed on December 21 1976 with an amendment

ftIed on January 6 1977 The amendment related only to correction of an

error in computation

The subject shipments moved via mini bridge service under through

rail water rates published in Sea Land TariffNo 234 FMC No 106 and

ICC No 92 The shipments moved via rail to Oakland California then

via Sea Land from Oakland to Hong Kong Waiver ofcollection ofthe

charges involved herein would affect only the ocean carrier s portion The

aggregate weight of the three shipments was 118 216 pounds with an

aggregate measurement of4 275 cubic feet The rate applicable at time of

shipment was 138 per 2 000 pounds or 40 cubic feet plus 40 cents per

cubic foot if measuring over 70 cubic feet per 2 000 pounds Sea Land

Freight Tariff No 234 FMC No 106 ICC No 92 Item 581 2000 79 2d

revised page 352 The rate sought to be applied is 73 per 2 000 pounds

IThis decision became the decision of the Commission on February 28 1977

146 U S C 817 as amended
498 FEDERAL MARITIME COMMISSION

Sea Land Freight Tariff No 234 FMC No 106 ICC No 92 Ite

2000 79 300 revised page 352

Aggregate freight charges payable pursuant to the rate applic

the times of shipment amounted to 8 542 81 Aggregate freight c

at the rate sought to be applied amount to 4 212 21 The diffe

sought to be waived is 4 330 60 three shipments total The Appli

not aware ofany other shipments ofthe same commodity which 

via Sea Land during the same time period at the rates involved in 

shipments

Sea Land offers the following as grounds for granting the applica

4 A special mini Iandbridge rate of 73 00 per 2000 Ibs when measuring n

than 80 cu ft per 2000 Ibs was established from Atlantic coast terminals to Ho

on Synthetic Resin Scrap effective September 15 1975 on original page 352 of T

234 FMC No 106 Publication was made in Item 581 2000 79 with an expiratio

January 31 1976 that was extended to April 30 in Rule No 10 Attachment No 

Effective May 1 1976 a general rate increase was published in Tariff N

following a comparable general increase published in the all water rates by the 

Conference In preparation for it Sea Land s trans Pacific pricing depart

Oakland office had decided that the increase would not be applied to any 

special rates that had been established independently to meet other competitive 

rates Instructions to follow were given to all concerned in teletype messag

January 23 Attachment No 2

When publishing the increase through clerical and administrative oversight e

of the expiration date beyond April 30 in circle reference E 2 in Rule 10 Th

resulted in expiration of the special rate of 73 ooW in Item 581 2000 79 alth

rate continued to be carrier on 1st and 2nd revised pages 352 Attachment No 

subsequently the explanation of circle B2 reference was removed from Rule 1

Revised page 86 effective July I 1976 Attachment No 4 The error in allo

special rate to expire with April 30 left only the standard rate of 138 00W M

same item to apply on shipments to Hong Kong

The shipments involved inthis application were originally rated at the rate of 

Mand charges paid on that basis by the complainant through his freight forward

Land found the mistake in the applicable tariffrate in the course of normal inte

audit functions and issued balance due bills to the shipper

Sea Land did not intend to increase these special rates on May 1 and so ad

shipper by letter dated April 23 1976 Attachment 5 Upon receipt of the bal

bills the shipper rejected them by letter dated November 5 1976 Attachmen

Sea Land pricing personnel acljusted the failure to extend the special rate by fl

with a circleB3 referenCe expiration date of October 31 1976 on 3rd revised 

effective August 25 1976 Attachment No 7 Copies of the bills of lading fre

and a statement of the charges sought to be waived are contained in Attachme

Section 18b 3 ofthe Shipping Act 1916 46 USC 817 as amen

Public Law90298 and Rule 6b Spec ial DocketApplications R

Practice and Procedure 46 CFR 502 92 a set forth the applica

and regulation The pertinent portion of 18bX3 provides that

The Commissiltn may in its discretion and for good cause shown 

common carrier by water in foreign commerce to refund a portion of freigh

collected from a shipper or waive the collection of a portion of the charge

shipper where it appears that there is an error in a tariff of a clerical or admi

nature or an error due to an inadvertence in failing to file a new tariff and 

refund or waiver will notresult in discrimination among shippers Provided furt

1
SHUMAN PLASTICS INT Lv SEA LAND 499

the common carrier has prior to applying to make a refund filed a new tariff with

the Commission which sets forth the rate on which such refund orwaiver would be

based and Application for refund orwaiver must be filed with the Commission

within 180 days from the date of shipment 3

The clerical and administrative error recited in the subject application is

of the type within the intended scope of coverage of section 18b 3 of

the Act and section 502 92 of the Commission s Rules ofPractice and

Procedure

Therefore upon consideration of the documents presented by the

Applicant it is found that

1 There was an error in a tariff ofa clerical or administrative nature

resulting in the failure to withhold the general rate increase from the

special rates as had been promised to the shipper

2 Such awaiver of collection of aportion of the freight charges will

not result in discrimination among shippers

3 Prior to applying for authority to waive collection of a portion ofthe

freight charges Sea Land f1led a new tariff which set forth the rate on

which such waiver would be based

4 The application was f1led within one hundred and eighty days from

the dates ofthe subject shipments

Accordingly permission is granted to Sea Land Service Inc to waive

collection of aportion ofthe freight charges specifically the amount of

4 330 60 An appropriate notice will be published in Sea Land s tariff

S THOMAS W REILLY

Administrative Law Judge

WASHINGTON D C

January 26 1977

3 For other provisions and requirements see 18 b 3 and 0 S02 92 of the Commission s Rules of Practice and

Procedure 46 CPR 502 92 0 oj

19 F MC
1

1

FEDERAL MARITIME COMMISSION

DOCKET No 7623

AGREEMENT No 808011 AMENDMENT TO THE ATLANTIC AND 

INDONESIA AGREEMENT AGREEMENT No 82409 AMENDMENT 

ATLANTIC AND GULF SINGAPORE MALAYA AND TfiAlLAND

CONFERENCE AGREEMENT AGREEMeNT No 808013 AMENDME

THE ATLANTIC AND GULFIINDONESIA CONFERENCE AGREEME

I

I

1

ORDER ON REVIEW

January 31 1977

On July lZ 1975 the Atlantic and GuWlmlonesia Conference 

and the Atlantic and Gu1fSinaapore alaYa and Thailand Con

AG SMTC each tiled anamendmQnt AareementNo 888011 ad 

9

respectively to their basic conference qreements As proposed 

amendments would expand the jurisdiction of each conference to 

ports points and place s ontributary inland waterways

On July 9 1975 another amendment Aireement No SDSO 1

filed with the Commission by AGIlC As proposed this amonclmen

extend the jurisdiction of AGIIC to intennodal movements o

which include as a part of such movement the transportation o

from an Atlantic orGulf port to Indonesia including Timor and W 

Guinea

Seven months prior to the tiling of the conference amendme

November 1974 Central Gulf Lines Central Gulf applied for mem

in each conference Central Gulfs applications were approved by 

the conferences on June 21 1975 to become effective on July 14 

The basic conference qreements ofthe AGIIC and AO SMTC 

that proposed amendments to these agreements be approve

unanimous vote ofthe conference members Althoush it still was a

admission to the AG le and AG SMTC at the time the conf

member lines voted to amend their conference qreements Cent

indicated its objection to any extension of conference juriadictionb

ocean port to ocean port movements Immediately upon beco

member of the conferences Central Gulf formally expressed its d

ment WIth each of the three proposed amendments and request

the conferences withdraw them fromtbrther Commission consid

i

1

i

0

I

1

1I

j

j

500 19 
AGREEMENTS NOS 808011 82409 808013 501

On July 21 1975 and August 18 1975 Central Gulf by then amember

of AGIIC and AG SMTC filed protests with the Commission to the

approval ofthe agreements In response to the protests filed by Central

Gulf the Commission on April 21 1976 ordered an investigation and

hearing concerning the three proposed conference amendments 1

Administrative Law Judge Stanley M Levy pursuant to amotion to

dismiss filed by Central Gulf thereafter discontinued the proceeding The

Presiding Officer relying on prior Commission determinations 2

con

cluded that the subject amendments are not agreements within the

meaning of section 15 ofthe Shipping Act 1916 because prior to their

approval by the Commission a member ofthe conferences i e Central

Gulf had indicated that it did not assent to the amendments thereby

destroying the required unanimity Having so determined that there were

no agreements before the Commission to approve he discontinued the

proceeding No exceptions to the Presiding Officer s ruling were filed

The Commission subsequently determined to review the Presiding Offi

cer s Order discontinuing this proceeding

We find that the Presiding Officer misinterpreted the Hong Kong

Tonnage Ceiling decision and its progeny and erred in finding that

Central Gulfs admission to the conference vitiated the required unanim

ity In Hong Kong Tonnage Ceiling the Commission considered the

impact of the withdrawal of one of the original signatories from the

agreement prior to Commission approval The factual situation in Hong

Kong Tonnage Ceiling though somewhat similar is clearly distinguishable

from the factual situation obtaining in the instant proceeding

The circumstances here are more akin to those surrounding the

agreement put at issue in Docket No 724 greement No 57JJ6

Pacific Westbound Conference Extension ofAuthority for Intermodal

Services served July 2 1975 3

There Seatrain International S A

Seatrain had applied for membership in the Pacific Westbound Confer

ence which has a unanimity requirement for amendments to the

conference agreement Prior to the admission of Seatrain the conference

adopted and med an amendment designated Agreement No 57 96 with

the Commission for approval Seatrain protested the agreement and

opposed its approval In approving the agreement the Commission did

not specifically address the impact ofSeatrain s dissent on the conference

unanimity provision However by approving the agreement the Commis

sion determined albeit by implication that the entry ofa new conference

member does not invalidate a prior unanimous conference action even

though that action has not yet received Commission approval

I

By letter dated June 29 1976 counsel for AGSMTC advised the Commission thatAgreement No 82409 was

withdrawn and that Such agreement need not therefore be considered further under the pending Commission

proceeding Docket No 7623

I

Hong Kong Tonnage Ceiling Agreement 10 F M C 134 1966 New York Freight Bureau Hong Kong 10

F M C 165 1966 Inter American Freight Coriference Cargo Pooling Agreements 14 F M C 58 1970 Agreement

No T 3J6 NYSA II S RR 432 435 n 6 1970 andAgreement No 2423 ortof Seattle 12 S RR 91 0 0

affd 12 SR R 221 FMC 1971

3

The final order in this proceeding was served onSeptember 20 1976

19 F M C
502 FEDERAL MARITIME COMMISSION

1

Thus there is a critical difference between the pertinent f

Agreement No 57JJ6 and the present proceeding on the one ha

Hong Kong Tonnage Ceiling on the other In the latter proc

Hong Kong withdrawal of an original party prior to Comm

approval vitiated the aareement In the former proceeding fttgr

No 57J6 the entry of a new conference member did not abrog

previously unanimous conference filing That result is clearly con

here Accordingly we find that the Presiding Officer erred in rul

no agreement existed on which he and the Commission could act

While we disagree with the Presidina Officer s reasons for disco

the proceeding we nevertheless concur in such discontinuance a

other grounds As previously noted no party to this proceeding in

AGIIC the proponent ofthe agreements filed exceptions to the P

Officer s ruling that there was no valid aareement before the Comm

We consider this failure to except to the Presiding Officer s 

tantamount to acquiescence in that decision and construeit as an e

withdrawal of these agreements from the Commission s conside

THEREFORE IT IS ORDERED That this proceeding is discon

By the Commission

i

1

i

j

S JOSEPH C PoLKINO

Acting Secre

1

j

1

1

J

1

1

i

4 Soe S abo rd and Western Air Mall AUlhorl atlon 29 CAB 49 19j9 where theCivU Aeronautics 

that the ailure of aparty to except to an examinen deciaJon is tantamount to acquitlOOnco in that decilio

J

1

19 
19 F MC 503

FEDERAL MARITIME COMMISSION

DOCKET Nos 754AND 755

DEPARTMENT OF DEFENSE AND MILITARY SEALIFT COMMAND

v

MATSON NAVIGATION COMPANY

ORDER ON APPEAL OF DISMISSAL

February 2 1977

This consolidated proceeding 1

is before the Commission on an appeal

taken by the Military Sealift Command MSC from a ruling of

Administrative Law Judge William Beasley Harris dismissing complaints

fIled by the Department of Defense and MSC 2

A previous dismissal of

the same complaints by the Presiding Officer was remanded by us on

appeal on the grounds that the Presiding Officer had failed to set forth

any reasons or basis for his conclusion that the Complainants had failed

to make out a case on the facts and the law as required by the

Administrative Procedure Act and the Commission s Rules of Practice

and Procedure 3

On remand the Presiding Officer in a Supplemental Order ofDismissal

again found that the Complainants had not supported their allegation that

Matson s failure and refusal to file appropriate military class rates is an

unjust and unreasonable practice under section l8a ofthe Shipping Act

1916 and section 4 ofthe Intercoastal Shipping Act of 1933 According to

the Presiding Officer the evidence presented by Complainants

bears little relevance to their allegations and burden ofproof and

no violation ofthe Shipping Act has occurred as a resulfofRespondent s

failure to continue the past practices of simplified rates for military

cargo

MSC has appealed the dismissal Matson Navigation Company Mat

son Hearing Counsel and the Household Goods Forwarders Association

ofAmerica Inc HHGFAA have responded in support ofthe dismissal

MSC raises four principal objections to the Presiding Officer s ruling

I Docket No 754involves Matson s ra s between the West Coast of the United States and Hawaii and Docket

No 755 deals with Matson s rates between the West Coast and Guam

1 Hereinafter all referenceswill be to MSC since it is the entitywhich is actively litigating the case

Order on Appeal from Presiding Officer sDismissal of Complaint April 9 1976
504 FEDERAL MARITIME COMMISSION

First it is alleged that the Presiding Officer failed to comply w

Commission s Order on Remand in that his Supplemental Order 

make findings and conclusions as well as state reasons or basis th

upon all material issues of fact law or discretion presented 

record

Second MSC contends that the Presiding Officer erred in dis

the complaints because of noncompliance with Department of D

regulations requiring that the furnishing of the full noun nomencla

items shipped by MSC with Matson MSC alleges that the Pr

Officer apparently concluded that MSC s noncompliance with 

regulations was willful and therefore MSC was undeserving ofw

Presiding Officer termed equitable relief MSC notes that the e

in the record indicates that compliance with DOD regulations is 

easy matter but explains that it has attempted to conform to 

regulations

Third MSC argues that the Presiding Officer erred in holding t

Commission has no authority to require Matson to continue the cla

structure formerly in effect According to MSC the case cited 

Presic ing Officer in support of his statement is inapplicable to the 

in the current proceeding

Finally MSC contends that the Presiding Officer erred in his e

ment and adoption of the reasoning of Matson and Intervenors 

extent that that reasoning is erroneous MSC argues that the P

Officer s endorsement and adoption of these positions is insuffic

satisfy section 8 of the Administrative Procedure Act or Rule 13 e 

Commission s Rules In responding to the various arguments ra

brief MSC incorporates its previous reply brief which addres

arguments and positions raised by Matson and Intervenors in thei

Motions to Dismiss 4

Matson in its response to MSC s exceptions is ofthe opinion 

Presiding Officer s Supplemental Order does contain adequate fi

conclusions and reasoning and should be atfll tlled by the Comm

Matson argues that MSC offered no evidence that it is currently 

excessive freight charges by reason ofits inability to identify cargo

evidence introduced alleaedly indicates that MSC s cargoes were p

and adequately identified and the lowest applicable rate under M

tariff applied that no effort was made by MSC to quantify the e

that might be involved in changing existing documentation proc

and further that MSC has failed to offer any proof as to wheth

currently paying agreater or lesser amount than the fully allocate

plus a reasonable system average return level of rates which MS

asks the Commission to prescribe for it

Finally Matson believes that the proposed class rates whic

4

For afullerdiacussion of thearlJUmentl and position raised by theparties for and aptn t the Motion

seeourOrder of April 9 1976 which summarizes these araum nts

1
MSC v MATSON NAVIGATION CO 505

would like to see established would violate sections l8 a and 16 First of

the Shipping Act 1916 These class rates would allegedly create a

classic example ofunjust discrimination in which the sole justification for

the discrimination rests not in transportation conditions but rather on the

identity ofthe shipper

Hearing Counsel also urge the Commission to uphold dismissal ofthe

complaints In so doing they rely on the arguments advanced in their

Motion to Dismiss of October 30 1975 wherein they contended that the

repeal of section 6 ofthe Intercoastal Shipping Act of 1933 precluded the

type of rate structure requested by MSC that MSC s difficulties in rating

military cargoes in accordance with commercial tariffs were the result of

its own failure to administer the MILSTAMP Military Standard Trans

portation Movement Procedures system to the extent ofits capabilities

and its obligations and that there has been a failure ofproof on the issue

ofthe proper level ofrates assessed MSC by Matson

HHGFAA advised by letter that while it would not submit a separate

pleading in response to MSC s appeal it also would rely on its earlier

Motion to Dismiss in support of the Presiding Officer s ruling and in

opposition to the appeal of MSC In this regard the comments of

HHGFAA generally followed those presented by Hearing Counsel

We have reviewed the Supplemental Order ofDismissal ofthe Presiding

Officer and find that it substantially complies with the requirements ofthe

Administrative Procedures Act and our own Rules of Practice and

Procedure

The Presiding Officer s Order makes clear his findings and provides an

adequate explanation for the ultimate conclusion reached i e that the

Complainants have failed to meet their burden of proof and that no

violation ofthe Shipping Act has occurred as a result ofMatson s failure

to me class rates for military cargo We find that the Presiding Officer s

Order is procedurally sufficient and agree with his ultimate disposition of

this matter

In its appeal MSC argues that

A mere endorsement and adoption of the reasoning in the initial Order of Dismis al

which the Commission found deficient can hardly in itself contain a cure for that

deficiency

MSC apparently misconstrues our remand We took no position with

respect to the merits of the arguments advanced by any ofthe parties in

the initial Order of Dismissal Our concern was with the failure ofthe

Presiding Officer to adequately explain the basis for his conclusions We

believe that he has rectified that deficiency in his Supplemental Order of

Dismissal

MSC excepts to the Presiding Officer s reliance on Complainant s

noncompliance with DOD regulations requiring that the military furnish

the full noun nomenclature ofitems shipped as a ground for the dismissal

of its complaint It is true that the Presiding Officer did place significant

19 F M C
506 FEDERAL MARITIME COMMISSION

emphasis on MSC s failure to 0 conform to MILSTAMP which ess

requires that there must be a complete description of the cargo so 

proper determination can be made as to which commercial tariffto 

The Presiding Officer found that

S uch noncompliance undoubtedly relates directly to the controversy imm

involved in this proceeding and is of such a character as renders the Com

interest undeserving of the protection or equitable relief sought Equity require

who invokes its aid in any transaction must be ready to perform in referenc

transaction whatever justice may demand

This finding appears to reflect a belief that MSC is attempting to o

rate structure which would free it from having to comply with 

regulations In this regard MSC s problems in complying with 

STAMP do not in and of themselves provide a proper basis for 

Matson s present rate structure unreasonable in violation of sectio

We do not share MSC s concern overthe Presiding Officer s co

ation of Scott Paper Co v Puerto Rico Maritime Shipping Au

Docket No 7443 14 SRR 1616 1975 and its possible impact 

proceeding Our disposition of the appeal now before us can be 

without recourse to the possible application of Scott Paper 

proceeding

In its appeal MSC cites a number of substantial issues oflaw 

mixed law and fact which they believe must be resolved before ad

on the motions can be reached Certain of these issues are pre

another proceeding Docket No 75 20 Puerto Rico Maritime S

Authority Rates on Government Cargo now pending initial decisi

we see no reason to address those issues in this proceeding Ho

we do believe that to properly dispose of the matter before us t

legal issue raised by MSC should be resolved As framed by MS

issue reads as follows

Does the repeal of section 6 of the Intercoastal Shipping Act of 1933 precl

matter of law a

separate simplified rate system like that requested to be estab

ourcomplaints and in substance like that used by MSC with Matson and other 

carriers before that repeal

Much has been said about the Congressional intent in repealing 

6 ofthe Intercoastal Shipping Act 1933 MSC argues that the co

intended to be corrected by the repeal of that section was not the 

ofgovernment rates but the level of such rates Thus MSC conten

provided the level of rates for the carriage of military cargo was f

reasonable vis avis commercial cargo a different class ofrates for m

cargo could be established For the most part the other parties 

proceeding appear to take the position that MSC is not entitled 

preference whatsoever and rates on military cargo must take th

form as commercial rates

We believe that to a certain extent both positions are correct Co

was concerned that the rates on commercial cargoes were subsidiz

19 
MSC v MATSON NAVIGATION CO 507

carriage of government cargoes

5

To rectify this problem Congresss

repealed section 6 and amended section 5 of the Intercoastal Shipping

Act 1933 so as to provide for the economic regulation of rates on

government cargo These rates must now meet the same statutory

standards of reasonableness and fairness as presently apply to rates

charged for the transportation of commercial cargo in the applicable

trades

What Congress has done is to require that rates for the carriage of

government cargoes be established on the same basis as commercial

rates In other words the government is no longer statutorily entitled to

reduced rates but must justify such rates on valid transportation factors

This was recognized in the Senate hearings on P L 93 487 in the

following exchange between Senator Inouye and FMC Commissioner

James V Day

Senator Inouye If Section 6 were repealed wouldn t the federal government still be

eligible to obtain special rates based on demonstrable savings from the transport of

government cargo such as volume lack of advertising etc

Answer Commissioner Day That is a correct statement Mr Chairman As I pointed

out removal of Section 6 from the Intercoastal Act would not preclude the obtaining of

lower mtes by anyonethe government states and local jurisdictions or charities In

fact those shippers mentioned in Section 6 may find that when Section 6 is repealed the

carrier s compensable transportation costs will be such that the true considerations

service tmnsit time time of tender etc and not the outdated artificial foundation of

Section 6 result in lower mtes

Senate Report No 931278 also supports this position It states in part

Deletion of section 6 need not mean that the government and commercial rates will be

the same In instances where the government can show that there are cost savings in the

carriage of government cargo it will be entitled to obtain lower mtes

The fatal flaw in Complainant s case is that they have failed to establish

valid demonstrable savings to the carrier from the transport ofgovernment

cargo MSC as any other shipper could justify a particular rate if based

on proper transportation factors However the evidence in this record

does not support the establishment of MSC s class rates We do not

consider MSC s principal concern i e the difficulty of rating military

cargoes in accordance with commercial tariffs as sufficient to justify the

lower class rates MSC s proof goes primarily to this alleged difficulty

Therefore we conclude that while the repeal of section 6 of the

Intercoastal Shipping Act 1933 does not preclude as a matter of law a

separate simplified rate system such a rate structure must be based on

valid transportation factors The record in this proceeding does not

establish the necessary factors

Itfollows therefore that MSCs allegations of section l8 a violations

5

The legislative history of P L 93487 which repealed section 6 is found in the published Hearings Before the

Subcommittee on Merchant Marine althe Committee on Merchant Marine and Fisheries House of Representatives

93 d Congress SeOnd Session on Rate Exemptions H R 13501 and H R 13615 July 10 1974 Serial No 9347

pp I 55 Hearings Before the Subcommittee on Merchant Marine of the Committee on Commerce United States

Senate 93rd Congress Second Session on S 3173 August 9 1974 Serial No 93101 House Report No 93 1348 of

September 11 1974 and Senate Report No 931278 of October It 1974

19 F MC
1

d

i

j

1

I

4

508 FEDERAL MAlUTIMECOMMISSION

on the part of Matson because of its refusal to tile appropriate m

class rates are unsupported in this record MSC has failed to es

that Matson s present rate structure is unreasonable as applied to 

vis a vis other shippers Similarly MSC srequest that container rat

military cargo be established at alevel that will provide MatSon a 

equivalent to the fully allocated costs of transporting those clas

cargo plus an appropriate return on its investment in the trade wou

the extent that such a standard is not applied to commercial shipm

put MSC in a preferred class This would establish aspecial class o

applicable only to military cargoes and without additional justific

would clearly be contrary to the intent ofCongress in repealing sec

ofthe Intercoastal Shipping Act of 1933

THEREFORE IT IS ORDERED That MSC s appeal ofthe Pre

Officer s

ruling on dismissal is denied and the proceedings in Docke

754and 755 are hereby dismissed 6

By the Commission

8 JOSEPH C POLKINO

Acting Secreta

6

Tbe various motions to dismiss now before us weto made at the oolulloo of MSC CaIe in Docket 

Docket No 75 except for thereceipt of certain expert evidence fODcerniqthe level of clu8 rates request

Docket No 7 which was postponed by aareoment and conllnt Such evidence is now lrrelevarit however 

of Ollrfindlna that the record does not support the establishment of any class rates

19 F 
TITLE HIPPING

Chapter IV Federal Maritime Commission

Subchapter AGeneral Provisions

GENERAL ORDER 16 AMDT16 DOCKET NO 7649

Part 502Rules ofPractice and Procedure

February 4 1977

Miscellaneous Amendments

This proceeding was instituted by notice of proposed ru1emaking

published in the Federal Register ofSeptember 20 1976 41 F R 40504

The purpose ofthe proceeding was to amend appropriate sections ofthe

Commission s rules ofpractice to 1 specify that in proceedings under

section 15 of the Shipping Act 1916 parties to the agreement shall be

designated proponents and parties opposing approval shall be desig

nated protestants 2 place in the presiding officer the authority to rule

on production ofwitnesses and materials located in a foreign country and

3 establish aprocedure for Commission review oforders ofdismissal by

presiding officers which have not been appealed

Comments were submitted by the Council of European and Japanese

National Shipowners Association CENSA JapanKorea Atlantic and

Gulf Freight Conference Trans Pacific Freight Conference ofJapan

Korea New York Freight Bureau and Trans Pacific Freight Conference

Hong Kong Conferences Maritime Administrative BarAssociation

MABA and the Commission s Bureau of Hearing Counsel Hearing

Counsel We have considered these comments carefully and herewith

publish final rules A section by section analysis of the rules and

comments thereon follows

1 Section 502 41 was proposed to be amended by designating parties

to agreements as proponents and parties opposing approval as prot

estants in proceedings relating solely to approvability of section 15

agreements The proposal is designed to eliminate the current and

misleading designations of respondents and petitioners

For afuller explanation of the purpose of the proposed amendments see notice of proposed rulemaking cited

above

19 F MC 509
1

1

I

I

510 FEDERAL MARITIME COMMISSION

No comment was made to this proposal and it will be incorpora

the final rule

2 Sections 502 210 and 502 136 were proposed to be amended 

section 502 211 deleted to the net effect that presiding officers woul

on the production ofwitnesses and materials located in aforeign co

It was believed that the proposed procedure would eliminate conf

and delay occasioned by the present system of dual jurisdiction 

authority in the presiding officer to compel production of witnesse

materials located in the United States and in the Commission with re

to a foreign country

CENSA objects to the proposals on the ground that the Comm

alone should deal with matters which might arise from attempts to 

documents or subpoena persons abroad It points out that the c

standards for quashing subpoenas might not encompass for exa

prohibitory statutes of other nations If the Commission adopt

proposals CENSA urges that procedural guarantees be incorporated 

the presiding officer be required to consider the effect on interna

relations in making any ruling and that parties have an absolute rig

appeal any such ruling

The Conferences generally echo CENSA s position as to the Co

sion s traditional role in matters of international import They asse

that the efficiency to be gained under the proposal is illusory in th

Commission would ultimately have to enforce any order of the pre

officer They also urge the right ofimmediate appeal

MABA takes no position on the question ofwhether presiding o

should have the proposed authority since its members are divided o

question MABA however questions the authority of the Commiss

limit the time within which a private party may bring an enforce

action

Hearing Counsel support the proposal generally but would revi

wording of section 502 210 d to make clear that only the Comm

shall enforce orders and that enforcement is discretionary

The matter of enforcing orders abroad is not a common one but 

it occurs it is amatter of concern The process is very delicate pe

involving other entities of the government e g Department ofState 

Commission should be the entity making such determinations bas

policy as well as legal considerations Accordingly we shall not 

this aspect ofthe proposal

We believe however that the presiding officer should at least b

to determine whether the problem is one for him or the Commis

Accordingly we are amending section o502 210a to require an answ

party to indicate whether or not witnesses or documents are locate

foreign Country Section 0502 136 will be amended in accordance w

the foregoing

3 Section 502 227 was proposed to be amended by providing s

19 
GO 16AMDT 16DKT NO 7649 511

cally for review oforders ofdismissal by presiding officers At present

the rules are silent as to this

MABA is of the opinion that the present rules permit review of

dismissals by the Commision but supports the proposal as stating the

Commission s authority explicitly

Hearing Counsel would add language to insure that service of anotice

to review would not constitute a

reopening ofthe record

At the time offashioning its proposal the Commission was attempting

to do what MABA suggests i

e clarify the rules As to Hearing

Counsels addition we feel it unnecessary A record can not be reopened

automatically only the presiding officer or Commission as appropriate

may do so

Therefore pursuant to section 4 ofthe Administrative Procedure Act

5 D S C 553 and sections 27 and 43 of the Shipping Act 1916 46

D S C 826 841a Part 502 ofTitle 46 Code of Federal Regulations is

amended

Effective Date Inasmuch as the expeditious adoption ofthese rules is

desirable and inasmuch as they are procedural in nature they shall be

effective upon publication in the Federal Register and shall be applicable

to all pending and future proceedings

By the Commission

S JOSEPH C POLKING

Acting Secretary

The text of the amendment is reprinted in 46 C P R 502 41 502 210a 502136 502 227

19 F MC
FEDERAL MARITIME COMMISSION

DoCKET No 7366

AUSTASIA CONTAINER EXPRESS A DIVISION OF AUSTASIA INTERM

LINES LTD POSSIBLE VIOLATIONS OFSECTION 18b 1 AND GE

ORDER 13

Respondent found to be a nonvessel operating common carrier in the foreign co

of the United States within the meaning of section I Shippina Act 191

thoullh the water portion of the throuah transportation offered commenc

Canadian port

Respondent ordered to file a tariff pursuant to section 18 b 1 Shippinll Act 19

General Order 13 of the Commission s Rules section 1 carriers are su

through route tariff filing requirements regardless of whether they make a 

call at an United States port

Charles F Warren and George A Quadrino for respondent

Stanley O Sher and Jacob P Billig for intervenor U S Atlan

Gulf7AustraIia New Zealand Conference

Patricia E Byrne and Donald J Brunner Hearing Counsel

j

REPORT AND ORDER

February 7 1977

By THE COMMISSION Karl E Bakke Chairman Ashton C Barrett 

Casey James V Day Commissioners

This proceeding was instituted to determine whether Austasia Con

Express ACE an unincorporated division ofAustasia Intermodal 

Ltd is a common carrier by water in the foreign commerce ofthe U

States within the meaning ofsection 1 of the Shipping Act 1916 

and section 510 21 d ofthe Commission s Rules Rules I

and if so 

ACE should not be found in violation of section 18b 1 ofthe A

section 536 16 ofthe Rules for operating without filing a Federal Ma

Commission tariff 2

The U S Atlantic and Gulf7Australia New Ze

1 Section IO 21 d of the Rules defines nonvcssel operatina common carrier Copies of the pertinent re

and statutes are appended hereto

2 Section 536 16 concerns the nlinS of throuah rates and through routes It was adopted in 1970 as Amend

General Order 13 35 F R 6397

512 19 
AUSTASIA CONTAINER EXPRESS 513

Conference Conference a group of vessel operating common carriers in

the U SAustralia trade making direct calls at U S ports intervened J

BACKGROUND INFORMATION

ACE since June 1972 through direct contact mail and newspaper

advertising and shipping agents located in Detroit Chicago and New

York has held itself out to U S freight forwarders and shippers as

offering a through common carrier service from Detroit ACE s principal

place of business to various Australian ports 4

The service is conducted

in the following way

1 Shippers deliver their cargo to a freight consolidator contracted for

by ACE and located within the Detroit Commercial Zone presently in

Romulus Michigan There it is assembled into carload lots in containers

leased to ACE

2 Under a contract with ACE to move the goods from Detroit to

Vancouver British Columbia the Canadian Pacific Railway CPR

subcontracts with a truck line to carry carload lots from the consolidator

in Detroit to Windsor Ontario s

3 From Windsor the cargo moves by rail to container yards in

Vancouver

4 ACE contracts with various steamship lines calling at Vancouver

for the ocean carriage ofthe containers These lines do not sail directly to

Australia but proceed to Japan where the containers are transshipped to

other vessels calling directly at Australian ports

5 Containers are delivered at the Australian ports of Sydney and

Melbourne ACE also holds itself out to carry cargo to Adelaide and

Brisbane which it accomplishes by arranging for overland transportation

from Sydney or Melbourne 6

ACE issues a single bill oflading for this entire movement when the

cargo reaches Canada 1

This bill indicates Windsor as the Port of

Loading and Detroit as the pier 8 Clause 7 indicates that the carrier s

responsibility begins at the port of loading but ACE claims responsi

bility for the goods from the moment they are received by its consolidator

in Detroit 9

l The Pacific Austral lsian Tariff Bureau was also granted leave to intervene but did not participate in any phase of

the proceeding

4 ACE s

advertisements create the impression that ACE is holding itself out as a steamship line andACE testified

that this was its intention Mostof its shipper clients are located in midwestern states

5 Windsor is directly across the Detroit River from Detroit In the past CPR also subcontracted with aferry

operator tomove ACE cargo toWindsor but no longer does so

6

ACE reserves the unqualified right to deviate from the above route Bill of Lading Clause 6 Tariff Rule 19 but

has yet to exercisethat right

7 An onboard bill oflading is generally issued by ACE sagent in Canada after it receivesTELEX confirmation that

the goods have actually been loaded in Vancouver Unless aspecial request is made ashipper will only have the

Detroit consolidation yard receipt toevidence transferofpossession of his cargo until the onboard bill is issued

8 Windsor is placed on the bill to make it clear that the cargo is routed through Canada Canadian cargo receives

reduced customs duty in Australia and this is one reason that ACE can ordinarily offer its service at a

lower cost

thenthe costforrouting the same cargo through Los Angeles or New York

9

The source of this Detroit to Windsor liability was not indicated but is presumably grounded in common law

principles ACE s

advertising infers aunitary bill oflading from Detroit toAustralia and the single freight rate on the

billof lading coversthe entire movement from Detroitto Australia

19 F M C
514 FEDERAL MARITIME COMMISSION

I

ACE has no tariff onme for this service In 1972 ACE prep

tariff but was informally advised by the Commission s staff tha

was unnecessary This 1972 tariff is still the basis for ACE s rates v

surcharges and other assessments are added to the 1972 quotati

arrive at the present charges Only ACE knows how its rat

determined A shipper usually discovers a rate by requesting 

information from his forwarder or agent who in turn asks ACE 

record does not reveal whether ACE s tariff is available for 

inspection

American Container Express Inc a corporation owned and con

by the same individual who controls Austasia Intermodal Lines 

possesses ICC Part IV freight forwarder authority to carry contain

export cargo general commodities from all points in Michigan and 

to Michigan ports ofentry 10 This Part IV operation also emplo

ACE trade name and presumably has assumed all United States fun

of Austasia Intermodal Lines Inc II Despite the fact that two b

lading are required ACE apparently offers an effective door to 

service from U S inland points to Australia

Through the end of 1974 ACE carried about 8 000 revenue t

export cargo served 4050 United States shippers and issued 90

bills oflading ACE stipulated that it competes with the all water s

offered by the Conference

Administrative Law Judge Norman D Kline Presiding Officer 

an Initial Decision holding that ACE is not a common carrier by 

subject to the Commission s jurisdiction This decision relies prima

the legislative history ofShipping Act section 1 When the Alex

Committee examined the steamship industry in 1913 all water p

port transportation was the only significant type of ocean ca

available This fact plus certain testimony relating to the final legi

adopted in 1916 led the Presiding Officer to conclude that the 

provisions are limited to water carriers physically serving U S port

Several court and Commission decisions are also quoted in sup

this result 13 The second Circuit s language in Compagnie Ge

Transatlantique supra is typical

A steamship company engaged in foreign commerce with ships entering the 

States ports in such commerce is within the obligation of the Shipping Act 

fact that the bill of lading was issued in France does not exclude it Emphasis 

I

i

I

I

I

10 TheIce application FF453 of American Container Express Inc was aranted January 16 1976 sub

the release of the Initial Decision herein This authority is reitrictedto export traffic hllving asubsequent 

by water

IIMr Glenn W Scherenbach President of Austaaia Container Express testified that Austa8ia lntenno

IDe

would cease operations in the United States once American Container Express Inc received i

certificate

U Eg House Committee on the Merchant Marine and Fisheries Hearingg on HR 14J37 64th Coni 

1916 Statements of Representative Hadley at 3233 statements of biderJacobs President California 

Co at 5557 and statements of maritime lawyer J Parker Kirlin at 128

1

Compagnie Generale Transatlantlque Inc v American Tobacco

Co

31 F 2d 663 665 2d C

Armement Deppe S A v United States 399 F 2d 794 797 5th Cir 1968 Paciftc Seafarers Inc v A GA

et

al

8 F M C 461 46l l96l

19 
AUSTASIA CONTAINER EXPRESS 515

The Presiding Officer further noted that although the Commission has

extended its tariff filing requirements over through routes going beyond

port areas

14 and over connecting carriers not themselves calling at U S

ports IS in both instances at least one participating carrier in the through

movement made an actual vessel call at a U S port

The Initial Decision also held that Shipping Act section 18 b Iwas

inapplicable to ACE s activities because the words to and from United

States ports and foreign ports modify the through route language of

that section and thereby limit its application to water carriers which

physically call at U S ports This result was supported by the finding that

section 18 bIis patterned after Shipping Act section 18a and section 2

of the Intercoastal Shipping Act 1933 16 and the Commission has

described its through route jurisdiction under section 2 as applying only

to arrangements between intercoastal water carriers 17

Finally the Presiding Officer concluded that the jurisdictional underpin

ning ofthe Commission sthrough route and through rate regulations

section 536 16 was exclusively limited to section 18 b I Given his

interpretation of section 18 b I it followed that through route through

rate tariffs need be fIled only when they include an ocean rate offered by

acarrierphysically serving a U S port

Exceptions to the Initial Decision were fIled by the Conference and by

Hearing Counsel ACE filed a Reply to Exceptions These pleadings

largely repeat the arguments presented to the Presiding Officer and

address three basic questions IDoes section I of the Act embrace

ACE s service 2 Must ACE fIle a tariff under section 18 b lof the

Act 3 Must ACE fIle a tariff under section 536 16 ofthe Rules Hearing

Counsel supports the Conference but argues that ACE s operations are

subject to section 1 and this alone detennines the tarifffiling issue

POSITION OF THE CONFERENCE

The Conference first states that Ace is a common carrier in foreign

commerce because of its undertaking with respect to the public it widely

solicits cargo for and actually undertakes through transportation from the

Umted States to Australia issues bills oflading in its own name assumes

liability for the entire movement and charges shippers a single dollar

amount therefor

The Conference argues that while the legislative history ofthe 1916 Act

1446C F R 536 16

U

Transshipment Agreement Indonesia United States to F M C 183 l966 Transshipment Agreement Between

S Thailand and United States 10 F M C 199 1966

16 Section 2 states in pertinent part that

ifathrough routeis established acarrier must file all the rates in connection with transportation between

points in its ownroute and on the route of any other carrier by water fRmphasis added

17 Eg Sea Land Service Inc Cancellation of Rates 11 F M C 137 142 and n6 1967 which concerned the

Commission s1960 rejection of a single factor joint motor water tariff between Utah and Hawaii because it was

impossible to determine whereFMC or ICCjurisdiction began and ended See also Gulf Intercoastal Rates to

and From San Diego No 2 1 U S S B B 600 605 1936 Intercoastal Investigation 935 1 U S S B B 400 57

1935

19 F M C
516 FEDERAL MARITIME COMMISSION

may reflect only those shipping problems Congress recognized 

time this alone does not show a legislative intent to foreclose the 

application to future technological changes The Committee tes

cited by the Presiding Officer cannot support a restrictive interpreta

section 1 At best it shows thatcertain opinions were brought bef

Congress Similarly the judicial decisions relied on by the Pr

Officer merely indicate that in 1916 shipping lines in fact operated 

from U S ports These cases do not even address the question ofw

foreign commerce carriers not physically calling at United State

are immune from Shipping Act regulations

The Conference contends that the status of ACE s service m

decided by considering the remedial purposes of section 1 and the 

of the language employed and then construing the statute libe

achieve that purpose Activities Tariff Filing Practices and C

Status of Containerships Inc 9 F M C 56 59 1965 Imp

regulatory objectives will be frustrated ifACE is held to be outs

Commission s

jurisdiction Ace will continue quoting rates which 

be verified shippers will remain unsure whether the same ra

services that are available to them are also available to their comp

and shippers and ports will have no forum to voice compla

discrimination orprejudice

The Conference further claims that if section 1 is not limited to 

carriers touching U S ports then a fortiori section 18 b I is 

limited It states that the words transportation to and from United 

ports and foreign ports do not themselves evince aCongressiona

that the water carrier must call at a U S port and were not m

preclude the filing of tariffs by services such as ACE Moreov

Conference believes the to and from U S ports language do

modify the subsequent words and all through routes which hav

established so that rates for through transportation must be filed 

the through route does not feature a vessel call at a U S port

The Presiding officer s analogy between section 18b land se

ofthe Intercoastal Shipping Act 1933 is also disputed by the Conf

The fact that the sections are similarly worded does not mea

purpose and intent are the same In this instance the analogized s

are said to cover vastly different trades and have vastly different b

and purpose The Presiding Officer s reliance on language fro

Transshipment Agreement cases supra is challenged because 

cases were not directly concerned with tariff filing pursuant to 

18b 1

Finally the Conference argues that section 536 16 embraces 

service since General Order 13 requires all section 1 common car

me rates governing through transportation between ports or points 

United States and ports orpoints in a foreign country If Detroit i

port it is at least a point for purposes ofsection 536 16

19 
AUSTASIA CONTAINER EXPRESS 517

POSITION OF ACE

ACE supports the Initial Decision in all respects primarily contending

that the language of section I itself connotes port to port service

legislative history demonstrates that section Irequires actual United

States port calls for carriers in both domestic and foreign commerce

18

Detroit is not a port in this instance because it is not being directly

served by any type of water transportation the doctrine of liberal

construction to effectuate a remedial design cannot establish Commission

jurisdiction where all other critical elements are lacking the through

route portion of section 18 b l

is inapplicable to through routes not

involving U S ports because the to and from U S ports and foreign

ports phrase of 18 b 1 applies to and modifies the own route and

the any through route tariff fIling requirements the through route

language of section 18 b l

was intended to cover only through arrange

ments among water carriers as was section 2 of the Intercoastal Shipping

Act and section 536 16 is inapplicable to its NVOCC service because

the Commission lacks jurisdiction over the inland portion ofthe intermo

dal movements 19

DISCUSSION AND CONCLUSIONS

As revealed by the thorough and well presented Initial Decision the

legislative histories of Shipping Act sections I and 18 b contain no

statements concerning nonvessel operating carriers or true intermodal

cargo movements The 1916 House and Senate Reports on the bill that

became the Shipping Act H R 15455 say little other than to repeat the

major recommendations of the Alexander Committee The only jurisdic

tional debates involving foreign commerce concerned Senate Amendment

No I to H R 15455 which excluded all tramp vessels from regulation

See 53 Congressional Record August 29 1916 at 13365 13366 13420

and 13426 The House Committee hearings on an earlier bill H R 14337

are inconclusive if not irrelevant to the question of whether a direct

vessel call at an United States port is necessary for the Commission s

section I

jurisdiction to attach 20 IfCongress in fact formulated an

IS ACE argues that the absence oflhe word port is insignificant It states that the word port was missing from

the definition ofboth foreign commerce and interstate commerce carriers when section I was first reported out of

Committee the regular routes from pori to port language was expressly added to the interstate definition to

exclude tramp vessels from regulation see Rtl of Genera AtlCl1l1ic 5 S Co 2 U S M C 681 1943 United States

v

Stephen Bros Lim 384 F 2d 118 5th Cir 1967 and not to othelWise differentiate the two provisions ACE also

submits that the legislative history cited in the Initial Decision involved vessels carrying U S exports from Canadian

ports and these vessels almost certainly touched U S ports during their voyage Lack ofa generalized United

States presence argues ACE was not the reason Committee witnesses stated that the Act would not reach these

carriers Rather the testimony stressed the fact that in carrying U S cargo from Canada these vessels did not

physically tOlch U S ports

19 ACE argues that in Disposition ofContainer Marine Lines 11 F M C 476 1 8 and Filing of Through Rates

and Through ROlltes II S R R 574 1970 the Commission expressly recognized its jurisdiction was overport to

port and not inland mtes moreover even if Detroit were considered to be a port in this instance section 536 16

would not require atariffto be filed because that section applies only to throughroutes involving apoint oforigin or

destination beyond aport area

20 The testimony cited by the Presiding Officer was primarily concerned with possible United States losses to

Canadian competition if the American shipping industry were strictly regulated

19 F M C
518 FEDERAL MARITIME COMMISSION

I

intention as to how through container movements were to be hllI1

the 1970 s that intention was not disclosed in 1916 or 1 1 What i

is that the Shipping Act was conceived as a comprehensive regu

system for oceanborne foreign commerce Section 1 of the Act in

the entire realm of ocean shipping which then existed with the s

exception of contract carriers ferryboats and ocean tramps The a

ance of new technology alone is not a sufficient reason for limit

agency sjurisdiction when the agency was otherwise intended to p

a broad and unified authority 21

The 1916 legislation limited the Commission s in personam juris

in only three respects 1 there must be a common carrier by 

which is not a tramp or ferryboat 2 the carrier must transport 

between the United States and a foreign country and 3 the Comm

may not exercise concurrent power or jurisdiction over any 

within the power or jurisdiction of the ICC 22 These limiting 

have not been altered in the intervening 60 years Our authority eb

flows as Congress modifies the powers and jurisdiction of the IC

we conclude that our foreign commerce jurisdiction is not restric

ocean carriers operating vessels which physically call at United 

ports A common carrier engaged in the through transportation o

between the United States and a foreign country by water is 

to section 1 Transshipment Agreement Indonesia United Sta

F MC 183 191 1966

This is not to say the Shipping Act permits the Commission to d

reach the port to port rate of an ocean carrieroperating only betwe

foreign countries 23 This we obviously cannot do Neither do we e

section 1 as encompassing joint rate through route international tra

tation offered by ICC regulated carriers via foreign ports in conju

with oc ean carriers are themselves subject to the Shipping Act 24

However we conclude that ACE is performing all the function

nonvesse1 operating common carrier NYO in the foreign comme

the United States NYO s have been consistently recognized as se

carriers since at least 1952 Bernhard Ulmann Co Inc v Puert

J

11 In United Stales v Southwestern Cable Co 392 U S 157 1968 the Supreme CQlIrt affirmed t

Communication Commission siurisdiction overcable television transmissions and stated at 172

Nothlna in the Janauage histOry or purpose of the Communications Act limits the FCC sa

those activities Bnd forms of communications thatarespeclftcally described by the Act s other prov

Certainly Congress could not in 1934 have foreseen the development ofcommunity television systems

22 The latter restriction Shippina Act section 33 was added to obviate acoofUctof jurisdiction 

unforeseen manner any substantive provision of this biD inadvertently overlaps acorrcspondlnll provi

Interstate Commerce Act H R Report No 659 Creating AShipping Board

Etc

64th Cona 1st 

1916 Sen Report No 689 CreatingA Shipping Board Etc 64th

Cona

1st 8ess at 14 1916

H American aoods exported to Canada on one billof ladina may be shipped elsewhere under asecond b

without directly involvina this Commission s jurisdiction However extraterritorial aspects of section 15 

or other anticompetitive actions by section 1 carriers violative of section8 16 or 17 may be within the IC

8hippina Act See Transpacific Freight Conference ofJapan v Federal Maritime Commission 314 F 2d 9

1963 Paclffc Seafarers Inc v PFEL

IRe

404 F 2d 804 n16 D C Clr 1968 Imposition of Surcha

Far East Conference atSearsport Maine 9 F M C 1291966

24 Although no 8uch ICC tariffs appear to be In effectat present theICC has reversed its long standina 

against joint ratclthrouih route international tariffs to nonadjacent countries ExParte 261 337 IC C 6

5

1

19 
AUSTASIA CONTAINER EXPRESS 519

Express Company 3 F M B 771 775 778 1952 They undertake to

provide ocean transportation to the public and are subject to the same

tariff filing requirements as vessel operating carriers FMC General Order

13 46 C F R Part 536

NYO s tend to operate exclusively from United States port cities

because most if not aU NYO s exist only because of gaps in the

coverage ofthe Interstate Commerce Act See generally IML Sea Transit

Ltd v United States 343 F Supp 32 N D Calif 1972 affd per

curiam 409 U S 1002 1972 One such exemption is the partial exclusion

from Part IIregulation for motor carners operating entirely within a single

commercial zone which is now benefiting ACE 25 IfICC jurisdiction

attached to the movement ofACE s cargo from Romulus to Windsor

then the motor carrier would be involved in joint through international

transportation with a non Shipping Act water carrier subject solely to

ICC regulation and to that agency s tariff filing requirements

If an ICC regulated motor carrier and a section 1 water carrier offer a

joint through international service they must file a tariff listing their

through rate and their respective rate divisions or portions at both

the FMC and the the ICC Ex Parte 261 351 IC C 490 1976 Filing of

Through Rates and Through Routes 11 SRR 574 1970 Incontrast to

both the above possibilities ACE f1les no tariff in the United States or

Canada and asserts immunity from regulation by either the ICC or this

Commission 26

ACE s operation differs from other NYO s only in that it does not

issue a bill oflading for its through service until the goods reach Canada

so its shippers can realize Australian entry duties and the underlying

water carner does not call at a United States port To accord jurisdictional

significance to these artificially contrived distinctions would exalt form

over substance It would also leave a

significant loophole in the Shipping

Act s protective mantle 27 There is a presumption against construing

statutes in a mannerwhich renders them ineffective or inefficient Bird v

United States 187 U S 118 124 1902 United States v Blasius 397

F 2d 203 2fJ n 9 2nd Cir 1968 cert dismissed 393 U S 1008 1969

Inthe absence ofexpress legislative direction we must apply section 1 in

the manner most likely to effectuate the undisputed remedial policies

H 49 V S C 303 b8 adopted August 9 1935 49 Stat 544 Detroit and Windsor are contiguous communities

comidered to be part of the same commercial zone Verbeam v United States 154 F Supp 431 BD Mich

1957 atrdper curiam 356 U S 676 1958

16 The Part IV service of ACE s American subsidiary is beyond the scope of this proceeding as it merely delivers

cargo to ACE s

freight consolidation stationin Romulus Michigan under aseparate domestic bill of lading It should

be noted however that 49 U S C 1018 prohibits Part IV forwarders from employing or utilizing any foreign

commerce carriers and thereby establishing their own international through routes The ICC also forbids its carriers

including Part IV carriers from participating in joint ratethrough route international transportation with NVO s Ex

Parte 261 351 I C 490 493 1976

21 We find it significant that ACE now advertises an ICC authorized door todoor service to the Far and Middle

East as well as Australia Lump sum door todoor container rates are apparently being offered See September

1976 Intermodal Container News at 110

19 F M C
520 FEDERAL MARITIME COMMISSION

which motivated Congress generally to adopt the Shipping Act 28 S

as ACE solicits and musters cargo in the United States and use

exempt motor carriage to transport this cargo from the United Sta

a through route containing a significant transoceanic segment AC

and should be effectively regulated by this Commission We 

perceive the ICC s limited regulation of the Romulus to Windsor 

carriage as an obstacle to the exercise of our jurisdiction 29 Th

exercise ofICC and FMC authority over a particular person do

constitute the type of concurrent power forbidden by Shippi

section 33 that prohibition only prevents the two agencies from reg

the same commercial activities at the same time Alabama 

Southern Railroad Co v Federal Maritime Commission 379 F 

D C Cir 1967

We recognize our present position could appear inconsisten

earlier statements interpreting our through route jurisdiction in d

factual situations For example language in Disposition of Con

Marine Lines supra if read in isolation might be interpre

disavowing all authority to regulate matters involving inland tran

tion 30 Such an interpretation would be clearly erroneous The C

sion has long regulated more than the basic port to port mOvem

ocean carriers under Shipping Act sections 15 16 and 171 a

prohibited ocean carriers from unfairly absorbing the inland transpo

charges of ICe carriers E g City of Portland v Pacific Wes

Conference 4 F M B 664 1955 and 5 F M B 118 1956 af

nom Pacific Far East Lines v United States 246 F 2d 711 D 

1957

The true purpose of these previous descriptions of our jurisdic

port to port was to disclaim any encroachment into the leg

regulatory realm ofthe ICC at a time before the Commission an

had developed mutual procedures for the filing ofjoint through inte

tariffs 31 Inno instance do such statements represent the actual h

21 This was the approach followcdnot lona 880 by the United States eourt ofAppeals in ruline that 

Trade Commission had authority to adopt substantive industry reau1atioJ National Petroleum Refiners 

I Federal Trade Commission 482 F 2d 672 DC elr 1973 eef denied 4tj U S 9 1I 1974 There the 

at 686

In determininB legislative intent our duty is to favor an interpretation which would ren cr the tatu

effective in terms of the policies behind its enactment and to avold an interpretation which would make s

more difficult of fultilbnent particularly where as here that interpretation is consistent with the plain lanl

statute

29 Only the health and safety reaulations of 49 U SC 304 1 apply to Part II motor carrien opera

commercial zones 49 U S C 303 b

30 There theCommission stated

we are inclined to agree with those intervenors which have maintained that the word places 

18 b

I

is not intended to include inland points because the jurisdiction of the Commission is only p

includina services in terminal area

JISuch an intention is apparent Om aclose reading of the Sea Land decision cited by the Presidioa O

Commission rejected single factor joint motor waterrates from Utah Idaho an4 Montana to Honolulu b

the ICC and FMC portions of the rate Were not appropriately broken out and 2 without such abreak o

have been necessary for the FMC to asstrt jurisdiction overthe inlarid portion of the throu hrate when o

had such authority II F M

C

at 142

19 
AUSTASIA CONTAINER EXPRESS 521

ofthe case nor was the need for an actual vessel call at an United States

port ever in issue 32

Inasmuch as ACE is a common carrier by water in foreign commerce

within the meaning of section Iit follows that ACE must fIle a tariff

which fully complies with Part 536 of the Commission s Rules Section

18 b is unquestionably unclear when applied to a modern intermodal

operation such as ACE s Yet regardless ofwhether Detroit is a port

within the meaning of section 18 b or whether that section s

through

route language operates independently ofthe to and from United States

ports language there is a sound basis for requiring ACE to observe the

same tariff fIling practices as its competitors

The legislative history of section 18 b contains no indication that

Congress intended to omit any class of section I carriers from tarifffIling

responsibilities and since the type of containerized intermodal service

offered by ACE was unknown in 1961 the to and from United States

ports language in the final version ofthe bill H R 6775 adopted by the

87th Congress cannot reasonably be construed as a deliberate exclusion

offoreign commerce carriers not physically calling at United States ports

Indeed the probable explanation for changing the between all points

language in the 87th Congress s H R 4299 and the version of H R 6775

reported by the House was the Federal Maritime Board s suggestion that

this language be modified to make it clear that carriers need not me rates

for carriage between one foreign port and another foreign port Senate

Committee on Commerce Index to the Legislative History of the Dual

Rate Law Doc No 100 87th Cong 2d Sess 1962 at 445 132 and

218 This change was not considered a major amendment by the Senate

id at 219225 was not discussed in the Conference Report id at 444

446 and was not debated on the floor id at 244 246 369 and 4368

We therefore conclude that ACE is required by section 18 b to file a

tariff covering its through route transportation to Australia from Detroit

Moreover Part 536 is not jurisdictionally limited by section 18 b Since

1 1 the Commission s rule making authority has resided in Shipping Act

section 43 This authority has been broadly interpreted by the courts and

permits the adoption of substantive rules in furtherance of general

Shipping Act objectives without a prior finding that a specific Shipping

Act violation has occurred Pacific Coast European Conference v

Federal Maritime Commission 350 F 2d 197 203 204 9th Cir 1965

cert denied 382 U S 958 1965 Alabama Great Southern Railroad Co

v Federal Maritime Commission sapra at 103 Outward Continental

North Pacific Conference v Federal Maritime Commission 385 F 2d

981 1967 New York Freight Forwarders and Brokers Assn v Federal

Maritime Commission 385 F 2d 981 1967 New York Freight Forwar

ders and Brokers Assn v Federal Maritime Commission 337 F 2d 289

n

cr Transshipment AlrellIIlflt Indonesia United States supra where the Commission asserted jurisdiction

over first or connecting water carriers which did nOllhemselves call at United States ports

19 F M C
522 FEDERAL MARITIME COMMISSION

29295 2d Cir 1964 cert denied 380 U S 910 1965 The C

sion s obligations to define and eliminate unreasonable preferen

discrimination by ocean carriers pursuant to Shipping Act sect

First and 17 are sufficient to support the adoption of our Part 53

and their application to all foreign commerce carriers as defined in 

1

33 See Alabama Great Southern Railroad Co v Federal M

Commission supra

Accordingly it is ultimately found and concluded that ACE 

since June 1912 has been a common carrier by water in the 

commerce of the United States subject to section 1 ofthe Shippin

1916 that ACE has operated and continues to operate as such a 

without having atariff on me with the Commission and that 

operations without ftling tariffs have violated and continue to 

section 18 b of the Shipping Act 1916 and section 536 16 

Commission s Rules

Wherefore IT IS ORDERED That Austasia Intermodal Lines 

American Container Express Inc and any subsidiary afftli

division of either corporation employing the trade name A

Container Express CEASE AND DESIST from soliciting ext

or holding out to the public any through service as acommon 

between the Detroit Michigan Commercial Zone and Austra1ia un

time as Austasia Container Express shall file a tariff with the 

Maritime Commission covering its through transportation betwe

locations which complies fully with Part 536 ofthe Commission s 

including section 536 16 thereof and

IT IS FURTHER ORDERED That this Order is hereby STAY

thirty 30 days from the date of service indicated above in o

provide Austasia Container Express a reasonable opportunity to 

rates and charges in the format required by Part 536 ofthe Comm

Rules

Vice Chairman Morse dissenting Idissent and in so doing ad

Initial Decision ofAdministrative Law Judge Norman D Kline

S JOSEPH C POLKING

Acting Secre

3lPart S36is plainly directed to all section t carriers 46C F R 536 1 536 16b

19 F MC
S JOSEPH C POLKING

Acting Secretary

FEDERAL MARITIME COMMISSION

No 7531

CSC INTERNATIONAL INC

v

WATERMAN STEAMSHIP CORP

NOTICE OF ADOPfION

February 15 1977

The initial decision on remand ofAdministrative Law Judge Charles E

Morgan was served in this proceeding January 17 1977 No exceptions

were filed Notice is hereby given that upon consideration of the record

in this proceeding the Commission has determined to adopt the initial

decision except for the portion thereof relating to the application of the

statute oflimitations to this proceeding

By the Commission

19 F M C 523
FEDERAL MARITIME COMMISSION

No 7531

CSC INTERNATIONAL INCORPORATED

v

WATERMAN STEAMSHIP CORPORATION

Adopted February 15 1977

Shipment described as drums chemicals NO 2 Amino 2 Methyl 1 Propano

properly rated and charged as chemicals rather than detergents C

dismissed

William Levenstein for the complainant

Temple L Ratcliffe for the respondent

1

INITIAL DECISION ON REMAND OF CHARLES E MOR

ADMINISTRATIVE LAW JUDGE

The prior initial decision found that the complaint was rued tw

and one day after the cause of action accrued and therefore t

complaint was barred By Order on Remand served October 8 1

Commission decided by four to one vote that the complaint was 

fIled and thatjurisdiction rested with the Commission The said O

Remand vacated the prior initial decision and remanded the matte

Administrative Law Judge for further proceeding and a4judication 

complaint on its merits Inasmuch as the prior initial decision was

and because a party may plead lack of jurisdiction before a

rev

court it appears advisable to comment on the circumstances of th

of the complaint In any event as directed the ultimate fmdings 

initial decision on remand will be concerned only with the merits 

complaint

BACKGROUND By formal complaint rued on Monday Aug

1975 the complainant alleged that it was overcharged 454 5

shipment described on the bill of lading as 64 drums chemicals N

Amino 2 Methyl I Propanol ocean freight prepaid shipped Aug

1973 from New Orleans Louisiana destined to Keelung Taiwan

The shortened procedure was followed Complainant sought t

I

This decision became the decision of the Commission February 15 1977

524 19 
C S C INTL INC v WATERMAN S S CORP 525

the shipment rated as detergents instead of as chemicals The shipment

consisted of 175 measurement tons The charges assessed based on the

contract rate on chemicals of 107 50 per ton were 1 843 63 plus 647

for tolls and 17 84 for unloading The charges sought by the complainant

based on the contract rate on detergents of 81 per ton are 1 389 15

plus tolls and unloading The rates are found in Far East Conference

TariffNo 25 F M C No 5

The prior initial decision did not consider the alleged merits of the

complaint but found it barred by section 22 ofthe Shipping Act 1916

the Act which provides that reparation may be awarded if the complaint

is filed within two years after the cause ofaction accrued This agency s

jurisdiction is conferred only by statutes enacted by the Congress ofthe

United States

Notwithstanding that the written statutory law takes precedent over

common law and the unwritten common law applies only where there is

no statute the complainant on exceptions to the prior initial decision

asked the Commission to apply a common law rule for the computation

of the two year statutory limitation period so as to permit fIling of the

complaint on a succeeding business day when the last day ofthe statutory

period fell on a Saturday Sunday or legal holiday

Inaddition the complainant asked the Commission to assume statutory

jurisdiction over the complaint in this matter because of the alleged

hardship in filing the complaint within two years when the Commission s

offices were closed on Sunday August 17 1975 as well as on Saturday

August 16 1975 The Commission stated in its order on remand that

Sunday August 17 1975 was the last day of the two year limitation

period and that dismissal of the complaint under the circumstances

would cause undue hardship

Inasmuch as it was believed that the statute could not be amended by

rulemaking and since the two year statute seemed to be without need for

any interpretation the prior initial decision pointed out that our Rules of

Practice and Procedure necessarily were consistent with the two year

statutory period Also the statute itself makes no reference to extensions

for Saturdays Sundays or legal holidays

The Commission considered these circumstances and to avoid undue

hardship in the exercise of its discretion under the Rules ofPractice and

Procedure waived pursuant to Rule lj46 CFR 502 10 the exception

of Rule 5 c 46 CFR 502 63 contained in Rule 7 a 46 CFR 502 101

and concluded that the filing of the complaint on Monday August 18

1975 was timely Vice Chairman Morse dissented for two reasons one

reason being that Congress said two years not two years and one day

and the other reason being that in his view there was no hardship let

alone undue hardship

It is common knowledge that the Commission s offices are closed on

Saturdays and Sundays and for that matter after 5 00 p m on working

weekdays A reasonably prudent complainant or his attorney would act

19 F M C
526 FEDERAL MARITIME COMMISSION

accordingly and mail or file his complaint so that it would rea

Commission prior to a Saturday Sunday or holiday two year lim

period deadline Lack of such foresight it is believed would c

carelessness rather than impose any undue hardship under the fa

circumstances of the present complaint which arose following an 

freight bills by Ocean Freight Consultants Inc begun as earl

earlier than July 2 1975

Of further interest in this matter is the Commission s No

Proposed Rulemaking regarding GENERAL ORDER 16 DOCKE

7661 MISCELLANEOUS AMENDMENTS TO RULES OF 

TICE AND PROCEDURE 41 F R 51621 November 23 1976 

notice among other matters the Commission is giving considera

amending section 502 101 of the Rules of Practice and Proced

deleting the words except section 502 63 Rule 5 c from t

sentence By this amendment the Commission would relax the ru

complaint proceedings as it has done in the present proceeding N

31 so that all complainants will not be prevented from seekin

merely because the last day of the period oflimitation happens to 

a day on which the Commission s offices are closed Incommen

regarding this proposed rule Sea Land Service Inc oppos

proposed change which would disregard aSaturday Sunday orho

calculating the two year statute of limitations if such a day were 

day of the statutory period Sea Land said that the present sectio

the Act was approved by Congress and cannot be change

rulemaking proceeding but must be the subject ofamending leg

The Maritime Administration BarAssociation also is of the view 

Commission has no authority to narrow or to extend the two year 

oflimitations

While itis believed that the statute is not subject to interpretatio

submitted respectfully that if the two year statutoty period forjuris

is deemed subject to interpretation because of incompleteness or 

ness of the statute then any interpretation ofthe statute should e

all on the side oflimiting rather than ofexpanding jurisdiction

THE MERITS OF THE COMPLAINT Assuming as the C

sion has directed that the complaint was timely fIled and that juris

rests in the Commission the issue is what commodity was shippe

it chemicals detergents or something else

As a general rule the nature ofthe commodity shipped 

purchase or sales price nor the commercial demand for it nor the 

which it is put determines the freight rate which should be applie

record in the present proceeding has been combed carefully to a

all the facts relative to the nature of the shipment here in issue

The complainant is a corporation whose principal business 

manufacture and distribution of chemicals and chemical produc

consignee ofthe shipment is the Lidye Chemical Co Ltd in Tai

In Docket No 7550 Commercial Solvents Corporation Intern

I

1

1

1

j

1
C S C INT L INC v WATERMAN S S CORP 527

Inc v Moore McCormack Lines Inc wherein the complaint was

dismissed by the Commission as untimely filed report ofthe Commission

served January 4 1977 the same complainant as in the present proceeding

shipped the same commodity as in the present proceeding namely 2

Amino 2 Methyl l Propanbl hereafter for convenience sometimes called

AMP Also in No 7550 as in the present proceeding the bill oflading

described the shipment as Drums Chemicals Nor 2 Amino 2 Methyl l

Propanol Ordinarily a bill of lading description is neither conclusive

nor binding in a determination ofthe legal freight charges But where the

consignor or shipper was the manufacturer of the articles shipped the

description in the bill oflading may not be ignored Gulf Shipbuilding

Corp v Southern Pac Co 286 IC C 153 154 We now turn to various

other factors in evidence other than the bill of lading description

In Docket No 75 50 the complainant also was charged the rate on

chemicals In Docket No 75 50 the same complainant sought to be

charged the rate on Compounds Surface Active Wetting Agents or

Emulsifiers In the present proceeding No 75 31 the same complain

ant contends that the shipment should be rated as Detergents Liquid or

Dry non hazardous N O S

The commodity shipped AMP is listed in a chemical dictionary

attachment 5 to the complaint There it is also known as isobutanolamine

and Ch CCH JNH CH OH It has certain properties It is a colorless

liquid or awhite crystalline solid it is completely miscible in water at 20

degrees Centigrade its specific gravity is 0 934 at 20120 degrees Centi

grade its boiling point is 165 degrees Centigrade its melting point is 30

31 degrees Centigrade its flash point is 153 degrees Fahrenheit it is

combustible and has low toxicity

The chemical dictionary lists three uses for AMP one as an emulsify

ing agent in soap form for oils fats and waxes two as an absorbent for

acidic gases and three in chemical synthesis

The chemical dictionary also dermes an emuslifier as a surface active

em

The chemical dictionary also defines an emulsion as a stable mixture of

two or more immiscible liquids held in suspension by small percentages

of substances called emulsifiers

The chemical dictionary also defines surface active agent as any

compound that reduces surface tension when dissolved in water or water

solutions or which reduces interfacial tension between two liquids or

between a liquid and a solid

Also it is stated in the chemical dictionary that there are three

categories ofsurface active agents namely one detergents two wetting

ents and three emulsifiers It is said that all three have the same basic

chemical mechanism and differ chiefly in the nature of the surfaces

involved

By this definition of surface active agent surfactant as per attachment

19 F M C
528 C S C INTL INC v WATERMAN S S CORP

7 to the complaint detergents and emulsifiers differ from one a

chiefly in the nature ofthe surfaces involved

By attachment 4 to the eomplaint the complainant in its NP Te

Bulletin advertising nitro paraffins states that AMP is a

very e

emulsifying agent for the emulsifiable polyethylenes and waxes 

today s floor polish formulations Better synthetic 

polymers and modifiers when used with emulsifiers such as 

contribute the properties needed to protect preserve and beau

substrates to whichthe many polishes available today are applied

Thus it appears by the complainant s own exhibits or attachm

its complaint that it shipped a product advertised by it for use 

emulsifier for waxes in floor polishes

The complainant so far as this record shows apparently do

advertise AMP as a detergent

In Docket No 75 50 the complainant contended that AMP 

emulsifying agent so sold by the complainant The finding in the 

decision in No 75 50 was that the commodity shipped therein was 

an emulsifier for waxes and the complainant did not except 

finding The initial decision in No 7550 was made on the merits 

complaint and it was not adopted by the Commission becau

Commission found that that complaint was untimely filed 

Commission s decision in No 75 50 a discussion of the merits 

case was unnecessary in view of the finding oflack ofjurisdiction

From the above evidence it is concluded that one of the uses o

is as an emulsifier It is further concluded tliatby chemical de

emulsifiers differ from detergents and therefore that AMP when u

an emulsifier is not being used as a detergent It is further foun

there is nothing of record which shows that AMP ever was u

intended to be used as a detergent

Furthermore one use of a product does not necessarily determ

transportation nature for tariff purposes of a commodity In 

chemical definition AMP has uses as an absorbent for acidic gas

absorbent is not a detergent Another use ofAMP by chemical def

is in chemical synthesis These two uses do not show that AM

detergent

In fact different rates on the same commodity dependent upon 

made ofit would lead to uQjust discrimination Atchison Leather P

Co v Atchison T S F Ry Co 274 IC C 328 329

The nature and character of each shipment at the time te

determines its status for rate purposes and the use which m

subsequently made of the material does not control Sonken Ga

Corporation v Union Pac R Co 145 Fed 2d 808 812

There is no better entrenched rule in the making ofrates and 

than the one that a commodity cannot lawfully be rated or cla

according to the different uses to which it is put Food Machinery 

v Alton S R 269 IC C 603 606

I

i

19 
C S C INTL INC v WATERMAN S S CORP 529

Actually in the present proceeding the use of the AMP made by the

consignee the Lidye Chemical Co Ltd in Taiwan is not shown We

apparently must rely on such data as is found in the chemical dictionary

It must be borne in mind also that the burden of proof rests on the

complainant

Official notice is taken that a detergent generally has been considered

to be a substance or mixture which has cleansing action because of a

combination of properties including lowering of surface tension wetting

action emulsifying and dispersing action and foam formation that

ordinary soap is the best known example and that a detergent now is

coming to mean the synthetic variety in distinction to soap which is

derived from natural fats and oils See page 344 of the Chemical

Dictionary attached to complainant sreply memorandum The purpose

of a

reply memorandum is to rebut existing evidence and arguments

rather than to introduce new evidence but the definition of a

detergent

certainly is helpful to this record and therefore is noticed and since

complainant sought to introduce page 344 surely complainant cannot

oQject to its notice

It should be remembered that many surface active agents do not

possess detergent properties and hence that the terms surface active

agent and detergent are not synonymollS Attachment 7 to the complaint

This finding also may be confirmed by official notice ofpage 497 ofVan

Nostrand s Scientific Encyclopedia 1958

The chemical definition of AMP does not state that it has a cleansing

action or that it is used as a cleansing agent

The complainant attempts to counter its own attachment 5 definition

ofAMP by reference to the definition ofan emulsion in its attachment 6

From the definition of an emulsion in attachment 6 the complainant

interprets it to say that all emulsifiers both natural and synthetic are

known collectively as detergents But the chemical dictionary says

q v see the definition of detergents And as noted the definition of

detergents both natural and synthetic states that they have a cleansing

action Page 344 of the Chemical Dictionary states that synthetic

detergents are surface active agents and have structurally unsymmetric

molecules containing both hydrophilic or water soluble groups and

hydrophobic or oil soluble hydrocarbon chains We must if we rely on

the Chemical Dictionary take the direct definition of AMP in the

dictionary rather than rely on some other definition ofAMP obtained by

convoluting definitions ofother items such as ofemulsions in the same

dictionary

As seen one use of AMP is as an emulsifier An emulsifier is only one

type of surface active agent Whereas all detergents are surface active

agents it is not true that all surface active agents are detergents This

record does not show that AMP is a detergent or that it has a cleansing

action or that it is used as a cleansing agent

Inpart the complaint relies on the thin thread ofthe chemical definition

19 F M C
530 FEDERAL MARITIME COMMISSION

of AMP attachment 5 wherein one of the uses of AMP is 

Emulsifying agent in soap fonn for oils fats and waxes but t

very thin thread indeed because the fact that AMP may be used 

emulsifying agent in soap fonn does not make it asoap AMP in t

is an emulsifying agent

The AMP here in issue was shipped by the complainant a manuf

of chemicals and a distributor ofchemicals the bill of lading de

AMP as chemicals the consignee was a chemical company A

defined in a chemical dictionary and one of the uses of AM

chemical synthesis

From all of the above positive circumstances and also because 

negative circumstance that the chemical dictionary states that det

and emulsifiers differ it is concluded that AMP is not a detergent 

in fact a chemical

A search ofthe applicable tariffin this Far East Conference trad

not whow any rate on emulsifiers or emulsifying agents and in an

that is only one use 6f AMP Furthermore the Far East Conf

agrees that the respondent charged the proper rate and that A

strictly a chemical

Inaddition the classification and rating ofAMP as achemical is 

in conformity with the classification of AMP contained in the Sta

Classification ofDomestic and Foreign Commodities Exported fr

United States U S Schedule B which is published by the 

Department ofCommerce See Exhibit E attached to respo

memorandum page 75 section 5 Chemicals schedule number 51

From all of the above facts and circumstances it is foun

concluded that the shipment ofAMP here in issue properly was ra

charged as chemicals

The complaint is dismissed

S CHARLES E MORGAN

Administrative Law Ju

WASHINGTON D C

January 17 1977

I

I

i

19 
19 F MC 531

FEDERAL MARITIME COMMISSION

DOCKET No 7418

Dow CHEMICAL INTERNAIONAL INC

v

AMERICAN PRESIDENT LINES LTD ET AL

A proper tender of cargo by a shipper to a carrier consists of an unconditional offer to

deliver the cargo coupled with a manifested ability to carry outthat offer and

production of the cargo at the time and place of the offer

Where the shipper presented itself with its cargo at the gate to the carrier s dock and

received there both permission to enter onto the dock and directions to that portion

of the dock known as the container yard and where the shipper with its cargo

proceeded to that container yard there offering to the carrier the documents

identifying its cargo the shipper tendered its cargo to the carrier at the container

yard not the gate givng entry to the dock

Where a handling charge applies to cargo tendered at the container yard but not the

dock and the shipper tenders cargo at the container yard located wholly within the

dock the tariff containing the handling charge is ambiguous as to the applicability

of the handling charge

Ambiguous tariffs are to be construed against the carrier drafting the tariff but such

construction must be fair and reasonable

Where some carriers participating in a tariff have container yards located on their

respective docks and other carriers participating in that tariff have container yards

off of their respective docks and that tariff provides generally for a handling

charge on cargo tendered at the container yard orthe dock but specifically exempts

cargo tendered at the dock from the handling charge the word dock in the

exemption includes the container yard located wholly within the dock

Where the shipper tendered cargo to the carrier at the carrier s container yard located

wholly within the carrier s dock the cargo so tendered is exempt from the handling

charge cargo tendered to the carrier s dock

Robert R Tierman and Peter M Nemkov for Complainant Dow

Chemical International Inc

Edward D Ransom and Barbara H Buggert for Respondents

American President Lines Ltd Barber Lines AIS Pacific Far East

Line Inc Sea Land Service Inc United States Lines Inc Zim Israel

Navigation Company Ltd Kawasaki Kisen Kaisha Ltd Showa Ship

ping Company Ltd States Steamship Company and Intervenor Pacific

Westbound Conference
532 FEDERAL MARITIME COMMISSION

REPORT

February 22 1977

By THE COMMISSION Karl E Bakke Chairman Ashton C B

Bob Casey and James V Day Commissioners

This is a complaint proceeding The Complainant Dow Che

International Inc is engaged principally in the overseas market

chemicals plastics pharmaceuticals and related items Responden

nine common carriers by water members of the Pacific West

Conference 1 The Pacific Westbound Conference intervened 

proceeding

The complaint seeks reparations from Respondents tot

20438 43 alleged to be the total amount of handling charges ass

Complainant by Respondents during the period August 13 1973 to 

1 1974 which handling charges are alleged to be in excess of

authorized by the applicable tariff to wit the Pacific West

Conference Local Freight TariffNo 3 FMC 8

Complainant alleges that the omplainant tendered shipper p

containers to Respondents at their respective docks and th

applicable tariffdid not authorize the assessment of handling charg

shipper packed containers tendered to the carrierS docks The 

charges are alleged to be in violation of section 18 ofthe Shipping 

1916 In Respondents answer Respondents admitted all of th

forma allegations contained in the complaint but denied that Comp

tendered all cargo in shipper packed containers to Respondents a

respective docks To the contrary Respondents alleged that Com

ants cargo in shipper packed containers was tendered to Respo

at their respective container yards CY s and that the applicable 

the Pacific Westbound Conference Local Freight Tariff No 3 

authorized the asse sment of handling charges on shipper packe

tainers tendered to the carriers container yatds Respondents denie

section 18 of the Shipping Act 1916 had been violated

The matter was assigned to an administrative law judge for heari

decision Administrative Law Judge John E Cograve issued an 

Decision wherein the complaint was dismissed Complainant excep

that decision Respondents replied and the Commission hear

argument The Initial Decision is reversed and this Report is subm

lieu thereof

Complainant and Respondents entered into a stipulation of fact

put in evidence interrogatories the answers thereto requests for 

sion and the answers thereto all of which constitutes the evide

record in this proceeding

I American President Lines Ltd Barber Lines AlS Paet8c Far Baat Line Inc Sea Land Service In

States Lines Inc Zim Israel Naviaation Company Ltd Kawasaki Kilen Kaisha Ltd Showa Shippina 

Ud and States Steamship Company

19 
DOWCHEMICAL INC v APL 533

All of the Respondents herein are common carriers by water engaged

in transportation from U S Pacific Coast ports to ports in one or more of

the following places Japan Hong Kong Manila the People s Republic of

China Taiwan South Korea Vietnam and Thailand At all times

between August 13 1973 and April 1 1974 each Respondent was a

member of the Pacific Westbound Conference and party to the Local

Freight TariffNo 3 FMG 8published by that Conference

In the period from August 13 1973 to April 1 1974 Complainant made

147 separate shipments on the vessels of Respondents from the Pacific

Coast of the United States to destinations in the Far East including

Japan Hong Kong Manila and Kaohsiung and Keelung in Taiwan

Those 147 shipments were divided among Respondents as follows

Number of

Respondents Shipments

American President Lines Ltd nnn n nnnn nn n 90

Barber Lines AJS 1

Pacific Far East Line Inc nnn nn nnnn nnn n 4

Sea Land Service Inc n n n nnn n 41

United States Lines Inc n nn nnnnnn n nn 2

Zim Israel Navigation Company Ltd nnnnnn n n n 4

Kawasaki Kisen Kaisha Ltd nn nnnnnnnnn 1

Showa Shipping Company Ltd n n nnnn nnnnnnn n 2

States Steamship Company n nnn nn n n n nn 2

Each of those shipments consisted solely of containers packed by

Complainant The tariff applicable to each ofthose shipments was the

Pacific Westbound Conference Local Freight TariffNo 3 FMC 8 in

which each Respondent participated and by which each Respondent was

bound All rates rules regulations and charges applicable to each of

those shipments were contained in that tariff

In addition to the nine carriers respondent in this proceeding several

other carriers are members of the Pacific Westbound Conference and

participate in the Pacific Westbound Conference Local Freight TariffNo

3FMC 8

Complainant shipped the shipments identified above from several ports

on the Pacific Coast of the United States Those ports were San

Francisco Oakland Los Angeles San Pedro and Long Beach Each

Respondent loaded Complainant s cargo at one or more of those ports

during the period from August 13 1973 to April 1 1974

Respondents and the several other members of the Pacific Westbound

Conference conduct their common carrier operations in the several ports

on the Pacific Coast of the United States Each ofthose ports identified

above were designated by the carriers in conference as terminal ports In

each terminal port each carrier if it served that port had one terminal

dock That terminal dock encompassed the pier orwharf backup spaces

administrative offices parking lots and other facilities used in the conduct

ofthe ocean common carriage business The terminal dock was usually

19 F M C
I

J

j

I

534 FEDERALMARITIME COMMISSION

enclosed by a fence The carriers who were members of the P

Westbound Conference agreed among themselves that each carrier 

designate a location within the terminal port as that carrier s con

yard The container yard could have been located within the ca

terminal dock or at some place off of the carrier s tetminal doc

within the terminal port The members of the conference we

required to designate a container yard but if a carrier design

container yard then that container yard was the one location whe

carrier was permitted to receive containers for shipment which had 

packed by the shipper Ifacarrier did not designate a container 

then that carrier could recieve shipper packed containers only 

terminal dock At all times between August 13 1973 and April 1 

each Respondent had a container yard within their respective te

docks

The carriers also agreed among themselves that each carrier 

receive cargo from shippers to be packed by the carrier into cont

both at the terminal dock or at some place other than the termina

but within the terminal port Ifthe carrier had established a place 

than the terminal dock for the receipt of cargo to be packe

containers by the carrier that place wasdesignated as the con

freight station

For each of the shipments identified above Complainant follow

same procedure Complainant packed a container with its cargo at 

its plants A freight forwarder was selected to coordinate the mov

of that container from the plant to the Respondent for on carriage 

overseas destination The container was transported by a motor co

carrier under an inland bill of lading from Complainant s p

Respondent s terminal dock At the gate giving entrance to Respon

terminal dock the motor common carrier was issued agate pass 

security guard and then directed by that guard to the gate giving en

to Respondent s container yard At the container yard gate the 

common carrier presented the inland bill oflading to Respondents 

who issued a

receipt for the container to the motor common carrie

clerk then directed the motor common carrier to a point with

container yard where the container was removed from the chassis 

motor common carrier

Respondents assessed and collected from Complainant for each 

shipments identified above ahandling charge at the rate of 175 p

The totals ofthe handling charges assessed and collected from Com

ant by each Respondent are as follows

Respondent

American President Lines Ltd n n

n

Barber Lines AIS

Pacific Far East Line Inc

Sea Land Service Inc n n n

n

United States Lines Inc n

n nn

Ha

Ch

9 

8 

19 
DOW CHEMICAL INC v APL 535

Respondent

Zim Ismel Navigation Co Ltd

Kawasaki Kisen Kaisha Ltd n n n n nn nnn nnnnnn

Showa Shipping Company Ltd n nnnnnnnnnn

States Steamship Company nn n nn n nnnnnnnn

Handling

Charges

4280

357 00

145 93

249 44

Total 20 438 43

Each Respondent asserts the Pacific Westbound Conference Local

Freight TariffNo 3FMC 8 as the basis for the assessment and collection

ofthose handling charges

That tariff contained many rules pertaining to the carriage of cargo by

Respondents and the other members ofthe Conference Among those

rules were two of particular applicability to the matter at issue in this

proceeding i e Rules Nos 70B and 19

Rule 70B related to cargo carried in containers to Far East ports

including Japan Hong Kong Manila and Kaohsiung and Keelung in

Taiwan As originally stated in the tariff on March 15 1969 that Rule

provided that Shipper packed containers tendered to carrier at his CY

or dock are not subject to the handling charge or container service

charge Rule No 70BI a On May 9 1973 that Rule was changed by

the addition ofthe words provided in Rule No 19 As so changed the

Rule provided that Shipper packed containers tendered to carrier at his

CYor dock are not subject to the handling charge or container service

charge provided in Rule No 19 On August 13 1973 the Rule was again

changed so as to delete the words not and or container service

charge and to add the word as As so changed the Rule provided

that Shipper packed containers tendered to carrier at his CY or dock

are subject to the handling charge as provided in Rule No 19 The Rule

was not further changed until April I 1974 The word dock as used in

that Rule meant terminal dock The abbreviation CY as used in that

Rule meant the location designated by carrier in the port terminal area

where I the carrier assembles holds or stores containers and 2 where

containers packed with goods are received or delivered Rule No 703

Rule No 19 related to handling charges at United States loading ports

That Rule provided generally that for a fee the carrier would handle

cargo from places alongside the ship and places on the terminal to the end

ofthe ship s tackle Rule No 19 a and b The Rule also exempted

several categories of cargo from the handling charge including cargo

handled directly by the ship s tackle and cargo moving directly to the

ship s hold by gravity or mechanical conveyor Rule No 19 c 1 through

5 The Rule also contained an exemption for certain containerized cargo

Rule No 19 c 6 From January 1 1973 at least that last exempting

provision was as follows

The Handling Charge will not apply

6On cargo tendered at Container Yard CY Container Freight Station CFS or

carrier s dock and moving under the provisions of Rule No 70 B See Rule 70 B

paragraph lb for container service charge

19 F M C
i

4

1

I

1

cj

j

I

536 FEDERAL MARITIME COMMISSION

On August 13 1973 that provision was changed so as to delete the p

Container Yard CY As so changed the provision was as follow

The Handling Charge will not apply

6On cargo tendered at Container Freight Station CFS or carrier s dock and m

under the provisions of Rule No 70 B See Rule 70 B parallraph lb for co

service charge

The Rule was not further changed until April 1 1974 The Rule 7

paragraph 1 b referred to in Rule No 19 c 6 was Rule No 7B

which provided for the assessment of a container service char

varying amounts on cargo parked into containers by the carrier

Complainant was assessed the handling charge on all of its sh

packed containers shipped via Respondents on and after August 14 

On October 10 1973 Complainant communicated to the Pacific 

bound Conference its oijection to the assessment of the handling ch

Thereafter the Pacific Westbound Conference tiled with this Comm

an amendment to the exempting provision of Rule No 19 c 6 so 

provide that the handling charge would not apply on cargo tende

carrier s Container Freight Station CFS or dock for packing 

containers by carrier under the provisions ofRule No 70 B See 

70 B paragraph l b for application ofcontainer service charge 

amendment was to have been effective on October 17 1973 and r

that it was fIled for clarification of the language The amendmen

rejected by the Bureau of Compliance ofthis Commission beca

resulted in an increase in cost to the shipper and had not been fd

compliance with the notice requirements of the Shipping Act 1916 

the rejection of that amendment Respondents continued to asses

collect the handling charges from Complainant Effective onApril 1 

thehandlin charge was deleted from the tariff and aTerminal Rec

Charge was instituted in its place

In the Itfitial Decision the Presiding Officer found that Compla

delivered its containers to Respondents container yards and th

interpretation ofRespondents tariff proffered by Complainant was 

and unreasonable bordering on the absurd As a consequenc

Presiding Officerrejected thatinterpretatlon and dismissed the com

The Presiding Officer failed to decide whether or not Respon

tariff was ambiguous and ignored an alternative interpretation ofthe 

proffered by Complainant Inso doing the Presiding Officer erred

Complainant made two arguments to the Presiding Officer Compl

first argued that since on each shipment Complainant presented it

the gate giving entrance to the carrier s

terminal dock with the cont

and there offered to deliver the container to the carrier Compl

tendered its shipper packed container to the carrier atthat gate Com

ant argued that at all times after its arrival at the gate to the ca

terminal dock Complainant was under the direction and control 

carrier and that it was the carrier who caused the container to be m

19 
DOW CHEMICAL INC v APL 537

to the container yard located wholly within the terminal dock Conse

quently argued Complainant tender was made to the carrier at the gate

giving entrance to the terminal dock

Complainant s second argument was that since for each shipment at

issue in this proceeding the carrier s container yard was located wholly

within its terminal dock Complainant s tender of its shipper packed

container to the carrier at the carrier s container yard was tender at the

carrier s terminal dock within the meaning ofthe tariff

Respondents argued that Complainant tendered its shipper packed

containers to Respondents at their container yards According to Re

spondents a tender is complete when the tenderor offers to deliver the

cargo relinquishes control over the cargo and has nothing further to do

to effectuate deliver ofthe cargo Under such a definition of tender

according to Respondents Complainant tendered its cargo at Respond

ents container yards because it was only at the container yards that the

Complainant offered to deliver and relinquished control over the cargo

Respondents rejected the second argument ofComplainant by asserting

that Complainant was estopped from arguing that tender at the container

yard was tender at the dock within the meaning of the tariff because

Complainant has admitted that ifthe cargo was tendered at the container

yard the handling charge was properly assessed against Complainant

Respondents further argued that their tariff was not ambiguous because

the tariff provisions were clear on their face the terms used therein were

defined in the tariff and because a fair and reasonable construction must

be given to the tariff

Complainant tendered its shipper packed containers to Respondents at

their respective container yards At the common law a tender consists of

an unconditional offer to perform coupled with a manifested ability to

carry out the offer and production of the subject matter of the tender

Collins v Kingsberry Homes Corporation 243 F Supp 741 N D Ala

1963 aild 347 F 2d 351 5th Cir 1965 This Commission s decisions

regarding tender for delivery by an ocean common carrier are only

particular applications ofthe general common law rule and contain each

ofthe elements enunciated in Collins above Contrary to the argument of

Complainant the evidence of record in this proceeding does not support

a finding that Complainant offered to deliver its shipper packed containers

to each Respondent at the gates giving entrance to each Respondent s

terminal dock Complainant arrived at that gate was issued a gate pass

and was directed to the container yard That sequence ofevents does not

constitute an offer to deliver At the gate giving entrance to the container

yard ofRespondent Complainant offered to Respondent the inland bill of

lading documenting the shipper packed container ofComplainant That

act constituted an offer to deliver the container Complainant had the

container there at the gate and had there the ability to deliver the

container to Respondent Thus Complainant tendered its shipper packed

container to each Respondent at the gate giving entry to each Respond

19 EM C
I

1

538 FEDEAAL MARITIME COMMISSION

ents container yard not at the gate giving entrance to each Respon

tenninal dock

The determination of the geographic locations where Compla

tendered its shipper packed containers to Respondents does not re

the dispute in this proceeding It is necessary to also determine wh

or not Respondents tariff was ambiguous and if so the co

construction ofthat tariff

In this regard contrary to the argument of Respondents Compl

was not estopped by its admission that the handling charge was pr

assessable on cargo tendered to Respondents at their container 

from advancing its second argument that tender at the container 

was tender at the docks within the meaning of Respondents 

Complainant s admission can be reasonably read only to mean th

handling charge was properly assessable against cargo tendered 

container yard within the meaning of Respondents tariff

The Commission finps that Respondents tariffwas ambiguous in 

to the assessment of the handling charge and that a fair and reaso

construction ofthat tariff which is favorable to Complainant result

finding that Complainant tendered its shipper packed containe

Respondents at their respective docks within the meaning ofthe ta

Respondents tariff was ambiguous Prior to August 13 1973 Ru

70Bl a ofRespondents tariff provided that shipper packed cont

tendered to the carrier at the container yard or the dock were not s

to the handling charge provided in Rule No 19 At the same time 

No 19 c 6 provided that cargo tendered to the carrier at the con

yard the container freight station or the dock and moving und

provisions of Rule No 70B was exempt from the handling c

imposed by Rule No 19 Effective on August 13 1973 and continu

April 1 1974 the rules were changed During that period Rul

70B1 a provided that shipper packed containers tendered to the 

at the carrier s container yard or dock were subject to the ha

charge as provided in Rule No 19 The shipper was then by Ru

70Bl a referred to Rule No 19 to detennine when the handling 

was to apply As changed Rule No 19 c 6 provided that the ha

charge did not apply to cargo tendered to the carrier at the ca

container freight station or dock and moving under the provisio

Rule No 70B Cargo moving under the provisions of Rule No 

included shipper packed containers and cargo to be packed into con

by the carrier Where as here the container yard of the carrie

located wholly within the dock ofthe carrier and where as her

shipper tendered the cargo to the carrier at that container yard a pr

is encountered Should the handling charge have applied becau

cargo was tendered at the container yard or should the handling 

not have applied because the cargo was tendered at the dock 

interrelationship of Rules No 70B1 a and 19 c 6 was ambiguou

the tariff ofRespondents must be construed

19 
OOW CHEMICAL INC v APL 539

Itis now well settled that ambiguous tariffs are to be construed against

the carrier drafters thereof but that such construction must be fair and

reasonable Thomas G Crowe etal v Southern Steamship Company et

al 1 U S S B 145 1929 Rubber Development Corporation v Booth

Steamship Company Ltd et al 2 U S MC 746 1945 2

In this case Respondents argue that since all the words used in the

tariff were defined in the tariff the tariff was not ambiguous But at the

same time Respondents assert that the tariff contained a

redundancy

That is Respondents assert that in Rule No 70Bl a in the phrase CY

or dock where the CY was located within the terminal dock the word

dock redundantly referred to that portion ofthe terminal dock wherein

the CY was located

Complainant on the other hand argues that where the CY was located

within the terminal dock delivery to the CY was delivery to the dock

within the meaning ofthe tariff

The tariff at issue here Pacific Westbound Conference Local Freight

Tariff No 3 FMC 8 applied to not only the Respondents in this

proceeding but to all of the other carriers who were members of the

Pacific Westbound Conference While all of the Respondents in this

proceeding had a container yard located on their respective terminal

docks not all of the members ofthe PWC did so Some ofthe members

ofthe Conference maintained container yards at locations outside oftheir

respective terminal docks 3

The different locations of the container yards provides the key to a

construction of the tariff which is fair and reasonable and which assigns

meaning to each ofthe words in the tariff Respondents assertion that

the word dock was redundant in Rule No 70Bl a is rejected because

the construction of a tariff which gives meaning to all the words used in

the tariff is to be preferred over one which renders words meaningless

The abbreviation CY as used in Rule No 70B1 a was specifically

defined in Rule No 70 as the location where the carrier received shipper

packed containers The word dock as used in Rule No 70B1 a was

2 The cases cited by Respondents Bulkley Dunton Overseas S A v Blue Star Shipping Corporation 8 F M C

137 1964 and Complainant The Gelfand Manufacturing Company v Bull Steamship Line

Ine

1 U S S B 169

1930 are clearly distinguishable from the case at issue here In Buckley the asserted ambiguity in the tariffwas

alleged to be in the distinction orlack thereof between the words bales and units in the following tariff

provision

Item269Charges for Wharfage and Handling incents perton of2 000 pounds

Wood Pulp in bales 1 000 pounds and over 69

In units under 1000 pounds 95 fl

In that case it was apparent on the face of the tariff that the word units meant bales resulting in no ambiguity

Consequently the Commission denied reparations toComplainant

The Gelfand case was not so muchan ambiguity case as it was a definitional one Thequestion presented in Gelfand

was whether ornot a

rate for canned goods included foodstuff preserved in glass jars TheCommission found that the

commonly understood definition of car included glass jars and that the carrier s classification system defined can so

as to include glass jars Consequently the Commission awarded reparations toComplainant

3 Respondents in theiranswers to interrogatories stated that the CY in most instances was located on

the terminal dock From that statement the Commission infers that some of the members of the Pacific Westbound

Conference maintained container yards at locations otherthan on theirrespective terminal docks

19 F MC
540 FEDERAL MARITIME COMMISSION

not defined in that rule However Respondents have admitted t

word dock meant terminal dock which was that area usually en

by a fence wherein the carrier conducted its common carrier oper

The dock included the pier orwharf administrative offices parkin

backup areas and in some cases the container yards

It is clear that Respondents intended to subject some shipper 

containers to the handling charge provided in Rule No 19 4 The me

ofthe Pacific Westbound Conference which maintained containe

at a location off ot their respective docks would have incurred eJ

associated with handling containers from those container yards to t

ofship s tackle on the pier located within their respective docks 

be expected that those costs would have been greater all other 

being equal than the costs incurred by those members ofthe Conf

which maintained container yards on their respective docks for ha

containers from the nearer container yard to the end of ship s tac

the pier within the dock It would not have been unreasonable th

cargo tendered at the distant container yard to be assessed a ha

charge while cargo tendered at the nearer container yard to 

assessed ahandling charge

The other exemptions in Rule No 19 were related to reduced co

the part of the carrier The first five exemptions dealt with catego

cargo on which the handling was minimal Those categories in

cargo lifted directly by the ship s tackle from lighters or railroa

located alongside the ship and cargo moving directly into the h

mechanical means A similar cost relationship is discovered 

exemption for cargo tendered to the carrier for packing into contain

the carrier Such cargo was subjected to a container service c

approximating 3 00 per ton by Rule No 70B1 b

Therefore the Commission finds that the word dock as u

Rule No 70B1 a and Rule No 19 c 6 meant the terminal doc

included any container yard located within the terminal dock

As so interpreted Rules No 70B1 a and 19 c 6 related reas

one to the other Effective on August 13 1973 Rule No 70

provided that shipper packed containers tendered to the carrier 

carrier s container yard be it on dock or off dock or to the ca

dock were subjected to the handling charie as provided in Rule N

The shipper was therefore by Rule No 70B1 a referred to Ru

19 to determine the applicability of the handling charge In Ru

19 c 6 the shipper would have discovered that cargo moving und

provisions of Rule No 70B which applies to both shipper p

containers and carrier packed containers was exempt from the ha

charge if that cargo was tendered to the carrier at the carrier s co

freight station or the carrier s dock Since the word dock inclu

Respondents refused to answClr questions propounded by Complainant reprdina thepurposes of tho 

the Rule effected on AUlust 13 1973 and Aprill 1974 The record I therefore without direct evklence re

purposes of these rule changes leavina the discernmont of those purposes to inference

19 
DOWCHEMICAL INC v APL 541

on dock container yard tender ofshipper packed containers to the carrier

at the carrier s on dock container yard would have been tender to the

carrier at the carrier s dock within the meaning ofRule No 19 c 6 and

such cargo would have been exempt from the handling charge However

cargo tendered to a carrier at the carrier s off dock container yard would

have been subject to the handling charge

Because Complainant tendered its shipper packed containers to Re

spondents at their respective on dock container yards Complainant

tendered its shipper packed containers to Respondents at their respective

docks as that word is used in Rule No 19 c6 Complainant s cargo was

therefore exempt from the handling charge provided for in Rules No 70

and 19 Because Respondents assessed against and collected from

Complainant a handling charge of 175 per ton on that cargo so tendered

Respondents violated section 18 b 3 ofthe Shipping Act by charging and

collecting a greater compensation for a service in connection with the

transportation ofproperty than the charge specified in the applicable tariff

on file with this Commission Complainant has been injured by that

violation in the amount of 20438 43 Each Respondent Will be required

to return to Complainant those amounts collected by that Respondent

from Complainant in excess ofthe amount authorized by the applicable

tariff An appropriate order will be entered

Vice Chairman Clarence Morse dissenting

Idissent

The parties hereto stipulated pursuant to Rule 10 v ofthe Commis

sion s Rules of Practice and Procedure that

14 The tariff provisions relevant to this proceeding are Rule I Rule 5 Rule 19 c 6

Rule 70 and Rule 70 B and relevant revisions thereto Authentic and genuine copies of

tariff pages which contain these provisions are included in attachments to the Amended

Complaint orin Answers and Objections of Respondents to Interrogatories and Requests

for Admissions of Complainant dated August 2 1974

15 Under date of May 9 1973 Pacific Westbound Conference amended Rule No

70 B of said tariff 24th Revised Page 53 to read in significant part as follows

Shipper packed containers tendered to carrier at his CY or dock are not subject to

the handling charge or container service charge provided in Rule No 19 Emphasis

added

A Shipper packed containers tendered to carrier at his CY or dock are

subject to the handling charges provided in Rule No 19 A Effective August 13

1973

The statement in parenthesis was the amendment inserted in the tariff in May so as to

provide 90 days notice of its effectiveness on August 13 1973 as noted in the tariffwith

the symbol A Complainant received the notice of this change in compliance with

the General Commodity Contract Rate Agreement Subsequently the language which

existed prior to the May 9th amendment and which continued in effect until August 13

1973 was removed and this section of the tariff was amended 28th Revised Page 53

Effective September 12 1973 to read

Shipper packed containers tendered to carrier at his CY or dock are subject to the

handling charge as provided in Rule No 19

This language remained unchanged during the period covered by the Complaint

19 F M C
542 FEDERAL MARITIME COMMISSION

16 Under date of May 15 1973 Pacific Westbound Conference amended R

19 c 6 of said tariff 5th Revised page 31 to read in significant part as follows

The Handling Charge Will Not Apply On cargo tendered at Container Ya

Container Yard CY to be deleted 8 13 73 Container Freight Station C

carrier s dock and moving under the provisions of Rule No 70B

The amendment was the underscored language sic not to be effective until 

Complainant received the notice of this change in compliance with the 

Commodity Contract Rate Agreement

17 After Dow raised a question by telex to PWC dated October 10 197

Dow s interpretation of this provision PWC filed a revised Rule No 19 c 6 

tariff 6th Revised Page 53 Effective October 17 1973 to read in significant 

follows

The handling charge will not apply On cargo tendered at carrier s Co

Freight Station C FS or 1I0ck for packing into containers by carrier un

provisions of Rule No 70 B Emphasis added

Sixth Revised Page 31 was rejected by the FMC Bureau of Compliance 

contention that it was notjust a clarification but resulted in an increase Acco

PWC re published Rule No 19 c 6 7th Revised Page 31 Effective November 1

in the same form as the Rule appeared at 5th Revised Page 31 filed May 15 1973

18 As of April I 1974 handling charges as had previously been in the tar

eliminated The Amended Complaint is not concerned with provisions of the 

effect April I 1974 and thereafter

19 Rule 703 of said tariff Original Page 48 Effective March 5 1969 and in 

all times pertinent to the Amended Complaint defines the term container yard 

follows

3 Container Yard CY The term container yard CY means the 

designated by carrier in the port terminal area where I the carrier assemble

or stores containers and where containers packed with goods are rece

delivered Emphasis added

20 By Rule No 5 in effect at all times pertinent to the Amended Complai

carrier declares an assigned terminal dock in each port served 6th Revised P

Effective May 13 1973

21 By Rule No I

in effect at all times pertinent to the Amended Compla

carrier may have in each terminal port one location in the port terminal area de

as their CY where containers packed with goods may be received The one CY 

either off dock or on dock 4th Revised Page 23 Effective January 10 1972 E

added

22 During all times pertinent to the Amended Complaint the CY of each 

respondents named in the Amended Complaint in each of the ports referred 

located within their respective terminal docks

Each shipment referred to in the Amended Complaint was transported 

respective ocean carrier s terminal dock by a motor common carrier selected 

shipper Said common carrier with possession of the inland bill of lading on a

the entrance to the ocean carrier s terminal dock was issued a gate pass a

directed by a security guard to the container yard gate At the container yard 

common carrier presented a document or documents including the inland bill o

identifying the container being delivered areceipt including in most cases th

bill of lading was issued to the said motor common carrier executed on beha

ocean carrier and the motor common carrier was directed to a location in the c

yard for removal of the container

Summarizing the foregoing the ports served are identified 

assigned terminal dock within each port is identifie in writing 

Conference Chairman Inaddition each carrier 1

must declare in 

to the Conference Chairman when it elects to have an off doc

19 
DOW CHEMICAL INC v APL 543

where loose cargo may be received for stuffing into acontainer in addition

to its on dock facilities for so stuffing loose cargo into containers and as

to the latter on dock facility no notice need be given to the Conference

Chairman other than the elsewhere required notice of the location ofthe

carrier s assigned terminal dock and 2 each carrier also may have

within the entire port terminal area either one offdock C Y or one on

dock C Y where shipper packed containers are received Thus the CY

authorization is more restrictive than the CFS authorization The end

result is that loose cargo may be received and stuffed into containers

either at the offdock CFS if any or at the dock area itself but shipper

packed containers may be received only at the single Container Yard in

the port terminal area whether the CY is located in the terminal dock

area ofwhether the CY is located outside that terminal dock area but

within the port terminal area

From the foregoing it is clear tIult the dispute arises because TariffRule

70 BX1 a provided that on and after August 13 1973 handling charges

under Rule 19 would be assessed on shipper packed containers tendered

to carrier at his CY or dock whereas Tariff Rule No 19 c 6 was

amended effective August 13 1973 to provide that the exemption from

paying the handling charge which exemption theretofore applied to

cargo tendered at CY CFS or carrier s dock and moving under the

provisions of Rule No 70 B would thereafter apply only to cargo

tendered at CFS or carrier s dock and moving under the provisions of

Rule No 70B In other words after August 13 1973 while Rule No

70B provided that shipper packed containers tendered to carrier at

CY or dock would pay a handling charge nevertheless after August 13

1973 Rule No 19 c 6 provided that cargo tendered at CFS or

carrier s dock would not pay the handling charge

In my opinion the majority s interpretation does not take into

consideration all provisions ofthe tariff or other relevant factors including

practices in the ports which restrict the areas within the ports to which

shipper packed containers may be tendered Iagree that tariff ambiguities

should be resolved in favor ofthe shipper nonetheless the totality ofthe

tariff Storage Practices at Longview Wash 6 F M B 178 1960 at 182

and all pertinent facts must be considered in arriving at a reasonable

interpretation ofthe tariff Thomas G Crowe v Southern S S Co I

D S S B 145 1929 at 147 In the case before us there are other tariff

provisions and other facts which negate or at least clarify the ambiguity

which seems to result from comparing only Rules Nos 70B I a and

19 cX6

First there is TariffRule No 70 3 which defines Container Yard as

the location designated by carrier in the port terminal area where containers

packed with goods are received or delivered

Also Tariff Rule l a contains a provision which permits a carrier to

designate locations for the receipt of non containerized cargo and for the

19 F MC
544 FEDERALMARITIME COMMISSION

I

receipt of shipper packed containers That rule specifies that it is 

where containers packed with goods may be received

There is no tariff rule which designates the dock as a

separa

unique place separate from the CY as aplace where shipper 

containers could be recieved The mijority contends howeve

because the dock is mentioned in the cargo handling rules Rule

19c 6 and 70B 1 a there must be such a place available for del

packed containers Ifthere is not it is contended then the tariff i

confusing or fraudulent

To arrive at such aconclusion requires a

reading of only selecte

rules When Rules Nos 19 c 6 and 70B Ia are read with Rule

l a and 70 3 the reasonable construction is that shipper packe

tainers will be received only at the CYand that subsequent to Aua

1973 there would be a

handling charge on such containers

This interpretation is reinforced by a further reading ofthe 

language Rule No 70B I a in applying the handling charge re

shipper packed containers Rule No 19c 6 refers to cargo 

these are two separate and distinct thinas is cvident from the two 

Rule No I9 c 6 prior to August 13 1973 exempted three ty

cargo from the handling charge

1 cargo tendered at the CY

2 cargo tendered at the CFS

3 cargo tendered at the dock

provided the cargo moved under the provisions of Rule No 70B

Cargo moving un4er the provisions of Rule No 70B is spec

cargo packed in containers by the shipper and moving to 

destinations

Thus when cargo was in shipper packed ontaineri the tariff in

to impose the handling charge as of AlI8ust 13 1973 if the contain

delivered to the CY ot dock No mention is made in Rille No 

of CFS cargo Consequently when shipper packed containers iel

to the CY were deleted frQIn Rule No 70B I

a as beneficiaries 

handling charge exemption it was necessarily intended to remo

exemption for all shipper packed containers received It must be r

bered that no tariff rule authorized delivery of shipper packed con

elsewhere than to the CY

When however only cargo delivered to the CY wasdeleted from 

No 19 c 6 the intention was to make clear that cargo as oppo

shipper packed containers would still receive the handling charge e

tion when delivered anywhere except atthe CY the CY was sol

shipper packed container deliveries not for uncontainerized cargo

When all the tariff rules are thus read as a unit the alleged am

disappears

Also worth noting is Tariff Rule No 70 5 which provides the 

definition of Place of Rest It means that location ofthe floor 

I

4

J

I

I

1I

i

19 
DOW CHEMICAL INC v APL 545

platform or doorway at CFS or carrier s dock at which cargo is first

delivered by shipper Emphasis added The term dock is clearly

used in two different ways first in connection with cargo delivered to the

CFS non containerized and second in connection with the place where

cargo not sent to the CFS is delivered No mention is made ofthe CY

Add this to the fact that the longshore labor union will not permit truck

delivery of cargo or shipper packed containers to the dock at ship s

side sThe only reasonable construction is that the term dock here and

elsewhere when used in connection with shipper packed containers

refers to the CY Thus when Rules Nos 70B 1 a and 19 c 6 were

amended the intention and result was to remove shipper packed con

tainers delivered anywhere from the handling charge exemption

Iwould deny reparations

S JOSEPH C POLKING

Acting Secretary

5 Exhibit lB page 4

19 F M C
FEDERAL MARITIME COMMISSION

DOCKET No 7418

Dow CHEMICAL INTERNATIONAL INC

v

AMERICAN PRESIDENT LINI IS LTD IT AL

ORDER

This proceeding having been initiated by the Federal Maritime C

sion upon complaint and the Commission having fully consider

matter and having this date made and entered ofrecord a 

containing its findings and conclusions thereon which Report is 

referred to and made a part hereof

IT IS ORDERED That pursuant to sections 18 and 22 

Shipping Act 1916 each of the following Respondents shall pay t

Chemical International Inc the sums identified immediately to th

oftheir names

1

j

American President Lines Ltd n

Barber Lines AS n

Pacific Far East Lines Inc

Sea Land Service Inc

United States Lines Inc

Zim Israel Navigation Company Ltd n

Kawasaki Kisen Kaisha Ltd

Showa Shipping Company Ltd

States Steamship Company n n

IT IS FURTHER ORDERED That Respondents shall comp

the first ordering paragraph hereof on or before the 30th day af

date ofthis Order and shall within five days after compliance no

Secretary ofthe Commission ofthe date and mannerofcompliance

By the Commission

c

1

j

S JOSEPH C PoLKING

Acting Secre

546 19 
S JOSEPH C POLKING

Acting Secretary

FEDERAL MARITIME COMMISSION

46 CFR Chapter IV

DOCKET No 735

SECTION 15 AGREEMENTS UNDER THE SHIPPING ACT 1916

ORDER OF DISCONTINUANCE

February 24 1977

This proceeding was instituted by notice ofproposed rulemaking

published February 23 1973 38 F R 4982 The proposed rules were

designed to codify in one rule the various general provisions regarding

section 15 agreements and to set forth certain additional requirements

including justification of agreements time for filing of extensions of

agreements signatories of agreements and other provisions Certain

comments were received but upon request of interested persons the

proceeding was postponed by the Commission to permit further consid

eration ofthe nature the proposed rules should take

Since the postponement ofthis proceeding time and events to a great

extent have overtaken the original proposals Recent Commission expres

sions and determinations regarding processing of section 15 agreements

have negated the necessity or desirability of continuation ofthis proceed

ing in its present form The more efficient procedure would be to fashion

new proposed rules for further comment

Accordingly it is ordered that proceedings in this matter are hereby

discontinued

By the commission

19 FM C 547
FEDERAL MARITIME COMMISSION

DoCKET No 7551

PERRY S CRANE SERVICE INC

v

PORT OF HOUSTON AUTHORITY OF HARRIS COUNTY TEXAS

PARTIAL ADOPTION OF INITIAL DECISION

February 25 1977

By THE COMMISSION Karl E Bakke Chairman Ashton C Barr

James V Day Commissioners

This proceeding was commenced with the filing of a compla

Perry s Crane Service Perry against the Port of Houston Autho

Harris County Texas Houston alleging that Houston has been en

in certain practices in connection with the rental of heavy 

equipment which violate sections 16 17 and 18 of the Shippin

1916 46 D S C 815 816 817 2

The essence of the complaint is that certain tariff rules and 

practices which give Houston s cranes tirst priority on jobs even 

extent of displacil lg Perry s and other private crane owners equ

already working are unduly and unreasonably preferential and 

Complainant is seeking arevision of tariff rules and related pract

well as reparation for the alleged violations

In his Initial Decision Administrative Law Judge Norman D 

concluded that

1 Houston s first call and bumping practices violate sectio

First and 17 ofthe Shipping Act 1916 the Act not only as a

against private crane operators such as Perry but also with reg

stevedores hiring private cranes

2 Houston is entitled to a reasonable preference as to its own 

and may retain tirst call privileges provided it can timely frrnish a 

equally suited for the job Houston may also retain its bum

I

l

I

1 Commissioner Bob Casey not participatina

At the outset of the hearina with the aareement ofcounsel the Prosidina Officer clarified the s

complaint to encompass only alleaed violations of section 16 Firat and the secondparaaraph of section 17 

548 19 
PERRY S CRANE SERVICE v PORT OF HOUSTON 549

privilege provided that it can furnish a more suitable crane for the job

than that provided by the private crane owner

3 While complainant has clearly suffered some financial injury

because ofrespondent s practices no reparation can be awarded on the

record because of sketchy and confusing evidence as to the amount of

reparation due Perry The matter is remanded for further development

Exceptions were filed by both Houston and Perry s Crane Service

Oral argument was requested by Houston but denied by the Commission

Perry s only exception is to the conclusion ofthe Presiding Officer that

Houston is entitled to a limited first call on crane work and a

bumping privilege It is contended by Complainant that all preferences

accorded Respondent should be struck down as being in violation of

sections 16 and 17 ofthe Shipping Act 1916

Houston on the other hand raises some thirty exceptions to the Initial

Decision For the most part these exceptions constitute essentially

rearguments of contentions already advanced before the Presiding Officer

and rejected by him

Upon review ofthe record including arguments ofcounsel on briefand

on exception we find that the Initial Decision ofthe Presiding Officer is

except to the extent discussed below well founded and supported by the

evidence Accordingly that decision is adopted except as modified herein

Houston s exceptions go primarily to the emphasis placed on certain of

the evidence by the Presiding Officer Contrary to the findings made in

the Initial Decision Houston believes that the weight of the evidence

favors itrather than Complainant We disagree Our review ofthe record

supports the conclusions reached by the Presiding Officer The testimony

of Perry other private crane owners and stevedores who utilize crane

equipment clearly establishes that Houston s practices result in a disrup

tion to the proper handling of ships and an increase in expenses to

stevedores as well as to private crane owners The record indicates that

Houston has unjustly preferred itself to private crane owners and

subjected stevedores hiring private crane owners to bumping and other

unreasonable practices while exempting stevedores who own their own

cranes from such practices all in violation of sections 16 First and 17 of

the Act

Houston argues that its practices have had little effect on Perry s

operations and that Perry failed to show thatthe tariff provisions werethe

proximate cause ofits injury Houston attributes Perry s present financial

plight to a lack ofbusiness acumen and a decline in total crane hours

worked at Houston s facilities While these factors may have had some

bearing on Perry s declining revenues the fact remains that Houston s

restrictive practices did directly result in a loss ofrevenue in the fifteen

documented instances where a Houston crane bumped a Perry crane

Thus there is sufficient evience to show that Houston s practices were

the proximate cause ofPerry s injury

We find little merit in Houston s challenge to the Presiding Officer s

19 F M C
550 FEDERAL MARITIME COMMISSION

I

1

mini monopoly characterization of Houston s operations As u

the Initial Decision the term refers to the ability of Houston to e

competition from particular jobs The Presiding Officer found th

type of restraint on competition here is not blatantly monopoli

exclusive in terms ofdriving private crane owners out of the ma

and that Houston as a practical matter could not and does not w

exclude all private competition from its facilities However 

Presiding Officer points out

this limited mini monopoly aspect of the first call bumping system should 

overlooked It too runs counter to our national philosophy favoring free an

competition Furthermore even it if does not have to be justified with the same q

of proofnecessary in case involving completely exclusive and monopolistic p

and practices the lesser deree of an invasion of a national philosophy 

nevertheless require justification albeit less stringent Cases omitted

The Presiding Officer then goes on to describe how and why Hou

practices have made serious inroads upon the national philosophy fa

free and open competition We agree with the findings of the Pre

Officer in this regard

Houston is disturbed that the Presiding Officer allegedly did not c

himself to the facts in the complaint case but rather strayed into are

relevant to the subject proceeding and strains to bring within its a

class ofpersons neither parties hereto nor represented herein 

were a decision in an investigatory proceeding pursuant to Comm

order Houston argues that the Presiding Officer went beyo

authority in finding that Houston s practices are undue and unreas

within the meaning of sections 16 First and 17 with regard to stev

hiring private cranes We fail to see the relevance or significance 

challenge to the Initial Decision The evidence presllnted related d

to the operation of mobile cranes in and around Houston s fac

While it is true that the complaint Was brought by a private crane 

the tariff provisions have a direct effect on stevedores utilizing 

private cranes Itis the stevedore who goes out and hires the 

crane and it is the stevedore who must notify the crane owner that 

been replaced by aHouston crane The tariff provisions directly 

the stevedores expenses in connection with the loading and unloa

vessels at the port and to this extent they have an impact on the 

of a stevedore who is subjected to these practices to compet

stevedores who are not so subject by virtue of the fact that the

their own cranes

Finally Houston takes issue with the Presiding Officer s remand 

proceeding to determine the amount of reparation due Perry did a

to offer evidence and proof of damage during the hearings Howe

the Presiding Officer found such proof was sketchy in general 

was difficult to determine whether reparations were due in num

bumping incidences Further certain of the claims for reparat

timed barred by the two year limitation ofsection 22 of the Act

19 
PERRY S CRANE SERVICE v PORTOF HOUSTON 551

We agree with the Presiding Officer that Complainant is entitled to

some degree ofmonetary restitution for losses occasioned by the unlawful

practices of Houston The extent ofreparation cannot be determined on

this record A remand on that issue is accordingly in order This

procedure has been followed by the Commission in instances like the

present when the record is full and complete on the issue ofviolation but

is inadequate on the issue of damages See Pittston Stevedoring Corp v

New Haven Terminal Inc 13 F MC 33 34 35 1 9 Charles Salvesen

and Company Ltd v West Michigan Dock and Market Corporation 12

F M C 135 148 1968 The parties should follow the procedures set forth

in Commission Rule 15 b which may avoid the necessity of further

hearing

The Presiding Officer found that Houston s current practices with

respect to first call and bumping violated sections 16 First and 17

of the Act Accordingly he ordered Respondent to terminate these

unreasonable practices and modify its activities to conform to the

guidelines set forth by him in his Initial Decision In this regard he found

that inasmuch as all preferences or advantages are not necessarily

unlawful and in consideration of Houston s peculiar situation he would

allow Houston some preference with respect to first call and bump

ing privileges

We agree with the Presiding Officer that prior to the start ofany job a

stevedore should determine the availability of Houston s cranes and if

there is one equally suitable for the job at hand then Houston should be

given apreference as to furnishing a crane for that job

Our basis for allowing a limited preference is similar to that advanced

by the Presiding Officer namely Houston s heavy investment in cranes

and extensive labor related expenses and guarantees declining share of

available crane work the flexibility ofprivate cranes in moving from one

location to another an option not open to Houston the fact that private

crane owners are using facilities constructed and paid for by Houston to

conduct their own private business and the absence ofany evidence that

Houston is attempting to monopolize the crane rental business on its

facilities

The key determination to be made here is whether the granting ofany

fUSt call privilege to Houston results in any undue or unreasonable

preferential or prejudicial treatment Houston s existing first call

privilege is unlawful and the Presiding Officer correctly and properly so

concluded The Presiding Officer s modification ofthis privilege signifi

cantly limits Houston s preference and in our opinion results in a

practice which while still preferential is no longer undue or unreasona

ble 3As we noted in A P St Philip Inc v The Atlantic Land

Improvement Company et al 13 F M C 166 1969 Section 16 does

J

In so finding we specifically deny Complainants motion of December 3 1976 that in the absence of replies to

exceptions by Houston Complainant sexceptions should be in all things granted and the Initial Decision expanded

to eliminate all first call work privileges

19 EM C
552 FEDERAL MARITIME COMMISSION

not forbid all preferential or prejudicial treatment only that w

undue or unreasonable p

174

There is no evidence that Houston is attempting to monopolize 

operations and give itself an exclusive right to rent cranes on its fa

Indeed the record indicates the contrary and those cases ci

Complainant dealing with exclusive rights are for the most part in

able to the facts in this proceeding

The first call privilege as modified will require stevedores to 

a Houston crane only if that crane is suitable for thejob in thejud

ofthe stevedore in terms of size and expense as any available cran

23 Initial Decision While there are other factors involved in sele

crane the stevedores emphasized that the size and expense of a pa

crane were critical elements in its selection In addition a stevedo

be able to hire a private crane at the outset ofajob if Houston 

assure that a suitable crane will be available for the job In view 

fact that Houston owns only 13 of the available 37 cranes us

Houston s facilities the stevedores can be expected to utilize 

cranes to a significant degree even with the limited first call pref

we are allowing Houston

However assuming the unavailability of aHouston crane a

election by a stevedore to utilize a private crane for a particular jo

private crane operator should be permitted to perform the 

completion without bwnping by a Houston crane suQiect of co

the right of the stevedore to dismiss the private crane for fai

perform the job in a competent manner Any continuation of bu

rights even as modified by the Presiding Officer would contin

practices found to be unlawful in thisproceeding

The record clearly showsthat it is the bumping feature of Re

ents operations which generates the most concern among the 

crane owners and stevedores The practice of bumping which n

tates the removal of a crane already working results in the g

disruption and expense to the stevedore andor the private crane 

While there is evidence in the record that total elimination of all 

rights for Houston might place Houston s crane business in 

profitable situation elimination of bumping by itself would hav

effect on Houston s financial position In addition the Presiding 

found that bwnping results in discriminatory treatment betwee

stevedores owning their own cranes who are not subject to bum

and stevedores who must hire private cranes Even as modified 

Presiding Officer the bwnping privilege would still result in dis

tage to stevedores who must hire cranes Private crane renters wo

course necessarily continue to suffer as a result of the bum

practice

Therefore while there is support in the record for allowing a 

first call privilege to Houston the practice of bumping can

justified evenas modified by the Presiding Officer Inview ofthis 

1
PERRY S CRANE SERVICE v PORT OF HOUSTON 553

vacating that portion of the Initial Decision which provides for the

continuation of the bumping practice

With the one exception discussed we find that the Presiding Officer s

findings and conclusions are proper and well founded and we are

accordingly adopting the Initial Decision as modified herein The proceed

ing is remanded to determine the amount ofreparations due Complainant

THEREFORE IT IS ORDERED That the Initial Decision is adopted

in its entirety except that portion of the Initial Decision which allows for

the continuation of bumping

IT IS FURTHER ORDERED That Houston shall immediately cease

and desist from those practices found unlawful in this proceeding and

shall within 30 days ofthe date of this Adoption file appropriate tariff

amendments

FINALLY IT IS ORDERED That this proceeding be remanded to

determine the amount of reparations due Complainant

Vice Chairman Clarence Morse concurring and dissenting

I concur in the majority report insofar as it finds bumping is an

unlawful practice and remands the issue of reparations 4

Idissent from

the finding that the preference for Respondent s cranes is permissible or

lawful for Respondent when holding its terminal facilities out to be public

and open

s

The Administrative Law Judge made a thorough and well reasoned

analysis of the preference issue Nevertheless he and the majority

conclude that despite existing law the preference here allowed Respond

ent is lawful I

disagree

The Administrative Law Judge set forth the role of the stevedore in

4

Such remand is consistent with 46 C F R 502 251 and 252

S A briefdiscussion indicating the basic methods and arrangements for owning leasing and operating terminals

may be helpful

Terminals are owned either privately Le by individuals orby corporations and irrespective of whether stock

ownership in the corporation is closely held orwidely held ormunicipally i e by state orlocal government authority

orsubdivision thereof In the instant case the ownership ofthe terminal is municipal the Port of Houston Authority

Terminals hold themselves out as proprietary terminals serving mainly tramp ships and the needsof the terminal

operator and not open to useby common carriers orby the public oras public terminals which service common

carriers by water In this sense the terminal under consideration is public

In turn aterminal serving common carriers by water may be openinthat the operator holds itselfout to serve any

and all common carriers who in lurn may employ any stevedoring company of its choice to service its vessel or it

may be closed a terminal which is owned by or leased or preferentially assigned to aterminal operating company

which frequently has its own stevedoring operation and holds itself out to provide full terminal and stevedoring

services and facilities to its common carrier customers often on an agreed contract basis In this sense the terminal

under consideration is open

In those instances where a closed terminal as here defined is lawful the operator is frequently acargo linerl

common carrier company which has sufficient frequency of vessel calls and volume ofcargo to be carried as to

require full utilization of the terminal to meet its ownrequirements The other type of closed terminal exists where a

terminal operating company leases the terminal for the purpose of holding itself out to provide usually both terminal

and stevedoring services tocommon carriers either on a

contract basis or on atariffbasis In either of these two

instancesjust mentioned there would be other terminal facilities within the port where terminal operators hold

themselves out to provide terminal services on an open basis to any and all common carriers by water to the end that

common carriers have afull choice as between closed terminals and open terminals and a monopoly of terminal

facilities does not exist

Aterminal may be operated by orforthe owner or it may be operated by a

terminal operating company for its the

operating company s own account Here the Port of Houston Authority operates the terminal for its own account

19 F M C
554 FEDERAL MARITIME COMMISSION

J

I

ocean commerce the need for the vessel operator to have freed

stevedore selection and the necessity for open competition in ste

ing In connection with each of these aspects ofthe preference iss

Administrative Law Judge analyzed and applied Commission and j

precedent notably Greater Baton Rouge Port Commission v 

States 287 F 2d 86 5th Cir 1961 A P St Philip Inc v The A

Land Improvement Company et al 13 F M C 166 1969 

California Stevedore Ballast Co v Stockton Port District 7 F 

75 1962 It is then concluded and Iagree that artificial restra

terminal related and stevedoring activities are fundamentally and 

ently improper either in the vessel s free right of selection of a ste

or in the stevedore s free right ofselection or proper equipment

Then however the Administrative Law Judge and the major

that in this case precedent need not be followed 6

Yet nowhere d

find facts in this case or cite legal authority which warrants the 

aside ofestablished principles of prior cases

Heretofore this Colnmission has held various exclusive or prefe

or unfair arrangements ofpublic terminals to be unlawful under sec

First and or section 17 Shipping Act 1916

A P St Philip Inc v The Atlantic Land Improvement Co 

access of vessel to the terminal conditioned on utilization by vess

tug operator favored by the public non proprietary terminal opera

California Stevedore Ballast Co v Stockton Port District 

exclusive right in favored stevedoring company to provide all stev

services at the public non proprietary terminal

Greater Baton Rouge Port Commission v United States 

stevedoring provided exclusively by operator of public non prop

terminal to the total exclusion ofcompeting stevedores

California Stevedore Ballast Co et al v Stockton Elevators 

8 F M C 97 1964 a public terminal non proprietary may no

one stevedore a charge for rental of terminal provided equipment 

assess a like charge against a favored stvedore

Respondent sright of first refusal on crane rentals is cle

monopolistic practice Respondent s selfpreference is either la

not It is not legitimatized by the fact that Respondent is a public 

The Administrative Law Judge correctly disposed of that issue 

United States v California 297 U S 175 1936 The self pre

granted here is also not rendered proper by making it a som

narrower preference than that now stated in Respondent s tari

Respondent has a large investment in cranes is not controlling 

that is a basic justification offered The Commission s mandate is 

guarantee that every capital investment will be recouped Rat

Commission should ensure only that terminals subject to its juris

I

1

ATSF R Co v Wichita Board of Trade 412 US 800 1973 recoanizos the Commission s pow

policy but nevertheless mandates that it is the eney sduty to explain its departure from prior norms

1
PERRY S CRANE SERVICE v PORT OF HOUSTON 555

neither unduly or unreasonably prefer themselves nor adopt UI iust or

unreasonable regulations orpractices

The arrangement herefree right of access by all stevedores to the

open terminal coupled with Respondent terminal s

right offirst refusal in

the renting of cranes when their rental is required by the stevedoreis

analogous to tying arrangements under antitrust laws Tying arrangements

are frequently treated as per se violations of section I ofthe Sherman Act

on reasoning similar to that used in price fixing cases In all events

Tying arrangements serve hardly any purpose beyond the suppression

ofcompetition Standard Oil Co of California v U S 337 U S 293

305506 1949 As stated by the Court in U S v Loews Inc 371 U S

38 5 1962 Tying arrangements are a concern for two reasons

they may force buyers into giving up the purchase of substitutes for the

tied product citations and they may destroy the free access ofcompeting

suppliers of the tied product to the consuming market

The tying arrangement involved herethe Port ofHouston Authority s

right offirst refusal when a stevedore needs to rent a cranesuppresses

competition by Complainant denies Complainant access to the market

for crane rental denies to the stevedore access to rental cranes from

persons other than Respondent and discriminates as between stevedores

who own their own cranes and stevedores who do not in that stevedore

owners can select and use theirown cranes whereas stevedore nonowners

are compelled to select and use Respondents cranes By analogy if a

tying device is unlawful under the Sherman Act the similar self preferring

device used here is prima facie unreasonable and unlawful

Itis to be noted of course that the self preference provision compels

the stevedore to rent Respondents crane whereas the stevedore may

prefer Complainant s crane because the latter even assuming the same

lift capacity may be easier to operate may have a greater operating

radius may be newer may be better maintained may function more

rapidly may be safer in use may have more favorable payment credit

arrangements etc etc etc But whether Complainant s crane is or is

not superior is not the basic issue The basic issue here is whether

Respondent can lawfully claim selfpreferencethe right of first refusal

on crane rentals

A terminal operator which provides cranes for rental must adopt just

and reasonable rules governing their rental and utilization California

Stevedore Ballast Co et al v Stockton Elevators Inc supra 8

F MC at 103 Granting itself self preference or the right offirst refusal

ro provide rental cranes is prima facie unjust and unreasonable and the

burden ofsustaining such practices as being just and reasonable is a

heavy one Respondent has totally failed to sustain this burden

To justify approving the right of first refusal the selfpreference

provision Respondent relies upon the fact that the Respondent 1 is a

state agency and therefore is not governed by the Shipping Act 1916 2

has abig investment in these rental cranes and requires self preference in

19 FM C
556 FEDERAL MARITIME COMMISSION

I

order to amortize the cost ofthe cranes 3 is a terminal whose 

may be used only upon its own premises 4 has less than its fair s

the crane rental market and 5 employs 16 crane operators w

guaranteed 60 hours straight time pay per two week pay period a

employs 16 mechanics and maintenance men

Point I the state agency exemption has been demolished 

States v California supra Point 2 is applicable to every comm

enterprise IfRespondents conunercial needs are the test then eve

preferential undUly restrictive or monopolistic tariff rule mustnev

less be found to be lawful on a

simple showing that the terminal re

the self preferences to enable it to pay its debts Respondent W

compelled to buy cranes There is no eVidence that the vacuUff

absence

of cranes woUld not have been filled by equipment rental 

Respondent took an ordinary and calculated business risk in ac

cranes and we should not pull its chestnuts from the fire 

expense of Complainant or the public Complainant itself has an 

ment in cranes perhaps as to Complainant relatively greate

Respondents investment in cranes is to Respondent which 

protected by any self preferellce proVision such as that being a

by Respondent and yet botb Complainailt and Respondent volu

entered the crane rental business expecting to do business on afa

equal competitive footing Point 3 lends no support to Respondent 

must have known before it bought its craQes that they could not be 

for use offterminal if in fact that prohibition exists at all As to 

4 the fact it has but 23 of crane rental business in 1976 esta

nothing The Admitiistrative Law Judae found that Respondent s 

usage rental dropped from 60 of to Crane usage on Respo

facility in 1971 to 26 in 1975 and to about 23 in the flrst qua

1976 Further the total crane hours worked on the facilities in 19

82 of the hours worked in 1974 This indicates to me that 197

relatively a boom year for the terminal as it was for world wide 

The Administrative Law Judgc also found that in 1975 Respon

cranes worked only 75 ofthe hours they had worked in 1974 w

privately owned cranes in 1975 worked 85 Of the hours they had w

in 1974 The obvious explanation for the fall oifin usage of Respo

cranes comparma 1975 with 1974 is twofold one a declii1e in agg

cargo movement in 1975 as compared to 1974 and second llI1d 

revealing is the Administrative Law Judge s fmding Number 28 t

28 There has been an increase in the number of stevedoril1 l

concerns pu

cranes for use on vessels This has had an appreciable effect on iespqndent 

rental operations in terms of revenues and has also cut into the crane work ava

privately owned cranes

Thus stevedore owned cranes are doing a progressively incr

percentage ofthe crane work at the terminals since Respondent i

amended its tariff to permit stevedore owned cranes to have first 

i

1

1

J

I

I

19 
PERRY S CRANE SERVICE v PORT OF HOUSTON 557

work on their own vessels and freight handling activity and thereby

obviously having an adverse effect on the crane rental opportunities of

both Complainant and Respondent In 1962 there were 2 privately owned

cranes and in 1976 37 privately owned cranes in use at the facilities

Respondents 13 cranes constitute 26 ofthe total cranes being employed

on Respondent s property As to Point 5 the fact that Respondent

guarantees 60 hours straight time pay per two week work period to its 16

crane operatorsmay be as to Respondent an improvident undertaking

But if so that is no reason for permitting tariff rules which unfairly

prejudice Complainant

What then are the alleged justifications for approving this tariff rule

In the ultimate test it is MONEY not transportation need not public

benefit not service requirement no efficiency not availability not

superiority ofequipment Ifthe need for money is the test then we are in

trouble for the need for money is pervasive in most business enterprises

and therefore all self preferences would be lawful

I am not suggesting that Respondent might not in proper factual

circumstances hold itself out to operate its terminals itself as closed

terminals doing all the stevedoring on the terminals and itself providing

all the required crane services But it did not attempt to do so

Furthermore for such conduct to be lawful there must be other terminal

facilities in the port which are open terminals to the end that Respondent

would not be maintaining a monopoly on terminal facilities Thus in

Agreements Nos T 2455 T 2553 14 SRR 1317 1974 we held the

agreements to be monopolistic and unlawful under sections 15 and 17 of

the Shipping Act 1916 which had the effect ofgranting Lavino Shipping

Co a monopoly on all modem container terminal facilities in the Port of

Philadelphia Compare Agreement Port Canaveral and Luckenbach

S S 17 F M C 286 1974 In any event Respondent elected to operate

its terminals as open terminals not as closed terminals Having

made that election then stevedores which service the terminals may not

be denied the right to utilize any crane facilities oftheir choosing absent

a strong showing by Respondent that its monopolistic tariff rules are just

and reasonable Calif S B Co et al v Stockton Port District et

al supra 7 F M C at 84 Pittston Stevedoring Corp v New Haven

Terminal Inc 13 F M C 33 at 44 A P St Philip Inc v Atlantic

Land Improvement Co etc supra 13 F M C at 173 Such strong

showing was not made herein

The majority disallows and properly so Respondent s bumping

practice Such disallowance is however inconsistent with approving self

preference to Respondent If bumping is incompatible with the

stevedore s right to continue utilizing its chosen equipment for like

reasons the first call self preference is incompatible with a stevedore s

19 F MC
558 FEDERAL MARITIME COMMISSION

right to select at the outset the equipment it thinks best suited 

needs The two situations are indistinguishable

S JOSEPH C POLKING

Acting Secre

i

I

19 
III F MC 559

TITLE 4CSHIPPING

Chapter IV Federal Maritime Commission

GENERAL ORDER 22 DOCKET NO 7665

Part 503Public Information

February 25 1977

Pursuant to provisions ofthe Government in the Sunshine Act P L

5 U S C 552b September 13 1976 the Commission published

in the Federal Register 41 F R 55207 December 16 1976 its proposed

regulations implementing that Act Interested parties were encouraged to

submit comments on these proposed regulations Four such comments

were received

Of the four parties submitting comments two objected to the failure of

the Act and of the proposed regulations to provide as one ground upon

which an interested person may seek closure of a meeting the likelihood

that the meeting will disclose trade secrets and commercial or financial

information obtained from a person and privileged or confidential This

Commission can readily understand this objection but is powerless to

provide by regulation a procedure not authorized by the statute The

Commission therefore is compelled to disregard this objection

Additionally one party objected that the proposed regulations provide

no opportunity for an interested party to request the Commission to

withhold information from public disclosure while the Commission itself

may do so Again we are powerless to extend the authority ofthe Act

The Act does not provide for the action of an interested party as sought

by the commenting party Therefore we may not so provide by

regulation

The third commenting party addressed our proposed regulations in

more detail This party objected to our description in our statement of

policy 503 70 ofthese regulations as setting forth procedural require

ments designed to provide the public with information whilemaintaining

capabilities ofthe Commission in carrying out its responsibilities The

party recommends deletion ofthe term procedural We think such a

The parties ming comments were I the law firm of Graham and James 2 Outboard Marine Corporation 3

law firm of Casey Lane Mittendorff and 4 the Honorable Jack Brooks M C Chairman House Committee on

Government Operations
560 FEDERAL MARITIME COMMISSION

4

change to be unnecessary We therefore have not adopted this pro

This party also urges that capabilities is not synonymous with th

ability as used in the Declaration of Policy of the Act We can 

substantive difference between the two words in a statement of 

which would merit modifica on

This party recommends changing the definition of agency 

Federal Maritime Commission 503 71 to Federal Maritime 

mission or a quorum thereof or any subdivision thereof authorized 

on behalf of said Commission This change it is ur d would ma

definition consistent with 522b a1 ofthe Act We disagree A q

ofthe FMC is not the same as the FMC nor is a quorum of the F

agency headed by a collegial body as defined in 522

ofthe Act Additionally we specifically omitted reference to a subd

ofthe Commission authorized to act on behalfofthe Commission b

there is no such entity Reference to a non existent entity we feel 

be confusing and therefore unwise

This party also seeks to have the definition of information per

to ameeting expanded to include meeting minutes and other infor

referred to in 5 U S C 552b fIH2 We think this eviden

misunderstanding of information pertaining to a meeting as used 

Act The Act describes such information as being capable of exe

from the requirements of subsections d and e of the Act 

subsections simply do not apply to the information referred 

552b f

1 2 Therefore in our opinion information pertainin

meeting refers to that amenable to the provisions of subsections 

e only

Additionally the party finds fault in our use in the definit

meeting of the words the deliberations of at least three 

members This party urges us to adopt the word ma

instead This we may not do The Reorganization Plan 7 of 1961 7

840 April 12 1961 requires in all cases to afflfmative vote of n

than three members of the Commission to conduct its business irr

tive ofthe number actually in office Hence our use ofthe word 

rather than a mlliority

This party also oQiects to our specific removal in the regulation

the defmition of meeting of those items of business determined se

by members on notation This is explicitly permitted as discussed 

legislative history ofthe Act see Conference Report to accompan

at p11

This party then suggests two further non substantive word c

which are of no merit However the party does note an omission 

proposed regulations which clearly merits remedy Section 503 77 

proposed regulations was meant to provide in the second sente

paragraph a that if in the opinion ofthe General Counsel amee

aportion thereof could properly be closed under the Act his certif

of such opinion must contain certain information Unfortunate

i

19 
GO 22DKT NO 76 65 RULES 561

proposed the regulation provided If in the opinion of the General

Counsel a portion or portions of a meeting is proper As can

be seen we omitted the phrase the closing of Therefore we amend

this provision to read If in the opinion of the General Counsel the

closing of a portion etc

The fourth interested party filing comments was the Honorable Jack

Brooks M C in his capacity as chairman of the House Committee on

Government Operations on behalf of that Committee Mr Brooks had

three suggestions to offer

Mr Brooks first suggests that sections 503 73 and 503 74 be amended

to make clear that there are two separate steps in any determination to

close a meeting to public observation It is noted that the Commission

must decide first whether or not the meeting fits within one of the

exemptions ofthe Act so as to permit the meeting to be closed and

second notwithstanding the applicability ofan exemption whether or not

the public interest requires that the meeting remain open It is suggested

by Mr Brooks that the proposed regulations

seem to suggest that the Commission need consider the public interest only if it

chooses to whereas the Act contemplates that the public interest issue will be

considered in each instance where the Commission determines that a discussion comes

within a specific exemption

We agree with Mr Brooks view ofthe requirements ofthe Act

Therefore we have adopted appropriate modifications to our proposed

regulations We have amended section 503 74 by 1 adding the following

language at the end ofparagraph d ofthat section

That vote shall determine whether or notany portion orportions of a meeting or

portion orportions of a series of meetings may be closed to public observation for any

of the reasons provided in section 503 73 of this Subpart and whether or not the public

interest requires that the portion or portions of the meeting or meetings remain open

notwithstanding the applicability of any of the reasons provided in section 503 73

permitting the closing of any portion of any meeting to public observation

2 by amending paragraph e to read

e In the case of a vote on a request under this section to close to public observation

a portion or portions of a meeting no such portion or portions of any meeting may be

closed unless by a vote on the issues described in paragraph d of this section a

majority of the entire membership of the agency shall vote to close such portion or

portions of a meeting by recorded vote new material italicized

3 by amending paragraph t

to read

f

In the case of a vote on a request under this section to close to public observation

a portion or portions of a series of meetings as defined in section 503 71 of this Subpart

no such portion orportions of a series of meetings may be closed unless by a vote on

the issues described in paragraph d ofthis section a majority of the entire membership

of the agency shall vote to close such portion or portions of a series of meetings A

determination to close to public observation a portion orportions of a series of meetings

may be accomplished by a single vote on each of the issues described in paragraph d

ofthis section provided that the vote of each member of the agency shall be recorded

and the vote shall be cast by each member and notby proxy vote new material

italicized

19 F M C
562 FEDERAL MARITIME COMMISSION

Further we have amended section 503 75 by

1 amending paragraph g thereof by adding the following langu

the end thereof

That vote shall determine whether or not any portion orportions of a me

portion orportions of a series of meetings may be closed to pubHc observation 

of the reasons provided in paragraph a of this section and whether or not th

interest requires that the portion or portions of the meeting ormeetings rema

notwithstanding the appHcability of any of the reasons provided in paragraph a 

section permitting the closing of any portion of any meeting to public observatio

2 amending paragraph h to read as follows

h In the case of a vote on a request under this section to close to public obs

a portion of a meeting no such portion ofa meeting may be closed under by a 

the issues described inparagraph g ofthis section a majority of the entire mem

of the agency shall vote to close such portion of a meeting by a recorded vot

material itaHcized

Mr Brooks second suggestion regards alleged inadequacy 

proposed procedures for accomplishing public announcement offort

ing FMC meetings Mr Brooks notes that our proposed regu

503 82 and 503 83 make provision only for public notice gen

foUowed by publication in the Federal Register These provisio

alleged to fall considerably short ofthe notice envisaged under th

which should include publication in publications whose readers ma

an interest in the Commission s operations and the use of m

lists We understand the motivation of the Act and the necessity 

widest practicable notification of Commission meetings Therefor

regulations were framed in general terms to permit this agency the 

possible latitude to inform the public ofits meetings by the most ef

means The Commission fully intends to publish the announcem

forthcoming meetings by appropriate methods in addition to publica

the Federal Register For example among other possible me

dissemination notices of pending meetings will be provided 

Commission s public reference room It has been our experienc

trade publications do promptly publish all the information made av

by this Commission which is ofgeneral interest to their subscribers

We have not further specified means of dissemination of infor

because we are ofthe opinion that the notification policy ofthe A

be served more effectively by allowing us flexibility in this area W

to stress that we have every intent to fully implement the 

notification policy by dissemination to the widest possible audience

Finally Mr Brooks objects to the provisions ofthe proposed 

tions regarding certification by the agency s General Counsel 

explicitly providing that such certification will precede the vote ofw

or not to close a meeting Sections 503 74 d and 503 75 g im

provided for this by stating that the vote of the agency to close a m

may be taken only upon consideration ofthe certified opinion 

General Counsel ofthe agency provided the members under s

4I

19 
GO 22DKT NO 765RULES 563

503 77 of the Subpart Nonetheless in the interest of absolute

clarity we have amended the first sentence ofparagraph a of section

503 77 to read

a Upon any request that the agency close a portion orportions of any meeting or

any portion orportions of any series of meetings under the provisions of sections 503 74

and 503 75 of this Subpart the General Counsel of the agency shall certify in writing to

the agency prior to an agency vote on that request whether ornot in his or her opinion

the closing of any such portion orportions of a meeting or portion orportions of a series

of meetings is proper under the provisions of this Subpart and the terms of the

Government in the Sunshine Act 5 U S C 552b new material italicized

In addition to the comments of the four interested parties the

Commission has reviewed these proposed regulations sua sponte Our

review has unveiled three difficulties which we now take the opportunity

to remedy Mr Brooks suggestion regarding the public interest issue in

any determination to close ameeting caused us to review our provisions

regarding withholding from public disclosure information pertaining to a

meeting In our opinion the introductory language ofthe Act providing

Except in a case where the agency finds that the public interest requires

otherwise applies to determinations ofwhether or not to withhold

from public disclosure information pertaining to a meeting as well as to

determinations to close ameeting

We have therefore amended section 503 80 to conform to that view

As amended section 503 80 now requires that the Commission base any

determination to withhold information from disclosure on resolution of

both whether or not an exception is applicable and whether or not

notwithstanding the applicability of an exception the public interest

requires disclosure In our opinion this amendment conforms more

precisely to the statutory scheme

Therefore we have amended section 503 80 by 1 adding a sentence

at the end ofparagraph c reading as follows

That vote shall determine whether or not information pertaining to a meeting may be

withheld from public disclosure for any of the reasons provided in section 503 79 of this

Subpart and whether or not the public interest requires that the information be disclosed

notwithstanding the applicability of any of the reasons provided in section 503 79 of this

Subpart permitting the withholding from public disclosure of the information pertaining

to a meeting

2 amending paragraph d to read

In the case of a vote onarequest under this section to withhold from public disclosure

information pertaining to a portion or portions of a meeting no such information shall

be withheld from public disclosure unless by a vote on the issues described in

paragraph c ofthis section a majority of the entire membership of the agency shall

vote to withhold such information by a recorded vote new material italicized and

3 amending paragraph e to read

19 F MC
564 FEDERAL MARITIME COMMISSION

In the case of a vote on a

request under this section to withhold information pe

to a portion orportions of a series of meetings no such information shall be 

unless by a vote on the issues described in paragraph c ofthis section a 1I1

i0rit

the entire membership of the agency shall vote to withhold such Informa

determination to withhold information pertaining to a portion or portions of a 

meetings from public disclosure may be accomplished by a single vote on th

described in paragraph c ofthis section provided that the vote of each membe

agency shall be recorded and the vote shan be cast by each member and notb

vote new material italicized

Under the provisions of 503 75 as proposed at the request 

interested party that a meeting orportion be closed any agency m

the Managing Director or the General Counsel would request a

action on that proposal 503 75 d Upon review of the provis

the Act we conclude that in such circumstances only amember 

agency may seek agency action on such a request Therefore w

deleted from section 503 75 d the language the Managing Di

or the General Counsel ofthe agency

Additionally our review ofproposed sections 503 86 and 503 

revealed wording which might have been confusing if not cla

Section 503 86 a originally referred to all records required 

maintained by the agency under the provisions of section 503 85 

subpart That reference was overbroad Itwould haVe in

items to which public access was not contemplated under the A

remedy this overbreadth we have amended that sentence to read 

transcripts electronic recordings or minutes required to be maintai

the agency under the provisions of section 503 85 a 3 and b 

Subpart Hence for internal consistency we necessarily am

section 503 87 a to conform to the language of section 503 86 reg

transcripts electronic recordings and minutes rather than re

generally This revision comports with the wording of the Act 

refers only to these specific items 5 U S C 552bt 2

All amendments made herein have made these regulations co

precisely to the Government in the Sunshine Act with respect 

activities ofthe Federal Maritime Commission

THEREFORE IT IS ORDERED That pursuant to the Governm

the Sunshine Act P L 94409 5 U S C 552b September 13 

Part 503 ofTitle 46 C F R is hereby amended by adding a new S

H

Effective date These regulations shall be effective as of Mar

1977

By the Commission

S JOSEPH C POLKING

Acting Secre

Thetext ofthe amendment is reprinted in 46C F R 03 H

19 
S JOSEPH C POLKING

Acting Secretary

FEDERAL MARITIME COMMISSION

SPECIAL DOCKET No 502

KOHLER INTERNATIONAL LTD

v

SEA LAND SERVICE INC

NOTICE OF ADOPTION OF INITIAL DECISION AND ORDER

PERMITTING REFUND OF CHARGES

February 22 1977

No exceptions having been taken to the initial decision in this

proceeding and the Commission having determined not to review same

notice is hereby given that the initial decision became the decision of the

Commission on February 22 1977

Itis Ordered That applicant is authorized to refund 453 20 of the

charges previously assessed Kohler International Ltd

It is further Ordered That applicant shall publish promptly in its

appropriate tariff the following notice

Notice is hereby given as required by the decision of the Federal Maritime

Commission in Special Docket 502 that effective May I 1976 for purposes of refund or

waiver of freight charges on any shipments which may have been shipped during the

period from May I 1976 through August 25 1976 the rate to Group I Ports on various

articles of plumbing fixtures embodied in Items 812 2010 00 812 2010 20 812 2020 00

812 2020 20 812 301000 812 3010 20 812 302000 812 3020 20 812 3030 00 and 812

303020 is 47 WM subject to all applicable rules regulations terms and conditions of

said rate and this tariff

It is further Ordered That refund of the charges shall be effectuated

within 30 days of service of this notice and applicant shall within five

days thereafter notify the Commission of the date and manner of

effectuating the refund

By the Commission

19 F M C

565
FEDERAL MARITIME COMMISSION

SPECIAL DoCKET No 502

KOHLER INTERNATIONAL LTD

v

SEA LAND SERVICE INC

Adopted February 22 1977

Application granted

J

INITIAL DECISION OF THOMAS W REILLY

ADMINISTRATIVE LAW JUDGE

Pursuant to section 18b 3

2

of the Shipping Act 1916 as amen

P L 90298 and section 502 92 of the Commission s Rules of P

and Procedure 46 CFR 502 92 Sea Land Service Inc Sea L

Applicant has applied forpennission to refund a portion of the 

charges on a shipment ofplumbing fixtures and parts that move

New York to Tokyo Japan under a Sea Land bill of lading date

30 1976 The application was tiled December 17 1976

The subject shipment moved via mini bridge service under a 

rail water rate published in Sea Iand fartff No 2 4 FMC No 

ICC No 92 The shipment moved via rail to Qakland then via 

from Oakland to Tokyo Refund ofthe charges involved here wou

only the ocean carrier s portion The shipment weighed 27 832 

and measured 2 266 cubic feet The rate applicable at time ofs

was 55 per ton of40 cubic feet or 2 000 pounds Sea Land Freigh

No 234 FMCNo 106 ICC No 92 Item 812 3020 00 to Group 

2d revised p

550A The rate souabt to be appliedis 4Tper tO

cubic feet or 2 000 pounds Sea Land Freight Tariff No 234 FM

106 ICC No 92 Item 812 3020 00 to Group 1 Ports 3rd revised 

A

Aggregate freight charges collected pursuant to the rate applic

time ofshipment amounted to 3 115 75 Aggregate freight charge

rate sought to be applied amount to 2 662 55 The difference so

J

1

1

j

l

I

I This decision became the decision of theCommission February 22 1977

246U S C 817 as amended

566 1
KOHLER INTL v SEA LAND 567

be refunded is 453 20 The Applicant is not aware ofany other shipments

of the same commodity which moved via Sea Land during the same

period oftime at the rates involved in this shipment

Sea Land offers the following as grounds for granting the application

4 A special rate of 47 oow M had been established in TariffNo 234 FMC No 106

on various articles of plumbing fixtures that are shipped by the complainant including

among others the following tariff item numbers

1st Revised Page 550 Items 812 2010 00

812201020

812 2020 00

812 2020 20

1st Revised Page 550A nnnnn Items 812301000

812 3010 20

812 3020 00

812 3020 20

812 3030 00

812 3030 20

The special rates in the above items were established effective

September 22 1975 Attachment No 1 to meet all water competition

with an expiration date that was extended to October 31 1976

Effective May 1 1976 a general rate increase was published in Tariff

No 234 following a comparable general increase published in the all

water rates by the Far East Conference In preparation for it Sea Land s

trans Pacific pricing department in Oakland office had decided that the

increase would not be applied to any special rates established independ

ently to meet other competitive carriers rates Instructions to follow this

plan were given to all concerned in teletype message dated January 23

Attachment No 2

Unfortunately in reissue of the tariff pages to roll in the increase

effective May 1 1976 the above two pages containing 5 ofthe separate

commodity items of plumbing fixtures were overlooked in the clerical

process This clerical and administrative error resulted in these items

being erroreously increased to 55 00W M Attachment No 3 The

complainant had been informed by Sea Land that the increase would not

be applied to any ofthese special rates

Complainant made the shipment involved herein on June 30 covered

by BIJ F B 901 817477 Attachment No 4 It consisted of articles for

which the then applicable rate erroneously increased was 55 00 in Item

8123020 Charges of 3 115 75 were assessed on this rate and paid to

Sea Land by the complainants

freight forwarder The error in increasing

the rate was then discovered and request to correct it made by our

Chicago sales personnel in teletype of July 23 to all concerned Attach

ment No 5 The increase in the affected items was removed and the rate

to Group 1 Ports restored to 47 00W M on 4th revised page 550 and 3rd

revised page 550Aeffective August 25 1976 Attachment No 6

Section 18b 3 ofthe Shipping Act 1916 46 USC 817 as amended by

19 F MC
568 FEDERAL MARITIME COMMISSION

i

I

i

Public Law 90298 and Rule 6 1 Special Docket Applications R

Practice and Procedwe 46 CFR 502 92 a set forth the applicab

and regulation The pertinent portion of A 18b 3 provides that

Th Commission may in its discretion and for lood cause shown 

common carrier by wat r in fOf lilln comm n to r

fund a portion of fflillht 

coll ct d from a shipper or waive the collection of a portion of the charlles 

shipper where it appears that th re is an error in a tartlf of a clerical or admin

nature or an error du to an inadv mnc in fallinll to file a new tariff and t

refund orwaiver will not result in discrimination amOllll shippers Provided furth

the common carri r has prior to applyinll to make refund tiled a new tarift

Commission which ts forth the rate on which such refund or waiver w

bas d and Application for refund or waiver must be filed WIth the Com

within 180 days frolll th date of shlpm nt

The clerical and administrative error recited in the subject applic

of the type within the intended scope of coverage of section 18 

the Act and section 502 92 of the Commission s Rules of Pract

Procedure

Therefore upon consideration of thl documents presented 

Applicant it is found that

1 There was an error in a tariff of a clerical or administrative 

resulting in the failure to withhold the general rate increase fro

special rates as had been promised to the shipper

2 Such refund of a portion of the freight charges will not re

discrimination among shippers

3 Prior to applying for authority to refund a portion of the 

charges Sea Laildf1led a new tariff which set forth the rate on 

such refund would be based

4 The application was filed within one hundred and eighty day

the date of shipment

AccordinalY permission is granted toSea Lai1d Service Ine to 

a portion of the freight charges specifically the amount of 453 

appropriate notice will be published in Sea Lai1d s tariff

8 THOMAS W REILLY

Administrative Law Ju

1

l

I

WASHINGTON D C

January 26 1977

I

1

i

J For other provisions and requirements lee I 18b3 and I02 92 of the Commi lioo s Rulos of 

Procedure 46 CFR 502 92 0 e

19 
19 FM C 569

FEDERAL MARITIME COMMISSION

INFORMAL DoCKET No 341 F

THEFEDERAL MINISTER OF DEFENSE

FEDERALREPUBLIC OF GERMANY

v

REPUBLIC INTERNATIONAL FORWARDING COMPANY AND REPUBLICVAN

AND STORAGE OF Los ANGELES INC

ORDER

March 1 1977

This proceeding involves a claim for reparation on an alleged over

charge of ocean freight for a shipment of an automobile from California to

Germany The matter was considered by a Settlement Officer who

dismissed the complaint On review the Commission decided that a

proper determination ofthe matter required evidentiary proceedings The

matter was remanded and referred to an Administrative Law Judge for

such proceedings and decision

Subsequently the parties by joint motion advised that they had resolved

their differences and that a settlement was reached whereby Respondent

would pay the full amount claimed subject to receipt ofguarantees from

the Commission that no civil penalties would be recovered arising from

the acts set forth in the complaint

Administrative Law Judge Thomas W Reilly citing case law to the

effect that settlements are to be favored indicated that he would approve

the settlement but further indicated that he was not empowered to act on

or to bind the Commission on the question of civil penalties The

Presiding Officer therefore granted the motion to dismiss while referring

to the Commission the matter ofcivil penalties

In their motion Respondents have asserted that the agreement to make

full settlement should not be construed as an admission of any violation

of any of the shipping acts The Presiding Officer in approving the

Counsel for Respondents thereupon advised that they would defer implementation of the settlement pending

issuance ofan order by the Commission approving the settlement embodying all terms thereof including the matterof

civilpenalties
570 FEDERAL MARITIME COMMISSION

settlement made no specific finding regarding a violation but a

that

repayment of the full amount claimed would restore the total amount paid 

quoted in the original estimate and that the original estimate was in all probab

only amount justified by filed tariffs

d

l

The Presiding Officer conceded however that this assumption can

conclusively established because ofthe lack of documentation a d

search failed to produce

Nothing has been added to the record since the remand which 

shed some light on the transaction so that even the threshold ques

whether we have jurisdiction over the matter cannot be answere

any degree of certainty Moreover even assuming jurisdictio

Commission cannot ratify the Presiding Officer s approval ofthe 

ment in the absence of a specific finding ofviolation of section 1

An agreement to settle a claim for reparation based on an allegatio

violation of section 18 b 3 can be approved only on an affirm

finding that such violation occurred See the cases cited in the Pr

Officer s Order of Dismissal i e Consolidated International C

Concordia Line 14 SRR 1259 1975 ald Merck Sharp Doh

Atlantic Lines 14 SRR 232 1974 Here not only has a viola

section 18 b 3 not been established by the Presiding Offic

Respondents have specifically advised that the settlement is no

construed as an admission of any violation on their part

While the Commission cannot formally approve the stipulation 

ment between the parties here in the absence of a violation 

Shipping Act 1916 it also finds for the same reason no basis to 

any civil penalties Accordingly because the parties have app

resolved their differences to their mutual satisfaction we see no p

to be served by their litigating the matters put at issue by the com

Under the circumstances the parties are free to take whatever 

they deem necessary to terminate this proceeding

However because the Presiding OffiCer s dismisaal ofthe procee

premised on the Commissipn salProval of a Settlement agreement 

under the circumstances the Com llission cannot approve and b

the parties based their request for dismissal upon such approv

Presiding Officer sruling dismissing the proceeding must be vaCat

the proceeding remanded for whatever action he and the parties 

proper and warranted

THEREFORE IT IS ORDERED That the Presiding Officer s

approving the settlement and dismissing the complaint be and is h

vacated

i

I

1

I

j

j

j

I

1

j

1

J

19 
FEDERAL MINISTEROF DEFENSE 571

IT IS FURTHER ORDERED That the proceeding be remanded to the

Administrative Law Judge

By the Commission

8 JOSEPH C POLKING

Acting Secretary

19 F M C
FEDERAL MARITIME COMMISSION

INFORMAL DOCKET No 356 1

HOBELMANN INTERNATIONAL INC FMC 85R

AOENTS FOR AND ON BEHALF

OF

THE RANSOM RANDOLPH COMPANY

A DIVISION OF

DENTSPLY INTERNATIONAL INC

v

MOORE McCORMACK LINES INC

NOTICE OF DETERMINATION NOT TO REVIEW

March 2 1977

Notice is hereby given that the Commission on March 2 

determined not to review the decision ofthe settlement officer i

proceeding served February 18 1977

By the Commission

1

S JOSEPH C POLKING

Acting Secreta

572 19 F
FEDERAL MARITIME COMMISSION

INFORMAL DOCKET No 3561

HOBELMANN INTERNATIONAL INC FMC 850R

AOENTS FOR AND ON BEHALF

OF

THE RANSOM RANDOLPH COMPANY

A DIVISION OF

DENTSPLY INTERNATIONAL INC

v

MOORE McCORMACK LINES INC

Reparation awarded

DECISION OF JAMES S ONETO SETTLEMENT OFFICER

By complaint f1led June 30 1976 Hobelmann International Inc a

licensed ocean foreign freight fOlWarder as agent for Ransom Randolph

Company adivision of Dentsply International Inc alleges that charges

in excess of those lawfully applicable for transportation in violation of

section 18b 3 of the Shipping Act 1916 46 U S C 817 were assessed

by respondent Moore McCormack Lines Incorporated a common carrier

by water in the foreign commerce ofthe United States on a shipment of

dental investment on July 3 1974 from Baltimore to Buenos Aires

Argentina One thousand three hundred and fifteen dollars and thirtyfive

cents the amount ofthe alleged overcharge is sought as reparation

The complainant described the shipment on the bill oflading by the

broad commercial description Dental Investment Multi Vest consisting

of231 drums weighing 25410 pounds or 11 526 kilograms and measuring

632 cubic feet The shipment was rated on the basis of a Cargo N O S

125 00 WMrate 2

The freight was 2 133 00 The shipment it is alleged

should have been rated on the basis of a fire ground clay rate at 4175

W M3 The freight would then have been 817 65

I Both parties having consented to the informal procedure of Rule 19 of the Commission s Rules of Practice and

Procedure 46 CPR 502 301 304 this decision will be final unless the Commission elects toreview it within 15 days

from the date of service thereof Note Notice of determination not to review March 2 1971

2 Rate Item I Clay N O S W M 125 00 Inter American Freight ConferenceSection A Tariff No 3 F M e

No 7 From United States Atlantic And Gulf Ports To Ports Of Brazil Uruguay Argentina Paraguay 8th

Revised Page 93 Effective dateMay 10 1974

3 See footnote 13

19 F MC 573
I

I

i

1

574 FEDERAL MARITIME COMMISSION

The complainant contends that dental investment or UltraVest Je

Investment or Ultra Vest Investment is a powder used to form mol

the investment casting ofjewelry or in the present situation us

investment casting ofdental prosthetic devices Therefore compla

argues it should have been classified as a fire ground clay 

complainant Blso quotes the statement ofDentsply International spe

for the Ransom Randolph Company manufacturers of Ultra 

Multi Vest or dental investment thatthe composition ofUltra Ve

60 calcined silica 30 plaster and 10 control chemicals 

company is further alleged to have tatedthatdel tal investJ 1ent wa

the correct description ofthe material The COtTectalterriative descr

is averred to have been either Cement Refractories per Schedu

662 2230 or Fire Ground Clay per Scbeduie B 662 3205

Respondent argues toot the material s1ipped is not classifiable u

Export Declaration Schedule B Commodity Numbers Moreove

claim as a request for an adjustment of freight charges based o

alleged error in description should have been presented to the carr

writing before the shipment left the carrier s custody4 Respondent fu

argues that eventhe complainant ddeS not seem to know how to des

the commodity At various times complainant refers to it as ca

refractories clay fire ground and Ultra Vest Jewelry Investment 

spondent also notes that the directions for using Ultra Vest Jew

Investment make no reference to using fire of heat fumace or 

equipment and thus do not support the contention that the materia

fire clay or a

refractory mix

Procedurally section 22 ofThe Shipping Act 1916 46 U S C 

requires that complaints must be tiled within two years from the tim

cause of action accrues in order to enter an awatdoheparation5 

cause ofaction accrues at the time ofshipment or payment ofthe fre

whichever is later6 In the situation here presented the bill of lad

marked Freight to be Prepliid in USA On Board The Freight was 

by check dated October 17 1974 Moreover it is settled that claims 

within two years ofaccrual of the cause of action cannot be barre

tariff regulations impoSing a shorter time limitation The Commission 

held

once a claim has been finally denied by aClU rier the shipP rmay stillseek 

a proper case recover reparation before the COlllinission at any time within two ye

the alleged injury andthis is true whether the claim has been denied by the car

tile merits or on the basis of a time limitation rule 7

The claim therefore has been tiled within limitations

With regard to the burden of proof it is also settled that the te

4Rule J Claims For A4iustment In Freisht Charges 4th Revised Paae 20 Bffective dilte June 

Aforementioned tariffofrates

Reliance Motor Car Co v G L T

C

I US M C 794 I 39

Rohm dl Haas Co v Seatrain Lines ne 7WI Order IWl6173 and Aleutian Homes Inc v Coalwile

ai 5 F M B 602 1959

1

Proposed Rule Time Limit on Filing Overcharge Claims 12 F M C 298 1969

19 F 
HOBELMANN INTL INC v MOORE McCORMACK LINES 575

what the claimant can prove based on all the evidence as to what was

actually shipped even if the actual shipment differed from the bill of

lading description But where the carrier is thereby prevented from

verifying the claimant s contentions the claimant has a heavy burden of

proof to establish his claim 8

Furthermore in its Report on Remand 9

the Commission has added

In considering claims involving disputes as to the nature of the cargo either weight

measurement or description if the cargo has left the custody of the carrierbefore the

claim is brought and the cargo cannot be reexamined the Commission has traditionally

imposed a heavy burden of proof on the complainant Nothing in the Court s opinion in

Kraft should change this

The presentation yields very little that might be relied upon to identify

the character ofthis commodity However resort to definitions and usage

offer an insight into the nature ofthis material

Refractory material is defined as that which is capable ofenduring high

temperature such as clay brick or mortar Again refractory material is

more particularly described as any of various non metallic ceramic

substances that are characterized especially by their suitability for use as

structural materials at high temperatures usually in contact with metals

slags glass or other corrosive materials as in furnaces crucibles or

saggers that are classified chemically as acid as silica and fireclay basic

as magnesite and dolomite or neutral as high alumina refractories

carbon and silicon carbide and that are produced in the form ofbrick

castable concretes plastics and granular materials in bulk1o

Investment casting is described as the method used for reproducing

faithfully delicate and intricate detail Briefly two techniques are tradition

ally used The lost wax and the sand process methods In the sand

process which is involved here the mold is made by applying to the

pattern avery fine damp French sand composed of clay silica and

alumina which hardens when it dries Il

The Ransom Randolph Company apparently has improved the

traditional method ofapplying the sand to the model by the introduction

ofthe use ofcombined vacuum and vibration which facilitates investment

by their product The company describes Ultra Vest Investment as a

specially blended compound for the jewelry casting industry It was

designed to be mixed with water to give a smooth easy to handle slurry

at a

very low rise under vacuum In relevant part the instruction specifies

Remove bowl from mixer and place on vacuum table and vacuum until the investment

rises in bowl and collapses fill flasks by pouring investment down the side of the

flask allowing the investment to flow up and around and through the patterns Fill

flasks with investment to a height which completely covers the top of the patterns Place

invested flasks under vacuum and vacuum for one and a half to two minutes While

8 Western Publishing Co Inc v Hapag LloydA G 283 1 13 SRR 16 1972

9 Docket No 7344Kraft Foods v Moore McCormack Lines Inc 1124176 Report on Remand in accordance

with the decisron of the Court in Kraft Foods v

Federal Maritime Commission US App D C 538 F 2d 445

1976

10 Webster sThird New International Dictionary Unabridged 1967Edition

11 Encyclopaedia Britannica 1973 Edition

19 F M C
576 FEDERAL MARITIME COMMISSION

under vacuum the flasks should be vibrated to help release air bubbles from the 

of the patterns This vibration should be continued for a few seconds r the v

I

as been released This will aUow the investment to flow back aroundtl1e patter

flasks are filled to the top and vibrated to level off the irivestlllent the co

investing cycle should take eight to nine minutes

Combining definitions and usage a description ofthis commodity 

be fashioned It is concluded that it is arefractory material because 

non metallic ceramic substance 60 calcined silica 30 plaster 

10 control chemicals classifiable cheinicallY as an acid as silica 

produced in the form ofafinely ground powder suitable for u

forming molds by investment casting

This refractory material must next be classified in relation t

specific commo ty descriptions existing in the applicable tariff ofra

the time of shipment The only specific commodity description c

resembled by this shipment is ref actory mixes plastic or casta

There is no rate for fire ground clay 13

Accordingly reparation in the amount of 1 079 50 is awarded14

S JAMES S ONETO

Settlement Offic

RBFRACTORY MIXBS PLASTICorCASTABLB andBAFFLB 0 RAMMING MIXTURBS W M 

Rate Item 2Z 26th Revised Paat US Etfeclrve dateJune 1 1974

1J Fire around clays or variants thereof a8 described under Schedule B commodity numbers establishe

United Statea Customs Service are not the commodity deSCriptions controlUna in this matter It i the co

description and rateon tne with this saeney at the dme ofahlpment The rate for CLAY FIRESEE 

FIRE 8th Revised paae 93 alld 10th Revised Pa e 84 Effective dates May 10 alld June 17 197

aforemel ltioned tariffofratel is patently inapplicable

15 8 x 59 50 940 1 940 1 113 40 Bunker BC Iorron 1 053 50 2 133 00 1 0

1079 50

19 
19 F M C 577

FEDERAL MARITIME COMMISSION

SPECIAL DocKET No 487

U S DEPARTMENT OF AGRICULTURE

v

WATERMAN STEAMSHIP CORPORATION

NOTICE OF ADOPrION OF INITIAL DECISION AND ORDER

PERMITTING WAIVER OF CHARGES

March 2 1977

No exceptions having been taken to the initial decision in this

proceeding and the Commission having determined not to review same

notice is hereby given that the initial decision became the decision ofthe

Commission on March 2 1977

It is Ordered That applicant is authorized to waive collection of

3 27126 of the charges previously assessed the U S Department of

Agriculture

It is further Ordered That applicant shall publish promptly in its

appropriate tariff the following notice

Notice is hereby given as required by the decision of the Federal Maritime

Commission in Special Docket 487 that effective February 17 1976 for purposes of

refund or waiver of freight charges on any shipments which may have been shipped

during the period from February 17 1976 through August 20 1976 the all inclusive

rate on Peanut Oil In Cans from New York to Hodeidah is 230 50 W NSD subject

to all applicable rules regulations terms and conditions of said rate and this tariff

It is further Ordered That waiver of the charges shall be effectuated

within 30 days of service of this notice and applicant shall within five

days thereafter notify the Commission of the date and manner of

effectuating the waiver

By the Commission

S JOSEPH C POLKING

Acting Secretary
FEDERAL MARITIME COMMISSION

i

SPECIAL DOCKET No 487

U S DEPARTMENT OF AORlCULTURE

v

WATERMAN STEAMSHIP CORPORATION

Adopted March 2 1977

Application granted

I

1

INITIAL DECISION OF JOHN E COORAVE ADMINISTRAT

LAWHJDOE1

Waterman Steamship Corporation seeks permission to waive col

of a portion of the freight charges on a shipment by the Comm

Credit Corporation United States Department ofAgriculture 

hundred metric tons of Peanut Oil Refined in cans from New Y

Hodeiah Yemen on March 10 1976 The rate applicable at the t

shipment as 230 50 per 2 240 pounds NSD not subject to dis

plus 121 2 Hodeiah congestion surcharge 2 Thisrateresultedin 

gate freight charges 0 29 44l 35 The rate soughtto be applied is 

per 2 240 pounds NSD This rate would have resultedm total 

charges of 26 170 09 Therefore permission to waive collect

3 27126 is requested

On January 5 1976 Wate an booked the lf0re nenti9ned ship

On January 30 1976 a 71 2 Hodeiah congestion surcharge we

effect On February 6 f9i6 a 121z Hbdeiahconsestionsurc

e

into effect On February 17 1976 Watermlitn s tariff agent f

negotiated rate of 230 S0per long ton NSD plus 12112 Ho

congestion surcharge Through inadvertence the tariff agent W

informed that the rate was to be all inclusive ie not to inclu

j

1

I

J1

j

4

1 This decision became thedecision of the Commission March 2 1977

2 Item 4002 Account U S Department ojAgriculture Contract No 92 A From New York to 

Approximately 100 Metric Tons Peanut Oll in cans Rate includes Outport Arbitrary Group I 230 50 

Waterman Steamship Corporation Tariff No ISC Section V Project Rates Red SeaAden F

ATLANTIC AND GULF PORTS To RED SEA GULFOF SUEZ AQUABA AND ADEN BASE PO

Revised Pqe 116 EJfective February 17 1976

3 R Peanut OUt in Cans NEW YORK TO HODEIAH Approximately 103 metric tons Rate is alllnclu

expires with September 19 1976 GROUP2 230 50 W NSD Same Tariff Hkh Revised e 101 E Ef

AUiust 20 1976

578 19 F 
DEn OF AGRICULTURE v WATERMAN S S 579

12112 Hodeiah congestion surcharge On March 10 1976 the cargo was

shipped On August 20 1976 an all inclusive rate of 230 50 per long ton

NSD went into effect

Section 18 b 3 ofthe Shipping Act 1916 46 USC 817 as amended by

Public Law 90298 and as further implemented by Rule 6 b Special

Docket Applications Rules of Practice and procedure 46 CFR 502 92 is

the law sought to be invoked Briefly it provides

The Commission may in its discretion and for good cause shown permit a

common carrier by water in the foreign commerce of the United States to refund a

portion of the freight charges collected from a shipper or waive the collection of a

portion of the charges from a shipper where it appears that there is an error in a

tariffof a clerical or administrative nature or an errordue to an inadvertence in failing to

file a new tariff and that such refund or waiver will not result in discrimination among

shippers Furthermore prior to applying for such authority the carrier must have filed

a new tariff which sets forth the rate on which such refund orwaiver would be based

The application for refund must be filed with the Commission within one hundred and

eighty days from the date of shipment Finally the carrier must agree that if permission

is granted an appropriate notice will be published in its tariff or such other steps taken

as may be required to give notice of the rate on which such refund orwaiver would be

based

The legislative history ofthe amendment to section 18 of the Shipping

Act Public Law 90298 4

specifies that carriers are authorized to make

voluntary refunds and waive the collection of a portion of their freight

charges for good cause such as bona fide mistake The nature of the

mistake was particularly described

Section 18 b appears to prohibit the Commission from authorizing relief where

through bona fide mistake on the part of the carrier the shipper is charged more than he

understood the rate to be For example a carrier after advising a shipper that he intends

to file a reduced rate and thereafter fails to file the reduced rate with the Federal

Maritime Commission must charge the shipper under the aforementioned circumstances

the higher rates

The Senate ReportS states the Purpose ofthe Bill

Voluntary refunds to shippers and waiver of the collection of a portion of freight

charges are authorized where it appears that there is an error in a tariff of a clerical

nature or where through inadvertence there has been a failure to file a tariff reflecting

an intended rate

It is therefore found that

1 There was an error due to inadvertence in failing to me anew rate

2 Such waiver of collection of a portion ofthe freight charges will not

result in discrimination among shippers

3 Prior to applying for authority to waive collection of a portion ofthe

freight charges Waterman filed a new tariff which sets forth the rate on

which such waiver would be based

4 House Report No 920 November 14 1961 fo accompany H R 9473J on Shipping Act 19 6 Authorized Refund

ojCertuin Freight Charges S atemc 1I1 of Purpose and Need forthe Bill to Amend Provisions of the Shipping Act

96 to Athorize tilt Feder 1 Maritime Commission toPermit u Currier 0Refund a Portion of rile Freight Charges

S Senate Report No 1078 April 5 1968 To accompany HR 9473 onShipping Act 96 Authorized Refund of

Certuin Freight Clwrges under Purpose of the Bill

19 F M C
I

j

1

1

i

580 FEDERAL MARITIME COMMISSION

4 The application was tiled within one hundred and eighty day

the date ofshipment

Accordingly permission is granted to Waterman Steamship COrp

to waive collection of a portion of the freight charges represen

3 27126

S JOHN E COGRAVE

Administrative Law Ju

WASHINGTON D C

February 1 1977

19 
S JOSEPH C POLKING

Acting Secretary

FEDERAL MARITIME COMMISSION

No 75 53

REFRIGERATED EXPRESS LINES NASIA PrY LTD ET AL

v

COLUMBUS LINES INC ET AL

NOTICE OF DETERMINATION NOT TO REVIEW

March 2 1977

Administrative Law Judge Norman D Kline served an order of

dismissal in this proceeding February 3 1977 While dismissing the

complaint he expressed his opinion that some regulatory purpose would

be served by litigating the issue relating to past violations of section 15 of

the Shipping Act He acknowledged that it is the Commission that would

make this determination

Notice is hereby given that the Commission on March 2 1977

determined not to review the order of dismissal of the Administrative

Law Judge in this proceeding served February 3 1977 The question of

whether or not further proceedings are warranted on the issue of past

section 15 violations will be considered apart from this complaint

proceeding and need not affect the disInissal

By the Commission

19 F MC 581
FEDERAL MARITIME COMMISSION

No 7553

REFRIGERATED EXPRESS LINES AlASIA PrY LTD ET A

v

COLUMBUS LINE INC ET AL

1

DISMISSAL OF COMPLAINT WITH PREJUDICE

February 3 1977

The respondent carriers in this proceeding Columbus 

Columbus Associa d Container Transportation Australia Ltd 

tralian Shipping Commission Australian National Line ACT AN

Farrell Lines Inc lflell have filed a motion seeking dismissal 

complaint with prejlldie and without award of costs or attomeys 

Complainant Re llted Express Lines AlAsia Pty Ltd RE

entered into a stipylBtion with respondents agreeing with the 

requested in the motifll Hearing Counsel have filed a reply to the 

in which they state that they do not oppose the motion on the g

that the Commission has given its approval to various agreements 

have restored the trade to order Hearing Counsel furthermore sta

they do hot believe further proceedings are warranted to determ

existence ofpossible unfded agreements in the past and that no reg

purpose would therefore be served by continuance ofthe proceeding

The basis for the motion and stipulation is the fagt that the partie

apparently settled their differences and have embodied this settlem

a series ofagreements which have been filed with and approved 

Commission Agreement Nos 10245 10247 10 10250 10250A 

10260 Some time after the Commission approved these agree

approval occurrinS Nparently on orbout Auaust and September 

complainant and FOlipondents executllU a mutual release dated Dec

16 1976 as provided by Agreement No 10250 and the stipu

mentioned above dated December 17 1976

The various agreements cited essllntiaUy establish an arrangem

which REL would be permitted to carry meat from ports in Northw

1 Columbus Line is the trade name of Hambur Suedamerikanlscll DaMpfschiffahrts aeleUlchaft 

Amaick

582 19 
REFRIGERATED EXPRESS LINES v COLUMBUS LINES 583

and Eastern Australia to East Coast and Gulf ports ofthe United States

as abreakbulk carriedrom June 1 1976 at least through the year 1977

REL is furthermore guaranteed a 15 percent allocation of the meat

moving from the East Coast ofAustralia in the subject trade and in return

for serving ports in Northwestern Australia will be given a premium of

25 per metric ton to defray costs of handling at those ports funded by

contributions ofall the lines serving the meat trade The four respondent

lines continue to be designated as the containerized carriers together with

anothercarrier namely Trader Navigation Co Ltd AtlantraffIk Express

Service which line however is limited in its operations The essentials

of these arrangements are contained in Agreement No 10250 which

consists of separate letters from the chairman of the Australian Mean

Board to each of the carriers involved together with the acceptances of

each carrier See Exhibit 4 attached to the Motion to Dismiss The other

agreements cited consist of agreements relating to loading expenses at

Northwestern Australian ports coordination of sailings the guaranteeing

of REL s allocated share and other matters implementing the basic

arrangement The Australian Meat Board apparently plays arole in all of

these arrangements for example by designating lines as breakbulk or

containerized collecting funds to pay REL the premium for servicing

ports in Northwestern Australia determining the amount ofthis premium

or surcharge as it is sometimes called and calling the lines to meet

with representatives of Australian exporters to arrange schedules and

capacities subject to approval by the appropriate U S and Australian

authorities

The above arrangements appear to settle the controversy between REL

and the four respondents as well as between REL and the Australian

Meat Board 2The complaint as originally flled alleged that the four

respondent carriers entered into a deal among themselves and the Meat

Board by which the four carriers would enjoy exclusive rights to the

carriage ofmeat from Australia in the subject trade in return for observing

maximum freight rates designated by the Board REL further alleged that

meetings were held between members of the Board and respondents

following which respondents resigned from the AustraliaEastern USA

Shipping Conference FMC Agreement No 9450 and filed tariffs

simultaneously publishing identical maximum rates resulting in the exclu

sion ofall other carriers from the carriage ofmeat after January I 1976

The complaint alleged that these arrangements demonstrated the imple

mentation ofagreements which had not been flled with the Commission

for approval in violation of section 15 of the Shipping Act 1916 the

Act and that pursuant to such alleged agreements respondents had

engaged in unlawful discrimination preference unfair devices unfair

2 REL had also commenced an action in the Australian Industrial Court under the Australian Trade Practices Act

pinsl the Australian Meat Board 88 weD as respondents herein See Ex 7 Mutual Relase attached to the subject

motion

19 F MC
1

584 FEDERAL MARITIME COMMISSION

contracts and unreasonable rat s in violation af sectians 14 Th

Fourth 16 First 17 and 18b 5 oftheAct

As shown by the agreements ited above complainant RE

successfully negotiated asatisfactory resolution of its controversy 

ently resuming the carriage of meat under the terms and con

arranged The law and Commission rules of course encourage settl

and engage in every presumption that such settlements are va

lawful Consolidated International Corporation v Concordia L

SRR 1259 1261 1975 Merck Sharp Dohme International aD

ofMerck Company Inc v Atlantic Lines 14 SRR 232 235 

Rule 6a 46 CPR 502 91 Rule 6d 46 CPR 502 94a I This do

mean that the Commission must act as a rubber stamp in eva

settlements especially when the settlements themselves require ap

under section 15 of the Act Consolidated International Corpora

Concordia Line cited above Massachusetts PortAuthority v Co

Marine Lines et al 11 SRR 37 40 1969 Amerk an Export Isbra

Lines Inc 14 F M C 82 89 1970 Delaware River Port Autho

al v Puerto Rico Maritime Shipping Authority 14 SRR 1509 

1975 However in this instance the Commission has evaluated the 

of the settlements and given its approval Therefore the privatec

versy between REL and respondents can be dee1l1ed terminated a

complaint ought to be dismissed with prejudice as requested 

ordered Before terminating all discussion however a few matte

consideration relating to the remarks of Hearing Counsel in their r

the subject motion

As mentioned Hearing COIlIlsel stated that further proceedings 

not be warranted to determine whether there had been a viola

section 15 because ofthe alleged failure to me agreements for app

the Past Complainant as mentioned had alleged not only that 

suffered various types of harm stemming fram alleaed discrimi

prejudice etc but that respondents had entered into agreements 

had not been filed with nor approved by the Commission 

fur ermore proffered evidentiary material and cited facts wh

officially noticeable such as respondent simul eaus resignation

the existing conference and tariff rulings showing similar rates on 

See Preliminary Findings of Fact and Related Rulings Decem

1975 Requests in the Nature of Motians for Summary Judame

Motians to Dismiss Denied April 27 1976 pp 7 9 The reco

reached a stage of evidentiary develapment so as to canvince n

RFL but Hearing Caunsel to ask me to issue anjnitialde isian 

respandents in violation af sectian 15 not only far failure to me 

carrying out agreements to manapolize the importation ofAustralia

into the East Coast af the United States in return far maintainin

maximum rates See Hearing Counsel s Opening Memorandu

dI

I

19 
REFRIGERATED EXPRESS LINES v COLUMBUS LINES 585

Proposed Findings of Fact February 24 1976 and Reply Memorandum

and Reply to Motion to Dismiss March 16 1976 3

Notwithstanding these requests ofHearing Counsel and REL Irefused

to issue an initial decision in the nature of a

summary judgment which

would have found respondents in violation of section 15 primarily because

of factual denials by respondents and the need for full hearings with

opportunity for crossexamination to test complainant s as well as

respondents evidence See Requests in the Nature of Motions for

Summary Judgment and Motions to Dismiss Denied cited above pp 12

15 Subsequent appeals from my rulings were not pursued and negotia

tions for settlement which reached a successful conclusion have of

course eliminated any incentive on RELs part to prosecute its complaint

Hearing Counsel have no apparent interest in pursuing the matter ofpast

violations and conclude that under all the circumstances no regulatory

purpose would be served by further proceedings

Ihave no problem in ordering dismissal ofthe complaint with prejudice

as requested by the parties 4Ido not believe however that Ican agree

with Hearing Counsel that no further proceedings are warranted and that

no regulatory purpose would be served by further proceedings Although

complainant has settled its differences with respondents the complaint

raised issues which go beyond the confmes of a private controversy and

alleged in effect that a public wrong had been done If in fact the

record if fully developed would show that respondents had failed to fIle

and had executed an anticompetive agreement for some period oftime

during the first several months of 1976 or before aviolation of section 15

ofthe Act would have occurred and the public interest as well as that of

private parties would have been affected Indeed it was the public

interest in such an issue that prompted Hearing Counsel to petition for

leave to intervene in the first place s Furthermore I know of no doctrine

oflaw that holds that once violators of law have ceased their unlawful

practices no harm has been done and appropriate law enforcement

3 On the basis of the record developed as shown in my Preliminary Findings of Fact cited above Hearing Couosel

stated in their Opening Memorandum that Hearing Counsel submit that theAdministrative LawJudge may find that

an aareement exists among the parties respondent as is subject tothe filing and approval requirements ofsection 15

Opening Memorandum p 3 Later Hearing Counsel stated There exists today in the AustraliaU S East and Gulf

Coast trade adefacto conference arraoaement involving respondents OM p 17 and based uponall of the

above Hearing Counsel request the Administrative Law Judge to find that an agreement exists smona the parties

respondents as is subject to the filina and approval requirements ofsection IS OM p

20 On March 26 1976

Hearina Counsel concluded Moreover as we uraed on Openina Memorandum and by this Reply there exist

compeUing reasons for findina the instant aareement subject to section 15 at this stage of the proceedina where the

Administrative Law Judae canagree 2 There presently exists a

defacto conference agreement in defiance of this

nation s

regulatory laws We therefore request the Administrative Law Judge to find that the failure to file a

memorandum ofthe agreement is acontinuina violation of section IS of the Shipping Act 1916 Reply Memorandum

p 12

4

The parties request also that no costs orattorneys fees be awarded It is not Commission policy to award such

things as reparation except in most unusual circumstances not present here See Docket No 765 Ace Machinery

Company v Hapag Loyd Aktiengesellschtift Order October 7 1976 p

5 same docket Order Denying Motion to

Vacate August 4 1976 p 5 and casescited therein

5

In their petition for leave to intervene November 28 1975 Hearing Counsel had expressed great concern over

the possibility that an unapproved section 15 aareement would resultin exclusion of three carriers from the trade 8

matterof great public interest Petition p I

19 F M C
586 FEDERALMARITIME COMMISSION

l

agencies are relieved of their obligation to enforce the particular 

question This Commission has instituted investigations on fa

provocation than that which exists in the present case

6

It is true that administrative or other proceedings have been dis

ued when the activities under investigation have terminated and th

have been deemed moot but there are many cases holding tha

proceedings need not be terminated if the type of activity invo

likely to recur if necessary principles or guidelines would result i

ofoutside parties are involved if much time and expense in litigat

already been consumed or for some other valid purpose See 

Investigation ofRates in the Hong Kong United States Atlantic an

Trades 11 F M C 168 173 1967 Docket No 7557 Matson N

tion Company Proposed Rate Increase etc Order on Appeal J

14 1977 pp 68 Southern Pacific Terminal Co v IC C 21

498 516 1910 Walling v Haile Gold Mines Inc 136 F 2d 1

4th Cir 1943 Walling v Mutual Wholesale Food Supply Co 

2d 331 334335 8th Cir 1944 Boise City Irr Land Co v Cla

Fed 415 9th Cir 1904 Rates on U S Government Cargo

F MC 263 279 1967

The instant case provides an example of an issue that could ver

recur with enormously significant consequences namely that con

the validity ofthe Act of State and related doctrines which if ca

their logical conclusions would enable regulated carriers to 

licenses from foreign governments authorizing them to ignore the 

ments of the Shipping Act Although Iam convinced that these do

have no merit in the regulatory context and have so ruled see R

in the Nature ofMotions for Summary Judgment and Motions to 

Denied cited above pp 2942 Leave to Appeal to Commission G

May 5 1976 respondents had vigorously argued that the Com

had been in effect ousted from jurisdiction or at least consider

their past practices because of the participation of the Australia

Board Because of subsequent negotiations my rulings in this 

never reached the Commission on appeal Any regulated foreign 

therefore may resurrect the argument in case it wishes to prev

Commission from questioning its activities claiming that its gove

has ordered the action in question This is so eventhough respo

have since filed agreements for approval including participation 

Meat Board acurious development considering their earlier posit

the Meat Board s participation and ukases removed all ofthese 

from the Commission s consideration The status of Act of St

related defenses is therefore unsettled Consequently one could arg

J

1

I

i

1

6 See tho eli cuulon below eonccrnina an inv ltilIon lnitla dby die Commission in Docket No 7 

dilmiasalofthocompfaint inDocket No 16theJice case cited abovt

1
REFRIGERATED EXPRESS LINES v COLUMBUS LINES 587

a determination of the validity of these doctrines by the Commission

would serve auseful rellUlatory purpose

7

Whether any regulatory purpose would be served by pursuing the issue

of past violations of section 15 however is not for me or Hearing

Counsel but for the Commission to determine since only the Commission

can institute investigatory proceedings or otherwise instruct its staff to

inquire into the matter In some instances the Commission has refused to

institute investigatory proceedings following settlement of differences

between complainant and respondent despite Hearing Counsel s petition

that such a proceeding be instituted in order to determine a novel

jurisdictional issue See Docket No 73 30 American Warehousemen s

Association v The Port ofPortland Order November 11 1974 In other

cases cited above the Commission has continued to pursue issues

concerning rates long since canceled in order to establish guidelines and

to protect the rights of shippers who may wish to file complaints

subsequently See Docket No 7557 Matson Navigation Company etc

Order on Appeal cited above Instill other instances the Commission has

dismissed a complaint which it had found to be frivolous in which a

consignee had alleged that a carrier s heavy lift charge on a shipment

moving to Chicago Illinois in August 1974 was unlawful but apparently

as a result of the allegations in the complaint initiated a separate

investigation not only of that carrier s heavy lift charge at Chicago but

also similar charges of approximately 10 other carriers for a five year

period covering Atlantic and Great Lakes ports See Docket No 765

Ace Machinery Company v Hapag Lloyd Aktiengesellschaft Order

October 7 1976 same docket Order Denying Motion to Vacate August

7

If one is seekhll other possible reaulatory purposes one could note that Commission determination of issues

concernina alleaed unapproved concerted canieractivity may affectriahts of other parties under antitrust laws See

Carnation Co v Pacific We bound Conference 383 US 213 1966 Moreover Hearina Counsel have themselves

araued in other casestbat i88ues au ht to be litiaaled to conclusion even if parties have settled their private

differences orrates under investi ation have been canceled in order to establish guidelines protect rights utilize

principles in later casel ormerely to protect the Commission sreaulatory function See e

g

Docket No 7330

American Warehousemen s Allociation cited below determine novel jurisdictional issue Docket No 7557 Matson

Navigation Company P opoled Rate Inc eale etc Order on Appeal January 14 1m protect possible shipper

riJhtsto reparation and utilize findinas in latercase Docket No 7430 Sea lAnd Service lnc Generallncreasel

in Ratel in the US Welt Coalt Pue to Rico T ade Hearina Counsels Exceptions July 21 1976 p

10 protect

Commission s rate relulatory function In Docket No 75 57 cited above incidentally the Commission

announced its policy of not dilcontinuina investiaations of canceled rates because the parties have spent agood deal

of time and money in attemptin to determine the lawfulness of the rates at issue and there is the possibility of

reparation actions by shippers pursuant to section 22 Order on Appeal pp 6 7

Ironically in Docket No 7430 cited above Hearina Counsel found a

reaulatory purpose when urging the

Commission to continue aproceedina in order to find that rates lon since canceled had beenjust and reasonable on

the around that such action was necessary to protect the Commission s rate reaulatory function which would be

destroyed by the carrier s

cancelation of the rates under investiaation In the instant case however Hearing

Counsel apparently lee no destruction of the Commission s relu atory function if parties who may have operated

concertedly in violation of section 15 and the antitrust laws have ceased doing so and therefore the matter of past

violations is not to be pursued by the Commission

19 F MC
588 FEDERAL MARITIME COMMISSION

4 1976 pp 5 6 8

Docket No 7642 Heavy Lift Practices and C

of Hapag Lloyd Aktiengese lschaft The North Atlantic Wes

Freight Association and its Member Lines and Europe Canada 

Line Ernst Russ in certain United Kingdom Trades Order of I

gation and Hearing August 4 1976

j

CONCLUSIONS

Complainant REL and four respondent carriers have negot

successful resolution oftheir controversy and have obtained Comm

approval ofall oftheir agreements embodying this resolution purs

which complainant has executed a release and stipulated th

complaint should be dismissed with prejudice Hearing Counsel 

oppose dismissal and state furthermore that no further proceedin

warranted to determine whether there had in fact been a viola

section 15 as the complaint had alleged

It is axiomatic that the law favors settlements In this case furthe

the Commission has given its specific approval to the terms andcon

contained in the various documents embodying the settlemen

complaint is therefore dismissed with prejudice and without aw

costs orattorney s fees

Icannot agree with Hearing Counsel s statements that no reg

purpose would be served by litigating the issue relating to past vio

of section 15 A violation of section 15 does not become moot 

because the parties involved have terminated the alleged pract

question There are numerous cases In which the Commissio

continued cases orpursued issues even when they were atguably m

order to establish guidelines and principles or to protect the rig

outside persons or for other reasons It is clearly established ho

that it is the Commission and not this judge nor Hearing Counsel 

makes the determination as to whether further proceedings are war

S NORMAN D KLINE

Admii strative LawJudge

ftbeR be any doubt as to iIIe Commillioo feoUnp prdina the fact that it and noJ t he pro iinaju

whether to initl lte lnveIUptOfY proceedinp any luch doubt il dl ptlled by theComml oJ

lntho pap 

Ace cue a1tho aareeina with the prelldina judlO that the com Wnt w frivoloul and WaI correctl

the Commillion took exception to the judIO Itatecment thore wuno roalOo for tllo cdmml ion t

inveltlption uPOII itlown motion ald procecc1ed to Iauncb luch an inveltl ion on tho builthat thoco

pleaded several potential Shippina Actviolationl

19 
19 F MC 589

FEDERAL MARITIME COMMISSION

DOCKET No 7613

LYKES BROS STEAMSHIP CO INC

v

FAR EAST CONFERENCE ET AL

ORDER ON APPEAL OF DISMISSAL

March 7 1977

This proceedin arose upon the complaint of Lykes Bros Steamship

Co Inc Lykes which alleged that the Far East Conference s condon

ation of westbound mini land bridge minibridge activities violates

section 15 14b 14 Third 16 First and 17 of the Shipping Act 1916

Shipping Act or Act 2 Administrative Law Judge Stanley M Levy

granted a motion to dismiss after receiving arguments from both sides 3

Lykes has filed an Appeal from Dismissal of Complaint to which the

respondent carners Respondents have replied

BACKGROUND

Lykes is a subsidized American Flag carner primarily serving the U S

Gulf The terms of its operating subsidy agreement with the Maritime

Administration prevent Lykes from making vessel calls at U S West

Coast ports The ability to call at Pacific Coast ports is necessary to

engage in westbound minibridge service and Lykes does not offer

minibridge transportation to the Far East

Lykes also belongs to the Far East Conference FEC or Conference

an association of some 15 ocean carners organized to promote stability of

service and uniformity of rates in the U S Atlantic and GulfFar East

Trade 4

The Conference publishes a tariff offering an all water service to

I Westbound orFar East minibridge service is a type of intermodal transportation wherein containerized cargo is

tendered toocean carriers at U S Atlantic orGulf Coast port cities and transported by rail to West Coast ports where

the containers are loaded aboard ocean vessels for carriage to destinations in the Far East Westbound minibridge

service did not begin untilearly 1972

2

461 J SC 814 813a 813 Thhd 815 First and 816 respectively

Motion to DismissComplaint Granted served June 30 1976 Order of Dismissal

4

The FEe operates under an expre s

conference agreement FMC No 17 filed with and approved by the

Commission as required by Shipping Actsection 15
590 FEDERALMARITIME COMMISSION

i

the Far East and maintains a Commission approved dual rate c

pursuant to Shipping Act section 14b s

The FEC does not have express authority to adopt and fde ra

any type ofintermodal service to the Far East 6 However sever

member lines provide a Far East minibridge service under indiv

published tariffs 7

These minibridge carriers make direct vessel 

Pacific Coast ports in order to provide such service and are also m

ofthe Pacific Westbound Conference

Some of the minibridge carriers offer intermodal rates equal to o

than the FEC s all water contract rates No minibridge carrier o

discount to FEC contract shippers who USe its intermodal service 

has demanded that the FEC prohibit Far East minibridge operati

its member lines on the theory that minibridge service or at le

lower rates charged for such service violate the FEC Conf

Agreement and the FEC Merchants Rate Contract The Conferen

refused to take action against the minibridge carrier 8

Close examination of Lykes complaint reveals three separa

related charges ofillegality 1 Respondents are implementing am

and unapproved version ofAgreement No 17 in violation of sec

by failing to impose sanctions against the minibridge carrie

Respondents are similarly employing amodified and unapproved 

ofthe FEC Merchants Rate Contract in violation of sections 14b 

Third and 3 Respondents failure to take action against the min

carriers even if consistent with Agreement No 17 still results in 

prejudice to Lykes and to the FEC s contract shippers in viola

sections 15 16 and 17

Lykes alleges that Respondents conduct has caused it sub

business losses and prays for the disapproval of Agreement N

Alternatively Lykes requests that the FEC be ordered to cease and 

from allowing its members to 1 participate in both all wat

minibridge service Or 2 offer minibridge rates lower than theFE

water rates

The Presiding Officer rejected Lykes arguments as a matter 

His Order of Dismissal held that Agreement No 17 applies only 

water shipments and that the FEC s acquiescence in the min

activities of some ofits members was therefore not adefacto modi

j

I

I

I

i

i

1

5 The PEe Merchants Rate Contmt providoB ft15 discQunt to 81jnatory shipper who p1edae in retur

theirshipments to conference lines

6The Commission haa approved asection Uqreement whereby the Pacl6c Westbound Conference P

fbe intol111odal rates for Far East carao

Passinl throulb Paciftc Coast ports for an olabt nmonth periO

September 20 1976 Agreement No 5716 FMC Docket No 72 6 16 S R R tj9 197 An amend

FEC Aareement authorlzinl intermodal operadons with ve8selloadin at Adaatlc and Gulf Coast ports i

examined In FMC Docket No 7453 Agreement No 17 J4 There is asubstantial overlap about 12 

membenhip of the FEC and the PWC and thelr activities are c oordina ted to alarae extent by FMCAare

8200 and 1013 Lykes does not belong to thePWC butall nine o theFEC mtnibridge carriers do

The PWC intermodal amendment see note 7 supra permits PWC member Unes to separately 

minibridae and other intermodal services until such time as a

conference intermodalservice Is hriplem

PWC has yet to establish such aservice

8 In November 19 Lykes unsuccessfully proposed an amendment to the FEC Conference Asree

would have prohibited member Iinel from offerins minibridae service Complaint at 12

19 
LYKES BROS v FAR EAST CONFERENCE 591

of Agreement No 17 or the dual rate contract promulgated thereunder

Disposition of Container Marine Lines 11 F M C 467 48691 1968

was relied upon for the proposition that the FEC would have acted

beyond the scope ofAgreement No 17 had it attempted to either curtail

or encourage intermodal activities by its members regardless of the

competitive impact such activities might have upon the FEC s all water

business

The Presiding Officer further held that in the absence ofallegations that

the Respondents were concertedly attempting to establish FEC rates or

practices in a manner injurious to nonminibridge carriers Agreement No

17 could not be found to unfairly discriminate against Lykes or FEC

contract shippers

POSITION OF THE PARTIES

A Lykes Arguments Lykes begins by stating that it is not attacking

the lawfulness of westbound minibridge service per se

9

but only the

compatibility ofthis service with FEC membership

Lykes principal assignment oferror is that the Presiding Officer failed

to recognize that the 1968 Container Marine decision supra concerned

intermodal service between interior inland points and not between ports

it was not on its facts a minibridge case Container Marine is also

allegedly distinguishable from the FEC situation because the conference

agreement construed therein was expressly limited to transportation by

sea whereas the FEC Agreement applies to transportation between

ports In Lykes view it therefore follows that Agreement No 17

requires all rates on freight moving from Atlantic and Gulf Coast ports to

be uniform regardless ofthe mannerin which the goods are conveyed

Lykes states that the FEC s permissiveness towards minibridge competi

tion by its own members will destroy the very benefits the Conference

and its dual rate system were created to confer 10

Lykes also alleges that the Presiding Officer erred in describing

minibridge as a new service different from the type of port to port

transportation encompassed by Agreement No 17 without explaining

how he reached this conclusion Lykes states that transcontinental rail

water service has existed from the turn ofthe century albeit under

combination rather than joint rates the only new feature about

minibridge service is that increased containerization has made such

intermodal transportation financially attractive In any event Lykes

contends that newness alone does not determine whether an activity is

within the scope of an approved section 15 agreement E g when the

9This issue is already before the Commission in FMC Docket No 73 35 Lykes has also challenged U S Gulf to

Europe minibridge service as an unfair competitive device in FMC Docket No 724 et al See Slale of Texas v

SeaJrain International SA 518 F 2d 176 5th eir 1975

10 I e frequent regular service at stable predictable rateswhich allowed forward selUng calculationof laid down

costs freedom from speculative risks and competitive equality in the market Alexander Report Vol 4 63dCong

2d Sess at 295303 1914 Isbrandtsen Co v North Atlantic Continental Freight Conference 3 F M B 235 238

1950 Agreement No 8765 GulflMediterranean Trade 7 F M C 495 499 1963

19 F MC
592 FEDERAL MARITI COMMISSION

j

Panama Canal was opened C members previously using the 

Canal to reach the Far East were deemed to have Conunissionap

to operate via Panama

Another Lykes exception is that the Presiding Qfficer misunde

its argument that the minibridge carriers releasedFEC contract sh

from their obligation to exclusively patronize IEC vessels by o

cut rate minibridge service to non contract shippers 11 Itis con

with established principles of contract law to assert that FEC co

shippers are free to employminibridge carriers while also assertin

the carriers offering minibridge service to contract shippers 

breach ofthe FEC Merchants Rate Contract

Finally Lykes claims its complaint should not have been dism

without first permitting leave to amend Lykes is now prepared to 

an amended complaint alleging that it has offered the FEC memb

specific rate reductions on raw cotton intended to meet mini

competition which weredefeated along minibridge nonminibridge lin

B Arguments of the Respondents Respondents contend that 

allegations all depend upon a finding that Agreement No 17 pre

gives the FEC authority to control the minibridge rates of its m

lines 12 Respondents believe such a finding cannot be made as ama

law because Agreement No 17 does not expressly include inter

transportation true intermodal transportation was unknown wh

FEC Agreement was first approved by the Commission and to in

Agreement No 17 to include rate controls overunknown comp

factors would contravene the result in Joint Agreement Fa

Coriference and Pacific Westbound Coriference 13

Respondents state that control over intenitbdalrates of my type 

an interstitial matterwhichmiahtroutinely comeWithinthescep

conference agreement without additional section 15 approval langu

the Container Marine decision indicates that the Commission s 

there rested upon policy matters as well aspartioular facts 11 

48990 This policy is further reflected in the Commission s deci

approve Far East intermodalserviceby the PWC instead of the 

Agreement No 5796 supra at 166167

Respondents also claim that no independent significance can be 

the FEe Merchants Rate Contract Ifaconference llireement do

apply to minibridge traffic that conference s dual rate contract is s

limited in scope Contract Routing Restrictions 2 U S M C 220 

Swift Cd v Gulf South AtlanticHavanaCoriference 6 F M 

J

1

i

1

I

1

J

1

1

j

4

j

l

PllI llilph I d of thePEC MerohRate ConlrllOt tale

The Carriera aaree that they will not provide ratolto anyone not bound by a

shippers rate aareeme

Carriel l

La Rospondents are not quite corre in thii ropid Lykol alfematively ClaiDlI that Ap1emeilt No 17 

dilcriminatory because it dota not allow minibridle rate to be Xntrolled

8 F M C 553 558 1965 The CommlRion there found a clion 15 vlolalion to haY ooclmdln JU

conference aareernent did not describe in de ai1 th pwcedUI OI and arranae nts uncilr wbich all d

concerted activities were to take pl ei an aare mentmutt Jteelfnotify areader ofitl IQOPO wltboqtresort 

sources of information See also Investigation ofOverlandlOCP Rates 12 F M C 184 208209 1969

19 
LYKES BROS v FAR EAST CONFERENCE 593

1961 The FEC further notes that conferences routinely apply for

approval of agreements extending their contract systems to interrnodal

traffic once their section 15 agreements are similarly extended E g

FMC Docket No 7611 Agreement Nos 150 DR 7 and 3I03 DR 7

Finally Respondents argue that the open conference requirement of

section 15 should be interpreted to allow any all water operator to join the

FEC with full voting rights regardless ofits other competitive interests

Respondents state that Lykes inability to compete in the minibridge

arena is voluntary in that it stems from a private business decision to

operate as a subsidized carrier under the Merchant Marine Act of 1936

Respondents suggest Lykes would be best served by seeking relief from

the Maritime Administration s subsidy restrictions a procedure suggested

in States Marine Corp Subsidy Tricontinent etc Services 5 F M B

537 549 1959

DISCUSSION AND CONCLUSIONS

Lykes has not described the type or amount of cargo it is allegedly

losing to the minibridge carriers but we shall assume for purposes ofthis

appeal that Lykes is indeed suffering substantial business losses

because it cannot influence the Conference majority on minibridge

matters 14 Despite these losses we fully agree with the Presiding Officer s

dismissal ofLykes complaint as a matter oflaw

Minibridge transportation is a full fledged intermodal service As such

it differs in kind from the all water service historically offered by the FEC

under Agreement No 17 The FEC may not itself engage or prevent its

members from engaging in any type of intermodal transportation without

first receiving Commission approval of an express amendment to Agree

ment No 17 Lykes arguments to the contrary conflict with our decisions

in Disposition of Container Marine Lines supra and Agreement No 57

96 supra

15 Lykes first two charges against the FEC are therefore 180

degrees off base Had the FEC acted to curb encourage or regulate

minibridge competition by its members the lines joining in such action

would have violated Shipping Act section 15 and possibly sections 14

Third and 14b

Lykes alternative argument which assumes a conference agreement

limited to all water transportation also fails In claiming that Agreement

No 17 discriminates unjustly against nonminibridge carriers Lykes

14 Lykes post dismissal offer to prove it has proposed rate reductions on raw cotton which were defeated by the

Conference membership voting along mini bridge lines not only comestoo late but is irrelevant in light of Lykes

fallure to claim that the minibridge carriers are conspiring touseAgreement No 17 as an anticompetitive tool against

nonminibridge lines Lykes has alleged only that there are sufficient minibridge carriers in the Conference to

potentially block anti minibridge measures Appeal at 9 and 3637 The potential power of the FEC s minibridge

m ority is not disputed If Lykes believe the m

inibridge carriers have actually exercised their conference voting

power in a

concerted manner dismissal of the instant complaint will not bar a subsequent action to prove such

contentions

ISThe latterdecision conditionally approved PWC s intermodal agreements for 18 months and necessarily rejected

the possibility that the FEC Agreement included the initiation orregulation of Far East minibridge transportation See

notes 7 and 8

supra

19 F M C
594 FEDERAL MARITIME COMMISSION

1

ignores the fact that overland competition from PWC linesthe m

ofwhich are also FEC members has existed for over 50 year

Investigation of Overland OCP Rates 12 F MC 184 189204 

Carriers belonging to both the PWC and FEC have regularly ob

cargoes under preferential PWC overland tariffs from territory 

monly served by the FEC without such competition being cons

discriminatory against exclusively FEC carriers such as Lykes 

2 226 At the heart of Lykes complaint is its dissatisfaction with 

philosophically outnumbered within the FEC on intermodal questio

other matters concerning the PWC Yet only Lykes own bu

judgment causes it to lose business to the majority of FEC line

serve Pacific Coast ports This type of economic favoritism 

unfair or uqjustly discriminatory within the meaning of sections 

and 17 Conference members can be expected to differ on mat

competitive importance For one viewpoint to prevail even 

consistent basis is not alone a Shipping Act violation There 

unfairness in a carrier independently and openly voting on conf

issues in a manner which best serves its private economic int

Neither should conference members be prevented from competin

each other or the conference itself by separately providing servic

encompassed by the conference agreement Mere competition 

actionable even if all conference members are unable to off

alternative service in question

Lykes contention that Agreement No 17 uqjustly discriminates 

contract shippers by providing a low cost alternative service t

noncontract competitors borders on the frivolous The FEC Mer

Rate Contract is limited to all water service and contract sh

desiring to use this service continue to receive a preferential disco

available to their noncontract all water competitors Far East min

service is available to contract and noncontract shippers on a com

equal basis There is neither discrimination nor disadvantage pre

such an arrangement Moreover a section 14b dual rate contract 

intended to prevent noncontract shippers from reaching foreign m

at an advantageous rate as implied by Lykes but only to pro

reasonable economic incentive for those shippers who do pat

conference vessels exclusively

To force nine minibridge carriers to elect between conference m

ship or intermodal operation would be to order the tail towag the 

single FEC carrier cannot be allowed to stifle the nonconference ac

ofother conference lines simply by refusing to participate in them

WHEREFORE IT IS ORDERED That the Appeal from Dis

ofComplaint of Lykes Bros Steamship Co Inc IS DENIED

By the Commission

1

I

j

i

1

1

S JOSEPH C PoLKlNG

Acting Secre

19 
FEDERAL MARITIME COMMISSION

DOCKET No 7614

AGREEMENT No 101161 ExTENSION OF POOLING AGREEMENT IN THE

EASTBOUND AND WESTBOUND TRADES BElWEEN JAPANESE PORTS AND

PORTS IN CALIFORNIA OREGON AND WASHINGTON

SUPPLEMENTAL ORDER

March 7 1977

This is an investigation commenced by Commission Order ofMarch 5

1976 the purpose ofwhich is to determine whether Agreement No 10116

shall continue in force and effect through December 31 1978 The six

lines party to the Agreement werenamed Respondents in the proceeding 1

The Marine Cooks and Stewards Union was named Petitioner The

investigation was limited to the submission of affidavits of fact and

memoranda oflaw unless the Commission determined that an evidentiary

hearing was required

Respondents filed an affidavit and a memorandum of law After

resolution of an interlocutory dispute regarding Respondents unsuccessful

attempt to prevent the disclosure of some ofthe financial data contained

in Respondents affidavit Petitioner fIJed an affidavit and a memorandum

of law and Hearing Counsel fIJed a memorandum oflaw Respondents

also moved for permission to fIJe a rebuttal to Petitioner s and Hearing

Counsels affidavits Petitioner opposed that motion and Hearing Counsel

supported Respondents None ofthe parties to the proceeding requested

oral argument

Agreement No 10116 was made in Tokyo Japan on January 30 1974

and filed with the Commission in Washington the next day By that

Agreement the six Respondents pool the revenue derived by each

Respondent from the carriage of cargo eastbound and westbound between

ports in Japan and ports in the States of California Oregon and

Washington including overland common point cargo

As originally fIJed the Agreement provided for a term of three years

from the date ofapproval Sea Land Service Inc fIJed comments with

the Commission urging the Commission to limit the Agreement to aterm

I

Japan Line Ltd Kawasaki Kisen Kaisha Ltd Mitsui O S K Lines Ltd Nippon Yusen Kaisha Showa Line

Ltd and YamashitaShinnihon Steamship Co Ltd

19 F MC 595
596 FEDERALMARITIME COMMISSION

i

of one year so that the effect of the Agreement could be mon

Instead of approving the Agreement the Commission determin

subject it to investigation and commenced a formal proceeding 

end Agreement No J0116 Pooling Agreement In the Eastboun

Westbound Trades Between Japanese Ports and Ports in Calif

Oregan and Washington cDocket No 7447 Respondents petition

Commission to reconsider the investigation NO one replied t

petition Thereupon the Commission discontinued the formal inv

tion and approved the Agreement for a term of one year through 

6 1976

Respondents filed Agreement No 101161 on January 20 19

that amendment Agreement No 10116 would continue in effect t

December 31 1978 Petitioner protested the approval ofthat amen

and asserted that it was uqjustly discriminatory and unfair as be

carriers and contrary to the public interest Petitioner s objecti

Agreement No 10116 were that the Agreement permitted the str

Respondent to sustain the weakest Respondent thereby elimina

competition among Respondents which would permit Responde

concentrate their economic power upon the other carriers in the 

Pacific trades

Because Petitioner s protest was somewhat vague and time was 

the Commission granted interim approval to Agreement No 10

through March 6 1977 and ordered an investigation into the appro

ofthe Agreement for the full term

The eVidence ofrecord in this proceeding consists ofajoint a

executed by six high executive officials of Respondents an af

executed by Petitioner s counsel the record hi Agreements Nos 

and 9731 5 Docket NQ 75 30 decided by the Commission on Nov

1 1976 and those matters noticed by the Commission

c

Respondents are six steamship companies flying the flag of 

Among other enterprises Respondents engage in the carriage of 

between the Pacific Coast of the United States and Japan The 

between those two nations is carried by vessels flying many f

addition lothe flag ofJapan including the flag ofthe United State

Agreement among the only Japanese flag liner carriers in those 

might have ramifications affecting the many nation states engaged 

trans Pacific trades

Petitioner asserted that Agreement No 101161 is uqjustly disc

tory and unfair as between carriers because it permits Responde

perpetuate the monopoly of the U S PacificJapan trades achiev

reason of Respondents several other agreements to wit their te

agreements llnd Agreement Nos 9718 9731 and 9835 Argued Pet

greement No 10116 1 is unjustly discriminatory and unfair b

those other agreements are uqjustly discriminatory and unfair

On November I 1976 the Commission held that Petitioner had fa

prove that Agreement Nos 9718 9731 and 9835 were uqjustly d

C

J

19 
AGREEMENT NO 101161 597

natory or unfair as between carriers and had failed to prove that

Respondents had a monopoly of the trades between Japan and the Pacific

Coast ofthe United States Agreements Nos 9718 3 and 9731 5 Docket

No 75 30 November 1 1976 Agreement No 9835 2 Order of

Approval November 1 1976 Petitioner has not adduced in the instant

proceeding any further evidence bearing upon monopoly or unfairness

Since the Commission has already rejected the premise upon which

Petitioner bases its conclusion in this proceeding it follows that there

being no other premise offered the conclusion has not been established

Consequently the Commission finds that Petitioner has failed to prove

that Agreement No 101161 is unjustly discriminatory or unfair as

between carriers

Petitioner also argued that the pool Agreement No 10116 provides

the cushion which keeps each Respondent participating in the space

sharing sailing rationalization and terminal operation consortia and that

the pool permits the strongest Respondent to sustain the weakest

Respondents denied this and argued that each Respondent carries so

many revenue tons in the trades that they wouldn t

think ofleaving such

a lucrative venture In 1975 Showa Line which carried the fewest

number ofrevenue tons in the trades carried 436 000 revenue tons

Kawasaki Kisen Kaisha carried the greatest number ofrevenue tons

646 000 Even so Nippon Ysen Kaisha received 1 024 176 from the pool

and Kawasaki Kisen Kaisha received 553 610 00 in the final accounting

for the period March 7 1975 through March 6 1976 In that period the

other four carriers each contributed monies to the pool ranging from

1l8 000 for Japan Line to 694 000 for Showa line 2

The word sustain

means supporting a carrier which would otherwise fail Petitioner has not

proved its allegation that the strongest Respondent sustains the weakest

Even though Nippon Ysen Kaisha received over a million dollars from

the pool it nevertheless grossed in excess of 33 000 000 and had net

pool revenue in excess of 23 000 000 in the year ending March 6 1976

more than any otherRespondent 3

The line which contributed the most

money to the pool Showa Line carried the least amount ofcargo

Petitioner also argued that after Respondents pool went into effect

Respondents market share rose at a steady pace and by January 1976

was 655 percent higher than at any time during the preceding 22 months

Respondents argued that it has been the experience of Respondents to

have higher cargo movements at the end of the year than at the beginning

ofthe year and point to the figures for 1974 to demonstrate that

Petitioner further replied that 1974 cannot be a proper measure as

Respondents added three vessels to the trade between March and May of

1974 and that the increased cargo carryings in 1974 merely refleted the

additional cargo attracted to Respondents by reason ofthe added vessels

2

The pool report of Respondents quoted was not offered by the parties tothis proceeding but is found in the files

of the Commission and is officially noticed

1 Nippo Yusen Kaisha received adistribution because it has a larger share than any other Respondent

19 F M C
598 FEDERAL MARITIME COMMISSION

Infact Respondents added the Yamashin Maru to the trades in 

of 1974 the Lions Gate Bridge in April the Hakawa Maru in May 

the Beishu Maru in October of 1974 As those vessels were pla

service older vessels were withdrawn from the trade An examinat

the data in this record shows that the percentage ofeach year s carr

carried by each Respondent in each month in 1974 and 1975 

compared with similar data for all other carriers in the Trans P

Freight Conference of Japan Korea as a group does not show 

Respondents experience in cargo carrying patterns is significantly 

ent from all other conference carriers as agroup The data shows 

both 1974 and 1975 Respondents generally carried approximat

percent of each year s cargo in the first six months of that yea

other conference carriers as a group experienced approximat

percent of their cargo carryings in the first half of 1974 and ab

percent in 1975

Further Petitioner neglected to mention that although Respon

share ofthe eastbou d conference trade was 65 5 percent in Janu

1976 it dropped to 604 percent in February of that year Respon

carried approximately 62 4 percent of the Trans Pacific Freight C

ence of Korea cargo in each of the months ofJanuary and Febru

1975 The datain the record does not demonstrate any consistent p

ofcargo carryings by or conference shares ofRespondents Respon

share ofthe conference carryings in the years 1974 through 1976 

follows

Year

Percentage of Trans Pacific Freight Coriference ofJapan Korea 

Carried by Respondents

In First Half

of Year

In Jan lFeb In Whole 

1974

1975

1976

55 55

62 45

62 72

54 63

56 49

57 72

58 18

That data will not support an inference that Respondents increased 

share of conference cargo for all of 1976 Consequently Petition

not established that Respondents have acquired a greater share 

conference trades as a result ofAgreement No 10116

Petitioner has not proven that it has actually been injured b

Agreement However the record in this proceeding does not illum

the full reach of all of the possible ramifications of the Agreeme

that the Commission niay be assured that its decision Win most fully 

the public interest the Commission will conduct further mquiry in

subject matter of this investigation In order to maximize the quan

the pertinent information which the Commission will acquire by rea

this further inquiry it will be conducted as a fu1l scale evidentiary h

under the supervision of an Administrative Law Judge of the Co

sion s Office ofAdministrative Law Judges To further ensure a com

and useful record at the conclusion of this further inquiry H

19 
AGREEMENT NO 101161 599

Counsel is adjured to use the processes of the Commission to the fullest

extent so as to investigate the subject ofthis proceeding and to lay on

the record the kind ofdetailed reliable and probative evidence which will

assist the Commission in making a proper disposition of this proceeding

Because the Commission s concern with this Agreement has continued

for some time now this further inquiry shall consistent with the fullest

development of the facts procede with the utmost expedition That

expedition is particularly necessary in this case because in order to

maintain the existing situation pending the completion of this further

inquiry the interim approval ofAgreement No 101161 heretofore

granted will be continued pending the completion ofthat further inquiry

Since the Commission has herein ordered a further inquiry into this

matter Respondents Motion for Modification of Order ofInvestiga

tion wherein Respondents requested permission to flle arebuttal to the

affidavits ofPetitioner and Hearing Counsel is moot and will be denied

as such

In the further inquiry herein ordered the parties shall address them

selves evidentially and with specificity to among other things overton

naging in the trans Pacific trades and the effect of overtonnaging on

stability in those trades the existence of malpractice in those trades the

quantitative and qualitative effect ofAgreement No 10116 either alone

or in connection with Respondents terminal agreements and Agreement

Nos 9718 9731 and 9835 upon overtonnaging and malpractices by

members ofthe conferences in the trades and by carriers not members of

a conference in the trades and how why and to what extent the self

policing provisions of those agreements creating the conferences in the

trans Pacific trades have not been effective to prevent the commission of

malpractices in those trades In addition to the matters referred to above

the parties to this proceeding are encouraged to develop that probative

reliable and relevant evidence which will establish facts which will

support the approval modification or disapproval of Agreement No

101161

The evidence offered and accepted into the record in this further

inquiry shall not be argumentative Evidence offered by a party shall be

internally consistent or the inconsistencies shall be explained by a

witness with personal knowledge ofthe explanatory facts Statistics and

numerical data in general shall be offered in such a way as to permit

comparison Where data is presented in different forms or is measured by

different scales evidence providing a method of conversion will be

offered Opinion evidence on matters within the expertise ofthe Commis

sion is not desired although the argument of counsel on those matters in

the brief is encouraged

THEREFORE IT IS ORDERED That the investigation herein

commenced by Commission Order of March 5 1976 is referred to the

Office ofAdministrative Law Judges ofthe Federal Maritime Commission

for further inquiry and Initial Decision

19 FM C
600 FEDERALMARITIME COMMISSION

IT IS FURTHER ORDERED That tne affidavits and memll

Respondents and Petitioner and the record in Docket No 75 30 

continue to be part of the recon of this proceeding

IT IS FURTHER ORDERED That the public hearings cond

pursuant to this order shall be held at a date and place to be deter

and announced by the Presiding Administrative Law Judge but 

event shall that hearing commence later than September 1 1977

IT IS FURTHER ORDERED That the Federal Maritime Co

sion Order dated March 5 1976 entitlec Agreement No 1011

Extension of Pooling Agreement in the Eastbound and Westb

Trades Between Japanese Ports and Ports in California Orego

Washington Order ofInvestigation is modified by deleting in th

ordering paragraph thereof the words and numbers for a te

one year to and including March 6 1977 and substituting th

the words pending the final order of the Commission 

proceeding instituted herein

IT IS FURTHER ORDERED That Respondents Motio

Modification ofOrder of Investigation is denied and

IT IS FURTHER ORDERED That this order be published 

Federal Register

By the Commission 4

8 JOSEPH C POLKING

Acting Secret

4 Commissioner Casey dissents Opinion willfollow

19 
TITLE 46SHIPPING

Chapter IV Federal Maritime Commission

Subchapter AGeneral Provisions

GENERAL ORDER 16 AMDT 17 DOCKET NO 7Hj j

Part 502 Rules ofPractice and Procedure

March 11 1977

Extraneous and Ex Parte Communications

This proceeding was instituted by notice of proposed rulemaking

published in the Federal Register ofJanuary 4 1977 42 F R 817 The

purpose of the proceeding was to amend those sections ofthe Commis

sion s rules of practice relating to ex parte communications in order to

conform them to the requirements set forth in Section 4 of the

Government in the Sunshine Act P L 94409 September 13 1976

the Act which amended the Administrative Procedure Act 5 D S C

551 et seq in the area of ex parte communications

Comments were submitted by Mr Leonard G James ofthe law firm of

Graham and James and by Mr Wade S Hooker Jr of the law firm of

Casey Lane Mittendorf Mr James essentially asks for clarification of

the proposed rules with respect to the role of the Commission s Bureau

of Hearing Counsel in Commission proceedings He states that the

proposed rules do not clearly establish that Hearing Counsel will be

treated like any other party as regards the prohibitions against making ex

parte communications and that some confusion exists because Hearing

Counsel are employees ofthe Commission as well as parties to proceed

ings The comments submitted by Mr Hooker also deal mainly with

suggested clarifications Mr Hooker believes that the rules should make

clear that they apply only to proceedings subject to 5 D S C 557 a that

only ex parte communications prohibited by paragraph b ofthe proposed

rules are forbidden that reference to a person who is a party or agent

ofaparty is superfluous as a result ofthe Act and furthermore confusing

in certain respects and other matters We have carefully considered these

For afullerexplanation of the purpose of the proposed amendments seethe notice of proposed rulemaking cited

above

19 FM C

601
602 FEDERAL MARITIME COMMISSION

comments and as discussed below have adopted one suggestio

tained therein Our discussion follows

We do not believe that the comments submitted by Mr James r

any change to the proposed rules Mr James expresses apprehe

that the Commission s Bureau of Hearing Counsel may be given 

treatment so as to engage in the type ofactivity prohibited by the A

the proposed rules There is nothing in the proposed rules which 

cause any such apprehension Under the present rules Hearing C

is designated as a party to a proceeding and is given no special trea

by virtue ofthe fact that they may be employees of the Commissio

Rule 3 b 46 C F R 502 42 Furthermore in the type ofproceedin

which the Act and proposed rules deal Hearing Counsel is n

employee who is or may reasonably be expected to be involved 

decisional process There is therefore absolutely no cause for co

that the rules will somehow authorize Hearing Counsel to eng

forbidden ex parte practices and consequently there is no need 

clarifying language to them Our present remarks in this regard 

furthermore suffice to allay any possible concern

2

The comments submitted by Mr Hooker as noted also dea

suggestions for clarifying language After carefully considering 

however we are of the opinion that for the most part the

unnecessary and in certain respects may evencontravene the purpo

the Act

Mr Hooker suggests that the rules should make clear that the

applicable only to proceedings which are subject t05 U S C 557 a 

than to any proceeding as defined in section 502 61 Rule 5 a 

presently proposed Mr Hooker fears that the rule s prohibitions 

be applied to proceedings other than adjudicatory or ertain f

rulemaking which was not intended by Congress citing Senate R

941176 94th Cong 2d Sess p

29 We are not adopting this sugg

The proposed limitation is too narrow and could permit ex parte a

in proceedings intended to be covered The legislative history cit

Mr Hooker is not clear because it defines the applicability o

prohibitions to formal acljudicatory proceedings and a few f

rulemaking proceedings Whatever the intended scope of the A

clearly goes beyond proceedings covered by 5 U S C 557 a

Mr Hooker suggests that the proposed rules delete referenc

person who is a party to or agent of a party to any proceedin

who directly participates in any such proceeding Le to delet

reference to a party his agent or direct participant in a pro

2 A

sood deal of the comments of Mr James consist OfUDsubstantiated remarks to the effectthat Heario

have customarily engaged in ex parte activity Moreover Mr James appears to complain overthe fact tha

Counsel have communicated with interested persons outside the Commission Not only are these 

unsubstantiated but in certain respects they are based upon an erroneous understanding of the law with res

parte communications Since Hearina Counsel are not involved in the decisional process there is no p

against their communicating with persons outside the Commission Indeed in the conduct of their dutie

Counsel often contact shippers and other persons outside the Commission in order to obtain relevant 

necessary forthe development of afull and complete record

19 
GENERAL PROVISIONSRULES 603

ing in the proposed rules He asserts that the language in question is

made superlluous as a result ofthe Act Alternatively he suggests that

reference to any agent be deleted He asserts that reference to

agents leads to confusion and is merely acarryover from the present

Commission rule

In our opinion the deletion of specific references to parties their

agents or participants in proceedings would not only be unhelpful but

more confusing It is certainly not the intention ofthe Act to permit any

of these persons to engage in ex parte activity Our present rules which

we are proposing to amend have long specified that the prohibitions apply

to parties and their agents Furthermore as we stated in the notice of

proposed rulemaking cited above specific reference to parties their

agents interested persons outside the Commission and direct

participants in proceedings will insure that previous law on the subject as

well as the amendments contained in the Act will be encompassed

The remainder of Mr Hooker s comments consist of further sugges

tions for clarification For example he suggests that reference to ex parte

communications in paragraphs b 4 and 6 specify that the type of

communication in mind is that prohibited by paragraph b of the rule

We see no need for such additional clarification and believe that it is self

evident as to the type of ex parte communication which is intended to be

prohibited

A final suggestion however has merit Mr Hooker suggests that

reference to a violation ofthe rule which could lead to sanctions against

a party specify that the violation must occur with respect to paragraph b

ofthe rule Since the rule also contains a paragraph a which does not

deal with ex parte communications but rather with other pleadings or

documents which are objectionable for reasons having nothing to do with

ex parte activity we agree that the rule should be clarified as suggested

Therefore pursuant to section 4 ofthe Administrative Procedure Act 5

D S C 553 sections 22 and 43 ofthe Shipping Act 1916 46 D S C 821

841a and section 4 ofthe Government in the Sunshine Act 5 D S C

557 d Part 502 of Title 46 Code of Federal Regulations is amended

Effective Date Inasmuch as the expeditious adoption ofthese rules is

desirable and inasmuch as they are essentially procedural in nature they

shall be effective upon publication in the Federal Register and shall be

applicable to all ex parte activities occurring on or after the effective date

By the Commission

S JOSEPH C POLKING

Acting Secretary

Thetextof the amendment isreprinted in 46 C F R 502

19 F MC
I

I

1

FEDERAL MARITIME COMMISSION

SPECIAL DOCKET No S06

Dow CHEMICAL INTERNATIONAL INC

V

FAR EASTERN SHIPPING COMPANY

NOTICE OF ADOPrION OF INITIAL DECISION ANDORD

PERMIITING WAIVER OF CHARGES

March 10 1977

No exceptions having been taken to the initial decision i

proceeding and the Commission having determined not to review 

notice is hereby given that the initial decision became the decision 

Commission on Match 10 1977

It is Ordered That applicant is authorized to waive collect

36 202 94 of the charges previously assessed DdwChemical In

tional Inc

It is further Ordered That applicant shall publish promptly 

appropriate tariff the fOllowing notice

Notice is hereby given as required by the decision of the Federal M

Commission in SpecialOocket 506 that effective August 31 1976 for purposes of 

orwaiver of freight chllllles on any shipments which may have been shipped dur

period from August 31 1976 throllgh October 7 1976 the rate on Soda and orS

viz Caustic minimum 500 tons per vessel is 50 00 per 1000 kilos subject to 

freight forwarding commission and subject to aU other applicable rules regu

terms and conditions of said rate and this tariff

Itis further Ordered That waiver of the charges shall be effect

within 30 daysof service of this notice and applicant shall withi

days thereafter notify the Commission of the date and mann

effectuating the waiver

By the Commission

S JOSEPH C POLKING

Acting Secreta

604 19 F 
FEDERAL MARITIME COMMISSION

SPECIAL DocKET No 506

Dow CHEMICAL INTERNATIONAL INC

v

FAR EASTERN SHIPPING COMPANY

Adopted March 10 1977

Application granted

INITIAL DECISION OF THOMAS W REILLY

ADMINISTRATIVE LAW JUDGE

Pursuant to section 18b 3

2

ofthe Shipping Act 1916 as amended by

P L90298 and section 502 92 of the Commission s Rules ofPractice

and Procedure 46 CFR 502 92 Far Eastern Shipping Company Far

Eastern or Applicant has applied for permission to waive collection of a

portion of the freight charges on a shipment of caustic soda that moved

from Freeport Texas to Singapore under Far Eastern bill oflading dated

August 31 1976 The application was fded January 25 1977

The subject shipment moved under Far Eastern Shipping Company

Ocean Freight Tariff No 18 FMC No 18 original page 117 effective

June 6 1976 under the rate for the item Soda andor sodium viz

Caustic Item 5090 The aggregate weight ofthe shipment was 2 252 770

pounds The rate applicable at time of shipment was 7750 per ton of

2000 pounds weight only The rate sought to be applied is 50 per 1000

kilos weight only for shipments ofaminimum of500 tons per vessel

and subject to a 5 freight forwarding commission Far Eastern Shipping

Company Ocean Freight TariffNo 18 FMC No 18 1st revised page

117 effective October 7 1976 item 5090

Aggregate freight charges payable pursuant to the rate applicable at

time of shipment amounted to 87 295 84 Aggregate freight charges at

the rate sought to be applied amount to 51 09190 The difference sought

to be waived is 36 202 94 The Applicant is not aware of any other

I

This decision became the decision ofthe Commission March 10 1977

246U S c 817 as amended

19 F MC 605
606 FEDERAL MARITIME COMMISSION

shipment of the same commodity which moved via Far Eastern 

the same time period at the rates involved in this shipment

Far Eastern offers the following as grounds for granting the applic

Movement of this cargo had been discussed between ourpricing and sales depa

and agreement WaS reache4 to publish the rate of 0 00 per mltric ton with a m

of 500 tons per vessel subject to a 5 percent freight forwarding commission T

was to be published upon notification by the sales department that cargo c

secured at this rate When cargo was in fact secured a memorandum was given 

pricing department however this memo was inadvertently misplaced and the app

rate was not f1 ed until after the vessel had sailed and ouragents requested clari

regarding this rate which they are unable to fmd in Qur ariffs This is not a norm

of occurrence and we ask the Commission s

indulgence to allow us to make t

retroactive to cover this shipment as cargo could not have been secured at tar

published Since rates as per the agreement were not filed due to administrativ

we respectfully ask that we be allowed to collect only on the basis of the agree

and not the higher rates

Section 18b 3 ofthe Shipping Act 1916 46 USC 817 as amend

Public Law 9a298 and Rule 6b Special DocketApplications Ru

Practice and Procedure 46 CFR 502 92 a set forth the applicab

and regulation The pertinent portion of 18b 3 provides that

The Commission may in itsdiscre tion and for good cause shown p

common carrier by water in foreign commerce to refund a

portion of freight 

collected from a shipper or waive the collection of a portion of the charges 

shipper where it appears that there is an errorin a tariff of a clerical or admini

nature or an error due to an inadvertence in failing to f1e a new tariff and tha

refund or waiver will notresultin discrimination among shippers Provided furthe

the common carrier has prior to applying to make refund f1ed a new tariffw

Commission which sets forth the rate on which such refund or waiver wo

based and Application for refund orwaiver must be filed with the Comm

within 180 days from the date of shipment 3

The clerical and administrative error recited in the subject applica

of the type withinth intended scope of coverage Qf section 18b 

the Act and section 502 92 of the Commission s Rules of Practic

Procedure

Therefore upon consideration of the documents presented b

Applicant it is found that

1 There was an error in a tariff of a clerical or administrative n

resulting in the inadvertent failure to fde the special rate for shipme

the subject commodity weighing a minimum of500 tons per vess

had been promised to the shipper

2 Such a waiver of collection of a portion of the freight charge

not result in discrimination among shippers

3 Prior to applying for authority to waive collection of a portion 

freight charges Far Eastern fded a new tariff which set forth the ra

which such waiver would be based

3 For other provisions and requirements see fl8b 3 and f 502 92 of the Commission s Rules of prac

Procedure 46 CPR 502 92 a c

19 
S THOMAS W REILLY

Administrative Law Judge

DOW CHEMICAL INC v FAR EASTERN S CO 607

4 The application wasfIled within 180 days from the date ofthe subject

shipment

Accordingly permission is granted to Far Eastern Shipping Company

to waive collection of a portion of the freight charges specifically the

amount of 36 202 94 An appropriate notice will be published in Far

Eastern s tariff

WASHINGTON D C

February 16 1977

19 F M C
FEDERAL MARITIME COMMISSION

SPECIAL DocKET No 504

UNITED STATES MAHOGANY CORPORATION

v

SOLAR INTERNATIONAL SHIPPING AGENCY INC AS AGENTS F

YANGMING MARINE LINE

NOTICE OF AOOPI ION OF INITIAL DECISION AND OR

PERMITTING WANER OF CHARGES

March 10 1977

No exceptions having been taken to the initial decision 

proceeding and the Commission having determined not to review 

notice is hereby given that the initial decision became the decision 

Commission on March 10 1977

It is Ordered That applicant is authorized to waive collec

486 55 of the charges previously assessed United States Mah

Corporation

It is further Ordered That applicant shall publish promptly 

appropriate tariff the following notice

Notice is hereby given as required by the decision of the Federal M

Commission in S ial Docket 504 that effective July 15 1976 for purposes of r

waiver or freight charges on any shipments which may have been shipped du

period from July 15 1976 through September 17 1976 the rate on Lumber 

Sawn in Bundles is 48 00 M subject to all applicable rules regulations te

conditions of said rate and this tariff

It is further Ordered That waiver of the charges shall be effec

within 30 days of service of this notice and applicant shall with

days thereafter notify the Commission of the date and man

effectuating the waiver

By the Commission

S JOSEPH C PoLKING

Acting Secret

608 19 
FEDERAL MARITIME COMMISSION

SPECIAL DocKET No 504

UNITED STATES MAHOGANY CORP

v

SOLAR INTERNATIONAL SHIPPING AGENCY INC AS AGENTS FOR

YANGMING MARINE LINE

Adopted March 10 1977

Application granted

INITIAL DECISION OF THOMAS W REILLY

ADMINISTRATIVE LAW JUDGE

Pursuant to section 18b 3

2

ofthe Shipping Act 1916 as amended by

P L 90298 and section 502 92 of the Commission s Rules ofPractice

and Procedure 46 CFR 502 92 Yangming Marine Line Yangming or

Applicant has applied for permission to waive collection of aportion of

the freight charges on two shipments oflumber that moved from Taiwan

via Japan to New York under Yangming bills of lading dated July 31

1976 and September 9 1976 The application was initially fded on January

7 1977 with an amendment filed February 9 1977 The amendment

corrected an error in computation

The subject shipments moved under Yangming Marine Transport

Corporation Freight Tariff No FMC 6 which governs shipments from

Taiwan Republic of China to Atlantic Gulf Ports San Juan P R at

page 101 original with an effective date of July 15 1976 That page

indicates that for Lumber rough sawn in bundles not exceeding 9

meters in length the rate was to be 48 per cubic meter or 99 per 1000

kilograms whichever produces the greater revenue On that basis the

two shipments 55 985 cubic meters and 30 575 kilograms and 31912

cubic meters and 18 028 kilograms were billed total aggregate freight

charges of4 942 93 including bunker surcharges of 2 70 per ton of 000

kgs or I cubic meter whichever is greater Yangming Freight Tariff

FMC 6 at page 101 orig effective July 15 1976 The rate sought to be

t

This decision became the decision of the Commission March 10 1977

t

46 V S C 817 as amended

19 F MC 609
610 FEDERAL MARITIME COMMISSION

applied is 48 per cubic meter weight only plus the same bunker 

of 2 70

The Applicant had first ftled for waiver of collection based at t

rate mentioned above but through some misunderstanding in the co

of the filing and the complexities of several overlapping tarif

revisions temporaries and corrections was told that it app

that a 51 per cubic meter rate weight only would have to be the 

of its claim for waiver of collection Accordingly the Applicant 

with the Commission a new application based upon the 51 rate 

this 51 rate basis tiling and assignment of the case to an Adminis

Law Judge it became clear from a careful review of the pertinen

pages on ftle with the Commission that only the 48 weight only 

could be used as the basis for any waiver of collection in view 

sequence ofthe tariff filings revisions and taking into considerati

different time notice requirements for increases and decreases in 

Thereupon the Applicant Yangming amended the computation 

application to reflect its original 48 per cubic meter rate basis re

Aggregate freight charges payable pursuant to the rate applica

the times of shipment amounted to 4 942 93 Aggregate freight c

at the rate sought to be applied amounted to 4 456 38 The diffe

collection of which is sought to be waived is 486 55 total fo

shipments The Applicant is not aware ofany shipments of othe

the complainant of the same or similar commodity which move

Applicant respondent during the same time period in which the 

rates above recited original and requested governed

Yangming offers the following as grounds for granting the applica

4 This Special Docket Application is being submitted to waive collection ofa 

of freight charges amounting to 486 55 on the referenced shipments

On July 15 1976 Messrs Yang Ming Marine Line ftIed rates for lumber roug

in bundles at 48 per cubic meter or 99 00 per 1000 kgs This rate was ftIed 

Yang Ming Marine Transport Corporation tariff FMC 6and appeared at page 1

annexture

The rate of 99 per 1000 kgs was ftIed in error but was subsequently dele

September 17 1976 See annexture On September 24 the rate was acljusted 

present amount see annexture

As a result of this error Yang Ming Marine Transport Corporation rece

complaint from United States Mahogany Corporation which has imported two shi

of lumber from Taiwan to New York on July 31 and September 9 1976 The freig

charged at the rate of 99 00 per 1000 kgs plus bunker surcharge of 2 70 per ton 

resulted in a 90rate hike see letter from U S Mahogany annexed hereto

In order to remedy the effects of this error we are filing this Special D

Application on behalf ofYang Mini Marine Transport Corporation to reque

Commission s permission to revise the freight charges of the aforementioned shi

to 48 per cubic meter plus 2 70 bunker surcharge

Section 18b 3 ofthe Shipping Act 1916 46 USC 817 as amend

Public Law 90298 and Rule 6b Special DocketApplications Ru

Per amendment letter dated February 9 1977

Per amendment letter dated February 9 1977
U S MAHOGANY CORP v SOLAR INT LAGENCY 611

Practice and Procedure 46 CFR 502 92 a set forth the applicable law

and regulation The pertinent portion of 18b 3 provides that

The Commission may in its discretion and for good cause shown permit a

common carrier by water in foreign commerce to refund a portion of freight charges

collected from a shipper orwaive the collection of a portion of the charges from a

shipper where it appears that there is an error in a tariff of a clerical or administrative

nature or an error due to an inadvertence in failing to ftle a new tariff and that such

refund orwaiver will not resultin discrimination among shippers Provided further That

the common carrier has prior to applying to make refund ftled anew tariffwith the

Commission which sets forth the rate on which such refund or waiver would be

based and Application for refund orwaiver must be ftled with the Commission

within 180 days from the date of shipment 3

The clerica1 and administrative error recited in the subject application is

ofthe type within the intended scope of coverage of section 18b 3 of

the Act and section 502 92 of the Commission s Rules ofPractice and

Procedure

Therefore upon consideration of the documents presented by the

Applicant it is found that

1 There was an error in a tariff of a clerica1 or administrative nature

resulting in the inadvertent fIling of a weight rate in addition to the

measure rate when only arate by measure had been intended as was

customary in the lumber trade

2 8uc awaiver of collection ofa portion ofthe freight charges will

not result in discrimination among shippers

3 Prior to applying for authority to waive collection ofaportion ofthe

freight charges Yangming fIled a new tariff which set forth the rate on

which such waiver would be based

4 The application was fIled within one hundred and eighty days from

the date of the subject shipments

Accordingly permission is granted to Yangming Marine Line to waive

collection of aportion ofthe freight charges specifIcally the amount of

486 55 An appropriate notice will be published in Yangming s tariff

8 THOMAS W REILLY

Administrative Law Judge

WASHINGTON D C

February 15 1977

3

For other provisions and requirements see 18 b 3 and 502 92 of the Commission sRules ofPractice and

Procedure 46 CFR 502 92a e

19 F MC
FEDERAL MARITIME COMMISSION

INFORMAL DocKET No 372 1

YASUTOMO Co

v

Y S LINES

NOTICE OF DETERMINATION TO REVIEW

March 10 1977

Notice is hereby given that the Commission on March 10 

determined to review the order ofdismissal of complaint and disc

ance of proceeding served February 28 1977 in this proceeding

By the Commission

S JOSEPH C PoLKING

Acting Secre

612 19 
19 F M C

613

FEDERAL MARITIME COMMISSION

INFORMAL DocKET No 373 1

AVIVA ENTERPRISES INC

v

Y S LINES

NOTICE OF DETERMINATION TO REVIEW

March 10 1977

Notice is hereby given that the Commission on March 10 1977

determined to review the order ofdismissal ofcomplaint and discontinu

ance ofproceeding served February 28 1977 in this proceeding

By the Commission

S JOSEPH C POLKING

Acting Secretary
FEDERAL MARITIME COMMISSION

DoCKET No 7425

TwIN EXPRESS INC

v

SEA LAND SERVICE INC ET AL

NOTICE OF DETERMINATION NOT TO REVIEW

March 11 1977

Notice is hereby given that the Commission on March 11 

determined not to review the order ofdiscontinuance in this proc

served February 10 1977

By the Commission

S JOSEPH C POLKING

Acting Secret

614 19 
19 F MC 615

FEDERAL MARITIME COMMISSION

No 7425

TwIN EXPRESS INC

v

SEA LAND SERVICE INC ET AL

ORDER DISCONTINUING PROCEEDING

February 10 1977

The Complainant having requested that its complaint herein be with

drawn

Ordered

This proceeding is discontinued

S STANLEY M LEVY

Administrative Law Judge
FEDERAL MARITIME COMMISSION

No 7548

SEA LAND SERVICE INC

v

THE CITY OF ANCHORAGE ALASKA AND TOTEM OcEAN TRAI

EXPRESS INC

No 764

ANCHORAGE ALASKA

v

SEA LAND SERVICE INC

NOTICE OF DETERMINATION NOT TO REVIEW

March 11 1977

Notice is hereby given that the Commission on March 11 

determined not to review the order of dismissal of responde

discontinuance of proceeding served in these proceedings Febru

1977

By the Commission

S JOSEPH C PoLKING

Acting Secre

616 19 
9 F MC 617

FEDERAL MARITIME COMMISSION

No 7 8

SEA LAND SERVICE INC

v

THE CITY OF ANCHORAGE ALASKA AND TOTEM OCEAN TRAILER

EXPRESS INC

DISMISSAL OF COMPLAINT AND

DISCONTINUANCE OF PROCEEDING

May 19 1977

Complainant Sea Land Service Inc Sea Land complained that its

vessel S S Mobile was improperly evicted from Terminal No I at the

Anchorage City Dock in order that a vessel of respondent Totem Ocean

Trailer Express Inc Totem could be berthed Sea Land further

complained that the Totem vessel did cause a break in the bus bar

conductor system which had the effect ofprecluding the movement of

contained cranes at Terminal No 3 ofthe Anchorage City Dock so that

Sea Land s vessels could not utilize dockside space at Terminal No 3

Sea Land sought reparations for the acts ofTotem

Sea Land in its complaint joined the City ofAnchorage as a

respondent

but by order dated February II 1977 the City of Anchorage was

dismissed as a respondent

The parties have now entered into a statement of satisfaction and

settlement agreement whereby Totem has agreed to pay ten thousand

dollars 10 000 00 in satisfaction ofthe alleged claims upon dismissal of

the complaint with prejudice

The parties further agree that the settlement agreement shall not

prevent either party from alleging or contending in any court that any

conduct or acts alleged in any complaint or action before the Federal

Maritime Commission constituted or were part of or were evidence of

violation of any federal or state laws provided however Sea Land is

precluded from seeking further relief in any action for the specific matters

in its complaint in FMC Docket No 7 8
618 FEDERAL MARITIME COMMISSION

The parties have jointly requested that the complaint in Dock

7548 be dismissed with prejudice and that the proceeding be dis

ued

Good cause appearing the parties have settled the issue between 

and because no useful regulatory purpose would be served by con

this complaint proceeding it is hereby

Ordered The complaint herein is dismissed with prejudice a

proceeding is discontinued

S STANLEY M LEVY

Administrative Law Ju

19 
19 F M C 619

FEDERAL MARITIME COMMISSION

DOCKET No 7410

FREIGHT FORWARDER BIDS ON GOVERNMENT SHIPMENTS AT UNITED

STATES PORTSPOSSIBLE VIOLATIONS OFTHE SHIPPING ACT 1916

AND GENERAL ORDER 4

Fees assessed GSA for ocean freight forwarding services found in certain instances to

violate section 16 First of the Shipping Act 1916 and Commission General Order

4

Freight forwarder services must be charged for uniformly to avoid giving unreasonable

preference oradvantage

Issues of whether section 35 exemption should be granted or whether General Order 4

should be amended to include a rule governing the practices of forwarders bidding

on GSA contracts and providing services thereunder held under advisement pending

further review

Frank J Costello for Air Sea Forwarders Inc

W B Ewers for Cobal International Inc

Thomas H McGowan for Meyer Shipping Company

Gerald H Ullman for National Customs Brokers and Forwarders

Association of America and New York Foreign Freight Forwarders and

Brokers Association

Francis X Davis Leonard Salters and William Smith for General

Services Administration

C Douglass Miller and C Jonathan Renner Hearing Counsel

REPORT AND ORDER

March 18 1977

By THE COMMISSION Karl E Bakke Chairman Clarence Morse Vice

Chairman Ashton C Barrett Bob Casey and James V Day

Commissioners

The Commission instituted this proceeding to determine 1 whether

the practices of Respondent ocean freight forwarders 1

as they relate to

bidding for forwarding contracts tendered by the Government Services

Administration GSA of the United States and rendering services

thereunder are in violation of section 16 ofthe Shipping Act 1916 the

I Air Sea Forwarders Inc AirSea Alltransport Incorporated Alltransport Geo S Bush Co Inc Bush

Cobal International Inc Cabal Gulf Florida TerminalCompany Gulf Florida MeyerShipping Company Meyer

Ras Forwarding Services Ros and W O Smith and Co Smith
620 FEDERAL MARITIME COMMISSION

Act by subjecting a person locality or description of tra

unreasonable preference or prejudice or disadvantage 2 whethe

practices are contrary to section 5l0 24b of the Commission s G

Order 4

2

and 3 whether the Commission s General Order 4 sho

amended to govern the practices offorwarders bidding on GSA co

and providing services thereunder or possibly exempting such forw

practices from Commission regulations under section 35 of the 

National Customs Brokers and Forwarders Association of Americ

NCBFAA and GSA intervened in the proceeding

Administrative Law Judge Stanley M Levy issued an Initial De

wherein he concluded inter alia that the fees charged GS

forwarding services by Respondents Air Sea Meyer Cobal and 

violated both section 16 First ofthe Act and section 5l0 24b

ofG

Order 4 Further he concluded that section 5l0 24b should be am

to clearly indicate that it is unlawful to render forwarding services 

government agency for less than the average forwarding fee charge

users ofsimilar freight forwarder services Finally he recommend

the ocean freight forwarder licenses of Air Sea and Meyer be re

and those of Cobal and Smith be suspended for six 6 months and 

30 days respectively Exceptions to the Initial Decision and re

exceptions have been rtled by Air Sea Cobal Meyer NCBFAA 

and Commission Hearing Counsel The Commission heard Oral 

ment

FACTS

Since Fiscal Year FY 10 GSA4

has pursuant to its com

bidding system awarded annual ocean freight forwarding contr

Commission Licensed ocean freight forwarders based upon the 

bids submitted Under GSA s competitive bid procedure a bidde

is awarded acontract which normally runs for one year must be pr

not only to perform the service normally required ofa 

I Section 1O 24b of theCommission sGeneral Order 4 46 C P R 510 24 b provides as follows

No licensee shall render oroffer to render any forwardlna sorvice feeof charae or at areduced frciaht 

Ceo in consideration of the licensee receivina compensation from ocean lIoina common carriers on the 

provided however that alicensee may perform hiptforwardina services for recoanized reliefpncies o

orianlzations desianated as such in tho tariffof theocean soina common carrier free Qf charae or at re

a Section 35 authorizes the Commission to exempt activities of persons subject to Its jurisdiction 

requirements of the Act where such exemption would not substantially impair effectivCl repletion 

discriminatory orbe detrimental to commerce

4 GSA ships Jarie volumes of ocean aolna CriO of which a

JlUjority isfor AID proarams and utilizes o

forwarder services in arrana ina such shipments

5 This system was initiated as aresult of a1958 decision of theCpmptroUer General that it was unlawful 

continue its past practice of allowina forwardera to provide freeforwardina services in consideration of 

brokeraae from the carriers 37 Compo Oen 602 1958

Section 44 of theAct requires that in order for aforwarder to bCl entitled to brokeraae be must solicit 

cargo for theship book or otherwise arranae for space and perform two of thefollowina services

1 The coordination of themovement of the carao to shipside

2 The preparation and proce8l1na of theocean bUl ofladina

3 Thepreparation and processina of dock receipts orde1ive y orders

4 The preparation and processini ofconsular documents orexport declarations

5 The payment of the ocean freiaht ChariCS on such shipments

19 
FREIGHT FORWARDER BIDS ON GOV T SHIPMENTS 621

also to maintain logs ofGSA shipments submit weekly export shipping

reports as well as monthly status reports to GSA and to provide the

Maritime Administration ofthe Department ofCommerce with copies of

the bills oflading

A comparative study of the services offered by the forwarders on

commercial shipments and GSA shipments revealed that forwarding

services are for the most part similar The forwarding services generally

offered with respect to commercial shipments are 1 arranging movement

of cargo to port and pier 2 booking cargo 3 preparing and processing

export declarations 4 preparing and processing bills oflading and 5

arranging insurance With respect to GSA shipments forwarders 1

coordinate service to effect the movement of shipments from origin to

vessel 2 confirm GSA tentative space reservations 3 prepare and

process shipper export declarations when required 4 prepare and

process consular documents when required and 5prepare and process

bills oflading

Notwithstanding the above similarities a considerable disparity exists

between fees and ocean brokerage received from commercial vis avis

GSA shipments The following lists the successful bidders on GSA

shipments for FY 1973 in designated geographical areas and sets forth the

fees assessed and amount bid for the handling of commercial and GSA

shipments respectively by these forwarders also indicated is the

brokerage received on these shipments

Amount Average

Average

Bid Average Broker

Broker

Port Forwarder p

Commer age on

cial age onCommer

Shipment

Fee

GSA

cial Ship

toGSA Shipments ments

Los Angeles uuu Air Sea u uu uu 0 05 22 88 40 68 6 57

San Francisco uuu Air Sea uu uuu 0 05 27 25 2038 7 16

Seattle Bush u uuuu 2 50 1348 4 24 13 51

Baltimore uu Cobal 125 750 19 12 27 86

Houston Cobal 4 00 20 76 50 78 14 80

New Orleans Cobal 4 00 8 65 3 03 10 80

Philadelphiau Cobal 10 00 18 16

Tampa Gulf Floridau uu 450 6 00

Miami Ross Forwarders 6 00 12 61 0 60 175

Chicago u Alltransport 15 00 15 60

New York Meyer 0 045 3048

The specifications in the GSA bid form advise the bidder that Federal

Maritime Commission regulations prohibit licensed ocean freight forwar

ders from rendering any forwarding service at a reduced fee in

consideration of the licensee receiving compensation from ocean

carriers on the shipments The specifications further require the bidder

to certify that its price is fully compensatory for the forwarding service

rendered without regard to any compensation paid to the forwarder by

the ocean carrier

19 F M C
622 FEDERAL MARITIME COMMISSION

DISCUSSION AND CONCLUSION

Jurisdiction

Some Respondents contend that the Commission lacks the juris

to investigate the practices at issue because GSA is as an exe

agency of the United States and the assessment ofreduced forw

fees to a part of the Federal sovereign cannot result in un

unreasonable preference or advantage to any particular person 

phrase is used in section 16 First ofthe Act Heavy reliance is pla

U S v Cooper Corp 312 U S 600 604 1941 where the Su

Court stated that in common usage the term person does not 

the sovereign and statutes employing the phrase are ord

construed to exclude it

The Cooper decision is hardly conclusive however for the 

itself conceded that there is no hard and fast rule of exclusio

that the purpose the subject matter the context the legislative h

and the executive interpretation ofthe statute may indicate an 

to bring state or nation within the scope of the law In Coop

Court after reviewing the scheme structure and legislative history 

Sherman Antitrust Act determined that the United States wa

person for purposes of bringing a treble damage action und

statute

We have reviewed the language purpose and legislative history 

Shipping Act 1916 and find no similar indication that the United 

or one ofits agencies is or was intended to be excluded from th

person as used in section 16 First of the Act In absence of 

indication to the contrary we shall continue to consider GSA an

governmental agencies as persons under section 16 ofthe Act 

not only appropriate and consistent with public policy but also in 

with our long standing practice oftreating such agencies as perso

the purpose offiling a complaint under section 22 of the Act 7

S

East Conference v U S 342 U S 570 576 1952

Even ifGSA were not a person within the meaning of sec

First however that section may nonetheless have been violated 

the facts presented here The prohibition against uneven tre

embodied in section 16 First extends not only to persons but a

description of traffic Thus as the Presiding Officer found 

GSA shipments describe a particular kind of traffic section 

applicable even ifthe GSA is not a person within section 16

Violations ofSection 16 First

Air Sea on exception reargues a point raised before the Pr

Officer and we fmd properly disposed ofby him Air Sea believes 

See also California v US 320 U S 577 585 86 1944 where the Supreme Court determined tha

municipalities which ownand operate dock facilities are other persons subject to the Shipping Act 191

be proceeded against foralleged violations ofthat Act

19 
FREIGHT FORWARDER BIDS ON GOV T SHIPMENTS 623

finding ofa section 16 First violation cannot be made here because it has

not been established that GSA actually competes with commercial

shippers The Presiding Officer in dismissing the need for a competitive

relationship in this case relied on the court s decision in New York

Foreign Freight Forwarder and Brokers Ass n v F MC 337 F 2d 289

1964 cert denied 380 U S 910 1965 and the Commission s subsequent

decision in Valley Evaporating Co v Grace Line Inc 14 F MC 16

1970 In the New York Freight Forwarder case the court specifically

rejected the argument that before a section 16 violation can be found a

competitive relationship must be established 8

There the court held that

while an unlawful discrimination in transportation charges requires a

showing of competitive relationship between two shippers who are

charged different prices this was not the case with respect to forwarder

charges where a competitive relationship need not be shown to establish

a violation of section 16 First In Valley Evaporating the Commission

again found a section 16 violation in the absence of a competitive

relationship In so doing the Commission explained that

while an effective competitive relationship is a necessary part of liability under

section 16 in situations where the allegedly preferential or prejudicial rates or charges

are geared to transportation facts or the different characteristics of commodities it is

notrequired where the carrier s obligation to render a particular service is absolute

and notdependent upon such factors or differences 14 F M C at 21

These decisions are controlling here Given the same service forward

ing fees should not vary by commodity as do ocean freight rates On this

point the Presiding Officer found and we agree that

the record was devoid of any evidence which would indicate that the handling of

GSA shipments is materially or substantially different from the handling of a shipment

for a commercial shipper

While evidence indicates that a forwarder may not have to perform all

the forwarding services listed in aGSA contract the fact remains that a

forwarder is contractually obligated to provide any and all those services

upon request These services generally correspond to those offered

commercial shippers Hence at any given time a forwarder will be

performing the same services for GSA as he would for commercial

accounts In fact General Services Administration Circular No 320

actually describes GSA Ocean Freight Forwarder Contracts as requiring

8

GSA argues that its shipments are not competitive for overseas markets with commercial shippers because the

former are made in connection withdevelopment assistance programs In this regard GSA explains that it

utilizes ocean freight forwarders only to provide aservice on its own behalf and for other civilian executive

agencies ofthe U S Government It is a

service organization and isnot profit oriented The greatest amount of GSA

shipments are forAID programs with tonnage fIgUres for the past four years showing that 81 percent of the tonnage

was shipped on behalfof the AID program Other executive agencies of the U S Government utilizing GSA ocean

freight forwarders were also acting largely on behalf ofthe AIDprogram

8 The Commission reaffbmed this principle in Violations of Sections 14 Fourth 16 First and 17 Shipping Act

1916 in the Nonassessment of Fuel Surcharges on Military Sealift Command MSC Rates Under the MSC Request

for Rate Proposals RFP Bidding System 15 F M C 92 1972 Citing Investigation of Free Time Practices Port of

San Diego 9 F M C 525 1966 the Commission there held that where abunker charge had been assessed

commercial cargo but not government cargo no competitive relationship was necessary to establish aviolation of

section 16 First of theAct

19 F M C
624 FEDERAL MARITIME COMMISSION

the ocean freight forwarder to perform the service normally requ

a forwarder engaged in this business

Our finding that this record will not support the proposition tha

are substantial differences between the amount ofwork required to 

aGSA shipment and that normally performed for commercial sh

further disposes ofAir Sea s argument that the GSA bids can be ju

by factors of cost value ofservice orother transportation condit

While in practice forwarders may do something less for GSA w

think of no single forwarding function nor could GSAs own w

which can be performed for the 5 cents per shipment bid made b

Sea Clearly the work involved in processing aGSA shipment is 

complex or time consuming than with a commercial account It f

that the costs involved in processing GSA and commercial ship

should be generally comparable The simple fact of the mat

however that commercial clients are charged a substantially g

amount for essentially the same services than is GSA with no ap

transportation justification for the disparity

One other explanation Air Sea offers as to why GSA bids are so 

lower than commercial fees is that because of the competitive e

ment it is allegedly abuyer s market for GSA as opposed to a s

market for commercial shippers We seriously questioTl this unsllP

contention considering the vast number of freight forwarders in the 

ports as well as the large number of commercial shippers who 

furnish a forwarder with more business than does GSA I0

Air Sea also challenges the Presiding Officer s

rejection of w

described as Air Sea s absorption theory This theory wh

advocated by Air Sea and Meyer essentially holds that the co

workload ofprocessing GSA accounts can be absorbed without add

personnel and incurring any significant costs Air Sea argues that

it is unfair and unrealistic to attempt to test these forwarder fees again

form of fully allocated cost standard Apart from the impossibllity of developing 

standard the GSA business clearly generates incremental revenues which sh

offset only against added outof pocket costs costs which are de minimis

10 ThefoUowina chart represents a

breakdown of GSA and commercial shipments handled by certain R

forwardors at particular ports for the six month period from July I 1972 throuahDeeember 31 1972

Forwarder

No ofGSA

Shipments

130

676

39

o

I

238

9

667

529

196

Ports

Air Sea n h n nnn n Los Anae1es nnn n nnnn h

Air Sea San Francisco

Bush Seattlo

Gulf Florida mmmmmmnnn Tampa n mmmn m

Ros Forwardina Miami

Cobal mmnmmmmnmnm Baltimore mmmmmnmmm

Cobal HOUlton

Cobal nn n n n nnn New Orleans n n

nn

n

Meyer New York

Smith n nnnnnnnn n Hampton Roads nnn4

ill For the six month period from July 1 1973 to December 31 1973

N

Com

Shi

1

1

1

1

19 
FREIGHT FORWARDER BIDS ON GOV T SHIPMENTS 625

The fatal flaw in this so called absorption theory is as the Presiding

Officer noted its failure to be applied to commercial accounts II Air Sea

and Meyer would justify their 5 and 411z cent bids to GSA respectively

on the ground that incremental pricing allows them to absorb the

additional work load without additional personnel and with only a de

minimis increase in costs 12 All commercial fees however were priced

well above this level Indeed Air Sea s lowest commercial fee in fiscal

year 1973 was 15 00 Meyer s average commercial fee for the same

period was 3048 per shipment Obviously as Hearing Counsel have

pointed out Mr Meyer never considered costing commercial shipments

on an incremental basis even during those years when his employees

were underutilized and he had noGSA contract The record here clearly

indicates that GSA is the only shipper that ever benefited from this

incremental pricing approach Respondents failure to even consider the

application ofthe absorption theory to its commercial accounts or to

provide any explanation as to why incremental pricing is appropriate for

GSA accounts but not for commercial accounts renders that approach

unjustly and unlawfully discriminatory

Whatever the merits of the absorption or incremental pricing

approach in principle it is beyond dispute as we have indicated earlier

that the incremental costs associated with the processing of a GSA

shipment necessarily amount to more than 411z or 5 cents In addition to

the normal forwarding services which they have contracted to provide

forwarders handling GSA shipments must also maintain a log on each

GSA transaction furnish GSA with a monthly report on shipments

handled transmit copies ofbills oflading to the Maritime Administration

and wait between 60 and 90 days to be paid a longer time than on

commercial shipments We simply cannot accept the suggestion that all

this work whatever effort is made to minimize it can be done for as low

as 41 2 cents The Commission therefore concurs in the Presiding Officer s

conclusion that the absorption theory is discriminatory as between

shipper customers and his rejection of that theory as justification for the

disparate forwarder fees assessed GSA vis avis commercial shippers

It is also argued on exception that continuing the present GSA bidding

practices is in the public interest in that it has caused the Government to

receive quality service at low rates while at the same injuring no one

This contention is without merit By enacting section 16 of the Act

among other provisions Congress has established the public policy to

11 Hearing Counsel advise that none of the Respondents have ever considered incremental pricing with respect to

theircommercial accounts

It On exception Meyer argues that it is incorrect to refer to its schedule fees as having been limited to 41 2

cents for each shipment accomplished for GSA because most shippers were allegedly charged an additional 5

per shipment for seclring dock receipts This contention is not particularly persuasive First there appears to be

some dispute between Meyer and GSA as towhether Meyer had a contractual right tocharge and collect its 5 charge

on PAS shipments or whether Meyer had an obligation to provide the receipts within the contract price of 4 2 cents

Secondly even assuming that Meyer could legally exact 5 for the issuance of the dock receipt on PAS shipments

and we certainly do not propose to decide this here we cannot find on this record that the 5 fee was in every

instance tacked on to the 41 2

cents bid charge to GSA In fact that the 5 fee was even according to Meyer

assessable only on PAS shipments would in and of itself indicate otherwise

19 F M C
626 FEDERAL MARITIME COMMISSION

be the fair and evenhanded treatment of similarly situated shippe

localities Respondents are furnishing GSA unwarranted advant

clear contravention of that policy In this regard the Presiding O

discussion is particularly appropriate and bears repeating

No one would seriously argue against the general proposition that the gove

should pay the lowest prices it can But such proposition carries within it the i

covent sic proper and appropriate in the circumstances No one for example 

suggest that the government should buy stolen goods because such goods 

obtained for less than the usual and legal price Similarly as here the gove

should not obtain services at prices which violate public policy and the statu

regulations enacted and promulgated in conformity therewith Nothing Congr

mandated to GSA in its procurement responsibilities contains within it a prescr

violate other statutes and regulations be a party to such violations or aid and lib

violations

The public policy to the extent it is expressed in sections 16 and 44 of the S

Act 1916 establishes that no shipper should be given an unreasonable prefer

advantage and forwarder services shall notbe rendered at reduced rates in consi

of receiving brokerage from carriers The prices bid to GSA in many instances 

direct violation of that policy

Moreover we do not necessarily agree with Air Sea that the 

bidding practices followed by certain Respondents here have inju

one Infact our fmdings would indicate otherwise To the extent t

fees bid GSAfor forwarding fees have not recovered the forwarders 

for performing such services they have arguably made comm

customers pay costs attributable to GSA shipments Ifa comm

shipper is called upon to subsidize any costs ofprocessing GSA ship

it follows that such shipper has been fmancially iIured to some d

Clearly Air Sea s bid for 5 cents does not cover incremental cos

alone distributed costs Thus a clear potential for subsidization 

We cannot therefore accept the conclusionary assurance that sim

one has been even remotely iIured by its practices lS

Nor as Air Sea argues will requiring forwarders to establish reas

and equitable charges for the handling of GSA shipments run cont

the public interest by substantially restrain ing competition with

entire forwarder industry Our decision here does nothing mor

require Respondents to honor an obligation imposed on them by la

that once a particular forwarding fee is established by aforwarde

particular service based on the circumstances ofhisoperation this 

made available to all shippers equally In any event and as a pr

matter because it is extremely unlikely that all forwarders are so 

in their operations that they share the same costs and indepen

would arrive at same fees and charges we fail to see how all comp

on fees and services will be eliminated by our action here Even 

were the result ofour decision however that decision would be 

dictated by the requirements of the Shipping Act 1916 Our autho
FREIGHT FORWARDER BIDS ON GOV T SHIPMENTS 627

take whatever action necessary to remedy discriminatory practices has

long been recognized See California v Us supra at p

83

After review and consideration of the record in this proceeding

including the Initial Decision and matters raised on exception we concur

in the Presiding Officer s conclusion that the unjustified disparity of fees

charged GSA and commercial shippers by Air Sea Meyer Cobal and

Smith resulted in violations of section 16 First ofthe Act The facts of

record clearly establish that the bidding practices followed by the above

named Respondent forwarders during the period at issue herein resulted

in the unwarranted preferential treatment of GSA over commercial

shippers Bids submitted on a per shipment basis were as low as 41 2

cents Meyer and 5 cents Air Sea In the case of Air Sea Meyer and

Cobal 14 there are wide variations between the per shipment charge to

GSA and the average per shipment charge on commercial shipments

While the variation between the level of the per shipment forwarding

fees assessed GSA and commercial shippers by Smith would appear to be

less substantial the record discloses that the unit price per shipment

charged GSA by Smith was less than the total forwarding fees collected

for any single commercial shipment forwarded by it during the relevant

period Further Smith has admitted that its GSA charges did not meet

distributed costs although its commercial fees do reflect the reasonable

value of services performed

The pattern offees assessed by forwarders found to be in violation of

the Act reveals a clear pattern ofreduction in fees charged GSA from

those charged other shippers This reduction is remarkable in every

instance when one considers the aforementioned inherent similarity ofthe

service obligations of a forwarder when handling GSA and commercial

shipments Under the circumstances the Presiding Officer s fmdings of

violations of section 16 First by Air Sea Meyer Cobal and Smith are

manifestly proper and well founded

With respect to the forwarding activities of Bush Ros Forwarding

Gulf Florida and Alltransport all of whom are licensed by the Commis

sion we agree with the Presiding Officer that the evidence ofrecord does

not sustain any violation ofsection 16 First by those Respondents

Violations ofSection 510 24 ofGeneral Order 4

Section 51O 24 b of General Order 4 as previously noted prohibits

forwarders from rendering forwarding services for a reduced forwarding

fee in consideration of brokerage Section 51O 21 m defmes the phrase

reduced forwarding fees as charges to aprincipal for forwarding

services that are below the licensee s usual charges

The Presiding Offic r concluded that those forwarders who violated

14 The differences in GSA versus commercial forwarder fees assessed by Cabal were 400 to 20 76 Houston

400 to 8 65 New OrJeans and 175 to 7 50 Baltimore This is in spite of Cabal s

admission that services ofa

freight forwarder performed on GSA and commercial shipments are not basically different as measured by the end

product

19 F MC
628 FEDERAL MARITIME COMMISSION

section 16 First with their appreciably lower GSA bids were only o

such bids in consideration ofreceiving ocean brokerage from car

cover their forwarding costs in violation of section 51024b of C

sion General Order 4 This conclusion was essentially premised 

finding that based on the relevant factors the average charges ma

and reasonably be deemed to be a reflection of usual charg

freight forwarder services

Air Sea Meyer and Cobal except to the Presiding Officer s conc

Air Sea and Cobal argue in part that average cannot be 

synonymous with usual AirSea believes it it absurd to 

average with usual and that by so doing the Commission mak

of the fees under the norm illegal Cobal explains that sin

Commission s section 21 Order issued in cor iunction with this proc

did not request any breakdown of the fees charged by type of 

provided be it usual or accessorial the responses submitted 

only the aggregate of the fees charged commercial shippers in ea

served Since the average fee allegedly does not reflect what s

were performed for a particular shipper in return for the fee 

submits that the Presiding Officer s comparison is invalid

We do not believe that in all instances the average commer

will be the forwarder s usual fee However given the fact t

service provided to GSA and to commercial shippers was ba

similar and the number of both GSA and commercial shipment

sufficiently large in number to be deemed areliable sample the Pr

Officer s determination on this record that the average commer

for a given port reflects the forwarder s usual fee for that por

unfounded

But however the usual charge is to be measured or determin

GSA bids found violative of section 510 24b are below any usua

and were demonstrably pegged at that level to take advantage o

volumes of GSA shipments and the accompanying brokerage 

evident when one compares Air Sea s GSA bid qf 5 cents fo

Angeles with its correspondent average ocean brokerage return of

Air Sea received over 19 000 in the first half of FY 1973 for h

government shipments only 45 70 of which can be attribu

forwarding fees paid by GSA

In FY 1973 Cobal provided GSA with forwarding services fo

per shipment at Houston contrasting with their average commercia

per shipment of 20 76 Average brokerage received by Cobal o

shipments at Houston was 50 78 during the same period F

Respondents found to be in violation of the Act and the Comm

regulations there is evidence in the record of significant var

between the level of the per shipment bids on GSA shipmen

brokerage received The Presiding Officer found this variation to 

sufficient magnitude to give rise to the reasonable probability that t

bids offered GSA by Air Sea Meyer Cobal and Smith w

19 
FREIGHT FORWARDER BIDS ON GOY T SHIPMENTS 629

consideration of the licensees receiving compensation from carriers in

violation of section 510 24 b of General Order 4

15 We concur in this

fmding as being consistent with the matters ofrecord herein

Sanctions

Virtually all the parties filing exceptions oppose the sanctions imposed

by the Presiding Officer i e revocation and suspension of certain

Respondents licenses as being either unlawful unwarranted or unreason

able This challenge has already been considered by the Commission in

its April 22 1976 Order Clarifying Scope ofProceeding wherein we set

aside as being beyond the scope of the proceeding the punitive actions

taken by the Presiding Officer 16 No action in the form ofrevocation or

suspension offorwarder licenses will be taken for violations found The

Commission intends however to monitor the activities ofRespondents

to ensure compliance with this Report and Order

Presiding Officer s Recommendations

In the closing section of his Initial Decision the Presiding Officer

recommended two actions regarding the regulation offreight forwarder

activities First he suggested that legislation prohibiting the payment of

brokerage to forwarders should be enacted The Presiding Officer

reasoned that the practice of brokerage under section 44 e of the Act is

inconsistent with the concept that no man can serve two masters

Second the Presiding Officer recommended that the Commission by rule

require freight forwarders to publish a schedule oftheir fees and charges

The publication of such schedules he found would conform to the

requirements ofboth section 16 First and section 17 ofthe Act in that it

would 1 make it more difficult to give any undue or unreasonable

preference to any particular person and 2 require the establishment

and observance ofjust and reasonable regulations and practices

Air Sea Coba1 and NCBFAA except to the Presiding Officer s collat

era1 proposa1s on the ground inter alia that they are gratuitous and

beyond the scope ofthis investigation We agree Whatever the merit of

the recommendations advanced in the Initia1 Decision they are clearly

beyond the issues set down for hearing in this proceeding and will be

disregarded

Prospective Relief

A number of proposa1s to resolve the GSA fee problem at issue here

have been advanced These proposals can be broken down into two

I Because section 510 24 b makes it unlawfulfor a

licensee to render oroffer torender any forwarding service

free ofcharge or at areduced fee alicensee who only offered torender but neveractuallyrendered such service at

free or reduced charge would stillrun afoul of that section

16 Pending before the Commission is a Motion to Withdraw Petition to Reopen Hearing filed by Smith The

Commission had originally been petitioned to reopen the hearing and remand the proceeding tothe Presiding Officer

in order that Smith might offer adefense to the sanctions ordered against it In view of the Commission s Order of

April 22 1976 Smith now asks that it be allowed towithdraw that petition Motion granted

19 F M C
630 FEDERAL MARITIME COMMISSION

categories 1 those advocating free or reduced rates for GSA 

those suggesting minimum fee charged GSA A discussion o

follows

1 Free or reduced rates

GSA suggests that section 510 24 b be amended to allow G

obtain forwarding services free of charge or at reduced rate

justification offered for this amendment is that GSA is uniqu

shipper is not competitive with commercial shippers and that the 

of its cargo and programs make its shipments indistinguishable from 

of charity or relief organizations which under section 510 24 

allowed free or reduced forwarding fees We cannot subscribe 

proposal

The feeling of the Committee on Merchant Marine and Fishe

expressed in its Report on the bill which ultimately added sectio

the Shipping Act 1916 was that

services which have been performed by forwarders for shippers sh

compensated for by the shippers and that where brokerage fees have been earne

forwarders or brokers then the carriers in turn should paY for these service

historical rate Both the carrier and the shipper should be expected to pay 

charge to each by the forwarders should be the reasonable value of the forw

service to each Emphasis added House Report No 1096 accompanying H 

87th Cong 1st Sess p

3

There is nothing in the Act or its legislative history to supp

conclusion that Government agencies are to be given preferred tre

on forwarding services If GSA must pay the same terminal and 

transportation charges as do commercial shippers we see no reas

GSA should acquire a preferred status in regards to forwarding s

Any amendment to section 51O 24b which would place GSA sh

in the same category as relief and charitable agencies 17 would i

permit forwarders of GSA shipments to rely on brokerage from 

carriers to cover the costs of processing such shipments This w

clearly inconsistent with the intent of Congress expressed above

Nor are we prepared at least at this time to exempt under sectio

the Act shipments of the civilian executive agencies of th

Government from the application ofthe provisions ofthe Shippi

1916 However we will continue to review this matter to determ

future feasibility ofthe requested exemption

2 Minimum fee charged GSA

There have also been suggested to us three approaches for 

GSA bids compensatory

Hearing Counsel s proposal would establish a unit cost fo

forwarding services by looking to the ratio of the commercial forw

fees charged by the licensee in the previous year to the total reven

11 We intend to review theexemption for reliefand charitable aaeneies in section lO 24b to determin

continues to be proper or lawful with the repeal of section 6 of the Intercoastal Shippina Act 1933

1
FREIGHT FORWARDER BIDS ON GOV T CARGO 631

measure of the value of service to the shipper In essence Hearing

Counsels proposed rule is based on the premise that the forwarder s cost

per shipment for forwarding commercial shipments in the previous year

provides a reasonable indication of the cost associated with processing

GSA shipments This approach is allegedly geared towards preventing the

shifting ofthe burden of paying for GSA services to the commercial

shipper

NCBFAA simply proposes to set the fee charged GSA to the average

fee charged commercial accounts in the preceding fiscal year

The Presiding Officer would amend section 51O 24b to require that the

forwarding fee assessed any government agency not be less than the

average forwarding feefor similar services rendered to other accounts in

the preceding year

We are not convinced by the facts before us that the implementation of

either ofthe formulas ofHearing Counselor NCBFAA would accomplish

the desired result Nor are we prepared to accept the Presiding Officer s

proposal without a more thorough review ofexisting forwarding services

practices and fees We are reluctant to establish binding rules ofuniversal

application governing the level offreight forwarder fees on the basis of

the existing limited record The important matter of what objective

standards if any should be adopted to judge the acceptability of

forwarding GSA bids under the Shipping Act 1916 and the Commission s

regulations is one that requires considerably more study and analysis

We do not intend to take any precipitous action no matter how well

motivated that might result in the establishment of requirements which

could prove impossible ofapplication or unduly or unnecessarily disrup

tive of the freight forwarder industry Whatever standards are fmally

adopted must be well reasoned economocally sound and consistent with

responsible regulatory policy In deciding not to prescribe detailed fee

requirements we are certainly not blind to the seriousness of the

problems underlying the practices found unlawful herein Quite to the

contrary it is our acute awareness and concern with these problems that

prompts us to exercise restraint in prescribing a solution lest we

compound their consequences In this case delay is manifestly preferable

to error

We will therefore hold under advisement pending further study S

and

review the issue raised in our Order instituting this proceeding of

whether the Commission s General Order 4 should be amended to

include a rule governing the practices of forwarders bidding on GSA

contracts and providing services thereunder In the interim each freight

forwarder issuing bids to GSA should determine and establish based on

his costs and the circumstances of his operation the fee that will be

assessed GSA for the processing of its shipments Consistent with our

18 This study will as discussed earlier include aconsideration of the feasibility of exempting GSA shipments from

the provisions of the Shipping Act 1916 under section 35 of that Act

19 F MC
632 FEDERAL MARITIME COMMISSION

findings herein we would expect that whatever GSA fee is establis

compensatory equitable and nondiscriminatory vis a vis comm

accounts

Conflict Between Laws

One mal point should be addressed GSA has placed heavy relia

us v Georgia Public Service Commission 371 U S 285 1963 

discussion of an alleged conflict between the laws administered b

and this Commission 19 That reliance however is clearly misplace

issue here it not one of conflict between a federal statute and sta

under the Supremacy Clause but rather one of reconciling the f

requirements of the Shipping Act 1916 with the federal procur

requirements ofnegotiated rates under the Federal Property Act 

authority to obtain transportation at the lowest overall cost do

overrule the requirement that the rate agreed upon for such transpo

be lawful under the Shipping Act This is particularly so sin

Shipping Act contains no exemption ofthe type appearing in sectio

the Interstate Commerce Act lCA granting the Government pr

status Rates and charges assessed the Government must theref

reasonable and nondiscriminatory and otherwise comply fully w

substantive provisions ofthe Shipping Act 1916 Viewed in this 

there is no conflict between the requirements imposed by the F

Property Act and the Shipping Act 1916 and GSA s contention 

contrary must be rejected

WHEREFORE IT IS ORDERED That Respondents Air Sea F

ders Inc Cobal International Inc Meyer Shipping Company a

O Smith and Company immediately cease and desist from sub

bids to GSA for forwarding services to be provided thereunder wh

inconsistent with our decision herein

S JOSEPH C POLKINO

Acting Secre

ItThis decision concerned al ontllct botwoon afederal procurement statuto and alaw of lb State 

govcminl therates established for the transportation of household IOods within that State The Court b

Supremacy Clause of the US Constitutionpve preference to the provi iona of the FedoralProperty Act 

481 et al which authorizcs the Administrator of OSA to seek preferential treatmentfor federal shipmen

requirements of the state statute

19 
19 F MC 633

FEDERAL MARITIME COMMISSION

INFORMAL DOCKET No 3361

ALFRED KUBIES WESTERN CORP

v

ROYAL NETHERLANDS STEAMSHIP CO

NOTICE OF DETERMINATION NOT TO REVIEW

March 7 977

Notice is hereby given that the Commission on March 17 1977

determined not to review the decision of the Settlement Officer in this

proceeding served March 9 1977

By the Commission

S JOSEPH C POLKING

Acting Secetary
FEDERAL MARITIME COMMISSION

INFORMAL DoCKETNo 336 1

ALFRED KUBIES WESTERN CORP

v

ROYAL NETHERLANDS STEAMSHIP CO

March 9 1977

Reparation awarded

DECISION OFJUAN E PINE SETTLEMENT OFFICER

Alfred Kubies Western Corp complainant claims 402 00 as r

tion from Royal Netherlands Steamship Co carrier for an alleged 

overcharge on a shipment carried from New York New York to P

Prince Haiti via the SS METEOR on bill oflading Number 92 date

21 1975 The consignee was Firestone Interamerica Company P

Prince While the complainant does not specifically allege a viola

the Shipping Act 1916 it is presumed to be Section 18b 3

The carrier denied the claim on August 27 1975 solely on the b

Item 45 b United States Atlantic and Gulf Haiti Conference F

TariffF M C No 1 which provides in part

Adjustment of freight based on alleged error in description wiD be d

unless application is submitted in writing sufficiently in advance to per

verification of description before the cargo leaves the carrier s possession 2

The shipment consisted of 12 crates identified on the bill oflad

El Commercial Freezers weighing 2 940 pounds and measuring 48

feet The carrier assessed a 4th class rate of 84 50 per measurem

based on the tariff description of Food Freezers Mechanical N 

Complainant alleges that the shipment consisted of Food Fre

I Both parties havina consented to the informal procedure of Rule 198 of theCommission Rules of P

Procedure 46 CPR 02 301 304 this decision will be final uRIc the Commillion elect to review it with

from thedate of service thereof

1 With respect to asimilar role reaardina the fdina of aclaim for reparation based on weiahta or me

before the shipment involved leave the cIltody of the carrier in Kraft Food v Moore McCormack Lin

its report on remand served November 24 1976 the Com minion held The Court of Appeals on 

determined that Rule 16 asimilar rule is not avalid tariff provisIon insofar as it conflicts with sectio

Shippil1l Act 1916 In effect the Rule set up aperiod of limitation the time durina which the shipm

in the custody of the carrier which limitation was reviewed by the Court as infrinail1l on the riahts aranted 

22 of theShipplnlAct

634 19 
ALFRED KUBIES WESTERN v ROYAL NETHERLANDS 635

Mechanical Household which take a class 18 rate of 5100 per measure

ment ton The surcharges would be identical using either description

Complainant alleges that instead ofbeing charged 84 50 for 12 measure

ments tons or 1 014 00 as it was it should have been charged 5100 for

12 measurement tons or 612 00 The overcharge claim is for 402 00

In support ofits claim the complainant has submitted the following

1 A copy ofthe subject bill oflading describing the commodities as 12

Crates El Commercial Freezers

2 Complainant s commercial invoice number 10336 dated May 21

1975 identifying the freezers as Models H 16

3 A Shipper s Export Declaration Correction Form dated July 10 1975

fded by complainant with the Customs Director at the Port of New York

changing the commodity description Com Food Freezers to El

Household Freezers The comment thereon is Inadvertent error in

description

4 A copy of complainant s original letter dated June 20 1975 to the

Consulate General of Haiti in New York New York requesting a

correction ofthe consular invoice amending the commodity description to

read Domestic Evercold Freezers for Operation on 115 60 A stamp

and signature to the effect that the letter was seen and noted by the New

York Consulate General of Haiti appears on the letter Complainant

advises that ordinarily no further action would be taken by the Consulate

General

5 Complainant s order No K 6504R of May 9 1975 placed with

the manufacturer W C Wood Co Ltd Guelph Canada for 12 Model

H16 Evercold Freezers

6 The manufacturer s price list effective on or after January 1 1975

which indicates that Model H 16 as well as all other freezers on the list

are household freezers

7 A catalog ofW C Wood Co Ltd the manufacturer in which it is

indicated There are six basic sizes of Chest freezers built with the

Wood s care to fit your family s needs The photographs ofthe freezers

and the descriptions thereof clearly indicate that they including Model H

16 are household freezers The measurements of Model H 16 are 461

inches long 291 inches wide and 36 inches high The capacity is 16

cubic feet

Therefore on the basis ofthe above information it is found that an

adequate substantiation of the complainant s claim that the shipment

consisted of household freezers has been established Complainant is

awarded reparation of 402 00

S JUAN E PINE

Settlement Officer

19 F M C
FEDERAL MARITIME COMMISSION

SPECIAL DOCKET No 507

UNITED FORWARDERS SERVICE INC

v

SEA LAND SERVICE INC

NOTICE OF ADOPfION OF INITIAL DECISION AND ORD

PERMITTING WAIVER OF CHARGES

March 23 1977

No exceptions having been taken to the initial decision i

proceeding and the Commission having determined not to review 

notice is hereby given that the initial decision became the decision 

Commission March 23 1977

Itis Ordered That applicant is authorized to waive collect

362 50 of the charges previously assessed United Forwarders Se

Incorporated

It is further Ordered That applicant shall promptly publish 

appropriate tariff the following notice

Notice is hereby given as required by the decision of the Federal M

Commission in Special Docket 507 that effective September 16 1976 for purp

refund or waiver of freight charges on any shipmenis which may have been s

during the period from September 16 1976 through January 7 1977 the rate on 

Goods Soles is 122 30 W M subject to all applicable rules regulations ter

conditions of said rate and this tariff

It is further Ordered That waiver of the charges shall be effect

within 30 days of service of this notice and applicant shall withi

days thereafter notify the Commission of the date and mann

effectuating the waiver

By the Commission

S JOSEPH C POLKING

Acting Secreta

636 19 F 
FEDERAL MARITIME COMMISSION

SPECIAL DOCKET No 507

UNITED FORWARDERS SERVICE INC

v

SEA LAND SERVICE INC

Adopted March 23 1977

Application granted

INITIAL DECISIONl OF THOMAS W REILLY

ADMINISTRATIVE LAW JUDGE

Pursuant to section 18 b 32 ofthe Shipping Act 1916 as amended by

P L 90298 and section 502 92 ofthe Commission s Rules of Practice

and Procedure 46 CFR 502 92 Sea Land Service Inc Sea Land or

Applicant has applied for permission to waive collection of aportion of

the freight charges on a shipment of rubber soling that moved from

Elizabeth New Jersey to San Jose Costa Rica under aSea Land bill of

landing dated December 18 1976 The application was filed February 3

1977

The subject shipment moved under Sea Land Tariff 261 FMC No

140 original page 96 effective September 16 1976 under the rate for the

item Rubber goods viz Belting through Soles all under Item

3410 The aggregate weight of the shipment was 4 800 pounds and it

measured 145 cubic feet 3 625 measurement tons The rate applicable at

the time of shipment 222 30 W M ie 222 30 per ton of 2000 pounds

or 40 cubic feet whichever creates the greater revenue The rate sought

to be applied is 122 30 W M per Sea Land Tariff 261 FMC No 140

1st revised page 96 item 3410 effective January 7 1977 correction No

445

Aggregate freight charges payable pursuant to the rate applicable at the

time of shipment amounted to 805 84 22 30 x 3 625 measurement

tons Aggregate freight charges at the rate sought to be applied amount

to 443 34 The difference sought to be waived is 362 50 The Applicant

I

This decision became the decision of the Commission March 23 1977

2

46 U S C 817 as amended

19 F MC 637
638 FEDERAL MARITIME COMMISSION

is not aware ofany other shipment ofthe saine commodity which m

via Sea Land during the same time period at the rates involved in 

shipment

Sea Land offers the following as grounds for granting the applicat

4 In Sea Land Service Tariff 217 A FMC 102 Rubber Goods Soles reflected 

of 111 20 weight or measure whichever created the greater revenue exhibit I

Effective September 16 1976 Section I of Tariff 217 A which named rates in

Rubber Goods Soles to Costa Rica was deleted from Tariff 217 A exhibit 2 an

published on statutory notice in freight tariff 261 FMC No 140 The rates na

Tariff217 A were subject to a 10 General Rate Increase and were brought fo

into Tariff 261 with the increase rolled in In computing the 10 G R IRubber 

Soles which was at a level of 11120 was to be increased to 122 30 Inadverten

tariff clerk recorded the new rate as 222 30 exhibit 3 The error in computati

not recognized and the incorrect rate was published on original page 96 Ta

effective September 16 1976 exhibit 4 On December 24 1976 United Forward

behalf of American BUtrite forwarded a shipment of Rubber Soles to Costa Rica 

5 Upon receipt of the bill United Forwarders noting the apparent rate error con

Sea Land salesman T Petro who in turn contacted M Cox Sea Land Car

Pricing to notify him of the clerical error exhibit 6

On January 7 1977 the rate was reduced to the proper level of 122 30 W M e

7 and 8

United Forwarder s paid Sea Land exhibit 9 based on 122 30 WM

A clerical error in computing an increased rate resulted an erroneous rate 

published in Sea Land Tariff 261 A corrected publication was made promptly fo

disclosure of the initial erroneous publication

Section 18b 3 ofthe Shipping Act 1916 46 USC 816 as amend

Public Law 9 298 and Ru1e 6b Special Docket Applications Ru

Practice and Procedure 46 CPR 502 92 a set forth the applicabl

and regu1ation The pertinent portion of 18b 3 provides that

The Commission may in its discretion and for good cause shown pe

common carrier by water in foreign commerce to refund a portion of freight c

collected from a shipper or waive the collection of a portion of the charges 

shipper where it appears that there is an error in a tariff of a clerical or admini

nature or an error due to an inadvertence in failing to file a new tariff and tha

refund or waiver will notresult in discrimination among shippers Provided furthe

the common carrier has prior to applying to make refund filed a new tariffw

Commission which sets forth the rate on which such refund or waiver wo

based and Application for refund or waiver mus be filed with the Comm

within 180 days from the date of shipment 3

The clerical and administrative error recited in the subject applica

of the type within the intended scope of coverage of section 18 b 

the Act and section 502 92 of the Commissioh s Rules of Practic

Procedure

Therefore upon consideration of the documents presented b

Applicant it is found that

1 There was an error in atarif of aclerical or administrative n

resulting in the inadvertent filing of a much higher rate than mere

intended new rate with the 10general rate increase

1 For other provisions and requirements see f l8bX3 and 502 92 of the Commission s Rules of Pr

Procedure 46 CFR 502 92 a c

19 
UNITED FORWARDERS INC v SEA LAND 639

2 Such a waiver ofcollection ofa portion ofthe freight charges will not

result in discrimination among shippers

3 Prior to applying for authority to waive collection of a portion ofthe

freight charges Sea Land filed a new tariff which set forth the rate on

which such waiver would be based

4 The application was filed within 180 days from the date ofthe suQject

shipment

Accordingly permission is granted to Sea Land to waive collection of

a portion ofthe freight charges specifically the amount of 362 50 An

appropriate notice will be published in Sea Land s tariff

S THOMAS W RRILLY

Administrative Law Judge

WASHINGTON D C

March 2 1977

19 F M C
FEDERAL MARITIME COMMISSION

INFORMAL DoCKET No 367 1

CATERPILLAROVERSEAS S A

v

SPRlNGBOK LINE LTD

NOTICE OF DETERMINATION NOT TO REVIEW

March 21 1977

Notice is hereby given that the Commission on March 21 

determined not to review the decision of the Settlement Officer i

proceeding served March 10 1977

By the Commission

S JOSEPH C POLKING

Acting Secret

J

i

640 19 
FEDERAL MARITIME COMMISSION

INFORMAL DOCKET No 367 1

CATERPILLAR OVERSEAS S A

v

SPRINGBOK LINE LTD

Dismissal of Complaint

DECISION OF RONALDJ NIEFORTH SETTLEMENT OFFICER

By complaint filed October 15 1976 Caterpillar Overseas S A

complainant alleges that Springbok Line Ltd carrier applied an

incorrect rate on three shipments of Engines and Parts Viz Automobile

Gasoline or Diesel and Parts N O S resulting in an overcharge of

1 863 77 It seeks refund of this amount pursuant to the informal

procedure contained in Subpart S 46 CFR 502 of Commission s informal

procedure for adjudication of small claims subject to discretionary

Commission review

While a violation of the Shipping Act 1916 is not specifically alleged

in support ofcomplainant s petition it appears from the nature of the

complaint that the claim for refund relates to the requirements of Section

18 b 3 which prohibits the assessment of rates and charges other than

those specified in the carrier s tariff on file with the Commission and du1y

published and in effect at the time It further appears that informal

settlement ofthe complaint is considered by the carrier to be time barred

by tariff Rule 16 entitled OVERCHARGES which Rule places a

limitation period of six months for the filing of claims described in the

Rule The merits of the complaint are therefore considered based upon

these premises

As noted in the complaint the shipments here involved were previously

the subject of a formal complaint Docket No 7639 which was

dismissed onjunsidictional grounds by Administrative Law Judge Glanzer

by Initial Decision served September 30 1976 after the filing ofajoint

Stipu1ation ofFacts and Motion for Authorization to Settle Dismissal of

I Both parties having consented to the informal procedure of Rule 19 of the Commission s Rules of Practice and

Procedure 46 CFR 502 301 304 this decision will be finaJ unless the Commission elects toreview it within 15 days

from the date of service thereof Note Notice of determination not toreview March 21 1977

19 F M C 641
642 FEDERAL MARITIME COMMISSION

I

the complaint did not restrict the complainant s right to resubmit its 

correcting the jurisdictional grounds defect found in Docket No 

The instant docket obviously is intended to accomplish this purpose

The claim at issue involves a simple case ofimproper rate appli

wherein cargo described on the bill of lading as Truck Engines 

Engines Automotive for replacement was assessed a different rat

that which is specified in the tariff as being applicable at the time 

of a rate of 119 50 per cubic feet which rate was assessed on the 

shipments identified in the claim the carrier s applicable United S

South and East Africa Conference Southbound Freight TariffNo 2 

No 3 provided in Item 255 Second Revised Page 152 Correction 

base rate of 70 25 per 40 cubic foot or 2 240 pounds which rate 

have applied on the shipments in question

Ordinarily this observation would warrant the issuance of an 

directing that the overcharge of 1 863 77 be refunded to the compl

Inthis instance however such action would be redundant for the 

that a check in full settlement ofthe overcharge has in the meantime 

paid by the carrier as confirmed in letter ofNovember 12 1976 sub

by attorney for the complainant

While in ordinary circumstances the carrier could be admonish

taking unilateral action in a proceeding before the Commissio

thereby prejudging the decision which might be rendered I

fmd tha

a regulatory standpoint the conference tariff did not prohibit an inf

settlement ofthe rate issue and there was therefore no legal neces

bring the matter before this agency for formal resolution This pos

based upon the fact that an informal settlement of the claim was no

barred by Ru1e 16 ofthe tariff as the carrier apparently believ

careful review of the Rule reveals that it does not extend to 

involving the niere misapplication of a rate which is the issue 

Docket It is noted that the ru1e could be phrased in a clearer man

appropriately inserting the words except as otherwise provided 

first paragraph in order to alert a tariff user of the pertinent exc

which appears in part 3 ofthe rqle

Following is a statement ofthe ru1e as it appears on pages 110 an

ofthe tariff

OVERCHARGES

Claims for adjustment of freight charges if based on alleged err

description weight andor measurement will not be considered 

presented to the carrier in writing before shipment involved leave

custody ofthe carrier Any expenses incurred by the carrier in conn

with its investigation ofthe claim shall be borne by the party respo

for the error or if no error be found by the claimant All other claim

adjustment offreight charges must be presented to the carrier in w

19 
8 RONALD J NIEFORT

Settlement Officer

CATERPILLAR OVERSEAS v SPRINGBOK LINE 643

within six 6 months after date ofshipment The limitation of six months

does not apply to U S Government or its agencies

I For purpose of uniformity in handling claims for excess measurements refunds

will only be made as follows

a Where an error has been made by the dock in calculation of measurements

b Against re measurements at port of loading prior to ship s departure

c Against re measurement by steamer s agent at destination

d By Joint re measurement of steamer s agent and consignee

e By re measurement of a marine surveyor when requested by steamer s agent

fRe measurement fees and cable expenses in all cases to be paid by party at

fault

2 In cases of claims by shipper of overcharges in weight certified invoice or

weigher s certificate to be considered evidence of proper weight

3 Except those claims for obvious error in calculation ormisapplication of rate or

rate basis all claims of adjustment in freight charges must be presented to the carrier in

waiting within six months after date of shipment

The assessment of a rate which differs from that which the tariff provides

clearly falls within the exception provided in paragraph 3 above as it

relates to misapplication of a rate

CONCLUSION AND ORDER

I

find that in view ofthe fact that the claim at issue has been properly

settled between the carrier and the complainant subsequent to the filing of

this Docket with this Commission and in view ofthe fact that there is no

tariff regulation or statutory provision which bars the parties from

informally taking such action a formal order with respect to this Docket

is unwarranted Complaint dismissed

19 F MC
FEDERAL MARITIME COMMISSION

INFORMAL DoCKET No 368 1

CATERPILLAR OVERSEAS S A

v

SOUTH AFRICAN MARINE CORPORATION LTD

NOTICE OF DETERMINATION NOT TO REVIEW

March 21 1977

Notice is hereby given that the Commission on March 21 

determined not to review the decision of the Settlement Officer 

proceeding served March 10 1977

By the Commission

S JOSEPH C POLKING

Acting Secre

J

644 19 
19 F M C 645

FEDERAL MARITIME COMMISSION

INFORMAL DoCKET No 368 1

CATERPILLAR OVERSEAS S A

v

SOUTH AFRICAN MARINE CORPORATION LTD

Dismissal of Complaint

DECISION OF RONALD J NIEFORTH SETTLEMENT OFFICER1

By complaint filed October 15 1976 Caterpillar Overseas S A

complainant alleges that South AfricaMarine Corporation Ltd carrier

applied an incorrect rate on three shipments of Engines and Parts Viz

Automobile Gasoline or Diesel and Parts N O S resulting in an

overcharge of 1 633 66 It seeks refund ofthis amount pursuant to the

informal procedure contained in Subpart S 46 CFR 502 ofCommission s

informal procedure for adjudication of small claims subject to discretion

ary Commission review

While a violation ofthe Shipping Act 1916 is not specifically alleged

in support of complainant s petition it appears from the nature of the

complaint that the claim for refund relates to the requirements of Section

18b 3 which prohibits the assessment of rates and charges otherthan

those specified in the carrier s tariff on fIle with the Commission and duly

published and in effect at the time It further appears that informal

settlement of the complaint is considered by the carrier to be time barred

by tariff Rule 16 entitled OVERCHARGES which Rule places a

limitation period of six months for the filing of claims described in the

Rule The merits ofthe complaint are therefore considered based upon

these premises

As noted in the complaint the shipments here involved were previously

the subject of a formal complaint Docket No 7639 which was

dismissed on jurisdictional grounds by Administrative Law Judge Glanzer

by Initial Decision served September 30 1976 after the fIling of ajoint

Stipulation ofFacts and Motion for Authorization to Settle Dismissal of

1 Both parties having consented to the informal procedure of Rule 19 of the Commission s Rules of Practice and

Procedure 46 CPR 502 301 304 this decision will be final unless the Commission elects to review it within 15 days

from the dateof service thereof Notice of determination not to review March 21 1977
646 FEDERAL MARITIME COMMISSION

the complaint did not restrict the complainant s

right to resubmit its 

correcting the jurisdictional grounds defect found in Docket No 

The instant docket obviously is intended to accomplish this purpose

The claim at issue involves a simple case of improper rate appl

wherein cargo described on the bill of lading as Truck Engines 

Engines Automotive for replacement was assessed adifferent rat

that which is specified in the tariff as being applicable at the time 

of a rate of 119 50 per cubic feet which rate was assessed on the 

shipments identified in the claim the carrier s applicable United 

South and East AfricaConference Southbound Freight Tariff No 2 

No 3 provided in Item 255 Second Revised Page 152 Correction 

base rate of 70 25 per 40 cubic foot or 2 240 pounds which rate 

have applied on the shipments in question

Ordinarily this observation would warrant the issuance of an 

directing that the overcharge of 1 633 66 be refunded to the comp

Inthis instance however such action would be redundant for the 

that acheck in full settlement ofthe overcharge has in the meantim

paid by the carrier as confirmed in letter of November 12 1976 sub

by attorney for the complainant

While in ordinary circumstances the carrier could be admonish

taking unilateral action in a proceeding before the Commissio

thereby prejudging the decision which might be rendered Ifmd tha

a

regulatory standpoint the conference tariff did not prohibit an in

settlement ofthe rate issue and there was therefore no legal nece

bring the matter before this agency for formal resolution This pos

based upon the fact that an informal settlement ofthe claim was n

barred by Rule 16 of the tariff as the carrier apparently believ

careful review of the Rule reveals that it does not extend to 

involving the mere misapplication of a rate which is the issue 

Docket It is noted that the rule could be phrased in a clearer man

appropriately inserting the words except as otherwise provided 

first paragraph in order to alert a tariff user of the pertinent exc

which appears in part 3 ofthe rule

Following is a statement ofthe rule as it appears on pages 110 a

ofthe tariff

OVERCHARGES

Claims for adjustment offreight charges if based on alleged er

description weight andor measurement will not be considered 

presented to the carrier in writing before shipment involved leav

custody of the carrier Any expenses incurred by the carrier in con

with its investigation ofthe claim shall be borne by the party resp

for the error or if no error be found by the claimant All other cla

adjustment of freight charges must be presented to the carrier in 

19 
S RONALD J NIEFORTH

Settlement Officer

CATERPILLAR OVERSEAS v SOUTH AFRICAN MARINE 647

within six 6 months after date ofshipment The limitation of six months

does not apply to U S Government or its agencies

I For purpose of uniformity in handling claims for excess measurements refunds

will only be made as follows

a Where an errorhas been made by the dock in calculation of measurements

b Against re measurements at port of loading prior to ship s departure

c Against re measurement by steamer s agent at destination

d By Joint re measurement of steamer s agent and consignee

e By re measurement of a marine surveyor when requested by steamer s agent

0 Re measurement fees and cable expenses in all cases to be paid by party at

fault

2 In cases of claims by shipper of overcharges in weight certified invoice or

weigher s certificate to be considered evidence of proper weight

3 Except those claims for obvious error in calculation ormisapplication of rate or

rate basis all claims of adjustment in freight charges must be presented to the carrier in

waiting within six months after date of shipment

The assessment ofarate which differs from that which the tariff provides

clearly falls within the exception provided in paragraph 3 above as it

relates to misapplication ofa rate

CONCLUSION AND ORDER

Ifind that in view ofthe fact that the claim at issue has been properly

settled between the carrier and the complainant subsequent to the filing of

this Docket with this Commission and in view ofthe fact that there is no

tariff regulation or statutory provision which bars the parties from

informally taking such action a formal order with respect to this Docket

is unwarranted Complaint dismissed

19 F MC
FEDERAL MARITIME COMMISSION

INFORMAL DoCKET No 3661

CATERPILLAR OVERSEAS S A

v

SPRlNGBOK SHIPPING COMPANY LTD

NOTICE OF DETERMINATION NOT TO REVIEW

March 21 1977

Notice is hereby given that the Commission on March 21 

determined not to review the decision ofthe Settlement Officer 

proceeding served March 10 1977

By the Commission

S JOSEPH C PoLKING

Acting Secre

648 19 
19 F M C 649

FEDERAL MARITIME COMMISSION

INFORMAL DoCKET No 366 1

CATERPILLAR OVERSEAS S A

v

SPRINGBOK SHIPPING COMPANY LTD

Dismissal of Complaint

DECISION OF RONALD J NIEFORTH SETTLEMENT OFFICER 1

By complaint filed October 15 1976 Caterpillar Overseas S A

complainant alleges that Springbok Shipping Company Ltd carrier

applied an incorrect rate on three shipments of Engines and Parts Viz

Automobile Gasoline or Diesel and Parts N O S resulting in an

overcharge of 1 275 89 It seeks refund of this amount pursuant to the

informal procedure contained in Subpart S 46 CPR 502 ofCommission s

informal procedure for adjudication of small claims subject to discretion

ary Commission review

While a violation ofthe Shipping Act 1916 is not specifically alleged

in support of complainant s petition it appears from the nature of the

complaint that the claim for refund relates to the requirements ofSection

18 b 3 which prohibits the assessment of rates and charges other than

those specified in the carrier s tariffon ftle with the Commission and duly

published and in effect at the time It further appears that informal

settlement ofthe complaint is considered by the carrier to be time barred

by tariff Rule 16 entitled OVERCHARGES which Rule places a

limitation period of six months for the filing of claims described in the

Rule The merits of the complaint are therefore considered based upon

these premises

As noted in the complaint the shipments here involved were previously

the subject of a formal complaint Docket No 7639 which was

dismissed on jurisdictional grounds by Administrative Law Judge Glanzer

by Initial Decision served September 30 1976 after the ftling of a joint

Stipulation of Facts and Motion for Authorization to Settle Dismissal of

1 Both parties having consented to the informal procedure of Rule 19 of the Commission s Rules of Practice and

Procedure 46 CFR 502 301 304 this decision will be final unless the Commission elects to review it within 15 days

from the date of service thereof Note Notice ofdetermination not to review March 21 1977
650 FEDERAL MARITIME COMMISSION

i

the complaint did not restrict the complainants

right to resubmit it

correcting the jurisdictional grounds defect found in Docket No 

The instant docket obviously is intended to accomplish this purpos

The claim at issue involves a simple case of improper rate app

wherein cargo described on the bill of lading as Truck Engines 

Engines Automotive for replacement was assessed a different ra

that which is specified in the tariff as being applicable at the time 

of arate of 119 50 per cubic feet which rate was assessed on th

shipments identified in the claim the carrier s applicable United 

South and East Africa Conference Southbound Freight Tariff No 2 

No 3 provided in Item 255 Second Revised Page 152 Correction 

base rate of 70 25 per 40 cubic foot or 2 240 pounds which rate 

have applied on the shipments in question

Ordinarily this observation would warrant the issuance of a

directing that the overcharge of 1 275 89 be refunded to the comp

In this instance however such action would be redundant for the 

that a check in full settlement ofthe overcharge has in the meantim

paid by the carrier as confirmed in letter ofNovember 12 1976 su

by attorney for the complainant

While in ordinary circumstances the carrier could be admonis

taking unilateral action in a proceeding before the Commissio

thereby prejudging the decisionwhich might be rendered Irod th

a regulatory standpoint the conference tariff did not prohibit an in

settlement of the rate issue and there was therefore no legal nece

bring the matter before this agency for formal resolution This pos

based upon the fact that an informal settlement ofthe claim was n

barred by Rule 16 of the tariff as the carrier apparently belie

careful review of the Rule reveals that it does not extend to 

involving the mere misapplication of a rate which is the issue 

Docket It is noted that the rule could be phrased in aclearer ma

appropriately inserting the words except as otherwise provided 

first paragraph in order to alert atariff userof the pertinent ex

which appears in part 3 ofthe rule

Following is astatement ofthe rule as it appears on pages 110 

ofthe tariff

OVERCHARGES

Claims for adjustment offreight charges if based on alleged e

description weight andor measurement will not be considered 

presented to the carrier in writing before shipment involved lea

custody of the carrier Any expenses incurred by the carrier in con

with its investigation ofthe claim shall be borne by the party resp

for the error or if no error be found by the claimant All other cla

adjustment offreight charges must be presented to the carrier in 

1
CATERPILLAR OVERSEAS v SPRINGBOK S CO 651

within six 6 months after date ofshipment The limitation ofsix months

does not apply to U S Government or its agencies

1 For purpose of uniformity in handling claim for excess measurements refunds will

only be made as follows

a Where an error has been made by the dock in calculation of measurements

b Against re measurements at port of loading prior to ship s departure

c Against re measurement by steamer s agent at destination

d By Joint re measurement of steamer s agent and consignee

e By re measurement of a marine surveyor when requested by steamer s agent

tRe measurement fees and cable expenses in all cases to be paid by party at

fault

2 In cases of claims by shipper of overcharges in weight certified invoice or

weigher s certificate to be considered evidence of proper weight

3 Except those claims for obvious error in calculation or misapplication of rate or

rate basis all claims of adjustment in freight charges must be presented to the carrier in

waiting within six months after date of shipment

The assessment ofarate which differs from that which the tariff provides

clearly falls within the exception provided in paragraph 3 above as it

relates to misapplication of arate

CONCLUSION AND OORDER

I

find that in view of the fact that the claim at issue has been properly

settled between the carrier and the complainant subsequent to the filing of

this Docket with this Commission and in view ofthe fact that there is no

tariff regulation or statutory provision which bars the parties from

informally taking such action aformal order with respect to this Docket

is unwarranted Complaint dismissed

S RONALD J NIEFORTH

Settlement Officer

19 F M C
FEDERAL MARITIME COMMISSION

SPECIAL DocKET No S

INTERNATIONAL PAPER COMPANY

v

GULF UNITED KINGDOM CONFERENCE

1

NOTICE OFADOPrION OF INITIAL DECISION AND ORD

PERMITTING WAIVER OF CHARGES

March 23 1977

No exceptions having been taken to the initial decision 

proceeding and the Commission having determined not to review 

notice is hereby given that the initial decision became the decision 

Commission March 23 177

It is Ordered That applicant is authorized to waive collec

2 440 73 of the charges previously assessed IntemationalPape

pany

It is further Ordered That applicant shall promptly publish 

appropriate tariff the following notice

Notice is hereby given as required by the decision of the Federal M

Commission in Special Docket 508 that effective May 28 1976 for purposes 

or waiver of freight charges on any shipments which may have been shipped d

period from May 28 1976 through December 16 1976 the rate basis for Pap

Dunnage Inflatable was W only subject to all applicable rules regulations te

conditions of said rate and this tariff

Itis further Ordered That waiver of the charges shall be effe

within 30 days of service of this notice and applicant shall with

days thereafter notify the Commission of the date and ma

effectuating the waiver

By the Commission

1

1

i

S JOSEPH C PoLKING

Acting Secre

652 19 
19 F MC 653

FEDERAL MARITIME COMMISSION

SPECIAL DocKET No 508

INTERNATIONAL PAPER COMPANY

v

GULF UNITED KINGDOM CONFERENCE

Application granted

INITIAL DECISION OF THOMAS W REILLY

ADMINISTRATIVE LAW JUDGE

Pursuant to section 18b 3

2

ofthe Shipping Act 1916 as amended by

P L 90298 and section 502 92 of the Commission s Rules ofPractice

and Procedure 46 CFR 502 92 Gulf United Kingdom Conference Gulf

U K or Applicant has applied for permission to waive collection on

behalf of Sea Land Service Inc of aportion ofthe freight charges on a

shipment ofpaper bags that moved from New Orleans Louisiana via

Rotterdam to Preston U K under Sea Land bill of lading dated

December 1 1976 The application was fIled on January 31 1977 with a

re submittal on February 14 1977 which supplied verified signatures

missing from the original fIling

The subject shipment moved under Gulf United Kingdom Conference

Tariff No 38 FMC 17 page 949th revised effective May 28 1976

which governs shipments from U S GulfofMexico ports to ports in the

United Kingdom The aggregate weight of the shipment was 7 863

pounds The rate applicable at time ofshipment was 270 WM under the

noncontract rate for paper bags dunnage inflatable The rate sought to

be applied is 270 per ton of2 240 pounds weight only per Gulf United

Kingdom Conference Tariff No 38 FMC 17 page 9410th revised

correction No 1089 effective December 16 1976

Aggregate freight charges payable pursuant to the rate applicable at

time of shipment amounted to 3 388 50 plus handling and wharfage

charges Aggregate freight charges at the rate sought to be applied amount

to 947 77 plus handling and wharfage charges The difference sought to

be waived is 2 440 73 The Applicant is not aware ofany other shipment

1

This decision became the decision of the Commission March 23 1977

246 U SC 817 as amended
654 FEDERAL MARITIME COMMISSION

of the same commodity which moved via Sea Land or GuIfIU K 

the same time period at the rates involved in this shipment

GuIfIU K offers the following as grounds for granting the applic

4 On May 18 1976 the Gulf United Kingdom Conference m

temporary filing by telex to become effective May 28 1976 as f

Contract Non conlract

Paper Bags Inflatable Dunnage n

n

nnn 21175 W 249 

Min 18 WT per HH container nnnn nnn

105 00 W 123 

However when the permanent tariff filing 7th Rev Page 9

issued the rates were erroneously shown on a WM basis Thi

was carried on the 8th and 9th Revised pages and not correcte

10th Revised Page 94 effective December 16 1976

Meanwhile on September 20 1976 a general rate increase b

effective and the above rates were increased by 8

1

2 rounded d

the next lowest 25 cents 9th Revised Page 94 was changed to ret

increased rates but still incorrectly showed the rates to be on a 

basis i

e

I

Paper Bags Inflatable Dunnage nnnn

un 229 50 WM

Min 18 WT per HH container n

n n nnn 113 75 WM

27

133 

On December I 1976 International Paper Company shipped 7 863 Ibs 502 c

Paper Bags Intlatable Dunnage on a vessel of Sea Land Service Inc a

assessed the non contract rate of 270 00 WM for total of 3 388 50 plus hand

wharfage charges At the correct rate of270 oo W the freight amounts to 947 

handling and wharfage charges Sea Land Service Inc therefore requests perm

waive collection in the amount of 2 440 73 International Paper Company co

this request

Section 18b 3 ofthe Shipping Act 1916 46 USC 817 as amen

Public Law 90298 and Rule 6b Special Docket Application R

Practice and Procedure 46 CPR 502 92 a set forth the applica

and regulation The pertinent portion of 18bX3 provides that

The COJ1mission may in its discretion and for good cause shown 

common carrier by water in foreign commerce to refund a portion of freight 

collected from a shipper or waive the collection of a portion of the charge

shipper where it appears that there is an error in a tariff of a clerical or admin

nature or an error due to an inadvertence in failing to file a new tariff and th

refund or waiver will not result in discrimination among shippers Provided furth

the common carrier has prior to applying to make refund filed a new tariff 

Commission which sets forth the rate on which such refund or waiver w

based and Application for refund or waiver must be filed with the Com

within 180 days from the date of shipment

The clerical and administrative error recited in the subject applic

of the type within the intended scope of coverage of section 1b 

the Act and section 502 92 of the Commission s Rules of Pract

Procedure

3 For otber provisions and requirements see A 18 b3 and I 502 92 of tbeCommission Rules of P

Procedure 46 CPR 02 92 0 c

19 
WASHINGTON D C

March 3 1977

S THOMAS W REILLY

Administrative Law Judge

INT L PAPER v GULF UNITED KINGDOM CONFERENCE 655

Therefore upon consideration of the document presented by the

Applicant it is found that

1 There was an error in a tariff of a clerical or administrative nature

resulting in the inadvertent inclusion ofthe symbol WM for weight or

measure in the tariff when only the symbol w for weight only had

been intended

2 Such awaiver of collection ofa portion ofthe freight charges will

not result in discrimination among shippers

3 Prior to applying for authority to waive collection ofaportion ofthe

freight charges Gu1f UK ftled anew tariff which set forth the rate on

which such waiver would be based

4 The application was ftled within 180 days from the date ofthe subject

shipment

Accordingly permission is granted to Gu1f UKand Sea Land Service

Inc to waive collection of a portion ofthe freight charges specifically

2 440 73 An appropriate notice will be published in the tariff ofthe Gulf

United Kingdom Conference

19 F M C
TITLE 46SHIPPING

CHAPTER IV FEDERAL MARITIME COMMISSION

SUBCHAPTER AGENERAL PROVISIONS

PART 502RuLES OFPRACTICE AND PROCEDURE

GENERAL ORDER 16 AMDT 18 DoCKET No 7661

March 28 1977

Miscellaneous Amendments

AGENCY

ACTION

SUMMARY

Federal Maritime Commission

Final Rules

Rules of Practice and Procedure are amended to authorize 

ing officers to enter such order or rule as they deem prop

no answerto a complaint is filed within the time provided 

and to extend the time for filing answers to permit the 

the following business day when the two year statutory 

filing complaints seeking reparation expires on a Saturday 

or legal holiday and to authorize presiding officers to 

hearing as well as the submission of additional evid

proceedings conducted under the shortened procedure

Effective Date Upon publication in the Federal Register

For further information contact

Joseph C Polking Acting Secretary

Federal Maritime Commission

1100 L Street N W

Washington D C 20573

202 523 5725

Supplementary Information The Commission instituted this proc

by Notice ofProposed Rulemaking published in the Federal Regi

November 23 1976 41 F R 227 to amend sections 502 64 Rule 

502 101 Rule 7 a 502 181 Rule l1 a and 502 184 Rule lIed 

656 19 
GO 16AMDT 18DKT NO 7661 657

Ru1es of Practice and Procedure 46 C F R 502 The Maritime Adminis

trative Bar Association MABA and Sea Land Service Inc Sea

Land submitted comments which the Commission has carefully consid

ered A section by section discussion of the rules and comments follows

1 Section 502 64 Ru1e 5 d This section presently provides that only

the Commission may enter an appropriate rule or order in the event that

a respondent fails to file an answer to the complaint within the time

provided The rule further provides that only the Commission or the Chief

Judge may permit the filing of an answer beyond the time permitted

The amendment proposed would transfer this authority to presiding

administrative law judges MABA and Sea Land support the changes

The need under the present rule to defer to the Commission or to the

Chief Administrative Law Judge the issuance of necessary orders and

rulings causes undue delays The Commission recognizes the importance

ofexpediting the hearing process so as to bring pending controversies to

a prompt resolution Any rule that acts to expedite such process while at

the same time honoring the due process requirements is clearly in the

public interest The amendment to section 502 64 will accordingly be

adopted

2 Section 502 101 Rule 7 a By deleting the reference to section

502 63 Rule 5 c in section 502 101 as proposed the method of

computing time provided in section 502 101 would be made applicable to

the computation of the two year period for filing complaints seeking

reparation under section 22 ofthe Shipping Act 1916 46 D S C 821

This would permit the filing of a complaint on the next business day

when the last day ofthe limitation period ends on a Saturday Sunday or

legal holiday

MABA and Sea Land Service Inc oppose the amendment and

maintain that the Commission lacks authority to adopt a rule which wou1d

resu1t in an extension oftime for fIling granted by statute Section 22 is

silent on how the two year period is to be computed While MABA s and

Sea Land s argument may have some superficial appeal it overlooks the

fact that the present ru1e may in fact act to shorten the time within which

reparation may be claimed a result rejected by the court in Kraft Foods

v F M C and U S A 538 F 2d 445 D C Cir 1976 Because the

Commission maintains no facilities for the fIling of documents on days

when its offices are closed the rejection of a fIling on the next business

day when the limitatiQn period ends on a Saturday Sunday or legal

holiday wou1d resu1t in shortening by one or more days the time provided

in section 22 ofthe Shipping Act 1916

MABAsuggests the addition to section 50211 of a warning ofpossible

subsequent adverse judicial construction of this statutory requirement

shou1d the amendment be adopted While there is always the possibility

that a court might overturn the rule adopted here this is unlikely in view

19 F M C
658 FEDERAL MARITIME COMMISSION

of the fact that the method of time computation reflected in s

502 101 has been generally applied by the courts in their const

ofperiods of limitation found mother statutes See e g Sherwood 

v District of Columbia 113 F 2d 162 D C Cir 1940 Union Na

Bank v Lamb 337 U S 38 1949 District of Columbia v G

Federation of Women s Clubs 249 Fed 503 D C Cir 1957 D

Power and Light Co v Federal Power Commission 251 F 

D C Cir 1958 Wilson v Southern Ry Co 147 F 2d 165 5 Cir 

In any event we believe that the caveat suggested is inappro

The suggestion is therefore rejected and the amendment will be p

gated as proposed

3 Sections 502 181 and 502 184 The amendment to section 5

authorizes presiding officers to order hearings in proceedings con

under the shortened procedure Under the current rule wh

Commission may order a hearing the presiding officer has no 

authority MABA opposes giving the presiding officer authority to 

a hearing when none ofthe parties want it

The amendment to section 502 184 authorizes presiding officers t

the submission of additional evidence MABA 1l1aintains that the 

ment is unnecessary as the presiding officer may now advise the 

that he considers the record insufficient and give them an opportu

submit additional evidence if they so desire and may also rule 

the party who has the burden ofproof

We see little merit to MABAs comments The two amendme

aimed at correcting certain inconsistencies in the rules by giving pr

officers in proceedings conducted under the shortened procedu

same authority they have under section 502 311 Rule 20 in proce

for the formal adjudication ofsmall claims There is no rational ba

the disparity in these rules both dealing with complaint proceedin

stated in our Notice ofProposed Rulemaking the present limitat

the authority ofpresiding officers may cause unnecessary delay 

the proceeding be remanded by the Commission for lack of su

evidence The presiding officer should have the authority to cond

proceeding in such a manner as will ensure a record adequate to s

a decision in accordance with statutory requirements We are th

adopting the amendments of sections 502 181 and 502 184 as propo

Therefore pursuant to section 4of the Administrative Procedu

5 U S C 553 and section 43 ofthe Shipping Act 1916 46 U S C 

Part 502 ofTitle 46 Code of Federal Regulations is amended

Effective Date Inasmuch as the expeditious adoption of these 

desirable and inasmuch as they are procedural in nature they s

The text ofthe amendment is reprinted in 46 C PR 502

19 
GO 16AMDT 18DKT NO 7Hi1 659

effective upon publication in the Federal Register and shall be applicable

to all pending and future proceedings

By the Commission

5 JOSEPH C POLK1NG

Acting Secretary

ViceChairman Morse dissenting

I dissent in respect to deleting the words except Section 502 63 Rule S e from the first sentence of Section

502 101 See my dissent in CSC International Inc v Waterman Steamship Corp Docket No 75 31 Order on

Remand served October 15 1976 16 SRR 1510 1512 Otherwise I concur

19 F MC
FEDERAL MARITIME COMMISSION

DOCKET No 7513

PETITION OFNORTH ATLANTIC FRENCH ATLANTIC FREIGHT

CONFERENCE AND NORTH ATLANTIC BALTIC FREIGHT CoNFEREN

FOR A DECLARATORY ORDER

Section 14b 2 Shipping Act 1916 is a notice provision and requires carrie

conferences of carriers to provide ninety days notice before increasing rates 

under their control

Howard A Levy for Petitioner the North Atlantic French At

Freight Conference and Petitioner North Atlantic Baltic Freight C

ence and the North Atlantic United Kingdom Freight Conference 

Atlantic Continental Freight Conference North Atlantic West

Freight Association Continental North Atlantic Westbound F

Conference Scandinavia Baltic U S North Atlantic Westbound F

Conference South Atlantic North Europe Rate Agreement Contin

U S Gulf Freight Association U KU S Gulf Freight Associatio

the Europe Pacific Coast Rate Agreement

John Mason and Paul S McElligot for Sea Land Service

Peter G Sandlund for the Council of European and Japanese Na

Shipowners Associations

Stanley O Sher for Iberian U S North Atlantic Westbound F

Conference Marseilles U S A North Atlantic Freight Conference 

Gulf Conference MediterraneanlNorth Pacific Coast Freight Confe

North Atlantic Mediterranean Freight Conference and the West C

Italy Sicilian and Adriatic Ports North Atlantic Range Conference

Elkan Turk Jr for the Far East Conference

Leonard James and David Nolan for the Pacific Coast Eur

Conference

Donald S Brunner and Paul KaUer as Hearing Counsel

REPORT AND ORDER

March 28 1977

By THE COMMISSION Karl E Bakke Chairman Clarence Morse 

Chairman Ashton C Barrett and James V Day Commissio

Commissioner Bob Casey not participating

660 19 
NORTH ATLANTIC FRENCHFREIGHT CONFERENCE 661

This proceeding was initiated as aresult of a petition fIled by the North

Atlantic French Atlantic Freight Conference and the North Atlantic Baltic

Freight Conference requesting the Commission to declare the correct

interpretation of the ninety day proviso of section 14b 2 of the Shipping

Act 1916 One carrier and 21 carrier conferences and associations have

replied to the petition 1 We heard oral argument

POSITION OF THE PARTIES

Section 14b of the Shipping Act 1916 authorizes the Commission to

permit the use of dual rate contracts provided inter alia that such

cotracts contain certain express provisions The provision required by

clause 2 of section 14b is that

whenever a tariff rate for the carriage of goods under the contract becomes

effective insofar as it is under the control of the carrier or conference of carriers it

shall not be increased before a reasonable period but in no case less than ninety days

The North European Conferences NEC 2take the position that there

are three possible alternative interpretations ofthis requirement i e I

that the carrier is only required to give the shipper ninety days notice of

any increase in rates covered by an exclusive patronage dual rate

contract 2 that a carrier need only maintain a contract rate in existence

for ninety days and thereafter may increase that rate without any notice

to the dual rate contract merchant and 3 that a carrier may increase a

contract rate upon thirty days notice to the shipper but only after that

dual rate has been in effect for ninety days Of these alternatives only 1

and 3 are acceptable to NEC

In the view ofNEC the second alternative ninety days effectiveness

is untenable because Congress allegedly intended to provide dual rate

shippers with a greater period ofrate stability than shippers in nondual

rate trades as a quid pro quo for their patronage agreements with carriers

1 North European Conferences

Associated North Atlantic Freight Conferences

North Atlantic United Kingdom

North Atlantic Baltic Freight Conference

North Atlantic French Atlantic Freight Conference

North Atlantic Continental Freight Conference

North Atlantic Westbound Freight Association

Continental North Atlantic Westbound Freight Conference

ScandinaviaBaltic U S North Atlantic Westbound Freight Conference

South Atlantic North Europe Rate Agreement

Continental US Gulf Freight Association

U KlU S Gulf Westbound Rate Agreement

Council ofEuropean and Japanese National Shipowners Association CENSA

Pacific Coast European Conference

Far East Conference

IberianU S North Atlantic Westbound Freight Conference

Marseilles US ANorth Atlantic Freight Conference

Med Gulf Conference

MediterraneanNorth Pacific Coast Freight Conference

North Atlantic MediterraneanFreight Conference

West Coast of Italy Sicilian and Adriatic Ports North Atlantic Range COnference

Sea Land Service Inc

2

The Far East Conference generally adheres tothe arguments of NEC

19 F MC
662 FEDERAL MARITIME COMMISSION

Therefore it is argued that Congress could not have intended that 

rate shippers would have no notice at all ofrate increases

NEC urges the adoption ofthe third alternative thirty days notic

ninety days effectiveness NEC notes that Congress enacted se

l8 b 2

3

and l4b 2 ofthe Act at the same time in Public Law 87 

and points out that in the former section Congress expressly use

word notice 4 while in the latter section Congress did not mentio

word notice From that choice of words NEC concludes that Con

intended that a dual rate remain in effect for ninety days but 

thereafter the carrier could increase that rate upon thirty days n

Sea Land Service Sea Land also advocates the third alternati

the theory that no other reading of the statute is permissible for th

no ambiguity in the statute requiring an interpretation Sea Land a

that section l4b 2 applies only to a rate that is in force and effect 

not concerned with advance notice Sea Land is ofthe opinion that 

is provided for in section l8b 2 of the Act and the two sections 

be read in conjunction with one another Thus it is argued that 

section l8 b 2 of the Act requires only thirty days notice o

increases for noncontractshippers if the Commission is to inte

section l4b 2 as a ninety days notice requirement the Commissio

find itself ina dilemma The Commission will either be in a posit

requiring that the carrier give non contract shippers ninety days not

rate increase rather than the statutorily permitted thirty days notice 

permitting the spread between the contract rates and ordinary ra

exceed the 15 permitted by section l4b 7 of the statute Sea 

argues that to give non contract shippers the same notice as is 

contract shippers would eliminate the benefit flowing to contract shi

which is the consideration for the promise of those contract shipp

give all oftheir business to the carrier

Sea Land believes the court erred in FM C v Australia U S A

Gulf Conference 337 F Supp 1032 1972 when it indicated that s

l4b 2 required ninety days notice ofrate increases

The IberianU S North Atlantic Westbound Conference and ot

Iberian jointly argue that section l4b 2 is a ninety day notice pro

only and that a ninety day in effect rule is unduly harsh Iberian 

that when section l4b 2 was added to the Shipping Act 1916 

increases were rare so it did not matter whether section 14b 2 w

effectiveness provision or a notice provision Because presen

economic circumstances require frequent rate increases a ninet

J In pertinent part section 18b 2 Shipping Act 1916 provides

No change shall be made in rates charges which results in an increase in cost to the shipper exc

publication and tiling of anew tariff which shall become effective not earlier than thirty days 

publication and filing thereof with the Commission

4

The wonl notice does not appear in section 18b 2 of the Shippiq Act 1916

5 Marseilles U gA North Atlantic Freiaht Conference Med GulfConference MediterraneanlNorth Pa

Freight Conference North Atlantic Mediterranean Freight Conference and West Coast of Italy Sicilian an

Ports North Atlantic Range Conference

19 
NORTH ATLANTIC FRENCH FREIGHT CONFERENCE 663

effectiveness rule would allegedly now have a detrimental impact upon

carriers

Iberian also points out that the Commission itself applying the intent of

the Congress rather than the literal meaning of the words ofthe statute

held in The Dual Rate Cases 8 F M C 16 1964 that section 14b 2 was

a notice requirement only

Finally Iberian notes that section 14b 2 requires that dual rate

contracts approved by the Commission expressly contain the clause

required by section 14b 2 Because none of the contracts approved by

the Commission contain a clause requiring the contract rates to be in

effect for thirty days before those rates may be increased Iberian

concludes that the Commission has clearly found section 14b 2 to be a

notice provision only

The Council ofEuropean and Japanese National Shipowners Associa

tions CENSA and the Pacific Coast European Conference PCEC

substantially agree with Iberian CENSA submits that the Commission

correctly decided The Dual Rate Cases and should reaffirm that holding

here PCEC is ofthe same opinion In this regard PCEC would dismiss

as erroneous the Commission s statement in Surcharges at U S Atlantic

and GulfPorts 10 F M C 13 1965 that

Sec 14b 2 itself does not require such notice However the Commission added the

clause because of its recognition that many mercantile transactjons require rate stability

for at least ninety 90 days 10 F MC at 24 note 10

PCEC submits that the Commission made it quite clear in The Dual Rate

Cases that the Commission was not adding the ninety day notice

clause but was merely interpreting section 14b 2

Hearing Counsel are ofthe opinion that section 14b requires that a dual

rate remain in effect for ninety days before it may be increased and then

only upon ninety days notice of the increase They argue that the

Commission could not have ignored the words of section 14b 2 in The

Dual Rate Cases so the Commission could not have interpreted that

section as being a notice requirement only as it clearly is a durational

requirement In the view ofHearing Counsel ninety days notice was an

added requirement imposed pursuant to section 14b 9

Hearing Counsel point out that section 14b 6 of the Shipping Act

permits the merchant to cancel adual rate contract on ninety days notice

to the carrier They assert that if the merchant receives only thirty days

notice of a rate increase under the contract even an immediate

cancellation ofthe contract would bind the merchant to pay the increased

rate for sixty days before the merchant could escape the obligations of

the dual rate contract Congress allegedly could not have intended that

result Therefore according to Hearing Counsel section 14b of the

Shipping Act requires both ninety days notice and duration before a dual

rate may be increased

The National Industrial Traffic League NIT League urges the

19 F MC
I

664 FEDERAL MARITIME COMMISSION

Commission to reaffirmits holding in The Dual Rate Cases that n

days notice of rate increases is required by dual rate contracts 

League argues that its members do not agree that dual rates ma

increased within ninety days following the effectiveness of the or

rate The Commission also received identical telegrams from 11 shipp

and a similar telegram from the Dupont Company

DISCUSSION

Section 14b of the Shipping Act 1916 in pertinent part provides 

the Commission shall permit the use ofadual rate contract if the con

expressly 2 provides that whenever a tariff rate for the carriage of 

under the contract becomes effective insofar as it is under the control of the ca

conference of carriers it shall not be increased before a reasonable period bu

case less than ninety days and 6 permits the contract shipper to terminate 

time without penalty upon ninety days notice

Section 14b ofthe Act was included in H R 4299 introduced i

House of Representatives in February 1961 As originally introduc

the House clause 2 of section 14b read fixes tariff rates fo

carriage ofgoods under such contract for a reasonable period subj

approval by the Federal Maritime Board but in no case less than n

days

Some of the witnesses testifying before the House Committee co

ering that bill interpreted the original language of section l4b 

requiring ninety days notice of tate changes For example Jam

Dennean testifying on behalf ofthe Far East Conference stated

Regarding the requirements of H R 4299 that the contracts provide for a minim

ninety days notice of rate changes our Far East Shipper s contract now provide

minimum of 90 days notice of rate increases which is a minimum period of s

which We have found have been most satisfactory to tile shipping public Hearin

H R 4299 Before the Special Subcommittee on Steamship Conferences of the 

Committee on Merchant Marine and Fisheries 87th Congress First Sess at 270 

Hereafter House Hearings

Donald F Wierda of the American Steamship Committee on C

ence Studies was unsure as to the import of that provision He tes

The wording of this item suggests that the rates must be set without any 

whatsoever for a period of at least 90 days but very frequently in foreign com

market conditions require exporters and importers to come to the conferen

assistance in maintaining the market by reducing their rates durina the contract 

and very frequently such reductions are effected our position should not b

inflexible by a law of the United States On the other hand if this item 2 is inten

prevent any increases in rates unless adequate advance notice is given then it is e

reasonable We feel that any shipper under a contract should be given adequate a

notice of any changes in the contract which might increase his landed cost and to 

him to revalue his position and to redetermine the advisability of maintain

contract provision House Heatings at page 70

6

These shippers took the following positions

We endorse the position of theFMC in Docket No 75 13 It is essential that wecontinue to have the 

available under the FMC interpretation in this docket if we are to meet our commercial obliaatlons as 

Shippers

19 
NORTH ATLANTIC FRENCH FREIGHT CONFERENCE 665

Most of the witnesses however read that provision literally that is

requiring that the rate remain in effect for ninety days before the rate

could be increased For example Grant Arnold on behalf ofNIT League

after quoting clause 2 advised

We are opposed to the provisions

The league previously suggested that carriers be required to give 90 days advance

notice of increases in rates

t he League suggests changing proviso 2 to read 2 Provides that applicable tariff

rates and charges shall not be increased upon less than 90 days notice House Hearings

at 281

Likewise Theodore Gommi of the National Association of Alcoholic

Beverage Importers referring to the ten conditions which the contract

must meet in order to receive approval stated

We recommend that the second of these conditions be changed to require that no

increase in tariff rates of the carriers be permitted without 90 days notice of such a

change House Hearings at 411

Alvin J Shields on behalf ofAmerican Metal Climax Inc after quoting

clause 2 remarked

As that reads it would mean that a rate cannot be made effective for less than 90 days

and that a carrier in order to meet say some spot competitions would be precluded

from establishing a rate for a shorter period The question also arises as to what

happens on the 91 st day after a rate has been established The day it is established it is

good for 90 days but on the 91st day the carrier is obliged to give only 30 days notice

of any change sic as covered by the proposed section 18 b 2 We do not think that

there should be a specific limit as to the period of effectiveness of any rate but simply a

proviso in the bill that would require the carriers to give contracting parties at least 90

days notice of a rate increase House Hearings at 501

As can be seen only one witness understood that provision to be a

notice provision One witness was unsure of the import of the provision

The remainder of the witnesses understood it to be an effectiveness

provision and were opposed to such a provision and requested a ninety

day notice requirement

Another indication of the witnesses understanding of the import of

section 14b 2 as it was initially introduced and the Committee members

intention in regard to that provision is found in a colloquy between

Leonard James and the Committee in March 1 1

Mr James began by asking the Committee to state the meaning of

14b 2 Counsel for the Committee responded That rate must be in

effect for 90 days It says so quite definitely sir House Hearings at

184 There ensued a discussion ofthe relationship ofthe notice provision

of section 18 to the 90day provision in section 14b 2 Mr James said

Under the provision of section 18 we would be required to give 30 days advance

notice to all shippers whether contract shippers or not of both increases and decreases

but the provision on page 2 section 14b 2 would require fixing tariff rates in

conferences for a period of 90 days without any exception there We have two different

standards House Hearings at 185

Chairman Bonner responded

19 F M C
666 FEDERAL MARITIME COMMISSION

Let me go back to the hearings that we held It was persistently stated that s

aid ourAmerican commerce rates could be given an assured rate for 90 days or 

so that negotiations could be gone into be manufacturers for delivery of goods d

Mr James then stated

We have no objection to giving a reasonable period of advance notice to co

shippers or to all shippers d

Mr James and the members ofthe Committee argued and conc

that 14b 2 as then phrased provided the rate period i e ninety 

while section 18 provided for the notice ofincreases i e thirty days 

that the two sections were not connected Representative Mailliard 

his understanding ofthe intent of the Committee as follows

Mr Chairman I

think Mr James is right I am not an attorney but I

think t

general provisions later on in the bill would not go to this section because this se

the detail under which the Board can approve these contract rates and I

think 

binding regardless of what is in the other section of the bill and I think inadve

because I do not think that is what we intended the provision stands that you 

change your rate upward or downward in less than 90 days regardless of what the 

says d

Representative Downing concurred in that interpretation

Upon being asked to state what suggestions he would mak

alterations in the bill Mr James responded

Could we notperhaps get over that conflict there by amending section 2 to p

that with respect to contracts they shall afford to shippers not less than let 

reasonable notice of rate increases House Hearings at 186

The Committee suggested that perhaps as an alternative section 

could be amended in such away as to apply to all sections of the bil

James argued that such an alteration would be inadequate He expla

That would not change my objection to it because as I understand the provis

page 2 section 14b 2 that is a provision which has as a matter of law been f

all contracts and would require as it says tariffrates to be in effect for 90 days 

think if you are going to make any change in section 14 on page 2 you have to 

that section right there You have to make any proviso that apply there apply rig

because simply by changing the word section to sections you would ref

House Hearings at 188

Mr James was cut off by the chairman who suggested that makin

word section plural would cause section 18 to apply to all sectio

the bill Mr James denied that asserting

But these provisions Mr Chairman do not apply to the contract The provis

section 18 have nothing to do with the contract that is concerned on page 2 

14b 2 d

Whatever the intention ofthe members of the Committee in Ma

1961 the subsequent history of section 14b2 seems to indicate th

Congress intended that a dual rate contract would provide for n

days notice to the merchant ofany increase in the rates for goods c

under the contract When the House Subcommittee reported out th

rate bill they did so by introducing a clean bill No H R 6775 Inth

section 14b 2 read as follows

19 
NORTH ATLANTIC FRENCH FREIGHT CONFERENCE 667

2 provides that whenever a tariff rate for the carriage of goods becomes effective

insofar as it is under the control ofthe carrier or conference of carriers it shall not be

increased for a reasonable period but inno case less than ninety days

That version of section 14b 2 passed the House and except for technical

changes passed the Senate and the entire Congress after conference

In the Senate Hearings on the House Bill all witnesses characterized

the new version of section 14b 2 as a notice provision For example

Leonard James then appearing for the Committee ofEuropean Shipown

ers testified in reference to H R 6775

Line 18 page 2 section 14b 2 requires each conference to give at least ninety days

notice of rate increases Hearings on H R 6775 Before the Subcommittee on the

Merchant Marine and Fisheries ofthe Senate Committee on Commerce 87th Congress

First Sess at 239 1961 Hereafter Senate Hearings

Mr James saw a distinction between the notice provisions of section

14b 2 and the notice provisions of section 18b 2 ofthe Shipping Act In

reference to the latter Mr James stated

It should also be noted that rate control provisions differ even with respect to different

classes of conferences and individual carriers

For example those using the contract rate system must give at least 90 days notice of

rate increases to all shippers contract or non contract page 2 line 22 section 14b 2

while conference carriers and individual carriers not using the contract rate system need

give only 30 days advance notice page 9 lines 23 24 section 18b 2 Senate Hearings

at 249

Matthew S Crinldey on behalf ofIsbrandtsen Co in commenting upon

the safeguards contained in H R 6775 testified

Item 2 page 2 section 14b 2 requires at least 90 days notice of any increase in

freight rates and since this is a period usually provided in conference contracts it

would appear this provision should notpresent toomuch of a problem to the conference

lines Senate Hearings at 533

An identical interpretation was placed on section 14b 2 in H R 6775

by Barber Steamship Lines Senate Hearings at 675 by James A

Dennean on behalf ofthe Far East Conference Senate Hearings at 712

and by Lewis C Paine on behalf of Amerind Shipping Corp Senate

Hearings at 719

The above testimony regarding section 14b 2 does not conclusively

establish that the Congress intended that provision to be a notice

provision However section l4b 2 does interact with another provision

of section 14b that is the provision dealing with the termination of the

contract

Section 14b 2 now reads

6 permits the contract shipper to terminate at any time without penalty upon ninety

days notice

Section 14b 6 as it now reads replaced three provisions originally

contained in H R 4299 As introduced on February 15 1961 those

provisions read

19 F M C
668 FEDERAL MARITIME COMMISSION

6 permits the shipper to terminate without penalty if the carrier or conf

increases rates or charges applicable to the carao within the contract period 7 

the shipper to terminate without penalty where the other signatory is a confere

carriers and when the carrier or carriers that have customarily carried the major s

the shipper s cargo withdraw from the conference 8 terminates without penalty 

end of the contract period unless affirmatively renewed

In his testimony before the House Matthew S Crinkley tied clau

of section 14b to clause 2 of that section He stated

I think that the provision here is alright I would say that it could be that i

protection to the carriers and shippers contracts could be canceled by either p

the same notice as required for rate increases 90 days Either party could cance

days notice That is the case with this upper provision 6 where you provide th

shipper does not accept a rate increase he can cancel his contract It could be 

the same period If some of the lines insist that 90 days is too much and 60 day

to be the time then the contract could be canceled on 60 days notice It co

against the provision for the rate increase House Hearings at 357

As it passed the House and sent to the Senate as H R 6775 c

6 7 and 8 had been combined and revised into the present clau

of section 14b

Mr Crinkley testified again in the Senate where he discussed s

14b 2 and section 14b 6 as they now appear in the statute In refe

to section 14b 6 Mr Crinkley stated

This section would permit the contract shipper to terminate his contract on 

notice presumably without having to give a reason I

think this is proper es

when the contract carriers are required to give 90 days notice of a rate increa

keep the matter in halance if a shorter period of time is permitted for notice o

increase by contract carriers then the contract shipper should be permitted to ca

contract within the same notice period Senate Hearings at 533

Section 14b 2 of the Shipping Act also interacts to some extent 

section 18 b 2 of the Act As indicated above some ofthe witn

before the House interpreted section 14b2 as it wasoriginally intro

in the House as being a provision which fIXed the tariff rates for a

day period One ofthose witnesses Edward Bransten testifyi

behalf of the Pacific Coast Coffee Association discussed the inter

of section 14b 2 and section 18b 2

Likewise after the initial fixed rate period specified for dual rate agreements 

2 on page 2 of H R 4299 section l4b 2 there is no provision in the bill for 

notice of changes in rates under dual rate agreements except the 30day notice p

of paragraph 2 of section 18 b on page 8 of the bill This 30 day notice prov

required to afford shippers protection in all of these situations House Hearings 

95

However in the Senate after section 14b2 and section 14b 6 ha

changed to read substantially as they now appear Matthew S C

saw the interaction of section 14b 2 and section 18b 2 differently

I see no particular wrong in the requirement that 30 days notice should be giv

increases The contract would set up either 60 or 90 days as the notice period 

people who don t sign a contract are also entitled to consideration and there sh

some notice period provided especially if you have a group of lines that are a

concert Senate Hearings at 524

19 
NORTH ATLANTIC FRENCH FREIGHT CONFERENCE 669

Thus Mr Crinkley saw section 18 b 2 as providing notice to non

contract shippers while section 14b 2 provided notice to contract

shippers

As originally introduced the bill clearly provided that the contract rates

would be fixed for ninety days section 14b 2 and that no change in any

rate could become effective until thirty days after that change had been

publicly ftled with the Commission unless the Commission permitted the

change to become effective in less than thirty days Carriers and shippers

appeared before the House Committee and complained that by fixing the

rates for ninety days carriers would be precluded from granting to

shippers a rate reduction urgently needed to permit the shippers to meet

their competition The carriers and shippers argued that even if the

Commission was given authority to allow rates to become effective on

less than thirty days notice the carriers would be prohibited from granting

the speedy reduction in rates to shippers necessary to meet spot

competition as the carriers and shippers expected that the Commission

would not act expeditiously on the request for a short notice reduction

It could be said that the changes subsequently made to section 14b 2

and section 18 b 2 by the Committee were intended to meet these

complaints by requiring thirty days notice for rate increases to non

contract and contract shippers under section 18 b 2 and providing in

section 14b 2 that no dual rate could be increased unless it was in effect

for ninety days There is a flaw in this reasoning however and it can be

found in the changes made in section 14b 6 ofthe Act

As originally introduced in the House section 14b 6 permitted the

contract shipper to terminate the contract contemporaneous with the

effectiveness ofany increase in a contract rate Thus if the contract rate

had been in effect for ninety days and thereafter increased upon thirty

days notice the contract shipper would be released from his obligations

under the contract as soon as the increase in the rate became effective

However when the House changed sections 14b 2 and 18 b 2 to read

substantially as they now read the House also changed section 14b 6 to

provide that the merchant could terminate the contract without any

reason but only upon ninety days notice to the carrier As a result if

section 14b 2 is read as an effectiveness provision with notice provided

in section 18 b 2 then the merchant would be bound to the contract at

the increased rate for at least sixty days after that increased rate became

effective because he would be required to give ninety days notice of

termination While the Congress could have intended that the Commission

would add a clause permitting the merchant to terminate the contract

contemporaneous with the effectiveness of any increase as the Commis

sion has in fact done there is no indication of any such intention in the

legislative history Moreover it is unlikely that a House Committee so

scrupulously attentive to the interest of contract shippers would have left

so vital a point to administrative rulemaking

The sounder interpretation of the 1961 changes to the Shipping Act

19 F M C
670 FEDERAL MARITIME COMMISSION

1916 and the one which is more fully supported by the legislative h

is that section l4b 2 is a notice provision governing the filing o

covered by a dual rate contract and 18b 2 is a notice provision 

to the filing of non contract rates Such an interpretation is also con

with the changes made in section 14b 6 of the Act

Faced with complaints from the carriers that fixing rates for a pe

time was undesirable and that all that was required was adequate 

to the contract shipper as had been the longstanding practice 

carriers in the dual rate contracts then existing and complaints 

shippers that a ninety day fixed period of effectiveness for a rat

inadequate protection to the shipper because on the ninety first da

a rate had been established the shipper would receive only thirty 

notice ofany increase the House changed its scheme and provided 

days notice to contract shippers and thirty days notice to non co

shippers This interpretation is bolstered by the testimony befo

House and Senate Committees considering the bill reading section 

as it was originally introduced in the House as a provision which 

the contract rate for ninety days but reading that clause as it pass

House to be a provision requiring ninety days notice ofrate incr

and linking it to the notice required for termination as provided in s

14b 6 Although the testimony ofwitnesses before legislative comm

does not conclusively establish the intent of the legislature in enac

statute the testimony regarding this statute carries greater weigh

usual because at no time did the Committee members or staff di

with the witnesses reading of section 14b 2 as a notice provision

Thus although the legislative history of the dual rate law 

conclusive and would permit section 14b 2 to be read either as a 

provision or as an effectiveness provision we interpret section 14

a notice provision

In The Dual Rate Cases 8 F M C 16 1964 we brought tog

considered and resolved all of the conflicting interpretations and d

of the many carriers and merchants participating in the enactment 

dual rate law In The Dual Rate Cases we required that all du

contracts provide for ninety days notice of rate increases He

Counsel argue that the notice provision was added pursuant 

authority under section l4b 9 ofthe Shipping Act wherein the Co

sion is authorized to require and permit such other clauses in du

contracts as are not inconsistent with section 14b Hearing Counse

In our discussion of section 14b 2 in The Dual Rate Cases we 

Under the second numbered provision of section 14b all contracts must co

provision which expressly here we quoted section 14b 2 of the Act

Read most literally this provision of the statute would simply require that rates 

not be increased more often than once every 90 days However numerous wit

both shippers and carriers who testified before the Senate and House Committee 

the consideration of H R 4299 and HR 6775 vieweq this provision as requ

days notice of rate increases rather than the bare assurance that rates would 

increased more often than once every 90 days It was recognized by these witnes

19 
NORTH ATLANTIC FRENCHFREIGHT CONFERENCE 671

merchants offering goods for sale in ourforeign commerce must know the ocean freight

rate well in advance of shipment A contract which merely assures the merchant that a

rate which was increased today will not be again increased sooner than 90 days from

today does not meet this need With the passage of each day under such a contract the

merchant has one day less for the planning of future sales and after the running of the

initial 90 days the merchant is assured of nothing It appears therefore the overriding

intent of the statute and the reasonable requirements of ourforeign commerce demand

that merchants be given a minimum of 90 days advance notice of increases in rates

This would seem a reasonable quid pro quo on the part of the conference for the

merchant s exclusive patronage

In keeping with the legislative intent that the Commission should insofar as

possible standardize dual rate contracts we are requiring that all contracts include a

uniform clause relating to provision 2 of section 14b This clause which is set out

below requires 90 days notice of rate increases and includes the additional cancellation

provision just discussed The provision whereby the merchant may terminate the

contract if the carrier does not rescind the rate increase Rate increases necessitated by

emergency conditions outside the control of the carriers are permitted under a

separate

contract provision which will be discussed below The Dual Rate Cases at 27 28

We thereupon prescribed the rate increase provision found in article 4 a

of the Uniform Merchants Rate Agreement UMRA 46 C F R 538 10

That article provides only for ninety days advance notice of rate

increases and does not require that the rate have been in effect for ninety

days before a rate increase can be made effective

Nowhere in The Dual Rate Cases or in the UMRA do we expressly

require dual rate contracts to provide that a contract tate must have been

in effect for ninety days before that rate may be increased Clearly we

were interpreting section 14b 2 to be a notice provision for we advised

that the witnesses before the Congressional Committees viewed this

provision as requiring 90 days notice of rate increases rather than the

bare assurance that rates would not be increased more often than once

every 90 days first italics added The Dual Rate Cases at 27 Thus we

elected to and did interpret section 14b 2 of the Shipping Act to be a

notice provision and did not add that requirement pursuant to our

authority under section 14b 9

In September 1966 we completed our consideration of the dual rate

law by promulgating General Order 19 the conclusion of a rulemaking

proceeding commenced in March of 1961 In that General Order we

provided for the procedures governing the filing and approval ofdual rate

contracts and for a uniform merchants rate agreement In that General

Order we brought together all of the provisions required in The Dual

Rate Cases and the several changes not relevant here to those

provisions permitted after the report in The Dual Rate Cases

However shortly before the promulgation of General Order 19 we

decided the case styled Surcharge at U S Atlantic Gulf Ports 10

F MC 13 1966 Ina footnote in that case we wrote

Sec 14b itself does not require such notice 90 days notice However the

Commission added the clause because of its recognition that many mercantile transac

tions require rate stability for at least 90 days Surcharge at 24 note 10

19 F M C
672 FEDERAL MARITIME COMMISSION

Hearing Counsel cite that footnote as support for their contention t

Commission added the ninety day notice requirement pursuant 

authority under section 14b 9 of the Act That footnote unimpor

the Surcharge case is in error for as indicated above in The Dua

Cases the Commission expressly found that section 14b 2 as re

ninety days notice of rate increases and no dual rate contract ap

in The Dual Rate Cases contained a provision requiring that ac

rate be in effect for 90 days before the rate could be increased

We have not been persuaded that our interpretation of section 1

The Dual Rate Cases was in error On the contrary our reexam

of the legislative history of section l4b 2 as discussed herein s

our earlier finding 7

Thus we conclude that the proviso in 14b2 of the ShippingAc

which provides that a tariff rate under the control ofthe ca

conference of carriers it shall not be increased before a reas

period but in no case less thanninety days is a notice proviso 

tariff rate under the control of the carrier shall be increased on les

90 days notice to the contract shipper

THEREFORE IT IS ORDERED That this proceeding be dis

ued

j

S JOSEPH C POLKING

Acting Secre

1

7 The discussion herein is limited to the express issues set forth in ournotice institutina this proceedina 

herein shall be construed to address any other matter

19 
19 F M C 673

FEDERAL MARITIME COMMISSION

INFORMAL DocKET No 324 1

CATERPILLAR TRACTOR COMPANY

v

UNITED STATES LINES INC

ORDER ON REVIEW OF SETTLEMENT OFFICER S DECISION

March 29 1977

This proceeding was instituted by informal complaint fIled by Ocean

Freight Consultants OFC as assignees of Caterpillar Tractor Company

against United States Lines Inc Complainant alleges that respondent has

subjected Caterpillar to an ocean freight rate in excess of the properly

applicable tariff rate Respondent consented to the informal adjudication

procedure but did not file an answer to the complaint The Settlement

Officer served his decision denying reparation We determined to review

DISCUSSION

The bill of lading pertaining to the shipment in question was prepared

by Harper Robonson Co acting as agents for the shipper It indicates

that the shipment moved in two house to house containers loaded by the

shipper Further the shipper s agent described the cargo as manufac

turer s parts for assembly and also specified the applicable rate of

45 00 W M underTariff Item No 8576 which refers to Tractors and

parts N O S packaged Freight charges assessed at 45 00 per 40 cubic

feet amounted to 2 513 25

OFC contends that in view ofthe description in the bill of lading the

shipment should have been rated per TariffItem No 85862 which refers

to Tractor parts for assembly purposes not replacement packaged at

57 00 per 2 240 pounds Computed on that basis freight charges would

amount to 1 818 20 or 695 05 less than collected by respondent

The basic question for consideration is whether complainant has

I North Atlantic UNITED KINGDOM Freight Conference Tariff No 47 FMC 2 6th Rev Page 182 effective

October 24 1972

Same tariffof rates as fn I Subject toaminimum of 35 000 Ibs per container
674 FEDERAL MARITIME COMMISSION

demonstrated that the lower rate is more properly applicable 

shipment in question

In support of its claim OFC has submitted the bill of lading a 

Note and certain sheets from the shippers Master Invoice A 

ofthe Special Note and of the shipper s invoice sheets reve

following

The Special Note offered in lieu of an unavailable packing l

statement prepared almost two years after the date of shipment N

ber 21 1972November 14 1974 Written on plain white pap

signed A F Mosher Export Rate Analyst it asserts that the sh

consisted of Tractor Parts for Assembly No mention is ma

whether Mr Mosher was at the time ofthe shipment and is now 

shipper s employ nor does it say what is the source of Mr Mo

knowledge on this matter We agree with the Settlement Officer th

provides little in the form of proof

The shipper s invoice sheets on the other hand list various 

identified by technical names and numbers sold by Caterpillar T

Company of Peoria Illinois to Caterpillar Tractor Company L

Glasgow Scotland The Settlement Officer found the nexus betwe

invoices and the bill of lading insufficient inasmuch as the nexus co

only of a handwritten notation number Even assuming that the ha

ten annotations were made at the time and truly reflect the dat

listed items wereforwarded to respondent there is no indication n

it be ascertained on the face of these invoices that they repre

complete list of what the two containers actually held

In light of the foregoing we agree with the Settlement Of

conclusion that the Special Note and the shipper s invoice sheet

little probative value Conspicuously missing from OFC s atte

prove its claim are copies of documents exchanged between shipp

carrier upon delivery ofthe cargo to the carrier such as export decla

packing list and dock receipt Such absence is especially sign

inasmuch as the Settlement Officer by letter dated March 25 

specifically allowed complainant to supplement the record to p

further evidence of what in fact was actually shipped

Complainant in reply to this letter furnished only the above men

manufacturer s invoices and a further explanation that the evi

already submitted was ample

Complainant s further explanation suggests that because Cate

manufactures tractors and the bill of lading describes the commo

Manufacturer s Parts for Assembly the conclusion must be re

that the shipment consisted of Tractor Parts for Assembly Com

ant argues that the word Manufacturer is synonymous with Tr

in this case Unfortunately for complainant Caterpillar is not synon

with tractor The decription in the complaint itself of the sco

Caterpillar s business shows that it is engaged in the manufact

19 
CATERPILLAR TRACTOR CO v U S LINES 675

equipment not limited to tractors The description reads earth

moving machinery and material handling machinery and tools 3

As indicated above the shipper s agent prepared the bill of lading and

specified the rate to be assessed As the containers were loaded by the

shipper and the bill of lading prepared by the shipper s agent it is

reasonable to presume in the absence ofproof to the contrary that the

agent knew the contents ofthe two containers and properly classified and

rated the cargo While we have held that the description on the bill of

lading is not the single controlling factor in claims alleging misclassification

of cargo the evidence offered by OFC failed to rebut the pre sumption

that the agent knew the contents ofthe containers when preparing the bill

oflading and rating to cargo

Complainant has also suggested that its claim should be treated as being

established inasmuch as respondent did not reply to the complaint The

Settlement Officer was not persuaded by this argument He stated that

although statements may be uncontroverted they are not thereby taken as

proved He also expressed certain doubts about aprevious Commission

decision in Ocean Freight Consultants v Royal Netherlands Steamship

Company Docket 72 39 Report on Reconsideration served January 30

1975 which he apparently feared could be read as unqualifiedly standing

for the proposition that unrefuted allegations are to be accepted as fact

We agree with the Settlement Officer that failure of respondent to

answer does not preclude examination ofthe proof by the Commission

As indicated by the Settlement Officer Rule 5 ofthe Commission s Rules

ofPractice provides at 46 CPR 502 64

In the event that respondent should fail to file and serve the answerwithin the time

provided the Commission may enter such order as may be just or may in any case

require such proof as to the matters alleged in the complaint as it may deem proper

4

Our previous decision in Ocean Freight Consultants is not in onsistent

with this because in the former case the complainant was found to have

sustained the burden of proof not only because relevant facts were

unrefuted but because additional evidence supported those fal ts to the

Commission s satisfaction The former case is also distinguishable because

it did not involve failure to file an answer but involved failure of

respondent to deny certain of complainant s allegations in its answer

They provision of the Rules of Practice applicable to failure to deny is

more emphatic as to what is deemed to be established The rule reads

Recitals of material arid relevant facts in a complaint unless specifically denied

in the answer thereto shall be admitted as true but if request is seasonably made a

competent witness shall be made available for crossexamination on such evidence

Accordingly the Settlement Officer s concern about reconciling the

3

Moody s

Industrial Manual Jists among Catepillar s

prime products pipe layers tool bars hydraulic controls

cable controls industrial and marine engines hydraulic excavators compactors and inertiawelders

4

See our report in Docket 75 15 served January 5 1977 as a

recent example wherethe Commission examined the

proofbut further supported its conclusions by reference to Rule 5

19 F MC
676 FEDERAL MARITIME COMMISSION

Ocean Freight Consultants case with burden ofproof requireme

unwarranted

In conclusion we agree with the Settlement Officer that compl

has not satisfactorily demonstrated that an overcharge occurred a

claim for reparation is denied

Vice Chairman Clarence Morse concurring I

concur only 

result but in so doing have the following observations

We have here a not uncommon situation where a shipper g

generalized description of a shipment to its expert the ocean f

fOlwarder an the latter blindly utilizes that description when pre

the ocean bill oflading There is no tariffcommodity description co

manufacturer s parts for assembly but instead the forwarder a

the tariff s Tractors and parts N O S packaged rate in extendi

freight computations Since the shipper s commodity description d

match the tariff commodity description the forwarder should 

contacted the shipper explained the situati n to it and obtaine

shipper s authorization to properly describe the shipment in the 

lading to match the applicable tariff commodity description 

opinion the freight forwarder has failed in adequately exercisin

degree of expertise which a

shipper is entitled to receive from 

licensed ocean freight forwarder 3

If Iwere a shipper Iwould ho

forwarder legally liable for any loss suffered or fire it or 

Furthermore Iwould initiate a

proceeding to have aforwarder s 

canceled if the forwarder has a

pattern of suCh acts

In this case the Commission gave claimant a second bite 

cherry for the purpose of enabling it to establish the true nature 

goods shipped Surely we need go no further in attempting to c

with the directives ofIsbrandtsen Co Inc v U S 96 F SuppJ 

892 1951 affd per curiam 342 U S at 950 Not only did claim

to produce such evidence but it and the majority ignored the ma

ofthe tariffrules Rule 3 tTariff 2nd Rev page 9 provides in pa

IDescription of commodities shall be uniform on all copies of the Bill of Lad

must be in essence in conformity with United States Export Declaration cove

shipment Carrier shall verify the Bill of Lading description with the United 

Export Declaration and request amendment of the Bill of Lading in the e

nonconformity with the United Staes Export Declaration Amendments in the 

tion on the Billof Lading will only be accepted if in conformity with the Unite

Export Declaration or as supported by United States Custom House Form 7403 

names are not acceptable commodity descriptions and Shippers are required to 

their commodity by their generally accepted orgeneric common name

g

If shipments are not covered by a Shipper s Export Declaration as perm

Export Control Regulations shippers must insert the applicable commodity Sch

number in the Line copy of the Billof Lading

5 Section 44 b and e Shipping Act 1916 8S amended 46 CPR 510 9 and 510 23

19 
CATERPILLAR TRACTOR CO v U S LINES 677

See my dissent in Carborundum Company v Royal Netherlands

Docket No 7515 served January 5 1977

By the Commission

S JOSEPH C POLKING

Acting Secretary

19 F M C
FEDERAL MARITIME COMMISSION

INFORMAL DocKET No 329 1

JOHNSON AND JOHNSON INTERNATIONAL

v

ROYAL NETHERLANDS STEAMSHIP CO

ORDER ON REVIEW OF SETILEMENT OFFICER S DECIS

March 28 1977

Settlement Officer James S Oneto served his decision in this pr

ing October 3 1975 wherein he determined that complainant s cla

reparation on an alleged overcharge of ocean freight should be g

We determined to review

Upon review ofthe Settlement Officer s decision we are ofthe o

that his conclusions are proper and well founded We wish howe

clarify one aspect ofhis decision and to further support the ult

conclusion ofhis decision by reference to subsequent decisions 

Commission

The Settlement Officer referred to our decision in Ocean F

Consultants v Royal Netherlands Steamship Company Docket 

Report on econsideration served January 30 1975 as having mod

not overruled the decision in Dockets 303 F and 304 F Johns

Johnson International v Prudential Grace Lines Inc The latte

had been cited by complainant to support its claim We fin

Settlement Officer s statement to be misleading inasmuch as the

decision of the Commission in Johnson Johnson is in fact t

consistent with the decision in Ocean Freight Consultants and cou

have been overruled thereby because it was issued later in time 

decision that wasmodified however by Ocean Freight Consultant

also by the later Commission decision in Johnson Johnson is the 

decision in Johnson Johnson We wish to clarify that it is the 

decision in Johnson Johnson that was quoted by complainant an

the initial decision to which the Settlement Officer was referring as 

overruled

Finally it should be pointed out that in addition to the gr

mentioned by the Settlement Officer for notadhering to the trade 

678 19 
S JOSEPH C POLKING

Acting Secretary

JOHNSON JOHNSON INTL v ROYAL NETHERLANDS 679

tariff rule we have recently adopted other grounds for reaching the same

conclusion See Commission Reports in Docket 75 15 The Carborun

dum Company v Royal Netherlands Steamship Company and Docket

75 27Abbott Laboratories v Venezuelan Line both served January 5

lW7

Vice Chairman Clarence Morse dissenting Idissent

See my dissent in Abbott Laboratories Docket 75 27 supra

By the Commission

19 F M C
FEDERAL MARITIME COMMISSION

DocKET No 7435

AGREEMENT No T 2880 AS AMENDED ET AL

DocKET No 7442

POUCH TERMINAL INC

v

THE PoRT AUTHORITY OFNEW YORK AND NEW JERSEY

ORDER AOOPI1NG INITIAL DECISION

March 31 1977

By THE COMMISSION Karl E Bakke Chairman Ashton C B

Bob Casey and James V Day Commissioners

This consolidated proceeding began with aCommission O

Investigation and Hearing Docket No 7435 into the approvab

six exclusive terminal lease agreements executed in the summer 

between the Port Authority of New York and New Jersey 

Authority and five different common carriers by water or te

operators subject to the Shipping Act 1916 Act Shortly ther

Pouch Terminal Inc Pouch which had initially lodged sec

protests against the lease agreements filed asection 22 complaint D

No 7442 against the Port Authority alone Pouch claimed th

leases were implemented without prior FMC approval alleged vio

of Shipping Act sections 15 16 and 17 and sought 3 500 

reparations

The Initial Decision of Administrative Law Judge Stanley M 

Presiding Officer held that the lease agreements were subject to 

15 of the Act and met the standards for approvability enunciated 

section 1

Although the Presiding Officer found that the proposed t

rents would not cover the Port Authority s

fully distributed 

I

The Presidina Officer did not approve Aareemont No T 2882 on the around that the parties no loqe

for the lessee to occupy Pier 12 the Aareement coverlna Pier 12 isactually desianated No T 2881 

Aareement No T 2884 was approved on the condition tbat it be amended to refleot thefact tbat only Pie

Piers I and 2 were to be used by the lessee Such an amendment No 8 baa been ftled with theCommissi

680 19 
AGREEMENT NO T 2880 681

including interest expense he nonetheless concluded that the agreed

upon amounts were basically fair and reasonable in light ofthe dwindling

highly competitive market for breakbulk cargo in the Port ofNew York

Pouch s complaint was dismissed and no unauthorized implementation of

the lease agreements was found to have occurred

The Commission now has before it the Exceptions to the Initial

Decision fIled by Pouch and the Replies to Exceptions fIled by the

Port Authority the lessees of nine Brooklyn Marine Terminal Piers

owned by the Port Authority Lessees and the Commission s Bureau of

Hearing Counsel

Pouch argues that the Initial Decision is erroneous because I

economic adversity cannot justify a noncompensatory terminal lease 2

there is no evidentiary support for finding the subject leases fair or

reasonable 3 there is substantial evidence ofprior implementation of

the lease agreements and 4 there is substantial evidence that Pouch was

harmed by the implementation ofthe leases

After a careful review ofthe entire record we have determined that

these arguments were fully presented to the Administrative Law Judge

and that his findings and conclusions thereon were well founded and

correct Accordingly we shall adopt his decision as modified by the

following supplemental fmdings and conclusions of our own

SUPPLEMENTAL FINDINGS

The Port Authority entered into the following minimummaximum

pier rental agreements Lease Agreements for Brooklyn Marine Terminal

facilities Brooklyn Piers in mid 1973

1 No T 2880 as amended with Barber Lines NS Barber for the exclusive use of

Piers 9A and 9B at an annual rent of not more than 1 027 965 norless than 513 982 50

Term of occupancy September I 1973 until June 30 1974 10 months and month to

month thereafter Barber s prior lease with the Port Authority for these facilities was to

have continued until December 31 1973 Piers 9A and 9B were declared Public Piers by

the Port Commissioners effective January I 1974

2 No T 288I as amended by T 2881 1 with Pittston Stevedoring Corp Pittston

for the exclusive use of Pier 12 at an annual rentof not more than 600 000 norless than

300 000 Term of occupancy August I 1973 until October 31 1975 27 months and

month to month thereafter This agreement was cancelled effective November 1 1975

and Pittston no longer occupies or intends to occupy Pier 12 Pittston s prior lease with

the Port Authority for this facility was to have continued until April 30 1975 Pier 12

was declared as Public Pier by the Port Commissioners effective May 1 1975

3 No T 2882 as amended with Pittston for the exclusive use of Pier 10 at an annual

rent of not more than 514 855 or less than 257 428 Term of occupancy August I

1973 until March 31 1975 20 months and month to month thereafter Pittston s prior

lease with the Port Authority for this facility was to have continued until September 30

1974 Pier 10 was declared a Public Pier by the Port Commissioners effective September

1 1974

4 No T 2883 as amended with Nippon Yusen Kaisha NYK and International

Operating Corp ITO for the exclusive use of Pier 7 at an annual rent of not more than

720 000 or less than 360 000 Term of occupancy September I 1973 until June 30

1977 46 months A prior NYK ITO lease with the Port Authority for this facility was to

19 F M C
682 FEDERAL MARITIME COMMISSION

have continued until June 7 1976 Pier 7 has not been declared a Public Pie

Port Commissioners

5 No T 2884 as amended with Universal Maritime Service Corp UMS 

exclusive use of Pier 2 at an annual rent of not more than 431 050 or less than 

Term of occupancy May I 1973 until January 31 1974 9 months and month to 

thereafter Piers I and 2 were both used by UMS between May I 1973 and July 

at a proposed maximum rental of 1 086 550 Agreement No T 2884 6 and 

August I 1973 and February 29 1974 at a proposed maximum rental of 62

Agreement No T 28847 UMS s prior lease with the Port Authority for Piers 

expired April 30 1973 but these facilities were not declared Public Piers by 

Commissioners until October 1 1973

6 No T 2885 as amended with UMS for Piers 4 and 5 at an annual rent of n

than 64I mor less than 320 996 Term of occupancy from month to month u

expiration of UMS s prior fixed term lease with the Port Authority on Decem

1973 Piers 4 and 5 were declared Public Piers by the Port Authority effective Ja

1974

Pittston s abandonment of Pier 12 and performance of all Bro

operations atPier to increases the likelihood Pittston will handle su

cargo to make Lease Agreement T 28821 fully compensatory

UMS abandonment of Pier 1 and performance of all Bro

operations at Pier 2 increases the likelihood UMS will attract su

cargo to make Lease Agreement No T 28847 8 fully compensato

The Port Authority did not bill the Lessees in accordance w

variable per ton charges stated in its public tariff FMC Schedu

PA 9 but instead sent monthly on account statements to each 

max tenant in the amount of 1 12th the maximum proposed renta

the understanding that these payments would be subsequently adju

reflect either the public tariffrates or the mini max rates dependin

the Commission s final decision herein The on account state

also equaled the monthly charges under the previous long term 

rental agreements the Lessees had had for the same facilities

Except for Agreement No T 2883 NYK and ITO the stated te

the prior leases had expired long before the record was closed 

proceeding January 1976 None of these prior leases were appro

the Commission

Pittston ITO and UMS have not always paid the Port Auth

monthly on account statements when due 2

Over 1 500 

arrearages have accumulated since mid I974 about 1 100 000 o

Pittston s account The Port Authority has not taken legal ac

collect back rents from Pittston ITO orUMS but has requested pa

by letter and telephone and has not excused the debt Pittst

experienced serious fmancial difficulties since 1974

Neither the proposed agreements nor the Port Authority s publ

contain provisions for the extension of credit

Pouch ultimately attempted to rent its three pier Staten Island fac

a flexible rate of 150 per ton 0 50 less than the Port Authority 

I

In the case ofPittston extensions of creditin excess of days apparently beaaD under its preexisting 

Piers 10 and 12

19 
AGREEMENT NO T 2880 683

per ton chmge under the mini max Lease Agreements Neither Pittston s

rejection ofthis offer norPouch s failure to attract other tenants at this

rate can be attributed to the fact that Pittston s mini max payments at

Brooklyn Piers 10 and 12 might have been less than the Port Authority s

fully distributed costs of owning and operating these piers In August

1973 Pittston was renting the two Brooklyn Piers and all three Pouch

Piers Business slow downs forced Pittston to consolidate its New York

breakbulk operations It chose to consolidate at Brooklyn rather than at

Pouch for a variety of legitimate business reasons including previous

difficulties in obtaining full contract performance from Pouch on matters

such as dredging The minimum cost ofrenting the two Brooklyn Piers

under the Lease Agreements 557 428 was higher than Pouch s initial

offer to Pittston for anew lease on all three Pouch piers 540 000

SUPPLEMENTAL CONCLUSIONS

The burden of proof in this proceeding is upon Pouch and Hearing

Counsel and the evidence adduced fails to establish that the Port

Authority engaged in or is proposing anticompetitive unduly preferential

or unreasonable practices The Port Authority knew the mini max rentals

were unlikely to be fully compensatory at cargo levels projected for 1973

and 1974 but this fact alone does not support a fmding that the Port

Authority was purposefully engaged in a predatory price cutting scheme

aimed at other breakbulk terminal operations within the Port of New

York Modernization of e Brooklyn Piers was completed by 1962 when

the breakbulk business was strong When breakbulk tonnages dropped

unexpectedly between 1969 and 1974 the Port Authority as the ownerof

these modem relatively expensive facilities could offer them at terms

the breakbulk market would accept or close them down completely We

cannot fault the Port Authority s choice of the former course of action

underthe circumstances

The amount ofrevenue actually realized under the mini max leases will

depend upon cargo volume If the maximum level is reached the Port

Authority would cover its fully distributed costs Ifonly minimum rents

are paid the PortAuthority would still net more income than it would be

closing the Brooklyn Piers Consequently the users of other Port

Authority facilities would not be required to unfairly subsidize the

Brooklyn operations See generally Matson Navigation Company

Reduced Rates on Flour 10 F MC 145 153 1966 Matson Navigation

Company eneral Increase In Rates 16 F M C 96 101 103 1973

There is also no indication that any other person ever sought what is

more was denied use ofthe Brooklyn Piers following the expiration of

the preexisting leases In fact no person other than Pouch has come

forward to complain of discrimination or preference of any kind We

conclude that the Lessees are not receiving special benefits unavailable to

other New York breakbulk carriers or stevedores

19 F MC
684 FEDERAL MARITIME COMMISSION

We realize the Commission has previously disapproved te

practices under Shipping Act section 17 second paragraph which 

recover fully distributed costs Eg City ofLos Angeles Agreeme

F M C 110 1968 Practices etc ofSan Francisco Bay Area Term

2 U S M C 588 1941 Investigation of Free Time Practic

Por

San Diego 9 F MC 525 1966 As ageneral rule all terminal us

expected to pay their own way Nonetheless noncompensatory 

synonymous with unreasonable Justifications can be and hav

accepted for terminal tariffs or leases with noncompensatory fea

Eg City of Long Beach and Transocean Gateway Corporatio

F MC 70 74 1969 There is sufficient justification present for th

Authority s failure to charge rents which would assure the recov

fully distributed costs in this instance The Lease Agreements woul

least incrementally profitable and if implemented as month to 

tenancies would not bind either party to a particular level of re

more than 30 days 3The low rental charges disapproved in City 

Angeles supra and investigated in San Francisco PortAuthori

States Steamship Co 4were not distressed short term prices reas

compelled by an oversupply of terminal space and declining m

conditions but were purely promotional inducements desig

attract long term business to aparticular port

Although the record offers no reasons for disapproving the mi

concept or the particular charges proposed in the Lease Agreemen

cannot ignore the fact that the only basis for the Lessees use 

Brooklyn Piers to date which was not violative of section IS was 

the Port Authority s Public Tariff and the parties have obvious

adhered to that tariff None of the Lessees were charged in the am

and in the manner specified by Tariff No PA 9 The tariff conta

provisions for monthly on account billing with subsequent acljus

nor does it permit extensions of credit in the unusual amounts and p

which have been extended to Pittston UMS and ITO Moreover 

case of Piers 1 and 2 UMS was allowed to continue its exc

occupancy for five months after the prior lease expired before th

Authority even declared those facilities to be public piers This co

conduct represents at least acooperative working arrangement whi

not reduced to writing tiled and approved by the Commission as re

by section 15 and constitutes a violation ofthat statute It also repr

a violation of section 533 3 of the Commission s Rules by th

Authority

The section 15 violation by Pittston and the Port Authority h

proximately injured Pouch however and Pouch is not entit

3 The term of theLease Aareement8 isfunher discus ed below

14 F M C 233 1971 The terminalleasc in that proceeding was ultimately found to recover fully 

costs

5 Section 333 3

requires terminal operators to maintain tariffs on file with the Commiuion which sbow 

charles rules and reauIations pertalnina to its terminal facilities No violation of section 533 3 arose from 

ITO s useof Pier 7 because that facility was not declared apublic pier

19 
AGREEMENT NO T 2880 685

reparations from either party for any loss of revenues or diminution in

property values it may have experienced since the first of Pittston s

preexisting leases expired on September 30 1974 Pier 10

A fmal matter requiring attention is the ambiguity created by the clause

providing that the Lease Agreements shall be ineffective unless

approved by the Commission and the lapse ofthe specific time periods

for the fixed rental terms provided by five of the six agreements 6

Ifthe

mini max leases were approved immediately it is now unclear whether

the parties intend to begin occupancy under month to month tenancies or

fixed term tenancies equal to the number of months originally stated in

the Lease Agreements

The original lease terms varied from between 3 to 46 months in duration

for no apparent reason except that they were generally related to each

Lessee s obligation under its preexisting Port Authority lease A month

to month tenancy even if approved for an indefmite period minimizes

the tenants ability to hold the Port Authority to a rental formula which

may produce revenues below fully distributed costs and also minimizes

the Port Authority s ability to hold a tenant at the Brooklyn Terminal

should it receive a more attractive offer from some other terminal

operator with a lower cost structure Accordingly we shall condition our

approval of the Lease Agreements upon the parties amending them to

specify that they shall run for an initial term of 30 days and from month

to month thereafter

Having this day adopted the Initial Decision ofthe Administrative Law

Judge in the above styled matters as supplemented by the foregoing

findings and conclusions which Initial Decision is set forth in full as an

Appendix to this Order

IT IS ORDERED That the Complaint of Pouch Terminal Inc is

dismissed and

IT IS FURTHER ORDERED That the request for approval of

Agreement No T 288l 1 between Pittston Stevedoring Corporation and

the Port Authority for the use ofPier 12 is dismissed as moot and

IT IS FURTHER ORDERED That Agreement Nos T 288014 T

2882 1 T 2883 5 T 2884 8and T 2885 1l are approved upon condition

that

A The Port Authority Barber Lines AlS Pittston Stevedoring Corporation Interna

tional Terminal Operating Company and Nippon Yusen Kaisha and Universal Maritime

Service Corporation modify numbered paragraphs 1 and 2 of their respective agreements

to read as foUows

1 The letting under this Lease shaD be extended to coverthe period of May 1

1977 through May 31 1977 and shall continue from month to month thereafter as a

periodical tenancy

2 For the period commencing May 1 1977 the Lessee shaD pay a basic rental as

foUows

B The Commission actuaDy receives on or before April 28 1977 a complete copy of

6

The VMS lease for Piers 4 and 5 T 2885 11 has no initial fixed term

19 F MC
686 FEDERAL MARITIME COMMISSION

the agreement modified as required in clause I of this paragraph and signed 

parties thereto and

IT IS FURTHER ORDERED That the approval contained herei

become effective on the date both the conditions set forth in the 

ordering paragraph are met and

IT IS FURTHER ORDERED That if the conditions set forth 

third ordering paragraph are not met for either Agreement No T 

14 Agreement No T 28821 Agreement No T 28835 Agreeme

T 2884 8or Agreement No T 288S11 then the agreement or 

ments not meeting said conditions are disapproved effective Ap

IfJ77 Commissioner Clarence Morse dissenting

The majority find section 15 violations existed in the manner 

Port s billing of charges to the terminal operators

Ifind the weight of the evidence to be that neither the Port n

terminal operators knew how the Pouch protest and complaint wo

resolved by the Commission and therefore they tried to dea

financial matters in away which would not keep them floundering 

uneconomic situation and cash flow problems which the min

agreements resolved and yet would permit reverting back to a

formula if the agreements were not approved

At most the Port is guilty of billing the terminal operators 

accordance with its tariff and the terminal operators willingly ac

the billing procedure because it both helped relieve a bad fin

situation and helped them await an unknown commission decis

stretches the evidence to the extreme to conclude that there were 

section 15 agreements in that course ofconduct

S JOSEPH C PoLKING

Acting Secre

19 
FEDERAL MARITIME COMMISSION

No 7435

AGREEMENT No T 2880 AS AMENDED ET AL

No 7442

POUCH TERMINAL INC

v

THE PORT AUTHORITY OFNEW YORK AND NEW JERSEY

Agreements Nos T 2880 as amended T 2881 1 T 2883 as amended T 2884 as

amended and T 2885 as amended are such agreements as encompassed by section

IS of the Shipping Act and subject to the jurisdiction of the Commission

Agreement No T 2882 as amended is no longer operative and no regulatory purpose

would be served by any determination relating to such agreement

Agreements Nos T 2880 as amended T 2881 1 T 2883 as amended T 2884 as

amended and T 2885 as amended are not unjustly discriminatory or unfair to

Pouch nordo they operate to the detriment of the commerce of the United States

norare they contrary to the public interest and are not otherwise in violation of the

Shipping Act 1916

Agreement No T 2884 as amended should be modified to reflect that UMS shall only

use Pier 2

The agreements should be approved

The agreements have not been implemented prior to Commission approval

The agreements do not subject Pouch to undue or unreasonable prejudice or disadvan

tage or establish unjust and unreasonable regulation and practices in connection

with the receiving handling storing ordelivery of property inviolation of sections

16 and 17 of the Shipping Act 1916

The complaint is dismissed with prejudice

Patrick J Falvey F A Mulhern Albert B Dearden ArthurL Winn

Jr Samuel H Moerman and Paul M Donovan for The Port Authority

ofNew York and New Jersey respondent

James M Leonard and Martin J McHugh for Barber Lines A S

Pittston Stevedoring Corporation Nippon Yusen Kaisha Limited Inter

national Tenninal Operating Co Inc and Universal Maritime Service

Corporation respondents

Seymour H KUgler and David R Kay for Pouch Terminal Inc

complainant

John Robert Ewers and Martin F McAlwee Hearing Counsel

19 F MC 687
688 FEDERAL MARITIME COMMISSION

INITIAL DECISION OF STANLEY M LEVY ADMINISTRAT

LAW JUDGE 1

This consolidated proceeding2 was instituted pursuant to the Co

sion s August 29 1974 Order of Investigation under section 15 

Shipping Act 1916 and the complaint of PouchTerminal Inc P

served September 17 1974 alleging violations by the Port Autho

New York and New Jersey Port Authority under sections 16 and 

the Shipping Act 1916 and involve certain lease agreements betwe

Port Authority and certain terminal operators and steamship line

terminal facilities located at the Brooklyn PortAuthority Marine Term

The agreements involved herein are

No T 2880 as amended with Barber Lines NS Barber

No T 2881 1 and T 2882 as amended by T 2882 1 with Pittston Steve

Corporation Pittston

No T 2883 as amended with Nippon Yusen Kaisha Limited NYK and 

tional Terminal Operating Company ITO and

No T 2884 as amended and No T 2885 as amended with Universal M

Service Corporation UMS

Agreement No T 2880 as amended between Barber and the Port Au

establishes terms and conditions for the exclusive use by Barber of Piers 9A an

the Brooklyn Port Authority Marine Terminal Under the terms of the Agre

Barber is authorized to use the berthing areas alljacent to the pier facilities to 

seagoing vessels and other water craft of designated companies and seagoing ve

two other operators with the prior and continuina consent of the Port Aut

Further Barber is subject to the general rules and regulations of the Port Auth

tariff FMC Schedule No PA 9 with the exception of the charges and fees set 

the tariff Under the payment provisions of the Agreement Barber wiU pay th

Authority on the basis of 2 00 times the revenue tons moving over piers 9A and 

no less than 513 982 50 and no more than 1 027 965

Agreement No T 2881 as amended between Pittston and the Port Au

establishes terms and conditions for the exclusive use by Pittston of Pier 10 

Brooklyn Port Authority Marine Terminal Under the terms of the Agreement 

is authorized to use the berthing area alljacent to the pier facilities to berth s

vessels operated by persons for which Pittston acts as the stevedore or terminal o

and which has the prior and continuing approval of the Port Authority Pitt

subject to the general rules and reaulations of the Port Authority tariff FMC S

No 9A 9 with the exception of the charges and fees set forth in the tariff Un

payment provisions of the Agreement Pittston wiU pay the Port Authority on th

of 2 00 times the revenue tons moving over Pier 10 but no less than 257428 

more than 514 855

Agreement No T 2882 as amended by Agreement No T 2882 1 between Pitts

the Port Authority is no longer an operative agreement and Pittston has cea

operate from Pier 12 under either a future lease agreement or under the Port Aut

public tariff

Agreement No T 2883 as amended between NYK and ITO and the Port Au

establishes tllrms and conditions for the exclusive use by NYK and ITO of Pier 

Brooklyn Port Authoiity Marine Terminal Under the terms of the Agreement N

authorized to use the berthing seagoing vessels owned or operated by NYK 

persons for which ITO acts as the stevedore or terminal operator NYK and IT

subject to the general rules and regulations of the Port Authority s tariff FMC S

I This decision became the decision of the Commission March 28 1977

2 See order served September 20 1974

19 
AGREEMENT NO T 2880 689

No PA 9 with the exception of the charges and fees set forth in the tariff Under the

payment provisions of the Agreement NYK and ITO will pay the Port Authority on the

basis of 2 00 times the revenue tons moving over Pier 7 but no less than 360 000 and

no more than 720 000

Agreement No T 2884 as amended and Agreement No T 2885 as amended

between UMS and the Port Authority establish terms and conditions granting UMS the

exclusive use of Piers I and 2 T 2884 and Piers 4 and 5 T 2885 at the Brooklyn Port

Authority Marine Terminal While Agreement No T 2884 as amended provides for the

use of Piers I and 2 by UMS the present understanding between UMS and the Port

Authority is that Pier I will not be utilized by UMS pursuant to the Agreement

Under the Agreements as modified between the Port Authority and UMS UMS is

authorized to only berth seagoing vessels and other watercraft in the berthing areas

adjacent to Piers 2 4 and 5 operated by persons for which UMS acts the stevedore or

terminal operator and which has the prior and continuing approval of the Port Authority

UMS is subject to the general rules and regulations of the Port Authority s tariff FMC

Schedule No PA 9 with the exception of the charges and fees set forth in the tariff

Under the payment provisions of the Agreement UMS will pay the Port on the basis

of 2 00 times the revenue tons moving over Piers 2 4 and 5 but no less than

312 743 75 and no more than 625 487 50 for Pier 2 and no less than 320 996 and no

more than 641 992 for Piers 4 and 5

It is the position of Pouch that

1 The rental formula contained in the Agreements is not compensatory i e it fails to

provide the Port Authority with sufficient revenues to meet the Port Authority s

expenses applicable to the demised premises

2 the Port Authority knew the rental formula would not be compensatory when it

offered such formula to its tenants

3 nevertheless the Port Authority put said rental formula into effect without

Commission approval in violation of section 15 of the Act

4 the Port Authority s actions were a substantial factor inducing Pouch s tenant

Pittston to remove operations from Pouch s piers to the Brooklyn Marine Terminal and

a substantial factor in depriving Pouch of other tenants to replace Pittston

5 the Port Authority s acts violate sections 15 16 and 17 of the Act

6 Pouch has lost rental income and the value of its property has been greatly reduced

as a result of the Port Authority s illegal acts and it is therefore entitled to damages

pursuant to section 22 of the Act in the amount of 3 500 000

To be determined therefore are

Whether the leases listed are agreements subject to Section 15 of the Shipping Act

1916 and if so whether said Agreements should be approved modified ordisapproved

pursuant to Section No 15 of the Shipping Act 1916

Whether the Port Authority as Pouch alleges in its Complaint violated sections 16

and 17 of the Shipping Act 1916 by entering into the subject Agreements and

Whether these Agreements subject Pouch Terminal Inc to undue or unreasonable

prejudice or disadvantage or establish unjust and unreasonable regulations and practices

in connection with the receiving handling storing or delivery of property in violation of

sections 16 and or 17 of the Shipping Act 1916

After the consolidation ofthis proceeding the Port Authority moved to

discontinue the investigation and dismiss the complaint for lack of

jurisdiction Additionally the Port Authority f1led a motion requesting an

evidentiary hearing limited to the issue ofthe Commission s jurisdiction

The other respondents leasees joined the Port Authority in these

motions Idetermined that the Commission possessed jurisdiction and

denied the two motions The Port Authority appealed by rulings to the

Commission and on March 14 1974 the Commission denied the Port

19 F M C
690 FEDERAL MARITIME COMMISSION

Authority s motion to dismiss and motion for evidentiary heari

jurisdiction but also vacated jurisdictional determination The Co

sion ordered that the investigation be expedited to resolve the ju

tional and substantive issues set forth in the Order of Investigation

Upon the completion ofdiscovery the hearing commenced on N

ber 17 1975 and ended on December 21 1975 Witnesses sponso

the Port Authority Pittston UMS Pouch and Hearing Counse

testimony and some 71 exhibits wereadmitted into evidence

FINDINGS OF FACT

lThe Port Authority is a public agency created by the States o

York and New Jersey and is the owner of or retains property 

under long term leases for marine terminal facilities located wi

geographical area designated as the New York New Jersey Port D

2 The Port Authority owns 100 vessel berths in the Port Dist

which 24 are designed to handle container vessels 10 are open 

designed to handle special bulk cargoes e g

lumber scrap 

automobiles and 66 are designed to handle general break bulk carg

vessels The Port Authority container berths constitute 24 of 

available container berths in the Port Its break bulk berths constit

of the 107 available break bulk berths in the Port In 1974 the 

Authority s container and break bulk berths handled over 72 of th

service cargo in the Port

3 The Port Authority is an other person subject to this ac

defined in section 1 ofthe Shipping Act 1916

4 Historically the Port Authority has made its marine terminal fa

consisting of piers wharves docks sheds and buildings available 

respective users through the means ofthe Port Authority s publishe

PortAuthority Marine TerminalsFMC Schedule No PA 9 or th

lease agreements with the terminal operator or steamship line usin

particular facility

5 Barber operates as a common carrier by water in the fo

commerce ofthe United States pursuant to tariffs on file with the F

Maritime Commission and is subject to the provisions of the Sh

Act 1916

6 Pittston conducts operations at terminal facilities in the Port o

York and in this capacity carries on the business offurnishing wha

dock and other terminal facilities in connection with common carri

water It is an other person subject to this Act as defined in sec

ofthe Shipping Act 1916

7 NYK operates as a common carrier by water in the fo

commerce ofthe United States pursuant to tariffs on file with the F

Maritime Commission and is subject to the provisions of the Sh

Act 1916

8 ITO conducts operations at terminal facilities in the Port o

19 
AGREEMENT NO T 2880 691

York and in this capacity carries on the business of furnishing wharfage

dock and other terminal facilities in connection with common carriers by

water It is an other person subject to this act as defined in section 1 of

the Shipping Act 1916

9 UMS conducts operations at terminal facilities in the Port of New

York and in this capacity carries on the business offurnishing wharfage

dock and other terminal facilities in connection with common carriers by

water It is an other person subject to this act as defined in section 1 of

the Shipping Act 1916

10 Pouch is engaged in the business ofrenting out to common carriers

by water and terminal operators three break bulk piers and operating

adjacent warehouse facilities which are located at Staten Island New

York

11 For the most part the Port Authority s facilities have been

furnished to terminal operators and steamship lines under separate lease

agreements rather than under the public tariff

12 All users of the Port Authority s marine terminal facilities are

subject to the Port s General Rules and Regulations contained in its

published tariff whether the respective user is a party to alease agreement

or not The primary distinction between a public user and a user under a

lease arrangement relates to the manner in which the user is charged for

the facility Ifthe user has a lease arrangement with the Port Authority

the charges are based on the terms set forth in the lease Ifthe userdoes

not have the benefit ofalease agreement the charges are those set forth

in the PortAuthority s public tariff

13 While the Port Authority furnishes marine terminal facilities to

vessel and terminal operators in the Port ofNew York the PortAuthority

does not staff these facilities in the sense that the Port Authority provides

labor for the handling of cargoes The Port Authority purposely limits its

operations to dredging and to repair and maintenance functions which are

necessary to keep the facilities in satisfactory condition for vessel tie up

and the handling of cargo The users of the facilities provide the labor

needed to load and discharge cargo This labor consists ofcargo handlers

coopers and checkers

14 At the time the Brooklyn Marine Terminal facilties wereconstructed

by the Port Authority in the mid nineteen fifties as modem and efficient

break bulk piers the PortAuthority had little difficulty in furnishing these

facilities to vessel operators steamship agents and terminal operators

under long term fixed renta1leases

15 In the years prior to 1969 cargo and cargo handling systems in the

Port of New York were largely break bulk in contrast to containerized

cargo or methods Atonnage survey conducted by the Port Authority in

1969 showed that ofthe approximately 25 million pay tons of cargo

handled by vessels maintaining regular calls at the Port ofNew York 16

112 million tons were being discharged and loaded on break bulk vessels

19 F MC
692 FEDERAL MARITIME COMMISSION

and the remaining 8 12 million tons of cargo were being hand

containers

16 While the 1969 projections indicated a substantial grow

container cargo so that by 1974 break bulk and container cargo wo

approximately equal the shift to containerized cargo and vesse

much greater than predicated Thus by 1974 of the approximat

million pay tons of cargo handled in the Port of New York 20 m

tons were handled by container vessels and break bulk vessels ha

less than 9 million tons

17 The decline of break bulk cargo activity during the period 

through 1974 had an adverse impact on older and less efficient brea

facilities in the Port ofNew York which werenot capable ofacco

dating modern break bulk vessels and cargo handling techniques s

multiple pallet loads side port operations containers and special 

movements

18 The Port Authority s modern break bulk facilities located 

Brooklyn Port Authority Marine Terminal also experienced a dra

decline in use as a result ofthe growth ofcontainerization illustra

the marked decline in cargo passing over the Brooklyn facilities a

PortAuthority s statistics comparing weight tons handled at the Bro

1 12 for the year 1966 with those handled in 1972 In 1966 2 0

weight tons were handled at the Brooklyn facility in contrast to 1 4

for the year 1972 During the same period the weight tons tha

handled at the Port Authority s NewarkElizabeth facilities rose 

5479 000 weight tons handled in 1966 to 10 256 000 in 1972

19 In a declining break bulk market the modern and efficient de

the Brooklyn piers waS no longer attractive to a single user under a 

term fixed sum rental arrangement

20 The effects of the decline in break bulk operations in the P

New York particularly for the Port Authority became critical 

1972 with the increased disuse of break bulk facilities and dec

break bulk tonnages

21 A study of the break bulk industry and the problems arising 

the decline in break bulk tonnages in the Port ofNew York and its 

on the Port Authority was undertaken by the PortAuthority during 

22 This study by the Port Authority revealed

I The shift of the large break bulk carriers to containerized operations mea

were no longer interested in leasing piers for break bulk operations and that th

could cause the modem high volume break bulk pier to become vacant

2 Long term fixed rent lease agreements were less advantageous to te

operators since the decrease in large break bulk lines left the terminal oprator 

fewer number of regular useror stable accounts and no incentive to risk a

lo

lease at a fixed rental

3 The large steamship agencies which had in the past unified marginal bre

vessel operators were disappearing and were no longer prospects for a fixed ti

rental program This left the terminal operator as a potential unifying entity 

19 
AGREEMENT NO T 2880 693

under a long term fIXed rental because the remaining break bulk vessels which could be

handled by a terminal operator have less regular schedules and levels ofactivity

4 Long term fixed sum rental arrangements were notattractive to the marginal

break bulk carriers operating in the Port on other than Port Authority facilities

23 As a

consequence ofthe study the Port Authority concluded

I

The more efficient and modern break bulk facilities such as the Brooklyn Port

Authority Marine Terminal facilities were required to meet the operational requirements

of break bulk carriers calling at the Port of New York Less efficient or smaller piers

were inadequate

2 Attracting and retaining break bulk cargo in the Port of New York depended on

making the most efficient break bulk facilities available to the break bulk shipping

industry upon terms which did not require a fixed rental overa fixed term

3 Unless the Port Authority devised a rental program that included a flexible rental

structure a flexible short term arrangement and a flexible labor stuffing practice most

of the tenants at the Brooklyn Port Authority Marine Terminal would notand could not

renew their existing leases could not compete with other ports for competitive cargo

and would leave the Port of New York or go out of business

24 As a

consequence ofits study the Port Authority in December of

1972 formulated a new rental program based on a mini max rental

formula which in the Port Authority s judgment was the most viable

means ofretaining the break bulk industry in the Port ofNew York

25 The rental program the Port Authority formulated is primarily based

on charging for the use of marine terminal facilities by the unit rather

than on afIXed rental This allows the facility charges to fluctuate on the

volume of cargo handled subject to amaximum and minimum rent

26 Each ofthe Agreements provide for a charge in an amount equal to

2 00 per revenue ton handled on the pier subject to a maximum and a

minimum rent

27 Prior to the summer of 1973 the Port Authority rented its piers at

Brooklyn Marine Terminal to tenants pursuant to long term fixed rental

leasing arrangements UMS was renting Piers 1 and 2 for an annual rent

of 1 086 550 pursuant to a lease due to expire April 30 1973 but to

continue as amonth to month tenancy thereafter UMS was renting Piers

4 and 5 for an annual rent of 720 000 pursuant to a lease due to expire

June 7 1976 Barber was renting Piers 9A and 9B for an annual rent of

1 027 5 pursuant to a lease due to expire December 31 1973 and

continue as amonth to month tenancy thereafter Pittston was renting

Pier 10 for an annual rent of 514 855 pursuant to a lease due to expire

September 30 1974

28 Implementation of a usage charge or rent for marine terminal

facilities based on the number of cargo units handled would place the

terminal operator in a position fmancially to operate from large facilities

by allowing the terminal operator to consolidate the cargo of smaller

carriers into the large block of cargo needed to maximize the efficiency of

the larger piers particularly the Brooklyn Port Authority Marine Terminal

piers and would also reduce the risks arising from fIXed overhead costs

such as labor inefficient operations or loss of cargo

19 F MC
694 FEDERAL MARITIME COMMISSION

29 The need to encourage and support a terminal opera

consolidate blocks of tonnage to justify the use of the more m

break bulk PortAuthority piers Was particularly important at the Bro

PortAuthority Marine Terminal Facilities since the physical con

llt

of the piers was suited to the piers being occupied by a single occ

In contrast to the Brooklyn piers Port Newark break bulk facilities 

the wharf type offacilities and were more easily subdivided be

different users

30 The principal purpose for establishing a substantial minimu

was to induce the respective user of a Port Authority pier to conf

operations to a smaller number ofpiers and not to begin operating o

or three piers at atime without the required amount of cargo to 

such an operation successful The minimum rent requiremen

designed to encourage as many carriers to use the Port as possibl

this reason the Port Authority did not want to establish facilit

charges for the piers solely on a revenue ton basis or on a tariff 

31 The tlexible rent program based on the mini max formula 

be implemented at the Brooklyn Marine Terminal by executing a

ments to the lease agreements in effect with the current users 

facilities These amendments would change the terms and cond

under which charges were assessed for the facilities from afIXed s

year charge to charges computed by multiplying the number of re

tons moving over the pier in anyone year by 2 00 with a ma

charge not to exceed the prior year s tixedsum payment and a min

charge of not less than one halfthe prior year s fIXed sum paymen

32 The mini max rental formula based on a 2 00 a

ton rate 

comparable to the prevailing charges at other terminals in the P

New York and at other Atlantic ports and was responsive 

obligations and needs of both the Port Authority and the brea

industry in the Port of New York

33 The minimum charge established by the Agreements betwe

PortAuthority and the respective parties to the Agreements guaran

the Port Authority an amount of revenue which is below the 

distributed costs of the Port Authority allocated to each of the 

subject to the Agreements The maximum charge established 

Agreements would exceed the fully distributed costs of the Port A

ity

34 The Port Authority recognized that the level of revenue 

Agreements would not meet its allocated costs in the first y

operation By the third year of operation the Port Authority expe

revenues which the Port Authority would receive under the pa

provisions of the Agreements will equal or exceed these costs

35 The Port Authority s rate of 2 00 a revenue ton is higher th

previous effective per ton rate at the Pouch facility or proposed ef

rate at the Pouch facility

36 The Port Authority s Brooklyn Marine Terminal faciliti

19 
AGREEMENT NO T 2880 695

located in an area where there is available a largepool of skilled longshore

labor

37 Pouch Terminal is located in an area that does not have alarge pool

of skilled labor

38 The PortAuthority Brooklyn Marine Terminal facility is superior to

any of Pouch s three piers for the loading and discharging of cargo from

modem break bulk vessels

39 Pittston s operations at the Pouch Terminal became increasingly

expensive and inefficient

40 The cessation of the business arrangement between Pittston and

Pouch was substantially caused by the obsolescense ofPouch s facilities

the inability to obtain skilled longshore labor at the Pouch location

41 The operational problems faced by Pittston at the Pouch terminals

combined with the decline of the break bulk market were the primary

causes for Pittston shifting its operations to the Brooklyn facility

42 Other terminal facilities operated by competitors of the Port

Authority which possess the characteristics of amodem break bulk pier

will remain competitive despite the institution of a mini max rental charge

for the Port Authority s Brooklyn facilities

43 The Port Authority s mini max rental program will be available to

all break bulk operators at the PortAuthority s break bulk facilities in the

Port ofNew York

DISCUSSION

The Port Authority built various piers comprising the Brooklyn Marine

Terminal during the six year span between 1956 and 1962 At the time

that the Brooklyn Marine Terminal was conceived the container revolu

tion had not yet begun Containerization and the suitability or lack

thereof ofthese piers to handle container traffic was never considered by

the Port Authority in building the piers

Starting in 1965 and continuing through the present there has been

particularly in the Port of New York a marked and radical change in the

method by which ocean borne cargo is transported and handled both on

loading and discharge Where prior to 1965 general cargo was handled

through traditional break bulk methods utilizing the services of skilled

longshoremen and relatively simple mechanical aids thereafter the

radically new technological improvements represented by the container

and its ancillary equipment became ever more pervasive

Some indication ofthe dramatic change in the nature ofthe carriage of

goods transported by water may be seen from the following tonnage

figures

In the year 1969 in the Port of New York some 16 2 million tons of cargo were

transported in the break bulk mode In that year some 8 million tons were transported

by container

Five years later in 1974 only 9 million tons were transported in the break bulk mode

while some 20 million tons of cargo passed through New York in containers

19 F M C
696 FEDERAL MARITIME COMMISSION

This trend toward containerization appears irreversible

The changes in the mode of maritime transport brought about b

container technological revolution have had serious repercussions 

stevedoring industry particularly with regard to break bulk steve

and terminaling Prior to containerization there were some S4 steve

engaged in break bulk operation in the Port of New York Today 

are only 6

Increasing containerization has whittled away in another eco

area at the remaining break bulk stevedoring and terminaling opera

It appears that practically all premium cargo today is transport

containers What is left is lower valued cargo whose form doe

particularly lend itself to transport by container Thus the bus

available to the break bulk stevedore and terminal operator 

represents the leavings of the container market Another and signi

result of this trend is that the break bulk terminal operator can no 

rely on regular callings by scheduled liner operations The break 

stevedore and terminal operator finds tramp ships as his customers 

and more frequently and this has compounded the economic pro

which affiict the industry This problem has particularly affected 

stevedores saddled with fixed term and fixed amount leases 

stevedore and terminal operator cannot count on a regularized fl

traffic he experiences difficulty in being able to meet fixed 

obligations

The plight of the stevedoring industry is illustrated by the fact th

of 1972 UMS was suffering losses at the rate of 3 million dolla

year One ofthe options faced by Pittston wasthe possibility ofgoi

ofbusiness in the Port ofNew York This danger was known to a

gravity recognized by many in the industry

It is clear that the outlook in 1972 and 1973 for increasing the Qtal break bulk 

in the Port District was most bleak and in fact most persons in the indust

predicting further reductions in break bulk tonnage It was the consensus that the 

of the container revolution and the consequent loss of break bulk cargo was irreve

With the decline of break bulk volume another fact became ob

There are far too many break bulk piers in the Port of New York 

obsolete or obsolescent

Faced with a depressed break bulk economy the Port Aut

concluded that the operational expenses attendant upon a prolifera

piers required drastic consolidation if break bulk operation was to s

in the Port Each separate pier maintained by a stevedore req

supervisory and operational personnel irrespective of the labor 

required on a day today basis The maintenance of large fIXed 

unrelated to the realities of the day to day flow of business w

economic burden which stevedores and terminal operators simply 

not afford Consolidation offacilities became imperative

i

l

OpeningBrief of Pouch Terminal Inc p 20

19 
AGREEMENT NO T 2880 697

It is useful to remember that the condition ofwhich protestant Pouch

herein complains the empty condition of its piers is not at all limited to

Pouch There are a number of piers comparable to Pouch s which are

vacant and are faced with closing In fact the PortAuthority recognizing

that its Erie Basin piers were not the equal of the Brooklyn Marine

Terminal Piers faced the obvious and realistic business necessity and

closed them down

Similarly VMS closed down its piers at Bush Terminal and paid rental

elsewhere because its business was not sufficient to support a sub

standard break bulk pier any longer

In view of the depressed conditions of break bulk traffic the over

abundance of piers in the Port of New York and the increasing threat

posed by the advancing technology of containerized transport ofgoods

only those piers with the physical capacity to serve an increasingly

sophisticated break bulk and semi container traffic might expect to

continue to be utilized There is no question that the physical character

istics of today s break bulk pier are extremely critical As noted above

the Port Authority closed down piers which it considered to be marginal

in efficiency or incapable ofmeeting the demands ofadvanced break bulk

shipping

There is a trend to unitized and palletized cargo and other technologi

cally sophisticated methods ofhandling break bulk cargo Then too it is

customary in by far the greater number of cases for break bulk ships to

carry some containers Thus even when operations are conducted at a

break bulk terminal that terminal must also have the capability to handle

a small number of containers It is for these reasons that few break bulk

piers are capable ofmeeting the requirements oftoday s break bulk cargo

handling The record establishes that the Port Authority Brooklyn Marine

Terminal piers represent the most modern and efficient break bulk piers

available in the Port ofNew York

It is in the context of this background that consideration will now be

given to the issues raised by the leases entered into by the respondents

JURISDICTION

The Port Authority supported by the leasees contends that the leases

are not section 15 agreements within the jurisdiction ofthe Commission

They had previously moved to discontinue the investigation in Docket

No 7435 and to dismiss the complaint in Docket No 7442 for the

reason that the subject matter ofthe investigation and complaint is not

within the jurisdiction of the Commission under the Shipping Act 1916

By ruling served December 13 1974 Idenied the motion to dismiss

for lack ofjurisdiction finding that the leases were such agreements as

set forth in section 15 of the Act and that they must necessarily be filed

with the Commission for its determination whether they should be

approved disapproved or modified

19 F M C
698 FEDERAL MARITIME COMMISSION

The parties appealed my ruling to the Commission which by o

served March 14 1975 determined that the ruling on the moti

dismiss was improvident and premature It ordered that along with 

substantive issues the question of section 15 jurisdiction shou

resolved at afull hearing as well as any uncertainties as to the eff

the lease provisions

In compliance with the Commission s order of March 14 197

question of section 15 jurisdiction as well as any uncertainties as 

effect of the lease provisions was heard during the course of the h

November 17 21 1975 as well as other substantive issues

The testimony and arguments advanced during the hearing and o

do not alter in any material way the analysis of the leases set fo

great length in my ruling ofDecember 13 1974 For all ofthe factu

legal reasons set forth in the ruling ofDecember 13 1974 it is conc

that after hearing on the issue the leases in issue in this proceedi

section 15 agreements within the jurisdiction of the Commission a

the parties to such agreements are carriers or other persons subject 

Shipping Act 1916

The factual and legal reasons set forth in the ruling of Decemb

1974 that the leases are subject to the Commission s jurisdictio

incorporated herein and made a part of this decision as if set forth 

herein

In determining whether the leases are section 15 agreement

subject to the Commission sjurisdiction we must also give conside

to Pouch s contention that the Port Authority and the lessees und

involved leases have implemented the leases prior to Comm

approval In support thereof Pouch points out that the lessees ha

fully paid the monthly lease billings submitted to them by the 

Authority and that the PortAuthority has not gone to court to colle

unpaid rents This Pouch suggests supports a fmding that the p

have schemed to put the lease provisions into effect and have do

prior to Commission approval

The leases here involved were signed in the fall of 1973 two and 

years ago Since then with the present proceedings pending an

respondents contending that the leases are not subject to section 15 

has existed great uncertainty as to the rents due the Port Auth

whether pursuant to the tariffor under the leases If as the PortAut

and the lessees contend the Commission is without jurisdiction 

section 15 then the leases have been effective throughout the two 

half year period since they were signed and the amounts due are 

the leases In the meantime with the leases expiring and shift

month to month basis in most cases and certain of the facilities 

declared public and tariffs being made applicable other sums are 

the lease provisions do not take effect until approved by the Comm

Under such circumstances any delay in action for collection by th

19 
AGREEMENT NO T 2880 699

Authority at the old lease rates are not indicative of an implementation of

the new lease rates

The Port has billed pursuant to the old leases and where appropriate

the Port tariff The matter is carried as an account receivable Ifthe

Commission believes it appropriate it could even permit the new rates to

have a retroactive effect 4

In any event the allegation that the parties

have implemented an agreement prior to required approval cannot be

sustained and it is not so found

THE MINI MAX FORMULA

Late in 1972 the Port Authority s representatives discussed with the

entire industry including the mlior stevedoring and terminal operators

and break bulk carriers within the Port District including those who were

not as well as those who were its tenants the possibility of the Port

Authority adopting a new rent scheme In December of 1972 a recommen

dation was made within the Port Authority s Marine Terminals Depart

ment to establish a new rental program This program was discussed with

all Port Authority tenants in Brooklyn and lease term extensions to the

existing leases were offered as an inducement to put the program into

effect on each of the Brooklyn piers at the earliest possible time Le

upon approval of the Port Authority Commissioners and upon the

approval ofthe Commission

Flota Mercante Grancolombiana at Pier 3 and Maersk Line Brigantine

Terminal Corp at Pier 11 declined to accept the new program because

they did not care to extend the terms oftheir leases

In the fall of 1973 the Port Authority and certain of its tenants at

Brooklyn Marine Terminal that is UMS ITO NYK Barber and

Pittston each signed amendments to their existing leases for Brooklyn

Marine Terminal piers each ofwhich amendments extended the terms of

the existing leases and provided for a rental to be determined on the basis

of the so called mini max formula Thus the amendments provided

that the UMS lease for Piers 1 and 2 then a month to month tenancy be

extended to a fIXed tenancy through January 31 1974 and a month to

month tenancy thereafter the VMS lease for Piers 4 and 5 due to expire

December 31 1973 be extended to amonth to month tenancy thereafter

the ITO NYK lease for Pier 7 due to expire June 7 1976 be extended to

June 30 1977 the Barber lease due to expire December 31 1973 and

continue as a month to month tenancy thereafter be extended to June 30

1974 and continue as amonth to month tenancy thereafter the Pittston

lease for Pier 10 due to expire September 30 1974 be extended through

March 31 1975 and continue as a month to month tenancy thereafter

the Pittston lease for Pier 12 due to expire April 30 1974 be extended to

October 31 1975 and continue as amonth to month tenancy thereafter

4

Mediterranean Pools Investigation 9 F M C 264 304 1966 Agreement No T 2336 New York Shipping

Ass n Docket No 69 57 11 SRR 571 473 1970

19 F MC
700 FEDERAL MARITIME COMMISSION

Each tenants rent pursuant to the amendment would be determin

multiplying the number of revenue tons of cargo handled on the l

pier as defined in the amendments by 2 00 but the maximum rent 

not exceed the annual fixed rental set by the existing lease nor b

than one half of such maximum rental The Minimum and Max

rents were set as follows

Minimum Maxim

Piers I and 2 n nn nnn nn n 543 275 1 086 

Piers 4 and 5 nnnnnnn n nnn nn 320 996 641 

Pier 7 nnnnnn nn nnnnn nnn 360 000 720 

Piers 9A and 9B nnnnnnnn 513 982 50 1 027 

Pier 10 n n nnnnn nnn nn nnn 257 428 514 

Pier 12 n n nnnn nnn nn 300 000 600 

Each amendment provided that it would not be effective until app

by the Commission

Pouch contends that the minimum rental does not return suff

revenue to recover fully allocable costs is not compensatory 

therefore is unlawful

The record in this proceeding does indeed demonstrate that the 

Authority will be furnishing terminal facilities below its fully distri

costs As a general rule the Commission has required that ter

facilities be furnished at a rate no lower than the terminal owne

operator s

fully distributed costs in order to prevent unlawful discri

tion to other ports or terminals and to avoid jeopardizing the fma

soundness ofterminal operations Agreement No T2108 and T 

12 F M C 110 1968 Agreement No T2227 Between the San 

cisco PortAuthority and States Steamship Co 14 F M C 233 1971

This rule finds support from the principle that public piers and m

terminals are considered public utilities for regulatory purposes since 

are necessary to the business ofsupplying the shipping public w

service needed in the furtherance of the commerce ofthe United S

and ocean carriers and the shipping public are dependent upo

economy efficiency and soundness of terminal operations Investig

ofFree Time Practices Port ofSan Diego 9 F M C 525 1966

The Commission however in exercising its broad discretionary a

ity to determine whetherthe terminal practices or the actions genera

public port authorities are unlawful has accorded public port autho

discretion in making managerial decisions which affect port operatio

long as the Port Authority has not acted unreasonably or contrary t

provision of the Shipping Act 1916 In the Matter ofAgreement No 

2598 Docket No 7224 14 SRR 573 March 21 1975 Viewed in 

light the record herein establishes that the circumstances which prom

the Port Authority s decision to implement the mini max rental a

ments were compelling and should not be viewed as unreasonab

contrary to provisions ofthe Shipping Act 1916

As clearly revealed by the record in today s conditions affecting b

19 F 
AGREEMENT NO T 2880 701

bulk stevedoring and tenninaling in the Port ofNew York it would be

unrealistic to believe that break bulk piers could be rented at the rates

and upon the tenns and conditions suggested by Pouch Mr Costello of

UMS in testifying to this effect said

If I am stuck with the fixed tonnage rental let us say and I only have 100 000 tons

moving through a facility I have to pay 700 000 I have to close the facility down It just

isn t there The beneficial good from that ton is gone It is gone to me it is gone to the

Port

The evidence herein reveals that the Port Authority s rental program as

provided in the proposed leases was occasioned by the container

revolution which caused a drastic reduction ofbreak bulk cargo traffic

and services and resulted in a shrunken market for break bulk tenninal

facilities

With the industry facing an uncertain future and the consequent

inability oftenants to pay rentals wholly unrelated to the volume oftraffic

handled the Port Authority in an effort to prevent the demise ofbreak

bulk service in the Port offered a lease program which offered the hope of

survival for break bulk stevedores and tenninal operators Mr Tenno of

the Port Authority stated it thusly

Without flexibility so that the total rent can increase or decrease with volumes

handled the break bulk industry in the Port of New York could not survive and compete

with other ports for competitive cargo

6

Although the minimum revenues would not be compensatory on afully

distributed basis the evidence does support the conclusion that it is

compensatory on an incremental basis Applying the proposed rental to

the actual tonnage moving over the piers in 1974 the revenues for the

piers as agroup namely Piers 2 4 and 5 7 9A and 9B 10 and 12

would aggregate 3 342411 This exceeds all direct expenses including

allocations for overhead 7

The record shows that the 2 00 per ton charge proposed exceeds the

charges ofother pier landlords in the Port ofNew York and also at other

ports on the Atlantic Gulf and Pacific Coasts To that extent it cannot be

said that the Port Authority devised rentals to undercut and eliminate

competitors Rather it is concluded that the proposed rentals are fair and

reasonable when measured by general market conditions

LAWFULNESS AND REASONABLENESS OF THE RENTAL

CHARGES

The heart of Pouch s complaint and at issue in this proceeding is

whether the mini max formula for rentals results in an unjust or

unreasonable practice or one otherwise discriminatory and unlawful

The Port Authority relying on Union Pacific R Co v United States

s

Tr 678

6

Ex 9 p 12

7 Exs 25 and 35

19 F M C
702 FEDERAL MARITIME COMMISSION

313 U S 450 1941 contends that the evidence shows that the re

proposed to be charged by the Port Authority under the involved 

constitute not less than the fair rental value ofthe properties invo

are in all respects reasonable non discriminatory and lawful and s

not be disapproved by the Commission

Union Pacific arose under the Elkins Act forbidding rebates co

sions ordiscrimination with respect to the transportation of prope

railroad as covered by the Interstate Commerce Act 49 U S C Se

41 1 Dealing with subnormal rentals offered by the City ofKansas 

Kansas to produce merchants for quarters in a municipal pro

terminal the District Court had ordered the City to assess re

adequate to cover operating expenses and a fair return o

investment The Supreme Court held this to be in error and decided 

the highest rentals which the City might be required to assess shou

determined by the standard of fair rental value rather tha

compensatory return The Supreme Court said pp 4734

Fair rental value rather than a compensatory return upon full value of the 

facilities is the standard by which the City s schedule of rates is to be judge

determine fair rental value the going rates of rental for similar facilities 

community are significant as are the rentals prospective tenants are willing t

Likewise evidence of the overall cost and the overall value of the properties wo

material The cost of furnishing the facilities including normal return on c

employed in like enterprises would have weight Other pertinent factors would do

emerge in a controversy to have determined judicially whether certain rentals re

are or are not fair When enough evidence is offered to justify a conclusion base

judgement and notguesswork the requirements of the judicial process are met

In line with the Supreme Court decision the present record show

the 2 00 per ton rental charge proposed to be assessed unde

involved leases is as high or higher than

I

Similar rental charges for other marine terminal properties throughout the 

New York s

2 Similar rental charges for marine terminal properties at other Atlantic ports r

from Boston to Miami at the Gulf ports of New Orleans Mobile and Houston 

the Pacific Coast ports of Los Angeles Oakland and Seattle and

3 The Port Authority Public Tariff No P S 9 charge at the Port of New Y

2 00 per ton 10

Pouch contends that in Union Pacific the Supreme Court also obs

that the ICC could require that rentals equal costs where the ICC so

to root out competitive evils in discriminatory warehousing indulg

by carriers in an effort to acquire traffic 313 U S 450 at p474 see 

Baltimore Ohio Railway Co v United States 305 U S 507 52

1939

Pouch does not believe that any decisions dealing with the Elkins 

are applicable to the Shipping Act 1916 It argues that the conce

fair rental value would seem to have little or no applicability to o

8

Ex 20 21

9Exs 22 23

10 Ex 9 pp 1415

19 F 
AGREEMENT NO T 2880 703

terminal rents since ocean terminals are for the most part municipally

owned or operated This makes many of the factors which determine

fair rental value inapplicable to meet the kinds ofproblems peculiar to

the rental of ocean terminals

Even assuming that fair rental value is the applicable standard

Pouch asserts that the Port Authority has not demonstrated that its mini

max formula constitutes the fair rental value ofits piers

Pouch attempts to discredit the evidence ofother pier rentals as set

forth in Exhibits 2023 by contending that the 1 95 rate shown therein

for Pouch was determined by dividing the annual rental of 537 000 by

the number of tons which moved across Pouch piers in 1972 However

says Pouch since the annual rental was fixed the rental of 537 000

would be paid even if only one ton passed over the piers

Pouch s argument is counter productive Ifconditions in the Port were

to deteriorate to the point where charges on an annual basis at Pouch

terminal resulted in costs of 3 4 or 5 a ton would a charge ofless

than 3 4 or 5 at Brooklyn thereby become unfair competition Would

competitors be required to continue to raise their charges per ton as

volume declined at Pouch to avoid being charged with unfair competition

The very fact that a cost of 195 per ton at Pouch piers in 1972 resulted

from declining volumes showed that from a leasee s point of view a rental

at Brooklyn of 2 00 for a more modern facility made good business

sense

Pouch claims that the Port Authority charged cut rate prices for its

Brooklyn Marine Terminal piers It arrives at this cut rate conclusion

by arguing that in establishing its mini max rate the Port Authority set a

rate for its facilities which according to its own computations is about

the same as that charged by its competitor Pouch a facility which the

Port Authority claims is very much inferior to the Brooklyn Marine

Terminal It says that 2 00 is an irresistibly low rental and one with

which Pouch could not compete The testimony of the witnesses for the

stevedores however is to the effect that Pouch could not compete at any

price because operating difficulties both physical ald labor could not be

surmounted

Despite Pouch s contention that the Port Authority could have ex

tracted higher rentals and that the offer of 2 00 per ton was predatory

and anti competitive the record cannot support such a conclusion

Neither the PortAuthority nor Pittston drove Pittston s customers from

Staten Island The Commission cannot ignore the reality that by 1972

one third ofthe break bulk tonnage handled in the Port ofNew York had

disappeared that major break bulk carriers had discontinued break bulk

operations and that more and more break bulk piers in the Port were

being vacated and rendered empty and unused With the disappearance of

mlior break bulk liner operations the only remaining tenants for the

11 See pouch reply brief p 3

19 F MC
704 FEDERAL MARITIME COMMISSION

break bulk piers are the terminal operators who can combine in on

operation the reduced break bulk tonnages of a number of lines Bu

as to these terminal operators with the volume oftraffic shrinkin

the volume in the future most uncertain it is reasonable to find tha

could no longer assume long term rental obligations which provid

flexibility for fluctuations in traffic or substantial reductions of t

The level ofthe proposed rental charges as well as the flexible 

max character ofthe formula is found to be a reasonably fair c

which the tenants were able orwilling to pay Furthermore the app

of the Port Authority it is concluded would provide the Port of 

York with the best means of continuing break bulk liner service t

from the Port in the face of a continuing decline in volume

competition with other ports for the volume that remained

The record also compels the conclusion that the continued vacan

the Pouch piers since the termination of the Pittston lease mu

attributed to general market conditions and not to tie rentals propos

the Port Authority When the Port Authority has on hand 29 emp

unrentable break bulk marine terminal berths many of which are mo

it is not surprising that Pouch has a similar experience with its three 

piers

Mr Chiarello President of Pittston Stevedoring Corporation te

that Pittston did not renew its lease ofthe three pouch piers bec

among other reasons Pi tston and its steamship customers did not 

all three Pouch piers although Pittston was willing to negotiate a con

rental of one ofthepiers Pier 19 and tIlen only on a flexible rental 

varied with the amount of cargo handled over the pier Howeve

Pouch insisted that any lease with Pittston should embrace all three 

In addition the physically obsolete and inefficient character of the 

piers coupled with the chronic and long standing labor problem 

Pouch piers made the shift to Brooklyn necessary

Mr Chiarello testified that the Port Authority Brooklyn piers 

physically attractive for his operations because

1 They are modem and physically efficient piers in contrast to the antiquat

inefficient Pouch piers and

2 there was a rich pool of skilled and experienced longshoremen in B

whereas Pittston had experienced serious intenerence in operations from the 

quacy of labor available at the Pouch piers

After describing the comparative advantages and disadvantag

operations on the Pouch piers as compared with the Port Auth

Brooklyn piers Mr Chiarello testified

Obviously the decision to lease any property for stevedoring purposes must 

the balancing of various economic factors I may say that any diff rential 

between that offered by Pouch and what would be charged to Pittston by th

Authority on a public usage basis was of little relative significance Wha

19 
AGREEMENT NO T 2880

significant however were the innate disadvantages inherent in the Staten Island

operation disadvantages which had proven themselves overthe years

12

There is no doubt that the Pouch piers in Staten Island enjoy some

physical advantages For one the existence of the warehouse facilities at

the site does offer an advantage to a shipper who wishes to make use of

both terminal and warehousing facilities the physical proximity of the

warehouses would all other things being equal offer an inducement to an

interested carrier

Then too the geographical location of Pouch on Staten Island offers

ready access to vessels coming into New York Harbor Once more

assuming that all other things were equal this location should offer a

competitive advantage to Pouch in its effort to solicit customers

The record reveals that the Pouch piers regrettably are obsolescent

Built in 1918 before the needs oftoday s break bulk transport were

developed the Pouch piers in large measure cannot service the current

carriers in an efficient and economic manner The deficiencies of the

Pouch piers were testified to by Mr Chiarello based upon Pittston s

uninterrupted tenancy from 1955 to 1974

The expert consultant hired by Pouch to inquire into the conditions

sUitability and future use ofthe Pouch Terminal concluded that Piers 19

and 20 were wholly inadequate for modern break bulk stevedoring and

terminaling operations Mr Pouch conceded that Piers 19 and 20 were

never equal to the piers at the Brooklyn Marine Terminal

A difference ofopinion did arise during the course of the testimony

with respect to the physical efficiency ofPier 21 Mr Pouch testified that

he believed that Pier 21 after it had been reconstructed subsequent to a

fire was the equal ofthe Brooklyn Marine Terminal Piers

This contention was disputed by a former tenant ofPier 21 Mr

Chiarello of Pittston He pointed out that among other drawbacks Pier

21 did not have sufficient unobstructed space to permit adequate

maneuvering room He said that there was little space in front for truck

accommodation so that the operator was forced to bring trucks down the

pier an unwholesome and inefficient practice All in all Mr Chiarello

concluded Pier 21 evenafter the modernization was not the equal ofthe

Brooklyn Marine Terminal Piers

In this regard it is worth noting that despite the fact that Mr Pouch

believes Pier 21 to be the equal of the Brooklyn Marine Terminal and

despite the fact that he had devoted a year and a half to soliciting all

marine interests in the Port as possible tenants ofthat pier Mr Pouch

was unable to lease the pier at a rental at least 50 cents per ton lower

than what was proposed to be charged by the PortAuthority

The testimony in this case establishes that the steamship lines calling at

the Pouch Terminal and handled by Pittston all left Staten Island Pittston

still had a rental obligation for three piers Pittston found it cheaper to

12 Ex 45 p 12

19 F M C

705
706 FEDERAL MARITIME COMMISSION

close down Pier 20 because the rental obligation owed by a ter

operator is only part of his costs operational costs may be a far 

significant factor Mr Chiarello testified that if Pouch Terminal 

made available to Pittston on afully rent free basisPittston wou

have experienced a 700 000 operating loss This was why Pi

decided to close down the pier even though obliged to continue t

rent Operating costs could more than offset any benefit derived f

cheap even a free rental

The Pouch Terminal finds itself in a distressed economic cond

This is unfortunate and regrettable That condition however 

corresponds to the equally distressed economic condition experienc

the break bulk stevedoring and terminaling industry in the Port of 

York Pouch s customers and tenants are afflicted by the very 

economic ills as is Pouch

It cannot be found on this record that the economic detriment 

has befallen Pouch can be attributed to any action by the Port Auth

Rather we fmd that an obsolescent facility has been overtaken b

economic ills ofthe times

MODIFICATION

Hearing Counsel interpose a single objection to approving the A

ments as drawn Hearing Counsel contends that two ofthe agreem

Agreement No T 2884 as amended and Agreement No T 288

amended do not accurately reflect the understanding of the parties 

present understanding between the Port Authority and UMS is for 

to use only Pier 2 not Piers I and 2 as reflected in the subject 

Agreement The present understanding between the Port Authorit

Pittston is that Pittston will not operate from Pier 12 unde

circumstances Thus they say Agreement No T 2882 as amend

no longer operative and its approval or disapproval is no longer an 

in these proceedings Also Agreement No T 2884 as amended s

be approved conditioned on the Agreement being amended to refle

present understanding ofthe parties

The Port Authority is agreeable to this condition It asserts that 

Agreement No T 2884 fully and 8ccurately stated the understand

the Port Authority and lessee UMS when made and submitted t

Commission it is the desire of both parties nowover two years la

that the agreement be modified to terminate UMS lease ofPier I

CONCLUSIONS

For all of the reasons hereinbefore set forth it is concluded 

Agreements Nos T 2880 as amended T 2881 1 T 2883 as ame

T 2884 as amended and T 2885 as amended are such agreemen

encompassed by section 15 ofthe Shipping Act 1916 and subject 

jurisdiction ofthe Commission

19 
AGREEMENT NO T 2880 707

Agreement No T 2882 as amended no longer being operative any

conclusion as to jurisdiction and approvability thereof would serve no

regulatory purpose

For all the reasons hereinbefore set forth it is further concluded that

the aforesaid agreements excepting withdrawn T 2882 as amended are

not unjustly discriminatory or unfair to Pouch nor do they operate to the

detriment ofthe commerce ofthe United States nor are they contrary to

the public interest and are not otherwise in violation ofthe Shipping Act

1916

Itis concluded that Agreement No T 2884 as amended should be

modified to reflect that UMS shall only use Pier 2

For all the reasons hereinbefore set forth the agreements as modified

should be approved

For all the reasons hereinbefore set forth it is concluded that the

agreements have not been implemented by the parties prior to Commis

sion approval

For all the reasons hereinbefore set forth it is concluded that the

agreements to not subject Pouch to undue or unreasonable prejudice or

disadvantage nor establish unjust and unreasonable regulations and

practices in connection with the receiving handling storing ordelivery of

property in violation of sections 16 and 17 of the Shipping Act 1916

For all ofthe reasons hereinbefore set forth the complaint is dismissed

with prejudice

S STANLEY M LEVY

Administrative Law Judge

WASHINGTON D C

May 7 1976

19 FM C
FEDERAL MARITIME COMMISSION

INFORMAL DOCKET No 3741

SOKO HARDWARE

v

Y S LINES

j

ORDER ON REVIEW OF DISMISSAL

March 30 1977

This proceeding involves a

request for reparation on alleged 

charges of ocean freight The proceeding was discontinued by or

the settlement officer served February 28 1977 The dismissal was 

on a letter from complainant advising that the claim had been paid 

and requesting the complaint to be cancelled By notice served Mar

1977 we indicated our determination to review

Our determination to review was prompted by the failure of the 

ofdiscontinuance to contain any discussion or findings on the ques

whether settlement by payment in full results in payment of app

tariff rates under section 18b 3 ofthe Shipping Act While settlem

litigation is to be encouraged it is our responsibility to assure tha

settlements in matters involving section 18 b 3 do not result in pa

ofcharges for transportation which would not otherwise be permitt

do otherwise could result in use of the Commission s offices t

approval ofinapplicable rates

While the settlement officer in this proceeding no doubt was sa

that the settlement was proper under section 18 b 3 we th

preferable that in the future specific findings to this effect be in

rated in the order of dismissal Upon our review of the record 

proceeding we have determined that there is sufficient basis there

permitting payment of the claim in full Accordingly it is ordere

proceedings in this matter be discontinued

By the Commission

S JOSEPH C POLKING

Acting Secret

708 19 F 
19 F M C

709

FEDERAL MARITIME COMMISSION

SPECIAL DOCKET No 488

COLLINS AIKMAN EXPORT CORP

v

BARBER STEAMSHIP LINES INC

NOTICE OF AOOPfION OF INITIAL DECISION

March 28 1977

No exceptions having been filed to the initial decision in this proceeding

and the Commission having determined not to review same notice is

hereby given that the initial decision became the decision of the

Commission on March 28 1977

By the Commission

S JOSEPH C POLKING

Acting Secretary
FEDERAL MARITIME COMMISSION

SPECIAL DocKET No 488

COLUNS AIKMAN EXPORT CORP

v

BARBER STEAMSHIP LINES INC

Application denied

INITIAL DECISION OF JOHN E COGRAVE ADMINISTRA

LAW JUDGE 1

Barber Steamship Lines Inc seeks permission to waive collec

a portion of the freight charges on a shipment by Collins A

Export Corporation of 13 983 feet of carpet from Newport 

Virginia to Jedda Saudi Arabia under bill of lading dated May 27 

The rate applicable at the time of shipment is alleged to be 144 00 

Plus 70Congestion Surcharge The rate sought to be applied is 

WM Plus 70 Congestion Surcharge subject to aminimum 

revenue tons This rate would have resulted in total charges of 52 

Permission to waive collection of 7 881 31 is sought

The application states that After shipper applied for rate 

Carrier established in Private Tariff FMC 31 there was a falldo

production schedule which prevented delivery of minimum quantit

revenue tons for the vessel

Section 18bX3 of the Shipping Act 1916 46 USC 817 as amend

Public Law 90298 and as further implemented by Rule 6b S

Docket Applications Rules of Practice and procedure 46 CPR 502 

the law sought to be invoked Briefly it provides

The Commission may in its discretion and for good cause shown p

common carrier by water in the foreign commerce of the United States to r

portion of the freight charges collected from a shipper or waive the collecti

portion of the charges from a shipper where it appears that there is an er

tariffof a clerical or administrative nature or anerror due to an inadvertence in fa

file a new tariffand that such refund or waiver will not result in discrimination 

shippers Furthermore prior to applying for such authority the carrier must ha

a new tariffwhich sets forth the rate on which such refund or waiver would be 

The application for refund must be flied with the Commission within one hund

1 This decision became the decision of the Commission March 28 1977

710 19 
COLLINS AIKMAN CORP v BARBER S S LINES 711

eighty days from the date of shipment Finally the carrier must agree that if permission

is granted an appropriate notice will be published in its tariff or such other steps taken

as may be required to give notice of the rate on which such refuud or waiver would be

based

The legislative history ofthe amendment to section 18 ofthe Shipping

Act Public Law 90298 2

specifies that carriers are authorized to make

voluntary refunds and waive the collection of a portion of their freight

charges for good cause such as bona fide mistake The nature of the

mistake was particularly described

Section 18 b appears to prohibit the Commission from authorizing relief where

through bona fide mistake on the part of the carrier the shipper is charged more than he

understood the rate to be For example a carrier after advising a shipper that he intends

to file a reduced rate and thereafter fails to file the reduced rate with the Federal

Maritime Commission must charge the shipperunder the aforementioned circumstances

the higher rates

The Senate Report 3states the Purpose ofthe Bill

Voluntary refunds to shippers and waiver of the collection of a portion of freight

charges are authorized where it appears that there is an error in a tariff of a clerical

nature or where through inadvertence there has been a failure to me a tariff reflecting

an intended rate

A falldown in production by the manufacturer is not an error in atariff

ofaclerical or administrative nature nor an error due to an inadvertence

in failing to f1e a new tariff

Accordingly permission sought by Barber Steamship Lines Inc to

waive collection of a portion of the freight charges represented by

7 881 31 is denied

S JOHN E COGRAVE

Administrative LawJudge

WASHINGTON D C

February 1 1977

2 House Report No 920 November 14 1967Toaccompany HR 9473 onShipping Act 1916 AuthorizedRefund

ofCertain Freight Charges Statement of Purpose andNeed for the Bill toAmend Provisions ofthe Shipping Act

1916 toAuthorize the Federal Maritime Commission 10 Permit a Carrier toRefund aPortion afthe Freight Charges

3 Senate Report No 1078 April 5 1968 To accompany H R 9473 on Shipping Act 1916 Authorized Refund of

CertainFreight Charges under Purpose ofthe 8iff

19 F M C
I

FEDERAL MARITIME COMMISSION

INFORMAL DoCKET No 341 F

THE FEDERAL MINISTER OFDEFENSE FEDERAL REpUBLIC OF GER

v

REpUBLIC INTERNATIONAL FORWARDING COMPANY

AND REpUBLIC VAN STORAGE OF Los ANGELES INC

ORDERDISMISSING PROCEEDING

March 22 1977

On March 16 1977 both the Complainant lUld the Respondent 

and fded a Joint Motion of Complainant and Defendants for Dism

the Complaint The Complainant has receiyed full payment fro

Respondents ofthe full amount demanded in the original complain

as observed by the Commission in its recent March 1st Order 

no purpose to be served by their litigating the matters put at issue 

complaint

Accordingly and in view of the history ofthis proceeding dis

with prejudice as requested by the parties appears fully justified 

circumstances

COMPLAINT DISMISSED WITH PREJUDICE

S THOMAS W REILLY

Administrative LawJu

712 19 
FEDERAL MARITIME COMMISSION

INFORMAL DoCKET No 341 F

THE FEDERAL MINISTER OF DEFENSE

FEDERAL REpUBLIC OF GERMANY

v

REpUBLIC INTERNATIONAL FORWARDING COMPANY AND REpUBLIC VAN

AND STORAGE OF Los ANGELES INC

NOTICE OF DETERMINATION NOT TO REVIEW

March 30 1977

Notice is hereby given that the Commission on March 30 1977

determined not to review the order of dismissal of the Administrative

Law Judge in this proceeding served March 22 1977

By the Commission

S JOSEPH C POLKING

Acting Secretary

19 F MC 713
FEDERAL MARITIME COMMISSION

DocKET No 7524

INTERCONEX INC

v

SEA LAND SERVICE INC

AMERICAN EXPORT LINES INC

US LINES INC

ORDER OF DISMISSAL

Aprill 1977

On June 5 1975 Colt Industries Colt on its own behalf and 

agent for the Government of the Republic of Korea filed acomp

Docket No 7519 against Interconex Inc lCX and Sea Land S

Inc Sea Land American Export Lines Inc AEL and U S 

Inc USL Inits complaint Colt alleged that ICX acting as anon 

operating common carrier by water NVOCC prepared 379 ocea

oflading during the period ofJuly 28 1972 to February 5 1975 on c

to be transported on vessels owned by Sea Land USL and A

which the cubic measurements andor weights ofColt cargo shippe

United States ports to Koreawere overstated It was also alleged t

reason of such overstated measurements andor weights ICX a

underlying carriers received compensation in excess of that provid

in their applicable tariffs contrary to section 18bX3 of the Shippin

1916 Act Colt sought reparation for Respondents in the amo

500 000 ICX subsequently July 11 1975 filed acounterclaim fo

1 100 00 against Colt in Docket No 7519

In response to motions filed by various parties the Presiding Ad

trative Law Judge by Order served September 5 1975 dismissed 

claim and ICX s counterclaim By virtue of a negotiated sett

reached by Colt the Republic of Korea and ICX the parties d

appeal the Administrative Law Judge s dismissal 1

On June 24 1975 ICX filed the complaint in this proceeding 

I The underlyina carriers USL ARL and Sea Land were invited to become party to an overall se

which they would settle leX s claims qainst them in lOQkot No 7524 discussed rUra as woll as lex 

settUna their claims apiost each other leX and tbe underlyil1j carriers however were unable to reach 

714 19 
INTERCONEX INC v SEA LAND 715

Docket No 75 24 In its pleadings ICX advised that it instituted this

proceeding primarily to toll the two year statute of limitation with respect

to any claims that it may have against Sea Land AEL and USL as a

result ofColt s claim against it in Docket No 7519 Further ICX stated

that it considered its complaint in this proceeding to be in the nature of

a crosslaim against co parties as authorized by Rule 13g

ofthe Federal

Rules ofCivil Procedure and requested that its complaint be consoli

dated with the proceedings in Docket No 7519

Because of the similarity of the causes of action ICX adopted Colts

complaint in Docket No 7519 and incorporated it by reference in the

complaint filed in this proceeding ICX alleged that on information and

belief Respondents will or may be required to indemnify ICX and

that they are or may be liable to ICX for all or part of any

reparations ICX may be required to pay as aconsequence of the

complaint in Docket No 75 19 ICX submitted that if Colt a shipper

prevails in its claim against leX as a carrier the same set offacts and

case law will entitle ICX as a shipper to recover from the respondent

carriers

Respondents each have moved for the dismissal ofICX s complaint on

the ground that it is procedurally and substantively deficient ICX

responded to each ofthe motions

On August 11 1975 Administrative Law Judge William Beasley Harris

granted Respondents motions to dismiss the proceeding in Docket No

75 24 In so doing he observed that ICX had filed no replies to

Respondents dismissal motions When ICX explained to the Presiding

Officer the clerical error which resulted in him not receiving copies of

ICX s replies to Respondents motions the Presiding Officer entered an

Order Upon Sua Sponte Reconsideration ofOrder served August 11

1975 wherein he took into account ICX s replies and reaffIrmed his

Order ofAugust II 1975 2

ICX has now filed an appeal from the order of dismissal to which

Respondents have replied USL has also flled a second motion to dismiss

ICX s appeal arguing that it is moot because Docket No 7519 has since

been terminated

USL s dismissal request is premised on the theory that because the

Administrative Law Judge s dismissal of Docket No 72 19 was not

appealed and subsequently became the decision ofthe Commission and

because Docket No 75 24 is premised upon Docket No 75 19 no

regulatory purpose would be served by allowing Docket No 75 24 to

continue USL believes that in view ofthe fact that ICX has incorporated

IOntbe day the Presiding Officer issued his suasponte Order lex moved for reconsideration and oral argument

with respect to the Order of August II 1975 The Presiding Officer did not address leXs motion However since

lex in its reconsideration request made the same arguments as were in its reply to Respondents motions to

dismiss we consider the suasponte reconsideration order to be an adequate response to the arguments advanced by

lex on reconsideration

19 F M C
716 FEDERAL MARITIME COMMISSION

by reference Colt s allegations in Docket No 7519 which alleg

will now never be proven ICX s appeal has become moot

ICX in reply argues that the dismissal of Colt s complaint should 

no bearing on its right to appeal It would violate due process con

ICX for the Commission to treat its appeal as though it has neve

filed particularly because its complaint constitutes an independent 

of action The proper approach concludes ICX is not to dism

complaint but rather to allow ICX to amend its complaint making c

its independence from Colt s complaint We disagree We view 

complaint as a contingent claim based upon aset of circumstances 

now cannot come about

The complaint of ICX in this proceeding being in the nature 

crossclaim did not constitute a wholly independent cause of actio

rather relied for its vitality upon the catalytic effect of a fmding tha

was liable to Colt Industries for assessing improper charges und

complaint filed in Docket No 7519 In the event of such afinding 

the claim ofICX in theory at least would come to life and any li

suffered by ICX would then ipso facto form the basis of ICX s com

against the ocean carriers

ICX itself in its appeal recognized the contingency ofits claim w

advised that

ICX has no reason to make any unconditional claim aphist the underlying 

unless it is held liable to Colt emphasis original

and that

Possibly the Colt case against ICX will be decided in away which renders t

complaint moot in which case the ICX complaint can be dismissed orwithdraw

The contingency i e a

rmding of ICX s liability in Docket N

19 failed however when the claim of Colt against ICX wasdism

by the Presiding Officer and became the decision of the Comm

This dismissal of the underlying Colt complaint destroys the pos iibility 

afinding of ICX liability in that proceeding which would give rise 

claim by ICX in this proceeding Therefore ICX has no claim 

which under any set of circumstances as framed it would p

Investigati m ofGeneral Rate Increase in the Domestic Guam Tr

S RR 167 1969 In short our determination here is a denial of 

appeal from the Presiding Officer s Order of Dismissal We do so 

thoroughly reviewed the ICX appeal We see in our denial no depr

ofdue process

Our disposition of the overriding issue remaining in this proce

makes unnecessary any ruling by us on USL s motion to dismiss 

appeal

THEREFORE IT IS ORDERED That appeal of Interconex 

from the Presiding Officer s Order ofDismissal is denied

19 
INTERCONEX INC v SEA LAND 717

FURTHER IT IS ORDERED That the complaint ofInterconex Inc

is dismissed with prejudice

By the Commission

S JOSEPH C POLKING

Acting Secretary

19 F MC
FEDERAL MARITIME COMMISSION

SPECIAL DoCKET No 490

FOOTNER AND COMPANY INC

v

SEA LAND SERVICE INC

NOTICE OF ADOPTION OF INITIAL DECISION AND

ORDER PERMITTING WAIVER OFCHARGES

August 12 1977

The Commission by notice served April 20 1977 determined to 

the Initial Decision of the Administrative Law Judge in this proce

served April 5 1977 Upon completion of review it has been decide

the Initial Decision of the Administrative Law Judge be adopted 

decision ofthe Commission

THEREFORE IT IS ORDERED That applicant Sea Land Se

Inc is authorized to waive collection of 525 00 ofthe charges prev

assessed Footner and Company Inc

lT IS FURTHER ORDERED That applicant shall publish prom

its appropriate tariff the following notice

Notice is hereby given as required by the decision of the Federal M

Commission in Special Docket No 490 that effective August 28 1976 for purp

refund or waiver of freight charges on any shipments which may have been 

during the period from August 28 1976 through September 18 1976 the 

ventilators roof non mechanical minimum 22 S m t for shipment Elizabet

Jersey to Riyadh Saudi Arabia was 210 00 wm subject to all applicable 

regulations terms and conditions of said rate and this tariff

IT IS FURTHER ORDERED That waiver of the charges sh

effectuated within 30 days of service of this notice and applican

within five days thereafter notify the Commission ofthe date and m

ofeffectuating the waiver

By the Commission

S JOSEPH C POLKING

Acting Secret

718 19 
FEDERAL MARITIME COMMISSION

SPECIAL DocKET No 490

FOOTNER AND COMPANY INC

v

SEA LAND INC

April 5 1977

Application granted

INITIAL DECISION OF THOMAS W REILLY

ADMINISTRATIVE LAW JUDGE

Pursuant to section 18b 3

2

ofthe Shipping Act 1916 as amended by

P L90298 and section 502 92 of the Commission s Rules of Practice

and Procedure 46 CFR 502 92 Sea Land Service Inc Sea Land or

Applicant has applied for permission to waive collection of a portion of

the freight charges on a shipment of roof ventilators which moved from

EIizabeth New Jersey to Riyadh Saudi Arabia under a Sea Land bill of

lading dated August 28 1976 The application was fIled October 20 1976

The subject shipment moved under Sea Land Service Inc Tariff256

A FMC I36 4th revised page 81 item 755 effective August 31 1976

The shipment measured 790 cubic feet 19 75 measurement tons of 40

cubic feet The rate applicable at time ofshipment was 210 WfM with

aminimum of25 measurement tons per container The rate sought to be

applied is 210 W M with aminimum of22 5 measurement tons per

container Same tariff as cited above except that the latter rate was

published on 5th revised page 81 item 755 effective September 18 1976

Aggregate freight charges payable pursuant to the rate applicable at

time of shipment amounted to 5 250 Aggregate freight charges at the

rate sought to be applied amount to 4 725 The difference sought to be

waived is 525 The Applicant is not aware of any other shipment ofthe

same commodity which moved via Sea Land during the same time period

at the rates involved in this shipment

IThis decision became the decision of the Commission August 12 1977

246 V SC 817 as amended

19 F M C 719
720 FEDERAL MARITIME COMMISSION

Sea Land offers the following as grounds for granting the applicat

4 Sea Land negotiated with Footner and Companyfor a rate to cover a movem

Ventilators Roof Non motorized from Elizabeth New Jersey The negotiations 

handled by Footner and Company a

freight forwarder on behalf of Herschma

Poole A rate of 210 00 W M minimum weight 22 S measurement tons was agree

Attachment No I page 6

In passing the information to the rate analyst attachment No 2 the minimum 

was incorrectly transcribed as 2S measurement tons and the publication r

Attachment Nos 3 and 4 reflects the incorrect minimum weight

The forwarder realized the error and in his telex of September IS 1976 Attac

No S informed our account representative Mr Beilin that the charges billed 

different from the charges as negotiated

On September 17 1976 the error in minimum weight was corrected by telex 

message 180 Attachment Nos 6 and 7

Clerical error on Sea Land s part in transmitting the wrong minimum weight 

tariff publications section was the cause of the erroneous publication effective 

31 1976 A corrected publication was made pramptly follawing disclasure af the 

erroneous publication

Section 18b 3 ofthe Shipping Act 1916 46 USC 817 as amend

Public Law 298 and Rule 6b Special DocketApplications Ru

Practice and Procedure 46 CFR 502 92 a set forth the applicabl

and regulatiQn The pertinent portion of 18b 3 provides that

The Cammissian may in its discretian and far gaad cause shown pe

camman carrier by water in foreign commerce ta refund a partian af freight c

collected from a shipper ar waive the callectiQn af a partian af tlte charges 

shipper where it appears that there is an errar in a tariffof a clerical or adminis

nature ar an error due to an inadvertence in failing ta me a new tariff and tha

refund ar waiver will natresult in discriminatian among shippers Pravided furthe

the camman carrier has priar ta applying ta make refund ftIed a new tariffw

Cammissian which sets farth the rate on which such refund ar waiver wo

based and Applicatian far refund ar waiver must be ftIed with the Camm

within 180 days from the date of shipment

The clerical and administrative error recited in the subject applicat

ofthe type within the intended scope of coverage ofsection 18b 

the Act and section 502 92 of the Commission s Rules of Practic

Procedure

Therefore upon consideration of the documents presented b

Applicant it is found that

1 There was an error in the tariff of a clerical oradministrative n

resulting from the inadvertent failure to tile the negotiated rate wit

proper minimum of 22 5 M T per container as had been promise

shipper

2 Such awaiver of collection of a portion ofthe freight charge

not result in discrimination among shippers

3 Prior to applying for authority to waive collection ofa portion 

freight charges Sea Land fired a new tariff which set forth the ra

which such waiver would be based

a For other provisions and requirements see f 18b 3 and I

502 92 of the Commission s Rules ofPra

Procedure 46 CPR 502 92 0

0

19 
FOOTNER co v SEA LAND 721

4 The application was filed within 180 days from the date ofthe subject

shipment

Accordingly permission is granted to Sea Land Service Inc to waive

collection of aportion ofthe freight charges specifically the amount of

525 An appropriate notice will be published in Sea Land s tariff

8 THOMAS W REILLY

Administrative Law Judge

WASHINGTON D C

April 5 1977

19 F MC
FEDERAL MARITIME COMMISSION

No 7327

CONSOLIDATED EXPRESS INC

v

SEA LAND SERVICE INC ET AL

COMPLAINT DISMISSED

March 8 1977

On February 14 1977 Iordered complainant Consolidated Ex

Inc Conex to submit justification against dismissal ofthe com

See Order Requiring Complainant to Submit Justification Agains

missal ofComplaint Briefly Iadvised Conex that Icould see no 

to retain this aged complaint case on the docket for a number ofre

relating to mootness want of prosecution other litigation and la

indication that the parties would either settle their differences orpr

to hearing

In response to my ruling Cone and respondent Seatrain Lines 

Seatrain have submitted comments Conex s comment takes the 

of arequest to withdraw the complaint without prejudice in or

avoid litigation of matters which it appears may be resolved in 

proceedings but suggests that it may desire to use the record dev

in this proceeding as part of any later Commission proceeding 

Complainant s Request to Withdraw Complaint Without Prejudice 

1 1977 By letter ofthe same date respondent Seatrain requests th

complaint be dismissed with prejudice Seatrain contends th

complaint was filed almost four years ago but Conex has demons

a total inability to back up its complaint with evidence or to purs

complaint to completion Seatrain furthermore requests a findin

Conex has totally failed in proof on the merits of its com

Without detailed explanation Seatrain requests this unusual action 

ground that it is a defendant in an unidentified antitrust case brou

Conex cannot prevent the complaint from being dismissed and som

needs afmding on the merits

As Iexplain below Isee no reason to continue this case on the d

However Ifmd that Seatrain s

requests for a dismissal with pre

and for specific fmdings on the merits to be unwarranted

722 19 
CONSOLIDATED EXPRESS INC v SEA LAND 723

As to the qustion ofdismissing the complaint Ibelieve there can be

little disagreement As I explained in my ruling cited above this

complaint case is now almost four years old and there are no signs

whatsoever that Conex will proceed to hearing Indeed Conex indicates

that it has chosen to seek whatever relief to which it believes it is entitled

in another forum As Inoted in my ruling furthermore the practices of

which Conex complained were ordered to be terminated long ago

September 18 1973 and whatever viable issues which might have

remained in the case were removed by Conex when it amended its

complaint on September 9 1976 to delete the claim for reparation The

case therefore is essentially academic and at best would lead to a

declaratory order type decision establishing principles and guidelines

governing the respective rights and duties of respondents under the

Shipping and Intercoastal Acts The need for even this type ofdecision is

questionable however in view ofthe many decisions favorable to Conex

already rendered in the courts another agency another proceeding before

this Commission and in this proceeding as well 2

Failure to prosecute is or course recignized grounds for dismissal ofa

complaint See Wright Miller Federal Practice and Procedure Civil

2370 p203 Federal Rule 41b 28 U S C A Link v Wabash Railroad

Co 370 U S 626 1962 This principle has been followed by the

Commission See e f The Tagit Co v Luckenbach Steamship Company

Inc et al 1 U S S B B 519 1935 Isbrandtsen Co Inc 3 F MB 543

1941 Moreover the Commission has expressed concern overthe amount

oftime consumedin its proceedings stating with respect to complaint cases

particularly that The Commission has a legitimate interest in seeing

proceedings pursued to a conclusion and not languish on its docket for

years while parties negotiate at leasure Docket No 7411 Rules of

Practice and Procedure 14 SSR 923 924 1974 For similar sentiments

expressed by the Commission see Docket No 7536 Miscellaneous

Amendments 41 Federal Register 20585 May 19 1976 and Docket No

7411 cited above Notice ofProposed Rulemaking 39 Federal Register

11117 March 25 1974 Both for reasons of mootness and want of

prosecution then this complaint should be and hereby is dismissed This

does not entirely dispose of the matter since Seatrain requests dismissal

with prejudice and findings on the merits As discussed below however I

find Seatrain s

requests unwarranted for several reasons

As far as the issue ofreparation is concerned Conex has itself already

succeeded in achieving a dismissal with prejudice This occurred when

Conex withdrew that portion of its complaint dealing with that issue

Since the practices of which Conex complained terminated as of

September 1973 Conex is now precluded from filing a new complaint

because ofthe two year period of limitation prescribed by section 22 of

I This was apparently done because Conex has elected to seek damBBes in an antitrust action in the courts See

Carnation Company v Pacific Westbound Conference etal 383 U S 213 224 1966

2 For a

recitation of all of these casesand decisions see my previous ruling cited above pp 4 5

19 F MC
724 FEDERAL MARITIME COMMISSION

the Shipping Act 1916 a non waivable jurisdictional prerequisite 

Borax Chern Corp v Pac Coast European Conj11 F M C 

471 72 1968 Aleutian Homes Inc v Coastwise Line 5 F M B 

612 1959

As to the remaining issues in the complaint Ido not believe tha

actiOJ lrequested by Seatrain to wit dismissal with prejudice and fin

on the merits is warranted Irecognize that complaints have 

dismissed with prejudice in proceedings before the Commission 3 N

theless such action as one court has stated is a drastic sanction 

applied only in extreme situations Syracuse Broadcasting Co

Newhouse 271 F 2d 910 914 2 Cir 1959 Dismissals with prejudic

therefore scrutinized very carefully and if allowed are done so for 

things asa clear record of delay contumacious conduct by compla

or serious showing of willful default See Wright Miller cited a

2369 pp 193198 Although there has been considerable delay i

proceeding as Ihave noted in my previous ruling cited above pp 

and elsewhere see Motions to Dismiss Denied 16 SRR 817 note 

has not all been attributable to complainant and Icertainly would no

that complainant has been guilty ofcontumacious conduct or has be

willful default Despite all the delay furthermore Conex had subm

prepared written case by September 1975 which although unteste

hearing withstood motions to dismiss See ruling cited above pp 

Furthermore Seatrain s very abbreviated letter is not very enlighte

much less persuasive as to other reasons why I should gran

extraordinary sanction requested 4

Postscript

Seatrain has followed its initial letter of March 1 with a second 

dated the next dllY

in reply to Conex s suggestions that the record 

could be made a part of any later Federal Maritime Commi

proceeding involving the same parties and the issues herein s

Se

expresses concern over a possible revival ofthese issues at some d

time in the future when memories fad and knowledgeable witn

3 See e8

Ace Machinery Co v Hapa LloydA G Order 16 SIR 1 31 noto 1 1976 this dooket Di

Complaint in Part AUlult 2 1974 Clipper Car oadin Company v

TNl1uPaciflc Frel ht Conference oj

DI

Docket No 7220 Order ofDiimiltal July 21 197 5 However even whenthe Commillion baa lp

refused to vacate an order of aprcaiditia Judie dJami lilll acomplaint with prejudice it has lublequently o

petitions to vacate and impliedly indicated that ullder pro r circumstances such 8S ovenidina publ

considerations it couldpermit a

reopenina of the proceedina See theOrder in theAce Machinery cue cit

p l 35

4

Seatrain also bues its request upon the fact that it ls adefendant in an unidentified antitrust cue b

Conex and luaaesti that it somehow miaht needadetermination on themerits by this Commi ion in conne

that tiption I

amnot liven much explanation as to why this miaht be 10 IfSeatrain mans say that Sh

findinp utothe lona terminated practices are nece sary to its detense in the antitrust case doubUell it can 

the Court of1he need for referral to the Commillion under the doctrine of primary jurisdiction Cf 

Company v Pacific Weltbound Conference et

al

cited above 383 US at pp 222 223

5 Althouah my mUfti permitted reSpOndents to file their comments simultaneously with thoseof Conex a

provide for repliel to Conex unlesl such would be appropriate rulin p 6 Seatrain s immediate 

undentandable considerina the suuestions contained in Conex s

request for withdrawal I have therefore 

and considered Seatrain s second letter However since both sidel have expressed theifpositions further 

are unnecesiary

19 
CONSOLIDATED EXPRESS INC v SEA LAND 725

depart Normally this would be a legitimate concern However as I

explained above the Congress anticipated Seatrain s concern by legislat

ing atwo year period of limitations and Conex s right to seek money

damages reparation under the Shipping Act 1916 is now time barred

and in effect its complaint has been dismissed with prejudice in this

respect As to the issues ofpossible violations of law occurring between

February and September 1973 it does not seem likely that Conex which

is seeking damages in an antitrust case would desire to resume litigation

before the Commission with no prospects of recovering damages and

even if it did 6there are five year statutes oflimitations which will expire

in 1978 18 D S C 3282 28 D S C 2462 so as to protect Seatrain against

statutory penalties assuming violations are found and related court action

is contemplated There is furthermore as Seatrain notes no evidentiary

record in this case merely proffered documents and other materials

which have not been admitted into evidence This fact provides additional

reason why I should not make findings on the merits which Seatrain is

requesting In short Ibelieve that Seatrain s apprehensions about

possible revival ofthis complaint case to its extreme prejudice are not

realistic Furthermore if there is a possibility that the Court in the

antitrust case needs findings under the Shipping Act in connection with

the antitrust case as Seatrain earlier hinted these findings should be

made by means ofthe full hearing process rather than by summary edict

via an orderofdismissal with prejudice

S NORMAN D KLINE

Administrative Law Judge

6 Seatrain suggests the possibility that the Court in the pending antitrust case may refer certain matters to the

Commission for determination I do not know how possible such action by the Court may be but if it should occur

obviously it would not happen at afar distanttime in the future and would doubtless occur because Seatrain itself or

another defendant persuaded the Courtto take such action

19 F M C
FEDERAL MARITIME COMMISSION

No 7327

CONSOLIDATED EXPRESS INC

V

SEA LAND SERVICE INC ET AL

NOTICE OF DETERMINATION NOT TO REVIEW

April 4 1977

Notice is hereby given that the Commission on April 4 

determined not to review the order of dismissal in this proceeding se

March 8 1977

By the Commission

S JOSEPH C POLKING

Acting Secreta

726 19 
FEDERAL MARITIME COMMISSION

SPECIAL DocKET No 505

KUHNE NAGEL

v

SEA LAND SERVICE INC

NOTICE OF ADOPTION OF INITIAL DECISION AND

ORDER PERMI1TING WAIVER OF CHARGES

April 4 1977

No exceptions having been taken to the initial decision in this

proceeding and the Commission having determined not to review same

notice is hereby given that the initial decision became the decision ofthe

Commission on April 4 W7

It is Ordered That applicant is authorized to waive collection of

3 626 56 ofthe charges previously assessed Kuhne Nagel

It is further Ordered That applicant shall publish promptly in its

appropriate tariff the following notice

Notice is hereby given as required by the decision of the Federal Maritime

Commission in Special Docket 505 that effective July 15 1976 for purposes of refund or

waiver of freight charges on any shipments which may have been shipped during the

period from July 15 1976 through August 19 1976 the rate from Group I Ports on

Boots ski N O S minimum 12 tons per container is 142 00 W subject to all

applicable rules regulations terms and conditions of said rate and this tariff

It is further Ordered That waiver ofthe charges shall be effectuated

within 30 days of service ofthis notice and applicant shall within five

days thereafter notify the Commission of the date and manner of

effectuating the waiver

By the Commission

S JOSEPH C POLKING

Acting Secretary

19 FM C 727
FEDERAL MARITIME COMMISSION

SPECIAL DocKET No 505

KUHNE NAGEL

v

SEA LAND SERVICE INC

Application granted

INITIAL DECISION OF mOMAS W REILLY

ADMINISTRATIVE LAW JUDGE

Pursuant to section 18b 3

2

ofthe Shipping Act 1916 as amende

P L90298 and section 502 92 of the Commission s Rules of Pra

and Procedure 46 CFR 502 92 Sea Land Service Inc Sea Lan

Applicant has applied for permission to waive colleetioJ of a 

the freight charges on seven shipments of ski bQots that moved 

Genoa Italy to respectively Oakland 3 Los Angeles and Long B

California and Seattle Washington 2 under bills of lading dated 

24 1976 four shipments July 30 1976 two shipments and Augu

1976 one

The subject shipments moved under Sea Land westbound Medit

nean Pacific Coast joint container freight tariff No 205 FMC77 

73 15th revised page 138 effective June 25 1976 und r the rate fo

item Boots Ski N O S from Italy only Item 19070 The aggr

weights of the seven ship ents were respectively 10 120 kilos 

9844 10 086 9820 and 9408 kilos The rate applicable at time ofship

was 224 per ton of 1000 kilos minimum 7 tons per contaiJler The 

sought to be applied is 142 per ton of 1000 kilos minimum 12 tort

container Sea Land westbound Mediterranean Pacific Coast joint 

tainer freight tariff No 205 FMC 77 ICC 73 16th revised page 

item 19070 effective August 19 1976

The shipments moved via Sea Land s mini Iandbridge service by w

from Genoa Italy to Elizabeth New Jersey then by rail to their 

coast destinations Although moved under a through rail water rate 

I

This decision became the decision of theCommission April 4 1m

146 U S C 817 as amended

728 19 F 
KUHNE NAGEL v SEA LAND 729

waiver of a portion of the charges involved here would affect only the

ocean carrier s portion

Aggregate freight charges pursuant to the rate applicable at time of

shipment amounted to 15 5546 combined total for seven shipments

Aggregat freight charges at the rate sought to be applied amount to

11 928 The difference sought to be waived is 3 626 56 The Applicant

is not aware ofany other shipments ofthe same commodity which moved

via Sea Land during the same period oftime at the rates involved in this

shipment

Sea Land offers the following as grounds for granting the application

4 In early July Sea Land agreed to publish a reduced through ocean rail rate of

142 00W for a movement of ski boots to be made from Genoa to Pacific Coast

destination terminals Rate was to be published to be applicable in Sea Land s mini

landbridge service in time for shipments that were to begin to move in the last halfof

the month Publication of the agreed rate was made in Item No 19m0 on 16th revised

page of Tariff No 205 with an issue date of July 13th applicable only from ports in

Italy Through clerical error on Sea Land s part the rate was erroneously symbolized as

an increase effective on full statutory notice of 30 days Attachment No I whereas it

should have carried a teardrop of R reduction symbol With an issue date of July 13

the reduced rate should have been made effective on July 15 on not less than one day s

notice which would have been in amply time for the first shipment dated July 24 The

tariff page was notrejected by either Commission and actually became effective August

19 The mistake in tariff compilation and publication was not discovered until early

August after some shipments had moved and charged at the rate of 224 00W minimum

7 tons per container than in effect on 15th revised page 168 Attachments No 2 and 3

Section 18b 3 ofthe Shipping Act 1916 46 USC 817 as amended by

Public Law 90298 and Rule 6b Special Docket Applications Rules of

Practice and Procedure 46 CFR 502 92 a set forth the applicable law

and regulation The pertinent portion on 18b 3 provides that

The Commission may in its discretion and for good cause shown permit a

common carrier by water in foreign commerce to refund a portion of freight charges

collected from a shipper or waive the collection of a portion of the charges from a

shipper where it appears that there is an error in a tariff of a clerical or administrative

nature or an error due to an inadvertence in failing to me a new tariff and that such

refund orwaiver will notresult in discrimination among shippers Provided further That

the common carrier has prior to applying to make refund med a new tariffwith the

Commission which sets forth the rate on which such refund or waiver would be

based and Application for refund or waiver must be med with the Commission

within 180 days from the date of shipment 3

The clerical and administrative error recited in the subject application is

ofthe type within the intended scope of coverage of section 18b 3 of

the Act and section 502 92 ofthe Commission s Rules of Practice and

Procedure

Therefore upon consideration of the documents presented by the

Applicant it is found that

1 There was an error in a tariff of a clerical or administrative nature

resulting in the inadvertent failure to post the teardrop R reduction

3

For other provisions and requirements see 18b 3 and 502 92 of the Commission s Rules of Practice and

Procedure 46 CFR 502 92 a e

19 F M C
730 FEDERAL MARITIME COMMISSION

symbol next to the new rate which was in fact areduction and inte

to be so and which had been promised to the shipper

2 Such awaiver of collection of a

portion of the freight charges 

not result in discrimination among shippers

3 Prior to applying for authority to waive collection of aportion o

freight charges Sea Land tiled anew tariff which set forth the rat

which such waiver would be based

4 The application was tiled within 180 days from the date of the su

shipments

Accordingly permission is granted to Sea Land Service Inc to w

collection of a portion of the freight charges specifically the amou

3 626 56 An appropriate notice will be published in Sea Land s t

S THOMAS W REILLY

Administrative Law Judg

WASHINGTON D C

March 15 1977

19 F 
FEDERAL MARITIME COMMISSION

SPECIAL DocKET No 481

THE PERMANENT MISSION OF SoCIALIST REpUBLIC OF ROMANIA

v

PRUDENTIAL LINES

NOTICE OF ADOPTION OF INITIAL DECISION AND

ORDER PERMITTING WAIVER OF CHARGES

April 4 1977

No exceptions having been taken to the initial decision in this

proceeding and the Commission having determined not to review same

notice is hereby given that the initial decision became the decision ofthe

Commission on April 4 1977

Itis Ordered That applicant is authorized to waive collection of

712 00 of the charges previously assessed The Permanent Mission of

Socialist Republic ofRomania

It is further Ordered That applicant shall publish promptly in its

appropriate tariff the following notice

Notice is hereby given as required by the decision of the Federal Maritime

Commission in Special Docket 481 that effective December 17 1975 for purposes of

refund or waiver of freight charges on any shipments which may have been shipped

during the period from December 17 1975 through March 4 1976 the special rate on

Automobiles is 175 00 lump sum subject to all applicable rules regulations terms

and conditions of said rateand this tariff

It is further Ordered That waiver of the charges shall be effectuated

within 30 days of service of this notice and applicant shall within five

days thereafter notify the Commission of the date and manner of

effectuating the waiver

By the Commission

S JOSEPH C POLKING

Acting Secretary

19 F MC 731
FEDERAL MARITIME COMMISSION

SPECIAL DocKET No 481

THE PERMANENT MISSION OF SoCIALIST

REPUBLIC OF ROMANIA

v

PRUDENTIAL LINES

Apri 4 1977

Application granted

INITIAL DECISION OF THOMAS E REILLY ADMINISTRA

LAW JUDGE

Pursuant to section 18b 3

2

ofthe Shipping Act 1916 as amend

P L 90298 and section 502 92 ofthe Commission s Rules of Pr

and Procedure 46 CFR 502 92 Prudential Lines Prudential orApp

has applied for pennission to waive collection of a portion of the 

charges on the shipment of an automobile from Costanza Roma

New York under Prudential bill of lading dated December 17 1975 

application was tiled May 17 1976

The subject shipment moved under Prudential Lines Inc Med

neanD S Atlantic Freight Tariff FMC No 43 Section 1 page 1

revised effective December 11 1975 under the rate for Cargo N 

The shipment measured 14 x 4 10 x 4 4 The rate applicable a

of shipment was 107 WIM The rate sought to be applied is a s

lump sum rate of 175 for automobiles for the Pennanent Mission 

Socialist Republic of Romania which had been agreed upon in ad

by the shipper and the carrier but which rate was inadvertently forg

to be tiled until after the shipment was completed See Prudential 

Inc MediterraneanJU S Atlantic Freight Tariff FMC No 43 Sect

page 16 15th revised effeCtive March 4 1976 correction 184

Aggregate freight charges payable pursuant to the rate applica

the time of shipment amounted to 887 Aggregate freight charges 

rate sought to be applied amount to 175 The difference sought 

This decision became the decision of the Commission April 4 1977

1146 U S C 817 as amended

732 19 
PERMANENT MISSION ROMANIA v PRUDENTIAL LINES 733

waived is 7 2 The Applicant is not aware ofany other shipment ofthe

same commodity which moved viaPrudential during the same time period

at the rates involved in this shipment

The documents submitted with Prudential s application together with

others submitted later in response to requests from the assigned Admin

istrative Law Judge establish that an agreement was reached between

Prudential s

representative in Romania and the Ministry ofForeign Affairs

of the Socialist Republic of Romania whereby an automobile measuring

14 x 4 HY x 4 4 would be shipped from Costanza Romania to the

Permanent Mission of the Socialist Republic ofRomania in New York

U S A for a lump sum special rate of 175 However due to poor

communications and a lack of understanding of F M C regulations by

Prudential s Romanian agent the lump sum rate was not transmitted to

New York until after the shipment had been completed

Section 18b 3 ofthe Shipping Act 1916 46 USC 817 as amended by

Public Law 90298 and Ru1e 6b Special Docket Applications Rules of

Practice and Procedure 46 CFR 502 92 a set forth the applicable law

and regulation The pertinent portion of 18b 3 provides that

The Commission may in its discretion and for good cause shown permit a

common carrier by water in foreign commerce to refund a portion of freight charges

collected from a shipper or waive the collection of a portion of the charges from a

shipper where it appears that there is an error in a tariff of a clerical or administrative

nature or an error due to an inadvertence in failing to me a new tariff and that such

refund orwaiver will notresult in discrimination among shippers Provided further That

the common carrier has prior to applying to make refund med a new tariffwith the

Commission which sets forth the rate on which such refund or waiver would be

based and Application for refund orwaiver must be med with the Commission

within 180 days from the date of shipment 3

The clerical and administrative error recited in the subject application is

of the type within the intended scope of coverage of section 18b 3 of

the Act and section 502 92 of the Commission s Rules of Practice and

Procedure

Therefore upon consideration of the documents presented by the

Applicant it is found that

1 There was an error in a tariff of a clerical or administrative nature

resulting in the inadvertent failure to timely me a new tariff which had

been agreed upon in advance by the parties

2 Such waiver of collection ofa portion ofthe freight charges will not

resu1t in discrimination among shippers

3 Prior to applying for authority to waive collection of a portion ofthe

freight charges Prudential med a new tariff which set forth the rate on

which such waiver should be based

4 The application was rued within 180 days from the date ofshipment

Accordingly permission is granted to Prudential Lines Inc to waive

S

For other provisions and requirements see 18 b 3 and 502 92 of the Commission sRules ofPractice and

Procedure 46 CFR 502 92 a e

19 F MC
734 FEDERAL MARITIME COMMISSION

collection of a portion of the freight charges specifically the amo

712 An appropriate notice will be published in Prudential s tariff

8 THOMAS W REILLY

Administrative Law Jud

WASHINGTON D C

MARCH 11 1977

19 
FEDERAL MARITIME COMMISSION

DOCKET No 7654

CONSOLIDATION ALLOWANCE RULES PuBLISHED IN THE FREIGHT

TARIFFS OF CONFERENCES INDEPENDENT CARRIERS AND THE RATE

AGREEMENT OPERATING BETWEEN UNITED STATES ATLANTIC PORTS IN

THE UNITED KINGDOM IRELAND THE SCANDINAVIAN PENINSULA AND

CONTINENTAL EUROPE

ORDER DENYING APPEAL AND DISCONTINUING

PROCEEDING

April 15 1977

The Commission instituted this proceeding to determine the legality

under sections 16 17 and 18bofthe Shipping Act 1916 of consolida

tion allowance provisions contained in the tariffs ofcertain conferences

rate agreement member lines and independent lines 1

These consolidation

allowances are fees paid by the Carriers to entities called Consolidators

for the services rendered by the Consolidators in amalgamating less than

container and less than trailer loads ofcargo into containerloads for ocean

transport

In December 1975 this Commission was informed by the carriers that

the consolidation allowance provisions which had been in effect for some

seven years previously were proposed to be suspended indefinitely

effective January 12 1976 The result of this proposed suspension was

immediate vociferous protest on the part of interests representing Consol

idators and others alleged to be adversely affected by the loss of

consolidation allowances 2

As a result ofthese protests and Commission concern the proposed

suspension date ofJanuary 12 1976 was repeatedly postponed ultimately

to September 20 1976 During this interim the carriers proposed

amended consolidation allowance provisions which were scheduled to

become effective on September 20 1976 in the place ofthe pre existing

provisions The amended consolidation provisions were agreat deal more

I When referred to generally aU carrier interests including conferences the rate agreement or individual carriers

willbe called Carriers

I

Although these parties include freight forwarders NVOCC s

and consolidators all such interests will be referred

to as Consolidators hereafter They are Andrews nternational Inc Boston Consolidation Service Inc J E

Bernard Co Inc C S Greene Co Inc andYellow Forwarding Company

19 F MC 735
736 FEDERAL MARITIME COMMISSION

1

i

camplex than their predecessars What had been with certain 

exceptians a fixed allawance af 525 per cantainer unit cansa

became aquagmire af confusing detailed rules 3

The net result a

amended rules hawever was the lass af allawance payments 

majar portian of Cpnsolidators and uced payments to thase few 

cantinued to qualify far such payments

Althaugh these proposed amended consolidatian allawance rules 

fact go into effect their dutatian was the limited periad from Sept

20 1976 to Navember 8 1976 On Navember 8 1976 by furthe

pravisian amendments the pre September 20 1976 status qu

restared This was accomplished as aresultafan Orderaf the F

District Court for the Southern District of New York4 issu

Navember 4 1976 granting aMotion for Preliminary Iliunction 

court ordered the restoration of the status quo ante by requirin

cancellation of the amended consolidation allowance rules and re

tion ofthe original provisians

Presiding Administrative Law Judge Thomas W Reilly sched

pre hearing conference for November S 1976 At that time h

informed afthe sequence of events described above At that time 

caunsel for the conferences informed the Presiding Officer that ef

November 8 1976 the court s order would be implemented and th

conferences intended rue amotion to dismiss this proceeding as 

All other parties save Hearing Counsel mad it cleat that they 

actively support such amotion in the interest of avoiding the expe

by all concerned ofunnecessary time expense and eff lrt in purs

proceeding notwithstanding satisfaction of all affected interests

Thereafter as pramised counsel for the Carriers on Novemb

1976 rued the anticipated Motion to Discontinue Proceeding B

filing the carriers urged discontinuance ofthe p eding on the gro

mootness and altemanvely requested that the proce ing be h

abeyance pendingresolution ofcet1ain iSllues in acompanion procee

In response thereto the Consolidators Baltic Shipping Company 

Polish Ocean Line POL and HelU ing Counsel submitted Replies 

Consolidators BSC and POL 6

uniformly supported the motion 

Carriers Hearing Caunsel however apposed the Motion to 

It was Hearing Counsels position that fOQr of the eisht

original 

placed under investigation could be dismissed but that the rem

ining 

issues should be PlJrslJed The Consolidators and Carriers then 

Answers taking issue with the position of Hearing Counsel

a

description of Utese rules may be fOlUld on paps 35of tbJ Commission s Order ofInvest1lation an

ofSeptember 24 1976

C S Greene cI Co Inc v North Atlantic Balllc Freight Conference No 76Cir 4118 S D N Y No

1916

8

Thecompanion proceedlna is Commission Docket No 763 That proceedlOl which wai in tituted b

Show Cause addrOllld only tho issue of carrior authority under section l to institute amend or d

con80U4tion allowance rules

Additionally POL souabt its dismi a1 as never havina been involved in any proposed suspension of a

or amendmeDts thereto

19 
CONSOLIDATED ALLOWANCE RULES 737

On December 27 1976 the Presiding Officer issued his Order

Granting Motion to Discontinue Thereafter pursuant to Commission

procedures Hearing Counsel fJIed an Appeal from that Order and the

Carriers and Consolidators fIled Replies to the Appeal

In his Order granting the motion to discontinue this proceeding the

Presiding Officer grounded his discontinuance on the Commission s own

Order ofInvestigation and Hearing with respect to all issues raised In so

doing he made the following points

Conference Respondents point out that the Commission s September 24 Order was

directed to the consolidation rules presently in effect in the trade referring to the

September 20 amendments to the consolidation allowance rules Indeed the Commis

sion s factual and historical preamble leading up to its Order specifying the eight issues

to be heard is filled with repeated references to the September 20 amendments to the

consolidation allowance rules the amended rules the revised rules see p 24 of

Commission s Order and the apparent evils inequities and mischief the September 20

amendments would create On page 5 of the Commission s Order the statement is

made Further the subject rules bring into focus several relationships which are of

interestto the Commission On page 6 the Commission concludes Upon consideration

of the above matters the Commission is of the opinion that the consolidation rules

presently in effect in the trade and the industry practices which have arisen in

conjunction with such rules should be made the subject of a public investigation and

hearing to determine among other things whether these rules make orgive any undue

or unreasonable advantage Emphasis original

Taking the Commission s September 24 Order as a whole and attempting to avoid

giving undue importance to any small portion taken out of context I fmd that the only

reasonable interpretation yields the conclusion that the Commission was primarily if not

totally concerned with the effects ramifications and inequities posed by the September

20 amendments to the Conference Respondents consolidation allowance rules and not

to a broad study of consolidation rules in general 7

Emphasis original

Hearing Counsel s position on appeal is essentially that 1 The

Presiding Officer correctly ruled as to issues 1 4 5 and 6 of the

original Order ofInvestigation because these issues dealt with allegations

ofviolations of sections 16 First 18b 3 18b 5 and 17 ofthe Shipping

Act by virtue of implementation ofthe amended consolidation allowance

rules and 2 The Presiding Officer erred however in permitting the

discontinuance ofthe proceeding with respect to issues 2 3 7 and 8

of the Order of Investigation because these issues allegedly address

possible statutory violations resulting from implementation of consolida

tion allowance rules generally and are issues which involved

regulatory considerations which transcend any ofthe changes to the tariff

provisions

The Consolidators and the Carriers oppose Hearing Counsel s appeal

essentially on the grounds relied upon by the Presiding Officer in his

discontinuance order

We concur in the fmdings and conclusions ofthe Presiding Officer The

further prosecution ofthe issues involved under the terms ofthe original

Order does not appear to be warranted We take no position at this time

1 Order Granting MOlion to Discontinue December 27 1976 pp 56

19 F MC
738 FEDERAL MARITIME COMMISSION

as to the merits ofthe issues alleged by Hearing Counsel to have su

the cancellation of the amended consolidation rules The Comm

shall keep such issues under advisement However should we dete

to pursue these issues such an investigation will be instituted afres

not be attempted to be molded out of whatever imprecise issues 

original Order may arguably survive in this proceeding

THEREFORE IT IS ORDERED That the Appeal of Hearing Co

from the Order Granting Motion to Discontinue is denied and

IT IS FURTHER ORDERED That this proceeding be and here

discontinued

By the Commission

S JOSEPH C PoLKING

Acting Secret

19 F 
FEDERAL MARITIME COMMISSION

DocKET Nos 71 2 71 71 26 AND 71 34

TRANSAMERICAN TRAILER TRANSPORT INC

SEATRAIN LINES INC

DANIELS KENNEDY INC

CHANDRIS AMERICA LINES INC

GREEK LINE INC

HOME LINE AGENCY INC

INCRES LINE

v

THE NEW YORK SHIPPING ASSOCIATION INC

DISMISSAL OF COMPLAINTS

April 13 1977

The captioned complaints were consolidated with our investigation in

Docket No 6957 Agreement No T J336 New York Shipping Associ

ation Cooperative Working Arrangement which wasdesigned to establish

the formula to be used by the New York Shipping Association Inc

NYSA in assessing carriers and other employers of maritime labor to

raise monies to fund various fringe benefits for longshoremen for the

1969 1971 period and to insure that the necessary adjustments in

assessments are made to implement the assessment formula approved by

the Commission The Commission has approved an assessment formula

Agreement No T 2336 New York Shipping Assoc 15 F M C 259

1972and such approval has been affirmed upon court review

Transamerican Trailer Transport Inc v F M C 160 U S App D C

351 492 F 2d 617 1974 The Commission has also ordered that various

assessment adjustments be made which it determined were necessitated

by its action in 15 F M C These adjustments are now the subject of

review proceedings in the Court of Appeals for the District ofColumbia

Circuit No 762024NYSA v F M C U SA and No 76 202

States Marine International Inc v F M C U SA

The captioned complaints dealt with matters that are no longer subject

to dispute and will remain so regardless ofthe outcome of the pending

review proceedings Docket Nos 71 2 71 and 71 34 dealt solely with

19 F MC 739
740 FEDERAL MARITIME COMMISSION

questions relating to the authority of NYSA to raise the lev

assessments on excepted cargoes and the propriety of such inc

assessments A challenge with respect to the increased assessme

excepted cargoes also formed a part of the gravamen of the compl

71 26 See 15 F M C supra at 302 These questions were res

against Complainants in these proceedings in the Commission s 

with respect to the establishment of the proper assessment formul

15 F M C supra at 264 301 303 160 U S App D C supra a

360 492 F 2d supra at 621 626

Moreover Transamerican Trailer Transport In Seatrain Lines 

and Daniels and Kennedy Inc the Complainants in 71 2 718 a

26 respectively have entered into Commission approved settl

agreements which resolve all issues as between these Complainan

NYSA with respect to the 19691971 assessment period See Re

Docket No 6957 served September 17 1976 pages 45 12

THEREFORE IT IS ORDERED That the subject complaint pr

ings be and they hereby are dismissed

By the Commission

S JOSEPH C PoLKING

Acting Secret

19 
FEDERAL MARITIME COMMISSION

SPECIAL DocKET No 485

FORD MOTOR COMPANY

v

SEA LAND SERVICE INC

NOTICE OF ADOPTION OF INITIAL DECISION AND ORDER

PERMITIING WAIVER OF CHARGES

April 13 1977

No exceptions having been taken to the initial decision in this

proceeding and the Commission having determined not to review same

notice is hereby given that the initial decision became the decision of the

Commission on April 13 ICJ77

Itis Ordered That applicant is authorized to waive collection of

30 170 88 ofthe charges previously assessed Ford Motor Company

It is further Ordered That applicant shall publish promptly in its

appropriate tariff the following notice

Notice is hereby given as required by the decision of the Federal Maritime

Commission in Special Docket 485 that effective December 31 1975 for purposes of

refund or waiver of freight charges on any shipments which may have been shipped

during the period from Decmeber 31 1975 through February 23 1976 the rate to

Hiroshima Japan on Shipping Containers metal Instruments of International Trade

Empty KID is 135 00W subject to a minimum of 1168 weight tons per container and

the rate is subject to all applicable rules regulations terms and conditions of said rate

and this tariff

It is further Ordered That waiver of the charges shall be effectuated

within 30 days of service ofthis notice and applicant shall within five

days thereafter notify the Commission of the date and manner of

effectuating the waiver

By the Commission

S JOSEPH C POLKING

Acting Secretary

19 F MC

741
FEDERAL MARITIME COMMISSION

SPECIAL DocKET No 485

FORD MOTOR COMPANY

v

SEA LAND SERVICE INC

Application granted

INITIAL DECISIONt OF THOMAS W REILLY

ADMINISTRATIVE LAW JUDGE

Pursuant to section 18b 3

2

of the Shipping Act 1916 as amen

P L 90298 and section 502 92 of the Commission s Rules of Pr

and Procedure 46 CFR 502 92 Sea Land Service Inc Sea La

Applicant has applied for pennission to waive collection of a port

the freight charges on a shipment ofempty metal shipping containe

moved from Houston Texas to Hiroshima Japan under a Sea La

of lading January 16 1976 The application wastiled July 14 1976

The subject shipment moved via mini Iandbridge service by rai

Houston to Oakland California then overwater to Hiroshima via

Japan The shipment moved under a through rail water rate publis

Sea Land Freight TaritlNo 234 FMCI06 and ICC92 item 692

32 1st revised page 477 effective December 31 1975 Refund 

charges here involved would affect only the ocean carrier s portion 

aggregate weight ofthe shipment was 187 008 pounds and it mea

14 160 cubic feet The rate applicable at time of shipment was 1

ton of 40 cubic feet or 2000 pounds with aminimum of 1168 re

tons per container The rate sought to be applied is 135 per weight 

2000 pounds with a minimum of 23 360 pounds per container 

weight tons per Sea Land Freight Tariff No 234 FMCI06 IC

item 692999932 2nd revised page 477 effective February 23 19

Aggregate freight charges payable at the rate applicable at ti

shipment amounted to 49 560 Aggregate freight charges at th

sought to be applied amount to 19 389 12 including container s

charge The difference sought to be waived is 30 170 88 The App

1 This decision became the decision of theCommission April 13 1977

146 U SC 817 as amended

742 19 
FORD MOTOR CO v SEA LAND 743

is not aware of any other shipment ofthe same commodity which moved

via Sea Land during the same time period at the rates involved in this

shipment

Sea Land offers the following as grounds for granting the application

4 Sea Land negotiated with Ford Motor Company for a rate to cover movement of

knocked down shipping racks being returned from Houston Texas or New Orleans

La to Hiroshima Japan A rate of 135 00 per weight ton of 2 000 Ibs to apply in Sea

Land s mini Iandbridge service was agreed upon as a special rate to apply only to

Hiroshima Letter from Ford MotorCompany dated October 29 1975 to Sea Land

attachment no I confirms these negotiations The agreed rate was to become effective

by January 1 1976 and remain in effect through March 31 1976 to coverthe anticipated

period of movements It also included attachment of a minimum weight of 1168 weight

tons per container to the rate to insure adequate minimum revenue for Sea Land as set

forth in teletype exchanges dated September 30 and October 29 attachment no 2

between Sea Land s Oakland Pacific Division office and the home office in Edison

Menlo Park

In sending the publication instructions however our Pacific Division in Oakland

erroneously transmitted to the Pacific Division in Elizabeth a weight or measurement

option for the rate whereas the agreement was for the rate to apply on a weight basis

only subject to the minimum weight per container This clerical error was carried

forward to the actual tariffpublication request attachment no 3 resulting in publication

of the agreed rate on an optional weight of measurement basis in Item No 629999931

on 1st revised pate 477 effective December 31 1975 together with the applicable

conditions and notes on 2nd revised page 82 4th revised page 83 and 3rd revised page

86 attachment no 4

Within a few days after the effective date of December 31 the error in publication

was picked up By teletype dated January 7 1976 the Pacific Division in Oakland

instructed a correction be made and it was passed to the tariffpublications department

January 12 attachment no 5 Actual publication of the correct rate was made on 2nd

revised page 477 attachment no 6 which became effective February 23 1976 on

statutory 30 days notice Less than statutory notice was not authorized for this type of

publication under the Interstate Commerce Commission s guidelines then governing

reductions in rates in mini landbridge tariffs

Section 18b 3 ofthe Shipping Act 1916 46 USC 817 as amended by

Public Law 9O298 and Rule 6b Special Docket Applications Rules of

Practice and Procedure 46 CFR 502 92 a set forth the applicable law

and regulation The pertinent portion of 18b 3 provides that

The Commission may in its discretion and for good cause shown permit a

common carrier by water in foreign commerce to refund a portion of freight charges

collected from ashipper or waive the collection of a portion of the charges from a

shipper where it appears that there is an error in a tariffof a clerical or administrative

nature or an error due to an inadvertence in failing to file a new tariff and that such

refund orwaiver will notresult in discrimination among shippers Provided further That

the common carrier has prior to applying to make refund med a new tariffwith the

Commission which sets forth the rate on which such refund or waiver would be

based and Application for refund or waiver must be med with the Commission

within 180 days from the date of shipment 3

The clerical and administrative error recited in the subject application is

of the type within the intended scope of coverage of section 18b 3 of

3

For other provisions and requirements see 18 b 3 and fi 502 92 of the Commission s Rules of Practice and

Procedure 46 CFR 502 92 a c

19 F M C
744 FEDERAL MARITIME COMMISSION

the Act and section 502 92 ofthe Commission s Rules of Practi

Procedure

Therefore upon consideration of the documents presented 

Applicant it is found that

1 There was an error in a tariff of a clerical or administrative 

resulting in Sea Land s iIiadvertent failure to transmit the proper a

tion of the negotiated already agreed rate to their tariff public

department and in turn to the official tariff tile in the Federal Ma

Commission

2 Such a waiver of collection of a portion of the freight charg

not result in discrimination among shippers

3 Prior to applying for authority to waive collection of aportion 

freight charges Sea Land fIled a new tariff which set forth the r

which such waiver would be based

4 The application wasfIled within 180 days from the date ofthe 

shipment

Accordingly permission is granted to Sea Land Service Inc to 

collection of a portion of the freight charges specifically the amo

3 170 88 An appropriate notice will be published in Sea Land s 

S THOMAS W REILLY

Administrative Law Ju

WASHINGTON D C

March 23 1977

19 
TITLE 46SHIPPING

Chapter IV Federal Maritime Commission

Subchapter BRegulations Affecting Maritime Carriers and Related

Activities

Part 514Reports ofRate Base and Income Account by Significant

Vessel Operating Common Carriers in the Domestic Offshore Trades

GENERAL ORDER 36 DOCKET NO 67 57

April 20 1977

Repeal ofPart 514

AGENCY

ACTION

SUMMARY

Federal Maritime Commission

Repeal of Part 514

Rules requiring the maintenance of records and submission of data

with respect to rate bases are revoked and repealed

Effective Date Upon publication in the Federal Register

For further information contact

Joseph C Polking Acting Secretary

Federal Maritime Commission

1100 L Street N W

Washington D C 20573

202 523 5725

Supplementary Information The Commission issued its Report and

final rules in this proceeding on August 18 1976 to become effective on

December 6 1976 Prior to the effective date several persons fIled

petitions requesting reconsideration ofthese rules andor reopening ofthe

proceeding l As a result of these filings the Commission postponed the

effective date ofthe rules pending its review ofthe various petitions

I Petitions were f1led by the following Camers

1 Matson Navigation Company Matson

2 Sea Land Service Inc Sea Land

3 PuertoRico Maritime Shipping Authority PRMSA

4 Farrell Lines Inc Farrell and

19 F MC 745
746 FEDERAL MARITIME COMMISSION

Of those ming petitions only Matson Sea Land and PST B 

participated in this proceeding previously All the other nine carriers 

either not in the domestic offshore trade ornot in existence at the ti

the proceedings in this docket For example Farrell urges reconside

of the final rules on the grounds that it did not enter the trade 

January 1976 and as a result has not had an opportunity to expre

views in this proceeding Likewise PRMSA argues that it has no

any opportunity to participate in the formulation ofthe final 

promulgated by the Commission because 1 the proceeding was in

seven years before PRMSA was created and 2 the bulk ofthe test

was taken five years before PRMSA was created PRMSA submi

sound regulatory principles and the public interest require th

proceeding be reopened to permit PRMSA to be heard before impl

tation ofthese rules

The petitions now before the Commission also raise issues ofeco

and accounting theory and practice Additionally they reargu

burdensomeness of compliance with the rules

After careful consideration ofthe petitions now before us and 

due regard to the fact that the carriers not previously participating 

proceeding represent a substantial portion of the entire capability 

very trades i e domestic offshore the Commission s final rules 

intended to address we have decided to withdraw the rules promu

on August 18 1976 in this proceeding and discontinue the proceedi

THEREFORE IT IS ORDERED That this proceeding be and 

is discontinued

AND IT IS FURTHER ORDERED That the rules promulga

August 18 1976 and published in the Federal Register on Septem

1976 41 F R 37785 be and hereby are revoked

By the Commission

S JOSEPH C POLKING

Acting Secret

5 Crowley Maritime Corporation on its ownbehalf and as parent corporation for

aTrailer Marine Transport Corp

b Interisland Intermodal Lines Inc

e Gulf Caribbean Marine Lines

d CTMT lnc

e Hawaiian Marine Lines Inc

tArctic Lipterage Co and

K Puge Sound Tug and BarKe Company PST B

19 
S JOSEPH C POLKING

Acting Secretary

FEDERAL MARITIME COMMISSION

SPECIAL DoCKET No 496

AMERICAN GILSONITE Co INC

v

LYKES BROS STEAMSHIP Co INC

NOTICE OF ADOPTION OF INITIAL DECISION AND ORDER

PERMITIING WAIVER OF CHARGES

April 13 1977

No exceptions having been taken to the initial decision in this

proceeding and the Commission having determined not to review same

notice is hereby given that the initial decision became the decision ofthe

Commission on April 13 1977

It is Ordered That applicant is authorized to waive collection of

5 95193 ofthe charges previously assessed American Gilsonite Co Inc

It is further Ordered That applicant shall publish promptly in its

appropriate tariff the following notice

Notice is hereby given as required by the decision of the Federal Maritime

Commission in Special Docket 496 that effective April 10 1976 for purposes of refund

or waiver of freight charges on any shipments which may have been shipped during the

period from April 10 1976 through July I 1976 the rate on Oilsonite packed in house

to house containers minimum 17 8 LT per container is 46 00W subject to all applicable

rules regulations terms and conditions of said rate and this tariff

It is further Ordered That waiver ofthe charges shall be effectuated

within 30 days of service ofthis notice and applicant shall within five

days thereafter notify the Commission of the date and manner of

effectuating the waiver

By the Commission

7
FEDERAL MARITIME COMMISSION

SPECIAL DocKET No 496

AMERICAN GILSONlTE CO INC

v

LYKES BROS STEAMSHIP CO INC

Application granted

1

INITIAL DECISIONIOF THOMAS W REILLY

ADMINISTRATIVE LAW JUDGE

Purs Jatt to section 18b 3

2

ofthe Shipping Act 1916 as amend

P L 90298 and section 502 92 of the Commission s Rules ofPr

and Procedure 46 CFR 502 92 Lykes Bros SteamShip Co Inc 

or Applicant has applied for permission to waive collection of a p

of the freight charges on a shipment of gilsonite which moved 

Galveston Texas to Rotterdam Netherlands under a Lykes bill of

dated May 26 1976 The application was tiled November 12 1976

The subject shipment moved under Gulf European Freight Assoc

Agreement GEFA 93603 Tariff No 2 FMC 2 4th revised pag

effective March 10 1976 under the rate for the item Gilsonite pac

The aggregate weight of the shipment was 240 222 pounds 

containers The rate applicable at time of shipment was 96 per 

2 240 pounds weight only The rate sought to be applied is 40 

ton of2 240 pounds weight only when packed in house to 

containers with aminimum of 17 8 long tOils per container This 

rate had been agreed upon in advance by the shipper and the carri 

had been fIled in the GEFA tariff cited above on 3rd revised pa

however through inadvertent administrative and clerical error th

revised page 73 was published bearing an unintended April 9 

expiration date thus leaving only the higher 96 rate effective as 

time of shipment on May 26 1976 This was not corrected un

issuance of the 10th revised page 73 same tariff citation as a

effective November 11 1976 It should be noted that the applic

refers several times to the 7th revised as being the correction how

I

I This decision b ame the decision of the Commission April 13 1977

146 D S C 817 as amended

748 19 F 
AMERICAN GILSONITE CO v LYKES BROS 749

it is clear from the reference to the effective date November 11 1976

the tariff pages submitted with the application and a review ofthe official

tariff documents on file at the Commission that the reference to 7th

was a typographical error that the 10th revised page 73 is the relevant

error correction

Aggregate freight charges payable pursuant to the rate applicable at

time of shipment amounted to 10 295 23 Aggregate freight charges at

the rate sought to be applied amount to 4 343 30 The difference sought

to be waived is 5 95193 The Applicant is not aware ofany other

shipments ofthe same commodity which moved via Lykes during the

same time period at the rates involved in this shipment

Lykes offers the following as grounds for granting the application

Prior to February 20 1976 respondent had negotiated with American Gilsonite Co a

rate of 405 2240 Ibs covering the movement of Gilsonite packed in House to House

containers minimum 17 8 long tons per container This rate was then filed in the Gulf

European Freight Association Tariff Number 2 FMC 2 per page 73 3rd revised copy

attached

During March 1976 Lykes reviewed this same tariffto delete rates against which cargo

was not currently moving Thru administrative error the 40 50 2240 Ibs rate was

inadvertently deleted effective April 10 1976 as per GEFA page 73 4th revised copy

attached overlooking the fact that American Gilsonite was tendering the cargo for

shipment against that rate

On March 30 1976 Lykes issued booking contract 0192057 copy attached with

the expressed understanding the 40 50 2240lbs rate was to be applied Despite the fact

that copies of this contract were furnished to Lykes Galveston Houston and New

Orleans offices the administrative personnel failed to note the necessary rate extension

required and thus the rate expired April 10

The vessel Almeria Lykes voyage 36 sailed Galveston May 26th and the cargo

moving under the referenced contract was assessed the only then current tariff rate of

96 00 2240 Ibs as per GEFA tariff pg 73 4th revised copy attached

Section 18b 3 ofthe Shipping Act 1916 46 USC 817 as amended by

Public Law 90298 and Rille 6 b Special Docket Applications Rilles of

Practice and Procedure 46 CFR 502 92 a set forth the applicable law

and regulation The pertinent portion of 18 b 3 provides that

The Commission may in its discretion and for good cause shown permit a

common carrier by water in foreign commerce to refund a portion of freight charges

collected from a shipper or waive the collection of a portion of the charges from a

shipper where it appears that there is an error in a tariffof a clerical or administrative

nature or an error due to an inadvertence in failing to file a new tariff and that such

refund orwaiver will not result in discrimination among shippers Provided further That

the common carrier has prior to applying to make refund filed a new tariffwith the

Commission which sets forth the rate on which such refund or waiver would be

based and Application for refund or waiver must be filed with the Commission

within 180 days from the date of shipment 3

The clerical and administrative error recited in the subject application is

of the type within the intended scope of coverage of section 18 b 3 of

1

For other provisions and requirements see 18 b 3 and 502 92 of the Commission s Rules of Practice and

Procedure 46 CFR 502 92 a c

19 F M C
750 FEDERAL MARITIME COMMISSION

the Act and section 502 92 of the Commission s Rules of Practic

Procedure

Therefore upon consideration of the documents presented b

Applicant it is found that

1 There was an error in a tariff of aclerical or administrative n

due to inadvertently deleting the negotiated rate from the rued tariff

2 Such waiver ofcollection of a portion of the freight charges w

result in discrimination among shippers

3 Prior to applying for authority to waive collection of aportion 

freight charges Lykes filed anew tariffwhich sets forth the rate on 

such waiver would be based

4 The application was rued within 180 days from the date of ship

Accordingly permission is granted Lykes Bros Steamship Co 

to waive collection of a portion of the freight charges specifica

amount of 5 95193 An appropriate notice will be published in L

tariff

II

S THOMAS W REILLY

Administrative Law Jud

WASHINGTON D C

March 17 1977

1

1

19 
19 F M C

751

FEDERAL MARITIME COMMISSION

DOCKET No 7651

WEST COAST OF ITALY SICILIAN AND ADRIATIC PORTslNoRTH

ATLANTIC RANGE CONFERENCE AMENDED TARIFF RULE ESTABLISHING

AN ALLOWANCE ON PREPAID FREIGHT

Allowance of a 3 percent discount for prepaid shipments found not violative of sections

16 and 17 Shipping Act 1916

Stanley O Sher and John R Attansio for Respondent West Coast of

Italy Sicilian and Adriatic Ports Nh Atlantic Range Conference

John Robert Ewers and Deana Rose as Hearing Counsel

REPORT AND ORDER

April 22 1977

By THE COMMISSION Karl E Bakke Chairman Clarence Morse Vice

Chairman Ashton C Barrett Bob Casey and James V Day

Commissioners

The Commission instituted this proceeding by Order served September

20 1976 directing the West Coast of Italy Sicilian and Adriatic Ports

North Atlantic Range Conference WINAC and its member lines to show

cause why the Commission should not find that its TariffRule 15 which

provides for a 3 percent allowance discount on prepaid freight is

violative of sections 16 First and 17 of the Shipping Act 1916 and

accordingly why such tariff rule should not be ordered stricken from the

Conference tariff Respondent ftled memoranda oflaw and an affidavit of

fact Hearing Counsel who opposed the 3 percent allowance filed a

memorandum oflaw 1

POSITIONS OF THE PARTIES

In its memoranda of law and upon the affidavit of G Ravera the

Conference Secretary WINAC argues that the discount is necessitated

by a 30day time difference in collecting the freight due between prepaid

and collect shipments In this regard it is pointed out that when freight is

I Because we believe that oralargument would serve no useful purpose in this proceeding the parties request for

oral argument is denied
752 FEDERAL MARITIME COMMISSION

prepaid the carrier receives payment prior to the sailing ofthe ve

generally when the cargo is tendered but that on collect shipmen

carrier receives payment only upon tender for delivery at the desti

port WINAC asserts that berthing time after tender and before s

sailing time which may iIiclude intermediate ports of call free time 

the time between tender for delivery and payment to the carrier 

agent results in a 30day difference between the receipt of payme

prepaid and collect shipments

WINAC maintains that the foregoing delay in receipt of pay

translates into an appreciable difference in the cost to the carrier a 

part ofwhich is attributable to the necessary increase in working c

caused by the delay Respondent argues that the Commissio

recognized that working capital is an appropriate part of the rate 

and has defined working capital for rate purposes as

The cash necessary to pay operating expenses incurred for common carrier 

prior to the time when the revenues from that service are collected and av

Alaskan Rates supra at 556

WINAC contends that since the need for working capital is necess

by the time lag between the payment of expenses and the rece

payment in respect to which the expenses Were incurred there 

question that a carrier s need for working capital increases a

incidence of collect shipments increases WINAC views the p

economic conditions in Italy as exacerbating the cost ofthese incr

working capital requirements In support of this contention Respo

cites the annual inflation rate in Italy of 18 percent short term in

rates of 23 percent and the decline ofthe lira and exchange restri

as factors which affect the cost of increased working capital requirem

WINAC further argues that because the Commission has recogn

comparative approach to assessing the reasonableness ofrates inc

comparisons with foreign to foreign rates 3

the 3 percent discou

prepaid shipments finds further support in a comparison with th

structure of other Italian trades G Ravera notes in his affidavit th

the trades between Italy on the one hand and West and South A

Australia and the Far East on the other a surcharge ranging be

2 5 and 5 percent is imposed on freight collect

Because ofthe fluctuations in the Italian economy and the cost inv

in the mechanics of collect shipments WINAC submits that it

differential is not unreasonable discriminatory nor results in 

preference The rate differential provided for in Tariff Rule 15 

allegedly reasonable differential for different transportation services

WINAC states that while the Commission s predecessor the U

States Shipping Board in American Tobacco Co v Campagnie Ge

1 General Increase in Rates Paciflc AtlantlclGuam Trade 8F M C 498 501 1965 remanded on other 

Guam v Federal Maritime Commission 124 U S App DC 324 365 F 2d 515 l966 cert denied Pacific 

Lines v Guam 385 US 1002 Alaskan Rates 2 U S M C 558 566 l941 modified 2 U S M C 639 1942

3 E g Investigation afOcean Rate Structures 12 F M C 34 1968

19 
WEST COAST OF ITALY 753

Transatlantique 1 D S S B 53 1923 found the rate differential in that

proceeding to be prejudicial and discriminatory it was only that carrier s

inability to justify the magnitude ofthe rate differential which resulted in

such a finding 4 WINAC submits that not only does the different service

and cost justify the rate differential but also that failure to provide such

a differential imposes an unfair burden on shippers who do not ship

freight collect Because collect shipments increase the carrier s cost

Tariff Rule 15 allegedly relieves prepaying shippers of a cost burden

which they have not created and at the same time establishes a modest

incentive for other shippers to prepay their freight and thereby aid in

holding down pressures for general rate increases Thus WINAC is of

the opinion that the Tariff Rule 15 clearly benefits shippers and is neither

violative of sections 16 First nor 17 ofthe Shipping Act 1916 5

Lastly WINAC submits that even assuming arguendo that it could be

concluded that the differential permits the collection of different rates for

similarly situated shippers no violation of section 16 can be shown since

the presence of a competitive relationship is required to prove a case of

undue preference or prejudice under section 16 WINAC notes that the

discount is available to all shippers and consignees and that there is no

known competitive relationship between shippers who ship collect as

opposed to prepaid In addition WINAC cites the lack of shipper

complaints since the inception of the rate as probative of the lack of

prejudice or preference resulting from the application of a three percent

differential

Hearing Counsel takes issue with every argument of law and factual

allegation made by Respondent At the outset Hearing Counsel submit

that Respondent has failed to proffer sufficient facts to justify an

allowance in freight charges through prepayment as previously found to

be violative ofthe Shipping Act in American Tobacco supra

Hearing Counsel next attack Respondent s premise that the lack of

shipper complaints against Tariff Rule 15 is indicative of the rule s

legality In this connection Hearing Counsel contends that while the

Commission has not addressed this argument in a section 16 or 17

proceeding the Commission in finding a violation of section 18 b 5 in

Investigation of Ocean Rate Structure 12 F MC 34 1966 summarily

dismissed this argument by deciding that the lack ofshipper grievance is

immaterial

Hearing Counsel dispute Respondent s analysis ofthe relationship

between prepaid freight and the need for sufficient working capital While

Hearing Counsel agree that working capital is aproper item in determining

4

InAmerican Tobacco supra the carrier accepted payment in francs at the current rate of exchange when freight

was prepaid in France but computed charges for freight collect on the basis ofafixed rate of 5 francs per dollar In

the time period concerned the exchange rate rose from 5 88 to 17 07112 francs per dollar The Board found that the

difference in ratesapproaching 560oexceeded the carrier s additional expenses for handling cargo freight collect

and accordingly was unduly discriminatory and prejudicial

WINAC also challenges what it terms the Interstate Commerce Commission s ICC ancient and dogmatic

approach to prepayment discounts TheICC has generally rejected prepayment discountsbased solely on the time of

payment

19 F MC
FORD MOTOR CO v SEA LAND 743

is not aware of any other shipment ofthe same commodity which moved

via Sea Land during the same time period at the rates involved in this

shipment

Sea Land offers the following as grounds for granting the application

4 Sea Land negotiated with Ford Motor Company for a rate to cover movement of

knocked down shipping racks being returned from Houston Texas or New Orleans

La to Hiroshima Japan A rate of 135 00 per weight ton of 2 000 Ibs to apply in Sea

Land s mini Iandbridge service was agreed upon as a special rate to apply only to

Hiroshima Letter from Ford MotorCompany dated October 29 1975 to Sea Land

attachment no I confirms these negotiations The agreed rate was to become effective

by January 1 1976 and remain in effect through March 31 1976 to coverthe anticipated

period of movements It also included attachment of a minimum weight of 1168 weight

tons per container to the rate to insure adequate minimum revenue for Sea Land as set

forth in teletype exchanges dated September 30 and October 29 attachment no 2

between Sea Land s Oakland Pacific Division office and the home office in Edison

Menlo Park

In sending the publication instructions however our Pacific Division in Oakland

erroneously transmitted to the Pacific Division in Elizabeth a weight or measurement

option for the rate whereas the agreement was for the rate to apply on a weight basis

only subject to the minimum weight per container This clerical error was carried

forward to the actual tariffpublication request attachment no 3 resulting in publication

of the agreed rate on an optional weight of measurement basis in Item No 629999931

on 1st revised pate 477 effective December 31 1975 together with the applicable

conditions and notes on 2nd revised page 82 4th revised page 83 and 3rd revised page

86 attachment no 4

Within a few days after the effective date of December 31 the error in publication

was picked up By teletype dated January 7 1976 the Pacific Division in Oakland

instructed a correction be made and it was passed to the tariffpublications department

January 12 attachment no 5 Actual publication of the correct rate was made on 2nd

revised page 477 attachment no 6 which became effective February 23 1976 on

statutory 30 days notice Less than statutory notice was not authorized for this type of

publication under the Interstate Commerce Commission s guidelines then governing

reductions in rates in mini landbridge tariffs

Section 18b 3 ofthe Shipping Act 1916 46 USC 817 as amended by

Public Law 9O298 and Rule 6b Special Docket Applications Rules of

Practice and Procedure 46 CFR 502 92 a set forth the applicable law

and regulation The pertinent portion of 18b 3 provides that

The Commission may in its discretion and for good cause shown permit a

common carrier by water in foreign commerce to refund a portion of freight charges

collected from ashipper or waive the collection of a portion of the charges from a

shipper where it appears that there is an error in a tariffof a clerical or administrative

nature or an error due to an inadvertence in failing to file a new tariff and that such

refund orwaiver will notresult in discrimination among shippers Provided further That

the common carrier has prior to applying to make refund med a new tariffwith the

Commission which sets forth the rate on which such refund or waiver would be

based and Application for refund or waiver must be med with the Commission

within 180 days from the date of shipment 3

The clerical and administrative error recited in the subject application is

of the type within the intended scope of coverage of section 18b 3 of

3

For other provisions and requirements see 18 b 3 and fi 502 92 of the Commission s Rules of Practice and

Procedure 46 CFR 502 92 a c

19 F M C
754 FEDERAL MARITIME COMMISSION

the rate base they argue that the formula for calculating working c

does not vary if the freight is shipped prepaid or collect Hearing Co

view TariffRule 15 as an attempt to increase the Respondent s wo

capital without sufficient facts for a proper evaluation In this re

Hearing Counsel argue that if the Respondent carriers do not have to 

voyage expenses until 45 days after the voyage then it is immate

there is a 30day delay in the receipt ofpayment from a collect shi

Hearing Counsel maintain that Respondent has failed to prove tha

3 percent allowance results in an equivalent lessening of cost Nor 

Hearing Counsel accept Respondent s comparison of the 3 pe

allowance with the surcharge for collect shipments in foreign to fo

trades It is improper Hearing Counsel argue to compare the surc

with the prepayment discount because the cases cited by Responde

support ofthis position deal exclusively with comparisions of recip

or competitive trades and not foreign to foreign trades Furtherm

Hearing Counsel argue that even if the trades were comparable Res

ent has not submitted any legal arguments to establish that the surc

inthe mentioned foreign to foreign trades is not unjustly discriminato

preferential

Hearing Counsel concludes that Respondent s factual and legal su

sions are insufficient and that WINAC has failed to demonstrate 

higher costs justify higher charges for collect shipments orthat there 

competitive relationship between prepaid and collect shippers and h

no violation of section 16 First Hearing Counsel therefore urge 

Commission to strike Tariff Rule 15 or take other appropriate acti

the circumstances warrant

DISCUSSION AND CONCLUSIONS

The Commission and its predecessors have on only one occ

squarely addressed the issue of a freight differential for the prepaym

freight charges with respect to sections 16 First and 17 Shipping 

1916 InAmerican Tobacco Co v Compagnie General Transatlan

1 U S S B 53 1923 affd 31 F 2d 663 cert denied 280 U S 555 1

the United States Shipping Board considered a carrier s practi

accepting payment in francs at the current rate ofexchange when f

was prepaid in France but computing charges for freight collec

fIXed basis of 5 francs to the dollar in New York In that instance 

Board found that the freight differential was unduly preferentia

unjustly discriminatory in violation of sections 16 and 17 becaus

difference in charges exceeded the total amount ofthe carrier s add

expenditures for transporting the cargo freight collect The Board d

find that all freight differentials based upon prepayment were unlawf

rather found that such differentials are only unlawful to the exten

exceed the carrier s cost for transporting the cargo freight collect In

the Board expressly recognized that

19 
WEST COAST OF ITALY 755

As the incidents of the transportation service in connection with the complainant s

collect shipments resulted in added expense to the carrier the cost thereof might

properly be reflected in a

higher charge than for prepaid shipmeni emphasis added 1

V S S B at 57

The Board s rationale in the American Tobacco decision clearly

indicates that the finding of a violation of sections 16 and 17 was not

based on atheory that the rate differential wasper se unlawful but rather

on the inability ofthe respondent in that proceeding to justify the level of

the differential The determinative factor therefore is whether the confer

ence or carrier can justify added expenses for handling collect shipments

Accordingly the amount of the allowance for prepaid shipments if any

must be determined on a case bycase basis Any allowance based upon

the time of payment must withstand scrutiny under the applicable

provisions ofthe Shipping Act 1916 and must be justified by a showing

that collect shipments result in added expense to the carrier An

examination of the record before us in this proceeding indicates that the

WINAC 3 percent allowance for prepaid shipments as provided in its

tariff is warranted

The representations of the Respondent in its brief and affidavit are

unrefuted In its memoranda of law and affidavit submitted by the

Conference Secretary Respondent states that the average difference in

time between the receipt of freight prepaid and the receipt of freight

collect is approximately 30 days and that this delay in the receipt of

payment results in additional cost to the carrier amajor part ofwhich is

attributable to the necessary increase in working capital caused by the

delay The impact ofthe delay in payment is exacerbated by the condition

of the Italian economy Short term interest rates of 23 percent and the

Italian inflation rate which is approaching 18 percent are cited as factors

which increase the cost associated with collect shipment In addition the

continued decline in the exchange rate of the lira has resulted in

governmental restrictions which in turn affects the cost and risk of

extending credit for collect shipments For instance the Italian Govern

ment had required that the purchase of dollars from within Italy be

accompanied by a six month deposit of50 percent ofthe purchase price

interest free in the Bank of Italy More recently the Government

imposed a surcharge tax of seven percent on foreign exchange purchases

Although none ofthes restrictions are currently in effect 6

the exchange

restrictions imposed by the Italian Government are indicative of the

instability in the Italian economy

In view of the foregoing we fmd that due to the present condition of

the Italian economy the deferral of payment by WINAC carriers on

collect shipments results in added costs to those carriers which justify the

imposition ofa three percent allowance on prepaid shipments However

because economic conditions are never static the Commission intends to

6

Source International Monetary Fund

19 F M C
756 FEDERAL MARITIME COMMISSION

closely monitor the status of the Ita1il neconomy particularly chana

the inflation and interest rates and periodically review the effect of 

Rule 15 on cargo movements in the trade to determine its conti

validity

THEREFORE IT IS ORDERED That this proceeding be disco

ued

S JOSEPH C PoLKINO

Acting Secreta

19 F 
19 F M C 757

FEDERAL MARITIME COMMISSION

INFORMAL DocKET No 351 1

STANISLAUS IMPORTS INC

v

SEA LAND SERVICE INC

NOTICE OF DETERMINATION NOT TO REVIEW

April 22 1977

Notice is hereby given that the Commission on April 22 1977

determined not to review the decision of the Settlement Officer in this

proceeding served April 14 1977

By the Commission

S JOSEPH C POLKING

Acting Secretary
FEDERAL MARITIME COMMISSION

INFORMAL DoclET No 351 1

STANISLAUS IMPORTS INC

v

SEA LAND SERVICE INC

Reparation Awarded

I

I

i

DECISION OF JUAN E PINE SETILEMENT OFFICER 

StanisliwsImports Inc complainant claims 289 75 as repa

from Sea Land Service Inc carrier for alleged freight overcharg

two shipments of beads from Kobe Japan to San Francisco Cal

one via the SEA LAND EXCHANGE on a bill oflading dated Ma

1975 and the second via the SEA LAND Trade on a bill of lading 

April 16 1975 While the complainant does not specifically al

violation of the Shipping Act 1916 it is presumed to be a viola

Section 18b 3 thereof

The conference chairman and the carrier in separate letters a

complainant that the claims were not submitted before the cargo l

carrier s custody and referred to the Trans Pacific Freight Confere

JapanKorea Tariff No 35 FMC 6which provides in Rule 59

Claims for lllljustment of freillht charges if based on alleged errors in des

weipt andor measurement will not be considered unless presented to the c

writing before the shipment involved leaves the custody of the carrier AU othe

for lllljustment of freight charlles must be presented to the carrier in writing w

6 months after the date of shipment

Basically the two movements covered shipments of Beads on 

the carrier assessed the rate of 94 00 per measurement ton of 40 

feet based on avalue exceeding 1 400 per revenue ton FOB The 

lading made no reference to value Several of the carrier s letters 

i

I Bolh pertlo havllll consented to the Informal procedure of Rule 190 of lhe CommlllloR Rule of P

Procedure 46 CPR az 3014 tbI decldoR wUl he final oole the Committloo elect to review ft wllb

from the date ofservice thereat Note Notice of datenninalion oot to Review AprU 22 1977

With reapeet to lucb arule the CommilsloD inits report on remandserved November 24 1976 in K

v MoQl f McCormack Un Inc neptod ItI applieatloa with respect to c1aJm before the Commi88loD 

part uln eflctthe Rule set up as aperiod of UmitatiOD thotime dwina which the sldpment remaln in t

of the carrier wblch limItetion w reviewed by theCourt iofrilllilll OR the riaht lIflUOd by ection 

Sblppilll Act

758 19 
STANISLAUS IMPORTS INC v SEA LAND 759

complainant referred to tariff Rule II entitled F O B Value for Rates

Based on F AS Valuation s

The claims filed with the Commission are accompanied by commercial

invoices stating the invoice value ofidentifiable groups of cartons as well

as certificates and lists of measurement and weight for each group of

cartons The carrier in aletter written after the claim was filed with the

Commission stated that

Upon investigation we find the commercial invoices included with the claims do

separately state the invoice values for the separate commodities involved The separate

rates based on valuations per Rule 11 of Tariff No 35 FMC 6 issued by the Trans

Pacific Freight Conference of JapanKorea could have been applied

Claim No ST l covers the movement of 189 cartons ofwooden beads

and shell beads measuring 457 cubic feet and weighing 9706 pounds

which moved from Kobe Japan to San Francisco California on the SEA

LAND EXCHANGE on bill oflading No 90524568 dated March 26

1975 Novaluation was shown on the bill oflading so the carrier assessed

the conference tariff rate under Item No 626015 on 3rd Revised Page

324 which covers Imitation Pearl Beads Beaded Goods Non precious

Beads and Personal Ornaments Value exceeding 1 400 per revenue ton

FOB of 94 00

Claim No ST 1 is submitted in the following format

Total FOB value of Shipment 17 994 70

Item 626010 Beads Invoice value 9 212 56 cube 282 6or 1 302 00 per revenue ton

F O B

Item 626015 Beads Invoice value 8 782 14 cube 174 8or 2 007 00 per revenue ton

F O B

Charged per bill of lading nn n nn

nnn nnnnnnnnn nn

Should be Item 626010 283 cu 7 075 x 80 00 nnn n nnn

626015 175 cu 4 375 x 94 00 n n nnnn n n

Delivery 5 00 1145 nnnn

n n n n n

Bunker S C 3 00 1145 nnn

nnn n nn

CAF 25 1 001 53 mnn

m mnnn

1 193 07

566 00

41125

57 25

34 35

25 86

1 094 71

Overcharge nnn nnnn n nnnn 98 36

This claim as submitted by complainant with the supporting documenta

tion ofthe bill oflading certificate and list ofmeasurement and weight

3 Where the tariffrateon any commodity is determined on the F O B value this value is tobe based on the total

value F A S loading port on such commodity as indicated in eacb certified shipper s invoice i e including aU

expenses up todelivery at sbip s tackle loading point

f

In its calculations complainant divided 17S cubic feet by 40 cubic feet arriving at afIgure of 4 275 measurement

tons The correct figure is 4 375 measurement tons which complainant used in multiplying by the 94 00 rateto get

the product of 41125 shown above However in computing the delivery and bunker surcharge complainant used

the flgUfC of 11 425 measurement tons The sum should be 7 CJ15 plus 4 375 or 1145 measurement tons Multiplying

the 5 00 delivery charge and the 3 00 bunker surcharge by 11 425 measurement tons complainant gotproducts of

57 13 and 34 28 Using 1145 measurement tons the products are 57 25 and 34 35 The claim is 19 cents higher

than it should be 55 claimed minus 19 cents is 98 36 theamount of theclaim as amended above

19 F M C
760 FEDERAL MARITIME COMMISSION

and invoice of merchandise has been computed properly is adeq

substantiated and reparation thereon of 9836 is awarded

Claim No ST 2 covers the movement of 178 cartons of wooden 

and shell beads measuring 549 cubic feet and weighing 9 424 po

which moved from Kobe Japan to San Francisco California on the 

LAND TRADE on bill of lading No 905 626799 dated April 16 197

valuation was shown on the bill of lading so the carrier assesse

conference tariff rate under Item No 626015 on 3rd Revised Pag

which covers Imitation Pearl Beads Beaded Goods Non precious 

and Personal Ornaments Value exceeding 1 400 per revenue ton F

94 00

Claim No ST 2 is submitted in the following format

Total POB value of shipment 19 472 79

Item 626010 Beads Invoice value 17 146 47 cube 5327 or 1 286 00 per reve

F O B

Item 626015 Beads Invoice value 2 326 32 cube 1 3 or 5 185 80 per reven

F O B

Charged per bill of ladins n

nn

n n

n n

n

n

Should be Item 626010 533 cu 13 325 x 80 00 nnn

n

n

Item 626015 16 cu 400 x 94 00 n n

nn

n

Delivery 5 00 13 725 n

nn

n

n n n

Bunker S C 3 00 13 725 n n

n n

n

CAF 25 II44 79 n

Overcharge

This claim as submitted by complainant with the supporting docu

tion of the bill of lading certificate and list of measurement and w

and invoice of merchandise has been computed properly is adeq

substantiated and reparation of 19120 is awarded

Total reparation of 289 56 is awarded complainant with interest 

rate of six percent per annum if not paid within 30 days of the 

hereof

S JUAN E PINE

Settlement Off

19 
19 F MC 761

FEDERAL MARITIME COMMISSION

INFORMAL DoCKET No 383 1

BRISTOL MYERS COMPANY

v

SEA LAND SERVICE INC

NOTICE OF DETERMINATION NOT TO REVIEW

April 22 1977

Notice is hereby given that the Commission on April 22 1977

determined not to review the decision of the Settlement Officer in this

proceeding served April 13 1977

By the Commission

S JOSEPH C POLKING

Acting Secretary
FEDERAL MARITIME COMMISSION

INFORMAL DocKET No 383 1

BRISTOL MYERS COMPANY

v

SEA LAND SERVICE INC

Application for pennission to refund a portion of ilie

freight charges granted

DECISION OF RONALD J NIEFORTH SETILEMENT OFFIC

By complaint riled February 7 1977 Bristol Myers Company 

plainant seeks a refund of freight overcharges in the sum of 2 5 

collected by Sea Land Service Inc carrier for the trartsportati

merchandise shipped from Port Elizabeth New Jersey to Port of S

Trinidad aboard the SS JACKSONVILLE sailing March 27 1975 

Bill of Lading Shipper Reference 403171

Inresponse to this docket the carrier has stated in its reply of Feb

18 1977 that the overcharge claim is correct and that payment i

Bristol Myers The carrier further stated that it previously declin

refund the overcharge for the reason that such action wastime barr

the freight tariff

The shipment at issue moved under the rates terms and cond

published in the Leeward Windward Islands Guianas Confe

Freight Tariff F MC No I ofwhich the carrier is listed as partici

member line As alleged by the carrier Rule 105 of this tariff provid

part that claims by shippers for adjustment of freight charges w

considered only when submitted in writing to the carrier within a 

ofsix months following shipment As noted above the merchand

issue was transported aboard the SS JACKSONVILLE Voyage 

overone year ago

A review ofthe complainant s rate audit and the applicable tariff c

supports the complainant s allegation that rates other than those pro

for in the tariff were applied thus resulting in an overcharge amo

2 588 74

I Both partie havlna consented to the informal procedure of Rule 19 of the Commission s Rulos of Pra

Procedure 46 CPR 502 301 304 this decision wUl be final unless tho Commission elects to review it with

from the dateofsorvice thereof Note Notice of determination not to review April 22 1977

762 19 F 
BRISTOLMYERS CO v SEA LAND 763

In instances where the misapplication of a rate s has occurred as in

this docket the restrictive condition contained in the above rule runs

afoul of section 18 b 3 Shipping Act 1916 which prohibits the

assessment of other than that rate s specified in the applicable tariff on

me with the Commission and duly published and in effect at the time

Section 22 ofthe Act on the other hand provides aperiod of2 years in

which aperson may me acomplaint setting forth any violation ofthe Act

The remedy to this dilemma lies in the complainant seeking redress before

the Commission as reflected in the instant docket

Based upon the foregoing commentary and areview of the applicable

tariff which clearly supports the validity of the overcharge as alleged by

the complainant and consistent with the carrier s concurrence in letter

of February 18 1977 Sea Land Service Inc is directed to promptly

refund the complainant the sum of 2 588 74 in full settlement of the

complainant s claim underthis docket

S RONALD J NIEFORTH

Settlement Officer

19 F M C
FEDERAL MARITIME COMMISSION

INFORMAL DocKET No 386 1

GTE INTERNATIONAL INC

v

ATLANTIC LINES LTD

NOTICE OF DETERMINATION NOT TO REVIEW

April 22 1977

Notice is hereby given that the Commission on April 22 1

determined not to review the decision of the Settlement Officer in 

proceeding served April IS 1m

By the Commission

S JOSEPH C PoLKING

Acting Secreta

764 19 F 
FEDERAL MARITIME COMMISSION

INFORMAL DocKET No 386 1

GTE INTERNATIONAL INC

v

ATLANTIC LINES LTD

DISMISSAL OF COMPLAINT

and

DISCONTINUANCE OF PROCEEDING

By complaint fded February 28 1lJ77 GTE International Inc Com

plainant states that Atlantic Lines Ltd Carrier refused to honor an

otherwise legitimate overcharge claim of 139 26 solely on the basis of

Item 105 of the Leeward and Windward Island Guianas Conference

Freight Tariff FMC No I which prohibits the payment of overcharge

claims not presented to the Carrier within six months after the date ofthe

shipment

The complaint was served upon the Carrier on March 7 1977 no

response has been received

By letter dated March 29 IlJ77 the Complainant advised the under

signed that it had received a refund check from the Carrier in the amount

of 139 26 as full settlement for Informal Docket No 386 1 The

Complainant also requ sted that this docket be withdrawn

A review of the complaint support documentation and the involved

tariff confrrms the Complainant s overcharge allegation and justifies the

Carrier s refund action Accordingly the subject complaint is dismissed

and this proceeding discontinued

S WALDO R PuTNAM

Settlement Officer

19 F MC 765
FEDERAL MARITIME COMMISSION

SPECIAL DocKllT No 486

P C INTERNATIoNAL INC

v

SEA LAND SE VICE INC

NOTICE OF ADOPTION OF INITIAL DECISION AND ORDE

PERMITIING WAIVER OF CHARGES

April 22 1977

No exceptions having been taken to the initial decision in 

proceeding and the Commission havingdetermined not to review s

notice is hereby given that the initial decision became the decision o

Commission on April 22 1977

It is Ordered That applicant is authorize to waive pollectio

2 500 00 ofthe charges previously asse lsed P C International Inc

It is further Ordered That applicant shall publish promptly i

appropriate tariff the following notice

Notice is hereby given as required by the decision of the Federal Mar

Commission in Special Docket 486 that effective February 11 1976 for purpos

refund or waiver of freight charles on any shipments which lDay have been sh

during the period froll February 11 1976 thrQugh February 26 1976 the ra

Plywood is 55 75 W subject to all appIlcablerules regulations terms and cond

of said rate and this tariff

Itis further Ordered That waiver ofthe charges shall be effectu

within 30 days of service ofthis notice and applicant shall within 

days thereafter notify the CommIssion of the date and manne

effectuating the waiver

By the Commission

S JOSEPH C PoLKINO

Acting Secretar

766 19 F
FEDERAL MARITIME COMMISSION

SPECIAL DocKET No 486

P C INTERNATIONAL INC

v

SEA LAND SERVICE INC

Appliction granted

INITIAL DECISION OF THOMAS W REILLY

ADMINISTRATIVE LAW JUOOE

Pursuant to section 18b 32 of the Shipping Act 1916 as amended by

P L90 and section 502 92 ofthe Commission s Rules ofPractice and

Procedure 46 CFR 502 92 Sea Land Service Inc Sea Land or

Applicant has applied for permission to waive collection ofa portion of

the freight charges on three shipments ofplywood that moved from New

Orleans Louisiana to Bremen Germany under Sea Land bills of lading

dated February 20 1976 The application wasfJIed August 16 1976

The subject shipment moved under Gulf European Freight Association

GEFA Agreement No 93603 Tariff No 2 FMC 2 3d revised page

83A effective February 20 1976 under the rate for the item Lumber

and timber viz Plywood in bundles cases or crates The

aggregate weights ofthe three shipments were 42 112 pounds 18 8 tons

of 2240 pounds 39 818 pounds 17 776 tons and 39 818 pounds

respectively The rate applicable at time ofshipment was 10175 per ton

of2240 pounds The rate sought to be applied is 55 75 per ton of2240

pounds GEFA Agreement No 93603 Tariff No 2 FMC2 4th revised

page 83 A correction 340 effective February 26 1976 for the item

Lumberand timber viz Plywood ale Combi Line and Sea Land

Aggregate freight charges payable at the rate applicable at time of

shipment amounted to 5 566 65 including wharfage Aggregate freight

charges at the rate sought to be applied amount to 3 066 65 including

whiufage The differeneesought to be waived is 2 500 The Applicant is

not aware ofany other shipment ofthe same commodity which moved

1

This decision became the decision of the Commission April 22 1977

246 U S C 817 as amended

19 F MC 767
768 FEDERAL MARITIME COMMISSION

via Sea Land during the same time period at the rates involved in 

application

Sea Land offers the following as grounds for granting the applicatio

4 At the time of shipment plywood was an open rated commodity in TariffN

FMC 2 issued by the Qulf European Freiabt Association OEFA and applying 

U S Oulf ports including New Orleans to Continental European ports inclu

Bremen and Bremerhaven Oermany For a period of time extending several m

prior to February 1976 Combl Line had maintained a rate on this commodity of 

per ton of 2 240 Ibs whereas Sea Land s rate to Bremen was 10175 as shown o

Revised Page 83 A Attachment No I and prior revised pages to this tariff an

predecessor Tariff No I FMC1

Sea Land s sales department negotiating in early February with the shipper was 

to obtain a booking of several contalnerloads predicated on meeting the Combi L

rate of 55 75 Booking was made for a sailing from New Orleans on or about Feb

20 On February 11 Sea Land s pricing department followed through by giving v

instructions to the OEFA office to reduce the Sea Land rate to 55 75 effecti

quickly as possible Unfortunately throullh clerical error OEFA failed to fil

reduced rate as requested This failure to publish was discovered by Sea Lan

February 26 Immediate verbal Instructions were then given to OEFA to rectif

oversight and telegraphic mlng of the rate was made effective the same date pe

Revised Page 83A Attachment No 2

The cletlcal error by OEFA to publish the rate as originaUy instructed by Sea La

confirmed by letter dated July 20 1976 by the chairmansecretary addressed to 

Land Attachment No 3

Section 18b 3 oftheShippinl Act 1916 46 USC 817 as amende

Public UlW 90298 and Rule 6b Special DocketApplications R

Practice and Procedure 46 CFR 502 92 a set forth the applicable 

and regulation The pertinent portion of A 18bX3 provides that

The Commission may In its discretion and for good cause shown per

common carrier by water in foreign commerce to refund a portion of freight ch

collected from a shipper or wlive the collection of a portion of the charles fr

shipper where it appears that there is an error in a tariff of a clerical or administ

nature or an error due to an inadvertence In falllng to me a new tar1ft llId that 

refund or waiver will notresult in discril1l1nation among shippers Provided further 

the common carrier has prior to applying to make refund flied iI new tariffwit

Commission which sets forth the rate on which such refund or waiver wou

based and Application for refund orwaiver must be med with the Commi

within 180 days from the date of shipment

The clerical and administtative errorNcited in th subject applicatio

of the type within the intended scpe of coverage ofsection 18b 

the Act and section 502 92 of the Commission s Rules of Practice 

Procedure

Therefore upon consideration of the documents presented by 

Applicant it is found that

1 There was an error in a tariff of a clerical or administrative na

resulting ill the inadvertent f8llUr eto tinely me the reduced rate tari

had been promised the shipper

For otbor provilions and requirements seo f 18bX3 and I 501 92 f the Comin flalo Rules of fraclt

Procedure 46 CPR 500 920e

19 F 
P C INT L INC v SEA LAND 769

2 Such a waiver of collection ofa portion ofthe freight charges will

not result in discrimination among shippers

3 Prior to applying for authority to waive collection ofaportion ofthe

freight charges Sea Land filed anew tariff which set forth the rate on

which such waiver would be based

4 The application was fued within 180 days from the date ofthe subject

shipment

Accordingly permission is granted to Sea Land Service Inc to waive

collection of aportion ofthe freight charges specifically the amount of

2 500

S THOMAS W REILLY

Administrative Law Judge

WASHINGTON D C

March 24 1977

19 F M C
FEDERAL MARITIME COMMISSION

INFORMAL DocKEt No 371 1

WHITE WESTINGHOUSE INT L CO FOR N V TECHNISCHE

HANDELMAATSCHAPPIZ

v

SEA LAND SERVICE INC

DISMISSAL OF PROCEEDING1

May 2 1977

White Westinghouse Intl Co complainant med this informal 

plaint against Sea Land Service Inc respondent which cover

movement of 84 cartons of household refrigerators weighing 2

pounds and measuring 3 523 cubic feet via respondent on the JACKS

VILLE bill of lading number 901629225 on September 17 1975 

New York New York to N V Technische Handelmaatschapp

Curacao Netherland Antilles On January 20 1977 respondent cons

to the informal procedure of Rule 19 a of the Commission s Rul

Practice and Procedure 46 CPR 502 301 304

Complainant seeks reparations of 1 233 05 from respondent 

respect to the subject movement the rates for SaDIe being in the U

States Atlantic and Gulf Venezuela and Netherlands Antilles Confer

S B YEN 11 Freight Tariff F M C No 2 The claim wasmed wit

respondent on August 20 1976 within two years from the date the 

ofaction arose i e September 17 1975 and must be considered 

merits as ruled by the Commission in Colgate Palmolive Compa

United Fruit Company Informal Docket No 115 served Septe

30 1970

The claim has already been settled between the parties by the sub

by respondent to complainant of a check dated January 31 1977 

amount of 1 233 05 the full amount ofthe claim Complainant ad

ofthe receipt ofsaid check in its letter ofMarch 21 1977 For the sa

good order the settlement involved the matters discussed below

On September 2 1976 respondent denied the subject claim me

t Both parties bavlllJ consented to tho Informal procedure of Rule 19 46 CPR 02 301 304 al amen

decision wU1 be final unles theCommission elects to review it within l days from thedate of lervice there

770 19 F 
WHITE WESTINGHOUSE INT L CO v SEA LAND 771

August 20 1976 referring to Item 11 2nd Revised Page 12B of the

conference tariff which states

claims by shippers for adjustment of freight charges will be considered only when

submitted to writing to the carrier within six months of the date of shipment

This claim is not governed by the six month rule but by the two year

principle referred to in Colgate Palmolive Company v United Fruit

Company supra

The subject shipment was described on the bill oflading as 84 ems of

electric h h refrigerators weighing 20 639 pounds measuring 3 253 cubic

feet The tariff rate applies per ton of 40 cubic feet or 2 000 pounds

whichever produces the greater revenue The rate assessed was on a

measurement basis for 88 075 measurement tons Item 490 of the

conference tariff contains a contract rate to Curacao Group A of 580

per WM ton for Household Refrigerators K D which the respondent

assessed Le 580 88 075 5 152 39 To this were added Landing

Storage and Delivery Charges to Curacao Item 9 oftarift on Cargo

N O S of 1100 per freight ton Le 1100 88 075 968 83 The total

freight and charges assessed complainant was 6 12122

Complainant based its complaint on lower rates and charges Item 490

ofthe conference tariff also contains acontract rate to Curacao Group

A of 50 00 per W M ton for Household Refrigerators S U which

complainant states should have been assessed ie 50 00 88 075

4 403 75 To this complainant adds Landing Storage and Delivery

Charges to Curacao Item 9 of tariff on Cargo in carrier s containers

stripped by consignee at an off terminal location of 502 per freight ton

Le 50 88 075484 41 The total freight and charges complainant

alleges that should have been assessed was4 888 16

Rates and charges assessed nn nn

nn un uuu 6 121 22

Rates and charges applicable per complainanL u u u 4 888 16

Amount of claim u un

u un 1 233 06

On December 13 respondent received the notice of our intent to

process this claim In its January 20 I1J77 response authorizing process

ing by aSettlement Officer respondent advised

Upon investigation we find the claim to be in order for refund of 1 233 05 and are

placing it in channels for payment

In view of the prompt settlement of the claim by check dated January

31 I1J77 after its fIling with the Commission on November 12 I1J76 it

appears that the parties had no difficulty as to the facts involved

However verifIcation that the refrigerators were set up subjecting

them to the lower rate appeared to be the only matter concerning which

available information was incomplete

I Attention is called to the fact that Landing Storage and DoIivery Charges assessed on Cargo N O S were 11 00

per freight ton The same charges covering Cargo in carriers containers stripped by consignee at an off terminal

locationare only 5 50per freight ton Item9 oftarift

19 F MC
772 FEDERAL MARITIME COMMISSION

In response to our inquiring complainant advised by letter ofM

31 1m that household refrigerators we shipped are ready for use 

therfore would be considered to be set lP per your statement 

24th instance Complainant further advised that it manufacture

household appliances it sold and submitted a

copy of the dock r

and its invoice dated September 4 1975 covering the subject ship

The invoice clarifies that the consignee was billed for 84 refriger

each packed in a separate carton Fifty one cartons measured 32 x 

67 19 cartons measured 34 x 32 x 63 and 14 cartons measured 

34 x 66 These are definitely uniform measurements ofrefrigerator

up

Respondent has advised that a check for the full amount ofthe 

1 233 05 has been given to complainant and complainant has ack

edged receipt of same Accordingly the proceeding is dismissed

S JUAN E PINE

Settlement Offic

19 
19 F M C 773

FEDERAL MARITIME COMMISSION

INFORMAL DoCKET No 371 1

WHITE WESTINGHOUSE INT LCO FOR N V TECHNISCHE

HANDELMAATSCHAPPIZ

v

SEA LAND SERVICE INC

NOTICE OF DETERMINATION NOT TO REVIEW

May 23 1977

Notice is hereby given that the Commission on May 12 1977

determined not to review the decision of the Settlement Officer in this

proceeding served May 2 1977

By the Commission

SEAL S JOSEPH C POLKING

Acting Secretary
FEDERAL MARITIME COMMISSION

DocKET No 7662

PuBLICATION OF INACTIVE TARIFFS BY INDEPENDENT CARRIERS IN 

FOREION COMMBllCIl OF THE UNITED STATES

ORDER

1

May Z 1977

This proceeding bepn with the i 8uance of an Ordor to Show 

directed to 38 nonconferonce nonvossol operating common carrie

water in the foreign commerce ofth United States Respondents 

carriers were directed to demonstrate that the tariffs they had med 

the Commission in fACt described an active bona fide offeri

transportation serviOI to the public or suffer the cancellation of 

tariffs

Thirty 30 of the Relpondents did not reply to the Show Cause 

and the Commission s Invitation to subInit supporting aftidavits o

and memoranda of law contained therein

Eight Respondents did me information of some type but none of 

even alleged that they wore actively soliciting or providing com

carrier services

Imperial Van Lines WDlIOn Container Co Inc and IASL Corpo

have canceled the tariffs alleged to describe an essentially fictitio

suspended service thereby mooting any controversy pertaining t

tariffs

Transocean Container Service Co Ltd has stated that it wish

tariffs to be canceled ThIll request shaI1 be accommodated by the i

Order

Requests for noncancollation were received from Trans Globe Sh

Co Trans Globe Speelalized Transportation Sales Inc STS 

International Inc posey and W R Zanes and Co of Louisiana 

Zanes A reply to these requests was med by the ComInission s B

ofHearing Counsel which fllvored cancellation of all but Zanes tar

The Commission is of the view that neither Trans Globe STS 

774 19 
PUBLICATION OF INACTIVE TARIFFS 775

nor Zanes are performing as common carriers by water in the trades

listed in the tariffs now under examination It is misleading to the public

potentially unfair to competing carriers and an administrative burden

upon our staff for paper tariffs to be kept on fIle available for possible

use if it should suit the narrow purposes of the persons issuing them to

quickly enter the trade but otherwise describing a nonexistent service

We construe such asituation as contravening the implicit requirements of

Shipping Act section 18b subsections 1 through 3 which necessitate

the prompt submission of accurate information concerning the services

offered by a common carrier including the suspension of all or any part

of the operations described by its published tariffs See Embargo on

Cargo North Atlantic and GulfPorts 2 U S M C 464 465 1940

Intercoastal Schedules ofHammond Shipping Co Ltd I U S S B 606

607 1939 Carriers Transporting Sugar from Virgin Islands to the

United States IU S M C 695 699700 1938 Intercoastallnvestiga

tion 1935 IU S S B 400 449 1935

Trans Globe has without explanation amended its tariff to include

Japan and South Korea in the range ofports served and substitute NOS

rates for several specific commodity rates Mere physical changes in a

tariff cannot substitute for the performance of common carrier service

Until Trans Globe intends to actively engage in such service it should

not maintain a tariff on filewith the Commision Ghezzi Trucking Inc

Cancellation ofInactive Tariffs 13 F M C 253 255 1970

Posey states that it has been inactive as a common carrier because

local ocean carriers do not publish Freight All Kinds FAK rates but

that one such carrier might begin accepting FAK cargo shortly Until

such time as Posey is actually able to perform as a common carrier it too

should not be permitted to maintain an inaccurate and incomplete tariff

on fIle with the Commission When and if the local ocean carriers publish

aFAK rate Posey can readily submit a current tariff

STS states that it has been quoting from its tariff and is in the

process of increasing some of its published rates In the absence of

evidence describing the exact nature and extent of this quoting we

have no basis for concluding that STS is actively soliciting what is more

offering common carrier services and shall cancel its tariffs

Zanes admits it is not an active common carrier but states that it has

been prevented from obtaining business by the International Longshore

men s Association s 50mile container stuffmg rule Now that this rule has

been overturned by the National Labor Relations Board Zanes is

seriously considering the activation of a common carrier service As in

the case of Posey once Zanes is prepared to actually commence common

carrier service it may readily fIle a tariff describing the service and rates

itwill be offering at that time

WHEREFORE IT IS ORDERED That the tariffs of the thirty five

carriers listed in the attached Appendix are hereby canceled provided

that this cancellation shall be without prejudice to said carriers fIling new

19 F MC
776 FEDERAL MARITIME COMMISSION

tariffs when they are prepared to begin bona fide operations as com

carriers in the foreign commerce of the United States

By the Commission

S JOSEPH C PoLKING

Acting Secreta

19 F
19 F M C 777

FEDERAL MARITIME COMMISSION

DoCKET No 762

BORDEN INTERAMERICA INC

v

VENEZUELAN LINE

ORDER

May 13 1977

In our January 10 1977 Report and Order in this proceeding we

allowed the parties additional time in which to submit further evidence

concerning 1 the standing ofthe Complainant to receive reparations and

2 the value ofthe goods shipped

Complainant filed an Amended Complaint stating that its proper

name was Borden Interamerica Inc and that Borden Interamerica Inc

actually paid the freight charges for the disputed shipment

Venezuelan Line fIled a Reply to the Amended Complaint wherein it

argued only that the terms of Borden s sales invoice bearing the

incomplete date of 2873 were not sufficiently clear to establish the

precise value per ton ofthe chemicals shipped Venezuelan Line also

stated that the value designation applied at the time of shipment 300 to

500 per ton was based upon an Export Declaration provided to its

Charleston South Carolina agent by an employee of the Complainant

The agent s copy of this document has been misplaced however and

was not furnished to the Commission

Complainant did not reply to these allegations or produce its copy of

the Export Declaration It has also failed to introduce evidence which

corroborates or verifies the accuracy of the 217 14 per ton value

indicated by the 1973 invoice

In circumstances such as these where critical information concerning a

disputed shipment is entirely in the possession of the shipper the

Commission has consistently required clear proof that the original

shipping documents were in fact erroneous before holding that the carrier

has violated Shipping Act section 18b 3 In the absence of evidence

corroborating the 1973 sales invoice or rebutting Venezuelan Line s

statements that a higher value was stated by the shipper on Export
S JOSEPH C POLI

Acting S
FEDERAL MARITIME COMMISSION

SPECIAL DocKET No 495

UNIVERSAL NOLIN UMC INDUSTRIES INC

v

SEA LAND SERVICE INC

NOTICE OF ADOPTION OF INITIAL DECISION AND ORDER

PERMITTING WAIVER OF CHARGES

May 11 1977

No exceptions having been taken to the initial decision in this

proceeding and the Commission having determined not to review same

notice is hereby given that the initial decision became the decision ofthe

Commission on May II lW7

Itis Ordered That applicant is authorized to waive collection of

870 19 of the charges previously assessed Universal Nolin UMC

Industries Inc

It is further Ordered That applicant shall publish promptly in its

appropriate tariff the following notice

Notice is hereby given as required by the decision of the Federal Maritime

Commission in Special Docket 495 that effective May I 1976 for purposes of refund or

waiver of freight charges on any shipments which may have been shipped during the

period from May I 1976 through June 25 1976 the rate on Milk Coolers with

Refrigeration Equipment including Fans to Group I port is 6650 WM subject to all

applicable rules regulations terms and conditions of said rate and this tariff

Itis further Ordered That waiver ofthe charges shall be effectuated

within 30 days of service of this notice and applicant shall within five

days thereafter notify the Commission of the date and manner of

effectuating the waiver

By the Commission

S JOSEPH C POLKING

Acting Secretary

19 F M C 779
FEDERAL MARITIME COMMISSION

SPECIAL DocKeT No 495

UNIVERSAL NOLIN UMC INDUSTRIES INc

v

SEA LAND SERVICE INc

Application granted

I

I

I

INITIAL DECISION OF THOMAS W REILLY

ADMINISTRATIVE LAW JUDGE

Pursuant to section 1 l3

Z

of the Shipping Act 1916 as amende

P L90298 and sec on 502 9h fthe Comniission sRulesacti

and Procedure 46 CFR 502 92 Sea Land Service Inc Sea Lan

Aplicant has applied for permission to waive collection of aporti

the freight charges on two shipments of milk coolers which move

Sea Land s mini landbridge service from New Orleans Louisian

Tokyo Japan by way of Oakland Califo ia rail New Orlea

Oakland The two shipments moved underSea Land bills oflading 

May 13 1976 The application wasmed November 8 1916 Waiver o

charges involved herein wollld affect only the ocean carrierll portion

The subject shipments moved under Sea Land s westbound USA 

East Joint Container Freight Tariff No 234 FMCl06 ICC92 

719 153630 3rd revised page 507 effective May I 1976 The agg

weight of the two shipments was 22 270 pounds and their aggr

measurement was 3315 cubic feet The rate applicable at time of ship

was 77 per ton of 40 cubic feet or 2000 pounds whichever yield

greater revenue The rate sought to be applied is 66 50 per ton 

cubic feet or 2000 pounds whichever is greater per the saroe tariff 

as cited above except see 7th revised page 507 effective June 25 

Aggregate freight charges for the two shipments payable pursua

the rate applicable at the time of shipment amounted to 6 56

including handling charges Aggregate freight charges at the rate soug

be applied amount to 5 692 57 including handling charges The diffe

sought to be waived is 870 19

I

ThIs decision became the decision ortbe Conums8ion May 11 1977

146 U SC 817 as amended

780 19 F 
UNIVERSAL NOLIN UMC v SEA LAND 781

Except for the four shipments involved in Special Docket 492 Toei

Kogyo Co v Sea Land the Applicant is not aware of any other

shipments ofthe same commodity which moved via Sea Land during the

same time period at the rates involved in this application

Sea Land offers the following as grounds for granting the application

4 Sea Land Tariff No 234 FMC No 106 and ICC No 92 naming mini Iandbridge

rates from U S Atlantic and Gulf seaport cities to Far East ports was a reissue of

Tariff No 201 FMC No 74 and ICC No 72 which became effective September 15

1975 On original page 507 Attachment No I

it brought forward without change a

special rate of 66 50 W Min Item No 719 153630 applying to Japan Group I ports

including Tokyo as provided in Rule No 5 This rate had initially been established to

meet the same total rate published by a competing carrier in its mini Iandbridge tariff

The rate was subject to an expiration date of January 31 1976 as explained in Rule No

10 on original page 86 Attachment No 2 The expiration date was subsequently

extended to June 30 and July 31 1976 on 1st revised page 507 3rd 4th and 5th revised

pages 86 Attachment No 3

In February 1976 a shipper of milk coolers requested Sea Land s sales representative

to extend the 6650 rate to December 31 1976 so that he could continue to sell his

products competitively with local Japanese manufacturers The sales representative

proposed this request by letter dated February 13 1976 Attachment No 4 It was

approved by Sea Land s Pacific Division pricing headquarters in Oakland and the

shipper so informed verbally on February 20 Instructions to publish the extension of

the expiration date were teletyped March 30 to the Elizabeth N J office for processing

through the tariffpublishing officer Attachment No 5

Concurrently Sea Land was processing a general increase in rates to become effective

May I 1976 in Tariff No 234 corresponding to a similar general increase in all water

rates taken by the Far East Conference Special rates which Sea Land had agreed to

maintain in effect to a date beyond May I were of course not to be subjected to a

general increase Unfortunately due to administrative error Sea Land failed to except

Item No 719 1536 30 from the general increase and the rate of 66 50 was increased to

77 00 on 3rd revised page 507 Attachment No 6 On June 23 this error was

discovered by pricing personnel and it was corrected by immediate filing of 7th revised

page 507 Attachment No 7 with an effective date of June 25 The shipments here

involved Attachment No 8 moved during the period of time the erroneous rate of

77 00W Mwas in effect

Section 18b 3 ofthe Shipping Act 1916 46 USC 817 as amended by

Public Law 90298 and Rule 6b Special DocketApplications Rules of

Practice and Procedure 46 CPR 502 92 a set forth the applicable law

and regulation The pertinent portion of 18b 3 provides that

The Commission may in its discretion and for good cause shown permit a

common carrier by water in foreign commerce to refund a portion of freight charges

collected from a shipper or waive the collection of a portion of the charges from a

shipper where it appears that there is an error in a tariff of a clerical or administrative

nature or an error due to an inadvertence in failing to file a new tariff and that such

refund orwaiver will notresult in discrimination among shippers Provided further That

the common carrier has prior to applying to make refund filed a new tariffwith the

Commission which sets forth the rate on which such refund or waiver would be

based and Application for refund orwaiver must be filed with the Commission

within 180 days from the date of shipment 3

8 For other provisions and requirements see l8b 3 and 502 92 of the Commission s Rules of Practice and

Procedure 46 CPR 502 92 a c

19 FM C
782 FEDERAL MARITIME COMMISSION

The clerical and administrative error recited in the subject applicat

of the type within the intended scope of coverage of section 18b 

the Act and section 502 92 of the Commission s Rules of Practic

Procedure

Therefore upon consideration of the documents presented b

Applicant it is found that

1 There was an error in a tariff of a clerical or administrative n

resulting in the inadvertent failure to except the subject commodity 

from the general rate increase as had been promised the shipper

2 Such awaiver of collection of a portion ofthe freight charge

not result in discrimination among shippers

3 Prior to applying for authority to waive collection ofaportion 

freight charges Sea Land tiled anew tariff which set forth the rate 

which such waiver would be based

4 The application was tiled within 180 days from the date ofthe s

shipment

Accordingly permission is granted to Sea Land Service Inc to 

collection of a portion of the freight charges specifically the amo

870 19 An appropriate notice will be published in Sea Land s tariff

S THOMAS W REILLY

Administrative Law Jud

WASHINGTON D C

April 14 1977

19 
S JOSEPH C POLKING

Acting Secretary

FEDERAL MARITIME COMMISSION

SPECIAL DOCKET No 492

TOE KOGYO Co LTD

v

SEA LAND SERVICE INC

NOTICE OF ADOPfION OF INITIAL DECISION AND ORDER

PERMITTING REFUND AND WAIVER OF CHARGES

May 11 1977

No exceptions having been taken to the initial decision in this

proceeding and the Commission having determined not to review same

notice is hereby given that the initial decision became the decision ofthe

Commission on May II 1977

It is Ordered That applicant is authorized to refund and waive

collection of 953 67 ofthe charges previously assessed Toei Kogyo Co

Ltd

It is further Ordered That applicant shall publish promptly in its

appropriate tariff the following notice

Notice is hereby given as required by the decision of the Federal Maritime

Commission in Special Docket 492 that effective May I 1976 for purposes of refund or

waiver of freight charges on any shipments which may have been shipped during the

period from May I 1976 through June 25 1976 the rate on Milk Coolers with

Refrigeration Equipment including Fans to Group I port is 66 50 WM subject to all

applicable rules regulations terms and conditions of said rate and this tariff

It is further Ordered That refund and waiver of the charges shall be

effectuated within 30 days of service ofthis notice and applicant shall

within five days thereafter notify the ComInission ofthe date and manner

ofeffectuating the refund and waiver

By the Commission

19 F M C 783
FEDERAL MARITIME COMMISSION

SPECIAL DoCKET No 492

TOEI KOGYO Co LTD

v

SEA LAND SERVICE INC

Application granted

I

INITIAL DECISION 1 OF THOMAS W REILLY

ADMINISTRATIVE LAW JUDGE

Pursuant to section 18b 3

2

ofthe Shipping Act 1916 as amend

P L90298 and section 502 92 of the Commission s Rules of Pra

and Procedure 46 CFR 502 92 Sea Land Service Inc Sea La

Applicant has applied for permission to refund a portion ofthe fr

charges on one shipment of milk coolers and to waive collection 

portion ofthe freight charges on three other shipments ofmilk coole

of which moved via Sea Land s mini landbridge service from 

Orleans Louisiana to Tokyo Japan via Oakland California b

New Orleans to Oakland between May 4 and June 28 1976 The 

shipments moved under Sea Land bills oflading dated May 4 Ma

May 28 and June 11 1976 respectively The application wasfIled Oc

29 1976 Refund or waiver of the charges involved herein would 

only the ocean carrier s portion

The subject shipments moved under Sea Land s westbound USA 

East Joint Container Freight Tariff No 234 FMC I06 ICC 92 

719 153630 3rd revised page 507 effective May 1 1976 The aggr

weights ofthe four shipments were respectively 3329 pounds 8850 

and 8922 pounds In the same chronological order they measure

cubic feet 1315 1040 and 1123 cubic feet The rate applicable at tim

shipment was 77 per ton of 40 cubic feet or 2000 pounds which

yields the greater revenue The rate sought to be applied is 66 50 pe

of40 cubic feet or 2000 pounds whichever is greater per the same 

page as cited above except see 7th revised page 507 effective Jun

1976

I

This decision became the decision of the Commission May 11 1977

246 VS C 817 as amended

784 19 F 
TOEI KOGYO CO v SEA LAND 785

Aggregate freight charges payable pursuant to the rate applicable at the

times of shipment amounted to respectively 317 76 inelu handling

charge 2 531 38 2 002 00 and 2 302 16 inelu handling charge

Aggregate freight charges at the rate sought to be applied amount to

277 07 inelu handling 2 186 19 1 729 00 and 2 007 37 inelu

handling The differences sought to be waived or refunded total 953 67

There were only two other shipments of the same commodity which

moved via Sea Land during the same time period at the rates involved in

this application Those other two shipments are the subject of another

Special Docket application S0495 Universal Nolin UMC Industries v

Sea Land because there the shipper rather than the consignee bore the

freight charges and would be the proper beneficiary of any waiver of

collection or refund That other application involves the same commod

ity origin and destination shipper and consignee

Sea Land offers the following as grounds for granting the application

4 Sea Land Tariff No 234 FMC No 106 and ICC No 92 naming mini Iandbridge

rates from U S Atlantic and Gulf seaport cities to Far East ports was a reissue of

Tariff No 201 FMC No 74 and ICC No 72 which became effective September 15

1975 On original page 507 Attachment No I it brought forward without change a

special rate of 66 50 W M in Item No 719 1536 30 applying to Japan Group I ports

including Tokyo as provided in Rule No 5 This rate had initially been established to

meet the same total rate published by a competing carrier in its mini Iandbridge tariff

The rate was subject to an expiration date of January 31 1976 as explained in Rule No

10 on original page 86 Attachment No 2 The expiration date was subsequently

extended to June 30 and July 31 1976 on 1st revised page 507 3rd 4th and 5th revised

pages 86 Attachment No 3

In February 1976 a shipper of milk coolers requested Sea Land s sales representative

to extend the 66 50 rate to December 31 1976 so that he could continue to sell his

products competitively with local Japanese manufacturers The sales representative

proposed this request by letter dated February 13 1976 Attachment No 4 It was

approved by Sea Land s Pacific Division pricing headquarters in Oakland and the

shipper so informed verbally on February 20 Instructions to publish the extension of

the expiration date were teletyped March 30 to the Elizabeth N J office for processing

through the tariff publishing officer Attachment No 5

Concurrently Sea Land was processing a general increase in rates to become effective

May I 1976 in Tariff No 234 corresponding to a similar general increase in all water

rates taken by the Far East Conferences Special rates which Sea Land had agreed to

maintain in effect to a date beyond May I were of course not to be subjected to the

general increase Unfortunately due to administrative error Sea Land failed to except

Item No 719 1536 30 from the general increase and the rate of 66 50 was increased to

77 00 on 3rd revised page 507 Attachment No 6 On June 23 this error was

discovered by pricing personnel and it was corrected by immediate filing of 7th revised

page 507 Attachment No 7 with an effective date of June 25

The erroneous rate of 77 00W M was in effect from May I through June 24 In

addition to the shipment described in paragraph I Attachment No 8 on which

permission to refund 40 69 is sought there were three additional shipments as shown in

Attachment No 9 on which permission is sought to waive collection of a portion of the

charges The rate of 77 00W M was assessed but the consignee paid charges based on

the rate of 6650W M on each

Section 18 b 3 ofthe Shipping Act 1916 46 use 817 as amended by

Public Law 90298 and Ru1e 6 b Special Docket Applications Ru1es of

19 F MC
786 FEDERAL MARITIME COMMISSION

Practice and Procedure 46 CFR 502 92 a set forth the applicable 

and regulation The pertinent portion of 18b 3 provides that

The Commission may in its discretion and for good cause shown per

common carrier by water in foreign commerce to refund a portion of freight ch

collected from a shipper orwaive the collection of a portion of the charges fr

shipper where it appears that there is an error in a tariff of a clerical or administ

nature or an error due to an inadvertence in failing to file a new tariff and that 

refund orwaiver will not result in discrimination among shippers Provided further 

the common carrier has prior to applying to make refund filed a new tariffwi

Commission which sets forth the rate on which such refund or waiver wou

based and Application for refund or waiver must be filed withthe Comm

within 180 days from the date of shipment 3

The clerical and administrative error recited in the su ect applicati

of the type within the intended scope of coverage of section 18b

the Act and section 502 92 of the Commission s Rules of Practice 

Procedure

Therefore upon consideration of the documents presented by 

Applicant it is found that

1 There was an error in a tariff of a clerical or administrative na

resulting in the inadvertent failure to except the subject commodity 

from the general rate increase as had been promised the shipper

2 Such a refund orwaiver of collection respectively where applic

for the subject four shipments will not result in discrimination am

shippers

3 Prior to applying for authority to refund or waive collection 

portion ofthe freight charges Sea Land filed a new tariff which set 

the rate upon which the respective refund and waivers would be b

4 The application was fIled within 180 days from the date ofthe su

shipment

Accordingly permission is granted to Sea Land Service Inc to re

and waive collection as applicable of a portion of the freight cha

specifically in the total amount of 953 67 for the subject four shipm

An appropriate notice will be published in Sea Land s tariff

S THOMAS W REILLY

Administrative Law Judg

WASHINGTON D C

April 14 1977

3 For other provisions and requirements see f 18b 3 and 0 502 92 of the Commission s Rules of Pra

ProCedUIO 46 CFR 02 92 a c

19 F 
19 FM C 787

FEDERAL MARITIME COMMISSION

DOCKET No 7379

HOUSEHOLD GOODS FORWARDERS ASSOCIATION OF AMERICA INC ET

AL

v

AMERICAN EXPORT LINES INC SEA LAND SERVICE INC

U S LINES

Where different commodity descriptions are involved economic injury is not demon

strated and the choice of routing is entirely within the control of the underlying

shipper the mere fact that military household goods are transported at one rate

when shipped directly by the Military Sealift Command and at another rate when a

nonvessel operating common carrier intermediary is employed does not establish a

violation of Shipping Act section 17 first paragraph

Alan F Wohlstetter for Household Goods Forwarders Association of

America Inc

James N Jacobi for American Export Lines Inc

Edward M Shea for Sea Land Service Inc

Russel T Weil for United States Lines Inc

Dudley J Clapp Jr Milton J Stickles Jr and E Duncan Hammer

Jr for Military Sealift Command

Donald J Brunner and C Jonathan Benner Hearing Counsel

REPORT AND ORDER

May 18 1977

By THE COMMISSION Karl E Bakke Chairman Clarence Morse Vice

Chairman Ashton C Barrett Bob Casey and James V Day

Commissioners

In response to a petition by the Household Goods Forwarders

Association of America Inc HGFA the Commission issued aShow

Cause Order directing American Export Lines Inc AEL Sea Land

Service Inc Sea Land and United States Lines Inc USL to

demonstrate why the disparity between the rates at which containerized

military household goods are shipped by the Military Sealift Command

MSC and by privately owned nonvessel operating common carrier
788 FEDERAL MARITIME COMMISSION

NVO members of HGFA between U S Atlantic and Contine

European ports MSC Trade Route 5 should not be declared uqj

discriminatory within the meaning ofsection 17 ofthe Shipping Act 

Act

At the time this proceeding was commenced the rates Respond

charged MSC for household goods MSC rates were lower than the 

available to HGFA members NVO rates by some 100 to 300 

container without consideration of bunker fuel surcharges and low

about 90 to 400 per container ifbunker surcharges were included i

calculations The NVO rates were in turn considerably lower tha

commercial rates 1

HGFA promptly entered ajoint stipulation offacts with the respo

carriers Among the stipulations were the following Respondents 

each unsuccessfully attempted to persuade MSC to remove house

goods from the Cargo N O S cpmmodity classification and esta

a separate MSC household goods rate during RFP 800 1st c

household goods constituted 9 1 percent of the items moving u

MSC s Cargo N O S rate Respondents NVO rates are reason

transportation conditions do not warrant a substantial discrepanc

tween rates for military household goods shipped by MSC and 

shipped by NVO s

2

the NVO rate is available only for shipm

covered by Government Bills of Lading the Defense Department 

the total transportation cost for both NVO and MSC shipments and 

Defense Department itself determines whether a given shipment m

via MSC or via a NVO

In separately f1led memoranda oflaw Respondents focused on M

insistence that they carry household goods under a broad C

N O S classification when they would prefer to establish a sep

Household Goods rate 3

It was argued that Respondents coul

have violated section 17 because there is only one underlying shipp

and they have merely acquiesced in a commodity classification sc

I

Therate data in the Commission sShow Cause Order was based upon MSC s RFP 800 2nd cycle bids 

January t

1974 and all applicable bunker surcharaes MSC rates arc established for sixmonth periods 

through a competitive bidding procedure RFP System whilOlh classifies all cargo other than refrigerated and 

items as Cargo N D S These rates are expressed in dollars per measurement ton TheNVO rateis estab

Respondents aetina individually but all three carriers express their rates as aOat cbarlc per container or 

per cubic foot for partial loads and have quoted identical rates except for bunker surcharJCs since at lea

1972 The NVO rate is available for aU United States Government shipments it Is not frnlted to househo

owned by Defense Departmentpersonnel The commercial rate is established by the North AtIanticfContln

North AtlanticlFrench Freight Conferences It is expressed indollan perweisht ton overa

6 720 lb minimu

different rating systems make rate comparison difficult MSC and NVO rates canbe accurately compared 

measurement ton is fixed at 40 cubic feet and the MSCtariff lists averaaes of the internal capacity of the c

used by each carrier Comparison of the MSC or the NVO ratewith the commercial by weiaht charge is 

than science Educated estimates are possible if one knows the storqe characteristics of household looth 

figures are impossible unless bothweiahts and measurement fiaures are available on a

specific shipment

Z The parties stipulated to MSC NVO rate discrepancies based upon RFP 800 2nd cycle data withou

surcharges and stated that these discrepancies were substantial

3 MSC typically accepts bids on only three military commodities Refriaerated Vehicles and 

N D S

4 Only AEL and USL make the sinaJ e

shipper araument Sea Land believes two shippers are invo

suggests without providing any particulars that there are cost justifications for different MSC and NVO 

household goods

19 
HGFAA v AMERICAN EXPORT LINES 789

dictated by the Defense Department American Export Isbrandtsen Lines

Inc v Federal Maritime Commission 409 F 2d 1258 2d Cir 1969

Violations of Section 14 Fourth 16 First and 17 Bunker Fuel Sur

charges 15 F M C 92 1972 as essentially reversed by order published

at 13 S RR 526 1973

Respondents also claimed that their lower MSC rates are justified in

light of the mix oflow and high valued items carried thereunder the

legality or reduced rates to the sovereign and their compliance with the

Commission s General Order 29 5 Nonetheless Respondents urge the

Commission to take prospective action against MSC s use ofthe Cargo

N O S classification and re establish the separate rate for military

household goods which existed prior to 1966 when MSC switched to the

RFP system

Hearing Counsel and HGFA supported the Respondents in arguing that

the stipulated facts present a prima facie but prospective only

violation of section 17 6 N either Respondent HGFA nor Hearing

Counsel exercised their right to request an evidentiary hearing

The only discordant note was voiced by MSC which had been granted

leave to intervene MSC objected strongly to what they viewed as the

collusive nature ofthe proceeding the inadequacy ofthe joint stipulation

and the other parties apparent efforts to deprive MSC of an opportunity

to rebut their allegations MSC further stated that the real controversy is

not a Shipping Act matter but concerns a dispute between itself and

HGFA as to the cost efficiency of NVO door to door service In 1971

MSC began using direct procurement methods the RFP system to obtain

inland drayage of household goods in conjunction with the line haul

services of ocean carriers it has subsequently increased its reliance upon

this method oftransport at the expense ofthe Through Government Bill

of Lading orNVO method MSC considered the claim that NVO rates

are reasonable to be a sham in light ofpast HGFA contentions that these

rates are too high E g HGFA Opening Brief in FMC Docket No 73

22 Matson Navigation Company Proposed Changes in Rates MSC

also stressed the absence offacts in the Joint Stipulation which show that

Respondents have identifiable costs peculiarly attributed to the shipment

of household goods which necessitate a special MSC household goods

rate or that HGFA members have been injured by the rate disparities in

question MSC also subscribes to the one shipper theory on the

grounds that the bifurcated military cargo rate system being investigated

is entirely a product ofDefense Department procurement regulations the

government pays the ocean freight in both instances

Sea Land thereafter f1ed a Motion to Supplement the Record stating

s

46 CF R Part 549 prescribed a fullydistributed costs floor for military cargo rates beginning with RFP 700

January 1 through June 30 1972 These regulations were affirmed percuriam by the United States Court of Appeals

on December 19 1974 General Order 29 has generally been effective in curbing unrealistically low military cargo

rates in foreign commerce

6

Like Sea Land Hearing Counsel and HGFA believe there are two different shippers involved because the NVO s

stand in the position of shippers in their relationship with theRespondents

19 F MC
790 FEDERAL MARITIME COMMISSION

that the RFP 900 1st cycle rates were considerably higher than t

relied upon in the Commission s Show Cause Order RFP 800 

Cycle and if bunker surcharges were omitted the disparity betw

Sea Land s own MSC andNVO rates would be under 60 for bot

and 35 foot containers

In February 1976 the Commission took official notice of the fact 

RFP 1000 2nd Cycle MSC rates were then higher than Responde

NVO rates if bunker surcharges were excluded and ordered HGF

show cause why the proceeding should not be discontinued as moot

HGFA responded by first arguing the facts MSC rates change 

each RFP cycle and according to HCFA the critical problem i

continuation ofdifferent rates for different shippers ofidentical comm

ties not the exact amount ofthe rate disparity orwhich ofthe shippe

favored 7 HGFA then presented a lengthy supplemental argument ag

the invalidity ofany discount to government shippers in light ofthe r

of section 6 ofthe Intercoastal Shipping Act on October 26 1974 

93487

Hearing Counsel and Respondents also stated that the controversy 

not moot so long as military household goods rates could be shi

under two different rates However Respondents felt it necessary to 

company with HGFA on the section 6 issue All three carriers 

replies emphasizing that the Defense Department is sclely responsib

any disparities between MSC and NVO rates and that the repe

section 6 affected only domestic commerce rates

MSC also replied to HGFAs supplemental afguments MSC stated 

whatever the effect of section 6 s repeal it did not eliminate the De

Department s obligatiof Sto procure ocean transportation under com

tive conditions pursuant to the Armed Services Procurement Ac

U S C 2304 et seq or require that government rates be identic

commercial rates in all respects Finally MSC claimed that if 

Government shippers must be treated as commercial shippers 

respects it follows that foreign governments are also precluded 

receiving special rates even when they own the vessels carrying 

goods

DISCUSSION AND CONCLUSIONS

Inasmuch as rate disparities similar to those initially complain

continue to exist this somewhat questionable controversy is not 

and must be resolved upon its merits Because the Commission ha

been presented with a clear case of two shippers of like traffic m

under the same circumstances and conditions being charged diff

7 HOFA allO pointed out that by May 6 1976 all three Respondents would have increased theirNVO r

level hiaherthan their MSC rates

19 
HGFAA v AMERICAN EXPORT LINES 791

rates tothe detriment of one of them we hold that the stipulated facts

do not establish a violation of section 17 as a matter oflaw 8

All parties admit that the instant dispute is caused by the Defense

Department s decision to ship some ofits household goods viaMSC and

some via NVO s and to pay the entire transportation cost in either case

The tariffs Respondents publish to accommodate this practice are claimed

to be unjustly discriminatory on their face yet the relief demanded by

HGFA and Respondents alike is not the interdiction of a separate

Government Household Goods tariff which duplicatively includes

military cargo but the abolition of the Cargo N O S classification by

MSC at least insofar as it includes household goods Either approach

would eliminate discrimination The former would also lower the rate the

NVO s must pay The Commission has been furnished no basis for

choosing one solution over the other or for making any rmding ofunjust

discrimination

Nothing in the record indicates that MSC Cargo N O S and

Household Goods ofGovernment Personnel Shipped by NVO s Under

Government Bills of Lading are not different commodities for rate

making purposes Although both include military household goods each

commodity description legitimately includes other items as well The

Commission has heretofore accepted MSC s use of a Cargo N O S

classification for amyriad ofcommercially shipped commodities provided

that the rates charged recovered the carriers fully distributed costs This

approach at least partially reflects the national policies expressed in the

Armed Services Procurement Act and the various cargo preference laws

Absent evidence that MSC Cargo N O S is not a distinct commod

ity no discrimination can occur if it moves at different rates than some

of the individual items e g household goods ordinarily included in

MSC s total cargo mix

HGFA would distinguish the instant case from the disparate Defense

DepartmentState Department household goods rates approved by the

Second Circuit in American Export Isbrandtsen Lines Inc supra

because here the United States Government operates through an NVO

intermediary as to part ofits shipments thereby technically involving two

shippers It is true that NVO s are ordinarily treated as shippers in their

dealings with ocean carriers The special circumstances of this case

indicate however that the HGFA members are not operating independ

ently but as the alter ego of the Defense Department They are

contractually limited to the use of a military rate available only on

American Flag carriers when a Government Bill of Lading has been

issued pursuant to a conscious choice of routing by the Defense

8

PL 93487 does not directly affect this conclusion The repealof Intercoastal Shipping Act section 6 means that

rates and practices applicable to government and cbaritable cargoes must now be judged by the same standards as

commercial cargoes it does not forbid all differences in tbe treatmentof government and commercial shipments See

Department of Defense v Malson Navigation Company 20 F M C 17 SRR I 56 1977 Acarrier may

reasonably andfairly accommodate the special needs of any shipper including MSC

19 F MC
792 FEDERAL MARITIME COMMISSION

Department Two different shippers may well be present in this inst

MSC and the NVO s but the real party in interest here is not iIijure

the different rates these shippers pay within the meaning of sectio

Moreover HGFA has not even attempted to demonstrate the am

of iruury if any it is suffering as aresult of MSC suse of a Ca

N O S rate HGFA concedes that Respondents NVO rateS 

reasonable and that its members are fully reimbursed for the co

ocean freight by the Defense Department 9

Based upon the 

Stipulation HGFA s objective in establishing alingle government ho

hold goods rate does not appear to be the elimination of iIijury t

members but to increase the amount of freight MSC must pa

Respondents Such a result is unwarranted in light of General Ord

and the record before us

WHEREFORE IT IS ORDERED That the initial Order to S

Cause directed to American Export Lines Inc Sea Land Service 

and United States Lines Inc and the subsequent Order to Show C

directed to the Household Goods Forwarders Association of Ame

Inc are hereby dismissed and

IT IS FURTHER ORDERED That this proceeding is discontinue

S JOSEPH C PoLKING

Acting Secreta

8 Thefact that HOPA member are fuUy reimbursed only to the extent that they comply witb MSC reaulatio

explain the uniformity in Respondents individually established NVO rates overthcpast few years

19 F 
FEDERAL MARITIME COMMISSION

DoCKET No 7664

STATES STEAMSHIP COMPANY FAR EAST USA HOUSEHOLD GOODS

TARIFF No 2 FMC 9

A foreign commerce tariffmay be canceled immediately if the effect of the cancellation

is to eliminate a service and not to raise the cost of that service

A telex tariff cancellation notice received after the close of Commission business was

effective upon receipt when no steps were taken to reject said notice within the

next few business days

Once accepted by the Commission a tariff filing is valid and binding between shipper

and carrier even if subsequently found to violate provisions of the Shipping Act or

the Commission s Rules it is not void ab initio

Dillon E Coker and Peter Q Nyce Jr for Military Traffic Manage

ment Command

R Frederic Fisher and Barbara H Buggert for States Steamship Co

Alan F Wohstetter and Edward A Ryan for Household Goods

Forwarders Association ofAmerica Inc

John Robert Ewers and C Douglass Miller as Hearing Counsel

REPORT AND ORDER

May 18 1977

By THE COMMISSION Karl E Bakke Chairman Clarence Morse Vice

Chairman Ashton C Barrett Bob Casey and Clarence Morse

Commissioners

The Military Traffic Management Command of the Department of

Defense MTMC has petitioned the Commission to review the status of

States Steamship Company s States Line Far EastUSA Household

Goods TariffNo 2 FMC 9 and issue a declaratory order indicating

whether this tariff has been canceled MTMC alleges that such an order

would resolve a pending dispute between itself and a number ofnonvessel

operating common carriers NVO s ofused household goods employing

an International Through Government Bill of Lading pursuant to contrac

793
794 FEDERAL MARITIME COMMISSION

tual arrangements with the Department of Defense 1 This dispute 

cerns the level of household goods rates offered by vessel opera

caniers from the Far East to U S West Coast ports and Hawaii betw

May 1 and October 30 1976 MTMC takes the position that the lo

available ocean rate was that quoted in Section Iof States Line s F

No 9 tariff and would have the Commission declare that this 

remained in effect until at least August 28 1976

Replies to MTMC s petition were submitted by the Bureau of Hea

Counsel Hearing Counsel States Line and the Household Go

Forwarders Association ofAmerica Inc Intervenor 2

These pa

claim Tariff FMC9 was canceled on orbefore May 21 1976 and tha

lowest available rate for military household goods from that 

forward was contained in the Trans Pacific American Flag Berth Op

tors Freight Tariff No 3 FMC2 effective May 1 1976 3

MTMC was permitted to reply to States Line which had style

reply as a Motion to Dismiss The controversy presented is ent

one of law no relevant questions offact are disputed

BACKGROUND INFORMATION

States Line entered into a mutual transshipment agreement FMC 

9373 with Lykes Bros Steamship Company Inc Lykes in 1965 

tiled a tariff implementing this agreement to take effect May 28 19

The agreement provided for the through carriage of miltary house

goods which originated at various Far Eastern ports and were 1 ini

booked by Lykes transshipped to States Line s vessels in Japan 

delivered to U S West Coast ports by States Line 5

and 2 init

booked by States Line transshipped to Lykes vessels in Japan 

delivered to U S Gulf ports by Lykes 6 The tariff designated these 

transship Ilent services as Section Iand Section II service respecti

and specifically referred to Agreement No 9373 in both instances 

tariff did not however contain rules clearly describing the details o

transshipment operation nor was it expressly required to contain 

rules by the Commission s tariff filing regulations 7

1 The NVO provide service to MTMCunder contracts which require adherence to asinale factor throuah 

asix month period unless the NVO cancels Its service upon thirty days notice MTMC will not permit an 

adjustment ofthe NYD a rateunless the NVOestabUshes an unavoidableincrease in ita underlyinlcosu W

claimed increase is in the cost of the uDderlylna ocean transportation an upward adjustment is apparently 

only when the lowest available ocean rate has increased

Intervenor isanon profit corporation consistin of68 NVO s who specialize in shipping used household 

Some oftheso NVO s are under contract with MTMC inthe Far East U S West Coast trade

3 States Une is amember of the Trans Pacific American Flaa Berth Operators Conference T PAFBO T 

calls only at US West Coast ports and Hawaii It does not sorve U S Gulf Coast ports

4

Aareement No 9373 called for States Line to file a

single tariff statina the rates char es and practices ap

to the transshipment service offered by both States Line and Lykes Lykes had no tariff on file in its own nam

included military household oods to West Coast ports but was listed as aparticipatina carrier in the Sta

tariffas provided by section 5364 10 of theRules

S States Line did notmake direct vessel calls at U S Gulfports between 1964 and 1977 as acondition of its 

arranaements withMARAD

6

Lykes did not make direct vessel calls at U S Gulf ports between 1964 and 1977 as acondition of its 

arranaements with MARAD Lykes is not amember of T PAFBO

1 46C F R Part 536 Oeneral Order 13

19 F 
STATES S S CO FAR EAST 795

In late 1975 States Line s original Household Goods Tariffwas

canceled and superseded by States Line s TariffFMC9 The title page of

the latter document erroneously indicated that Agreement No 9373

applied only to Section II service and the tariff rules did not specifically

clarify this discrepancy Nonetheless it was discernible from the tariff as

a whole that both Section Iand Section II service required some type of

transshipment arrangement between originating and delivering carriers

States Line and Lykes were the only participating carriers listed in Tariff

FMG9 since Section Iservice involved delivery on the West Coast by a

States Line vessel it follows that this transshipment service could be

offered only under a Lykes bill oflading

On January 10 1976 States Line and Lykes notified the Commission

that they had canceled Agreement No 9373 Without a properly med

agreement in effect any further transshipments of military household

goods by States Line and Lykes would have violated section 15 of the

Shipping Act 1916 Through oversight however States Line neglected to

cancel Tariff FMC 9 Neither States Line nor Lykes moved any cargo

under that tariff subsequent to January 10 1976

On May 17 1976 States Line sent the Commission s Bureau of

Compliance a telex commuication requesting special permission to cancel

Tariff FMC 9 in its entirety effective May 18 1976 No action had been

taken on this request when another telex was received withdrawing the

first message and stating that Tariff FMC9 was canceled immediately

This second telex was received about 9 00 P M Friday May 21 1976

and was not seen by the Commission s staff until Monday morning May

24 1976 Such temporary tariff amendments are permitted by section

536 6 c of the Rules A permanent cancellation supplement to Tariff

FMC 9 was filed July 29 1976

The Bureau of Compliance took no action to ancel or suspend Tariff

FMC 9 on January 10 1976 nor did it reject or disallow States Line s

subsequent tariff ftlings purporting to cancel that tariff

POSITION OF THE PARTIES

MTMC believes Tariff FMG9 to still be in full force and effect or

alternatively that said tariff was not legally canceled until August 29

1976 MTMC reaches this conclusion by contending that 1 Agreement

No 9373 applied only to Section II service States Line bookings

delivered to the Gulf Coast by Lykes so that cancellation of the

Agreement did not affect the availability of Section I service Lykes

bookings delivered to the Pacific Coast by States Line 2 the May 21

1976 telex cancellation was a legal nullity because it caused military

household goods rates to increase upon less than 30 days notice 8

was

I Shipping Act section 18 b 2 requires 30 days notice of rate increases MTMC believes the cancellation of Tariff

FMC 9 increased States Line s rates because States Line participated in T PAFBO Tariff FMC 2 and the lattertariff

contained ahigher rate forthe same service subsequent to May I 1976

19 F M C
796 FEDERAL MARmME COMMISSION

not followed by a permanent tariff amendment within 15 days9 and 

not simultaneously furnished to all States Line tariff subscribers 10 3 

July 29 1976 permanent cancellation supplement was invalid becau

improperly attempted to cancel the tariff retroactively and 4 if the 

29 1976 tiling were validly accepted for filing by the Commission it 

resulted in a rate increase for household goods which could not 

effect for 30 days

States Line Hearing Counsel and Intervenors believe Tariff FM

was canceled by operation of law on January 10 1976 when 

underlying transshipment agreement was canceled or in the alterna

that the May 21 1976 telex effectively canceled the tariff immediately 

support ofthis position it is argued that 1 Section Iservice was cle

dependent upon the continued existence ofAgreement No 9373 de

the absence of a specific statement to that effect on the title page ofT

FMC9 2 the cancellation of Section Iservice did not result in a 

increase for Far EastU S West Coast household goods carried by S

Line 3 States Line s failure to tile a

permanent cancellation supple

by June 5 1976 did not nullify its May 21 1976 telex f11ing as lon

the cancellation notice remained on file it was controlling for all t

flling purposes and 4 there were no subscribers to Tariff FMC9u

which the May 21 1976 telex filing could be served

States Line and Intervenors also devote significant space to arg

that the Tariff FMC9 rates were not actually available for use by 

NYQ s subsequent to January 10 1976 regardless ofthe legal statu

the tariff itself because States Line would have refused to provide 

service

DISCUSSION AND CONCLUSIONS

It is not the Commission s function to determine the lowest availa

ocean rate for MTMC purposes Whether the rates specified in T

FMC 9 would have been made available to NYQ s subsequent to 

cancellation of Agreement No 9373 is a matter for MTMC to resolv

accordance with its own statutes and regulations The Commission 

however render its opinion on the narrower question ofwhether T

FMC9 has been canceled

We believe TariffFMC 9 was effectively canceled on May 21 1

and not before or after that date The Commission s Rules do not pro

for the automatic cancellation of transshipment tariffs upon receip

notice that an underlying transshipment agreement has been cance

The responsibility for maintaining accurate tariffs falls fully and s

upon the ocean carriers which publish them As long as Tariff FMC9 

not include an amendment or supplement which purported to canc

9 Section 5J6 6c

5 of the Rules requires atemporary tariff amendment tobe followed by a

permanent ame

within 15 days States Line did not comply with this regulation

10 Section 636 6 c 4 ofthe Rules requires carriers making temporary taritT flUnas to simultaneously se

temporary filing on aU subscribers to the tariffin question

19 F 
STATES S S CO FAR EAST 797

then Tariff FMC 9 contained the only legal rates States Line could have

charged for the transshipment service covered by that tariff even though

the actual provision of such service would have violated section 15 of the

Shipping Act See generally Davis v Portland Seed Company 264 U S

403 425 1924 and cases Cited therein Chicago Milwaukee St Paul

and Pacific RR Co v Alouette Peat Products Ltd 253 F 2d 449 9th

Cir 1957

The critical question is the effect ofthe May 21 1976 telex cancellation

Ifa tariffcancellation would have increased States Line s rate for military

household goods delivered to the U S Gulf Coast or Lykes rate for

military household goods delivered to the U S Pacific Coast it could not

have taken effect until June 20 1976 The May 21 1976 telex did not

increase the rates for these services it eliminated the services altogether 11

MTMC Cites judiCial deCisions for the proposition that the May 21

1976 cancellation notice was invalid even though accepted by the

Commission because a permanent tariff amendment was not filed within

the 15 day period required by the Commission s Rules These deCisions

find various agency actions taken in contravention of an agency s own

regulations to be invalid but are readily distinguishable from the tariff

filing situation now faCing the Commission The Cited cases deal with

adjudicatory proceedings affecting significant operating or employment

rights where due process is constitutionally required and scrupulously

observed The filing of common carrier tariffs involves a considerably

different legal premise

A tariff has one major purpose to prevent rebates and other types of

unjust discrimination by publicly stating the rates to be charged all eligible

shippers Tariff filings are neither adjudicatory matters nor finally deter

minative of individual rights orprivileges Once accepted by the Commis

sion a tariff must be adhered to by publishing carrier and shipper alike

E g Gilbert Imported Hardwoods v 245 Packages of Guatamabu

Squares 508 F 2d 1116 5th Cir 1975 United States v Pan American

Mail Line Inc 359 F Supp 728 S D N Y 1972 Damage actions for

illegal tariff provisions arise after the fact and are resolved by means of

section 22 proceedings 13 To retroactively declare aduly accepted tariff

void for noncompliance with section 536 6 c 5 would contravene the

regulatory scheme established by most Federal common carrier statutes

including the Shipping Act Once accepted atariff may be canceled only

after the Commission has after appropriate proceedings found it to be

II TheTPAFBO rate which applied to States Line aod not Lykes was admittedly highertban the FMC9 Section

I

rate forservice from the Far East to the U S West Coast but Section I service required an initial booking on a

Lykes Bros vessel Section I service was therefore an offering of Lykes Bros and not States Line It should also be

Doted thatSection 536 2 c

of the Rules prohibits acarrier from filing atariffwhich duplicates or conflictswith any

other tariff towhich the carrier isaparty If Section I service were aservice of States Line and not of Lykes Tariff

FMC9 would have improperly duplicated the West Coast service offered by States Line under theT PAFBO tariff

ISRalph Nader v Nuclear Regulatory Corp 513 F 2d 1045 1051 D C Cir 1975 Pacific Molasses Co v

FederalTrade Commission 356 F 2d 386 5th Cir 1966 Mississippi Valley Barge Line Co v United States 252 F

Supp 162 E D Mo 1966

13 Section 22 of theShipping Act 1916 46 D S C 821

19 F M C
798 FEDERAL MARITIME COMMISSION

inconsistent with some provision ofthe Shipping Act or the Commiss

Rules Moreover the Rules provide another less drastic remedy 

noncompliance with section 536 6c 5 which is plainly inconsistent 

MTMC s nullity theory Section 536 6c 7 states that temporary 

privileges shall be denied to carriers which persistently fail to file p

permanent amendments to replace their temporary tariff submissio

States Line has furnished an affidavit from its Rates and Confere

Manager stating that there wereno subscribers to Tariff FMC9 and 

no violation of section 536 6cX4 could have occurred with regard t

May 21 1976 telex cancellation notice MTMC has not disputed this 

but even if section 536 6c 4 had been violated such a violation w

not make the May 21 1976 telex filing a nullity Once the tempo

tiling was accepted by the Commission 1

it became legally binding 

States Line Lykes and any shippers of military household go

employing the service described therein

Accordingly IT IS ORDERED That the Petition for Declara

Order of the Military Traffic Management Command is granted to 

extent indicated herein and denied in all other respects

S JOSEPH C PoLKING

Acting Secreta

See al o ectlon 32c of be Sblpplq Act 46 U S C 831 c wblch provide for clvB penalty of up to 

per day for violationa ofthe Commission Rules

ItThe Commllllon sRulos do not Indle bow orwhenatariff submission i accepted for mlna butprov

the rejection of taritI matter In certain instances No notice or coDflrmatlon of acceptance is routinely furnis

carriers by the Bureau of Compliance It Is nerally Illumed that atariftwhich II not rejected by the c

bUlin 1S on ita stated effective date bas been accepted for fiUna Difftculd ariae in thecase of after hou

filina Bucbas States Lino May 21 1976 cancellation noUce In lucb situationl the Commission must 

realonable opportunity to review the ftlin and a rule of reason has been applied If the tarifflubmilsio

proper form it is accept dretroactivdy If lilnlficant Clrrorsexist then the tar1ft il r8ject d as expeditio

possible on the theory that It was neveraccepted and not on thetheory that it was void ab initio

19 P 
19 F M C 799

FEDERAL MARITIME COMMISSION

INFORMAL DocKET No 375 1

NATIONAL STARCH CHEMICAL CORPORATION

v

SEA LAND SERVICE INC

NOTICE OF DETERMINATION NOT TO REVIEW

May 18 1977

Notice is hereby given that the Commission on May 18 1977

determined not to review the decision of the Settlement Officer in this

proceeding served May 10 1977

By the Commission

S JOSEPH C POLKING

Acting Secretary
FEDERAL MARITIME COMMISSION

INFORMAL DocKET No 375 1

NATIONAL STARCH CHEMICAL CORPORATION

v

SEA LAND SERVICE INC

Dismissal of Complaint and Discontinuance of Proceeding

DECISION OF RONALD J NIEFORTH SETILEMENT OFFIC

By complaint filed November 26 1976 National Starch Chem

Corporation complainant states that Sea Land Service Inc car

declined to honor a claim for freight overcharge of 124 44 on 

grounds that such action would violate item 105 ofthe Leewa

Windward Islands Guianas Conference Tariff F M C No 1 w

prohibits the payment of overcharge claims not presented to the ca

within six months after date of shipment

The complaint which was served on the carrier November 30 1

prompted the carrier to respond on January 20 1977 advising tha

investigation disclosed that the claim for refund was in order Su

quently in letter ofMarch 2 1977 the carrier confnmed that a chec

the amount of 124 44 dated February 2 1977 had been sent to 

complainant in settlement of the claim

An analysis of the complaint and supporting documentation toge

with a review of the applicable conference tariff confnms the comp

ants allegation relative to the assessment of an improper rate The fr

refund which has been made by the carrier in connection with this Do

is therefore found to be proper and indeed mandatory to satisfy stat

requirements as provided in Section 18b 3 Shipping Act 1916

The subject complaint is dismissed and this proceeding discontinue

S RONALD J NIEFORTH

Settlement Office

I Both parties havlna consented to the formal procedure of Rule 19 of the Commission s Rules ofPract

Procedure 46 CPR 502 3014 tbie decision will be final unlesl tbeCommission elects to review it within 

from dateof service tbercof Noto Notice ofdetermination not to review May 18 1m

800 19 F 
FEDERAL MARITIME COMMISSION

SPECIAL DocKET No 494

BRUNSWICK CORPORATION

v

SEA LAND SERVICE INC

NOTICE OF ADOPTION OF INITIAL DECISION AND

ORDER PERMI1TING WAIVER OF CHARGES

May 18 1977

No exceptions having been taken to the initial decision in this

proceeding and the Commission having determined not to review same

notice is hereby given that the initial decision became the decision ofthe

Commission on May 18 lW7

It is Ordered That applicant is authorized to waive collection of

1 007 50 ofthe charges previously assessed Brunswick Corporation

It is further Ordered That applicant shall promptly publish in its

appropriate tariff the following notice

Notice is hereby given as required by the decision of the Federal Maritime

Commission in Special Docket 494 that effective May 1 1976 for purposes of refund or

waiver of freight charges on any shipments which may have been shipped during the

period from May 1 1976 through June 1 1976 the rate on Golf Clubs to Group 1

Ports is 100 00 W M subject to all applicable rules regulations terms and conditions

of said rate and this tariff

It is further Ordered That waiver of the charges shall be effectuated

within 30 days of service of this notice and applicant shall within five

days thereafter notify the Commission of the date and manner of

effectuating the waiver

By the Commission

S JOSEPJ C POLKING

Acting Secretary

19 F M C 801
FEDERAL MARITIME COMMISSION

SPECIAL DocKET No 494

BRUNSWICK CORPORATION

v

SEA LAND SERVICE INC

Application granted

INITIAL DECISIONl OF THOMAS W REILLY

ADMINISTRATIVE LAW JUDGE

Pursuant to section 18b 3 of the Shipping Act 1916 as amende

P L 90298 and section 502 92 of the Commission s Rules of Pra

and Procedure 46 CFR 502 92 Sea Land Service Inc Sea Lan

Applicant has applied for permission to waive collection of a portio

the freight charges on three shipments of golf clubs which move

mini landbridge service from Jacksonville Florida to Tokyo and K

Japan under Sea Land bills oflading dated May 10 1976 The applic

was filed November 4 1976 Waiver of the charges involved herein 

affect only the ocean carrier s portion

The subject shipments moved via rail from Jacksonville to Oak

California then via Sea Land to Japan The shipments were m

pursuant to Sea Land s filed tariffs covering shipments from U S 

Japan Sea Land westbound U S A Far East Joint Container Fr

Tariff No 234 FMC106 ICC92 item 894 4210 00 1st revised 

577 effective May 1 1976 The three shipments had an aggregate w

of 27 502 pounds and measured 3 100 cubic feet The rate applicab

time of the shipments was 113 WM per ton of 40 cubic feet or 

pounds The rate sought to be applied is 100 WM per ton of 40 

feet or 2000 pounds same tariff cited above except see 2nd revised 

577 effective June 1 1976

Aggregate freight charges payable pursuant to the rate applicab

time of shipment amoU 1ted to 8 757 50 Aggregate freight charges a

rate sought to be applied amount to 7 750 The difference sought 

waived is 1 007 50 The Applicant is not aware ofany other shipm

I Tbis decision became thedecision oflbo Commission May 18 1977

46 U S C 817 as amended

802 19 F 
BRUNSWICK CORP v SEA LAND 803

of the same commodity which moved via Sl Ia Land during the same time

period at the rates involved in this application

Sea Land offers the following as grounds for granting the application

4 Sea Land Tariff No 234 FMC No 106 and ICC No 92 naming mini bridge rates

from U S Atlantic and Gulf seaport cities to Far East ports carried a special rate of

100 00 wM on original page 577 effective September 15 1975 Attachment No I

subject to an expiration date of July 31 1976 as shown in Rule 10 on 6th Revised Page

86 Attachment No 2 and applying to Japan Group Iports including Tokyo as provided

in Rule No 5

Commitment was made to the shipper to maintain the rate of 100 00 W Mwithout

increase through December 31 1976 per teletype of February 24 1976 from ourChicago

sales office to ourPacific Division pricing headquarters in Oakland Attachment No 3

Concurrently Sea Land was processing a general increase in rates in Tariff No 234

corresponding to a similar general increase in all water rates taken by the Far East

Conference The increase was originally intended to become effective April I 1976 but

actually became effective May 1 Special rates which Sea Land had agreed to maintain

in effect beyond that date were of course not to be subjected to the general increase

Unfortunately due to administrative error Sea Land failed to except the special rate in

Item No 894 4210 00 from the general increase and the rate of 100 00 W M was

increased to 113 W M on 1st Revised Page 577 Attachment No 4

On May 13 this error was discovered by pricing personnel who sent a teletype

message to the Elizabeth office requesting them to reinstate the 100 00 rate Attachment

No 5 That rate was then reinstated on 2nd Revised page 577 effective June I 1976

Attachment No 6 Meantime the three shipments involved herein had moved on May

10 and were assessed the then applicable rate of 113 00 W M Copies of each of the

bills of lading and freight bill are enclosed as Attachment No 7 Having been assured of

the continuance of the 100 00 rate through December 31 the shipper s freight forwarder

reduced the charges to the basis of that rate when paying the Sea Land freight bills

Section 18bX3 ofthe Shipping Act 1916 46 USC 817 as amended by

Public Law 90298 and Rille 6b Special DocketApplications Rules of

Practice and Procedure 46 CPR 502 92 a set forth the applicable law

and regulation The pertinent portion of 18b 3 provides that

The Commission may in its discretion and for good cause shown permit a

common carrier by water in foreign commerce to refund a portion of freight charges

collected from a shipper or waive the collection of a portion of the charges from a

shipper where it appears that there is an error in a tariffof a clerical or administrative

nature or an error due to an inadvertence in failing to file a new tariff and that such

refund orwaiver will notresult in discrimination among shippers Provided further That

the common carrier has prior to applying to make refund filed a new tariffwith the

Commission which sets forth the rate on which such refund or waiver would be

based and Application for refund or waiver must be filed with the Commission

within 180 days from the date of shipment 3

The clerical and administrative error recited in the subject application is

of the type within the intended scope of coverage of section 18b 3 of

the Act and section 502 92 of the Commission s Rules ofPractice and

Procedure

Therefore upon consideration of the documents presented by the

Applicant it is found that

3

For other provisions and requirements see 18b 3 and 502 92 of the Commission s Rules of Practice and

Procedure 46 CFR 502 92 a c

19 FM C
804 FEDERAL MARITIME COMMISSION

1 There was an error in a tariff of a clerical or administrative n

resulting in the inadvertent failure to except the special rate from 

general rate increase as had been promised the shipper

2 Such awaiver of collection of a portion of the freight charge

not result in discrimination among shippers

3 Prior to applying for authority to waive collection of aportion o

freight charges Sea Land tiled a new tariff which set forth the ra

which such waiver would be based

4 The application was tiled within ISO days from the date of the s

shipments

Accordingly permission is granted to Sea Land Service Inc to w

collection of a portion of the freight charges specifically the amou

1 007 50 An appropriate notice will be published in Sea Land s 

S THOMAS W REILLY

Administrative LawJud

WASHINGTON D C

Apri122 1977

19 F 
S JOSEPH C POLKING

Acting Secretary

FEDERAL MARITIME COMMISSION

SPECIAL DocKET No 4m

SMITH JOHNSON SHIPPING INC

v

SEA LAND SERVICE INC

NOTICE OF ADOPTION OF INITIAL DECISION AND

ORDER PERMITIING WAIVER OF CHARGES

May 18 1977

No exceptions having been taken to the initial decision in this

proceeding and the Commission having determined not to review same

notice is hereby given that the initial decision became the decision of the

Commission on May 18 Im7

Itis Ordered That applicant is authorized to waive collection of

4 681 35 ofthe charges previously assessed Smith Johnson Shipping

Inc

It is further Ordered That aplicant shall promptly publish in its

appropriate tariff the following notice

Notice is hereby given as required by the decision of the Federal Maritime

Commission in Special Docket 497 that effective May 21 1976 for purposes of refund

orwaiver offreight charges on any shipments which may have been shipped during the

period from May 21 1976 through November 15 1976 the rate on Pipe Fittings other

than Brass or Copper not including valves minimum 45 MT per container to ports in

Spain is 34 00 WfM subject to ail applicable rules regulations terms and conditions of

said rate and this tariff

It is further Ordered That waiver of the charges shall be effectuated

within 30 days of service of this notice and applicant shall within five

days thereafter notify the Commission of the date and manner of

effectuating the waiver

By the Commission

19 F M C 805
FEDERAL MARITIME COMMISSION

SPECIAL DoCKET No 497

SMITH JOHNSON SHIPPINO INC

v

SEA LAND SERVICE INC

Application granted

INITIAL DECISIONl OF JOHN E COGRAVE ADMINISTRAT

LAW JUDGE

Sea Land Service Inc seeks permission to waive collection 

portion of the freight charges on a shipment by Smith Joh

Shipping Inc of46 35 metric tons ofpipe fittings from New Orlea

Bilbao Spain on May 21 1976 The rate applicable at the tim

shipment was 135 00 per 2 240 pounds 2

This rate resulted in aggr

freight charges of 6 319 53 The rate sought to be applied is 34 0

2 240 pounds 3

This rate would have resulted in total freight charg

1 638 18 Therefore permission to waive collection of 4 68

3

requested

On or about May 14 1976 Sea Land s New Orleans office nego

with the complainant arate of 34 00 per ton of 40 cubic feet or 2 24

to meet competition of other carriers for a containerload ofIron or

Pipe Fittings to be shipped May 21 from New Orleans to Bilbao S

The existing effective rate was then 128 50 W M named in Item 1

plus 5 increase per 10th Revised Title Page of Sea Land s Fr

Tariff No 233 FMC No 105 The negotiated rate of 34 00 W M 

confirmed with a booking ofthe shipment by a teletype message 

May 14 from the complainant to Sea Land

Sea Land made telegraphic filing effective May 21 of the negot

rate but through clerical and administrative error the rate was nam

I This decision became the decision of the Commission May 18 1977

2 Item No 13360 Pipe Fittings NYIincludina Valves WM 128 50 Sea Land Service Inc Tariff 

FMCI0S FROM United States GulfPorts as Named in Item 40 TO Ports in Spain as named in Item 40 

Page 174 Effective Date April 5 1975

3

Telcsraphic flUnS Pipe Fittinas Other Than Brass or Copper NOT includina valves Minimum 45 

Container WM 34 00 Same tariff of rates as above Effective Date of Reduction when filed i

e Nove

1976

806 19 F 
SMITH JOHNSON INC v SEA LAND 807

apply to Lisbon Portugal instead of Bilbao and published in Item No

30110 of Sea Land s Tariff No 162 FMC No 40 When the erroneous

publication was discovered Sea Land made another clerical error by

telegraphic ftling of a rate of 80 00 per ton of 2 240 Ibs instead of the

agreed rate of 34 00 W M applicable to ports in Spain in Item No 13360

on 3rd Revised Page 174 ofSea Land s Tariff No 233 FMC No 105

effective July 21 1976

Freight charges on the shipment were calculated and billed to the

shipper at the then effective tariff rate of 135 00 W M for a total of

6 319 53 on Sea Land s

freight bill 031 705729 In paying the freight

charges shipper remitted 1 622 93 based on the agreed rate of 34 00 WI

M The amount paid is 15 25 less than the correct total charges that

obtain from the agreed rate Sea Land is billing the shipper for this

amount

Telegraphic ftling effective November 15 1976 has now been made of

the agreed rate of 34 00 W M minimum 45 measurement tons in Item

15735 on page 192 of Sea Land s TariffNo 233 FMC No 105 applying

from New Orleans to ports in Spain including Bilbao

Section 18b 3 ofthe Shipping Act 1916 46 USC 817 as amended by

Public Law 90298 and as further implemented by Rule 6 b Special

Docket Applications Rules ofPractice and procedure 46 CPR 502 92 is

the law sought to be invoked Briefly it provides

The Commission may in its discretion and for good cause shown permit a

common carrier by water in the foreign commerce of the United States to refund a

portion of the freight charges collected from the shipper or waive the collection of a

portion of the charges from a shipper where it appears that there is an error in a

tariffof a clericalor administrative nature or an error due to an inadvertence in failing to

file a new tariffand that such refund or waiver will not result in discrimination among

shippers Furthermore prior to applying for such authority the carrier must have filed

anew tariff which sets forth the rate on which such refund or waiver would be based

The application for refund must be filed with the Commission within one hundred and

eighty days from the date of shipment Finally the carrier must agree that if permission

is granted an appropriate notice will be published in its tariff or such other steps taken

as may be required to give notice of the rate on which such refund or waiver would be

based

The legislative history ofthe amendment to section 18 ofthe Shipping

Act Public Law 90298 4

specifies that carriers are authorized to make

voluntary refunds and waive the collection of a portion of their freight

charges for good cause such as bona fide mistake The nature of the

mistake was particularly described

Section 18 b appears to prohibit the Commission from authorizing relief where

through bona fide mistake on the part of the carrier the shipper is charged more than he

understood the rate to be For example a carrier after advising a shipper that he intends

to file a reduced rate and thereafter fails to file the reduced rate with the Federal

Maritime Commission must charge the shipper under the aforementioned circumstances

the higher rate s

4 House Report No 920 November 14 1967 To accompany H R 9473 on Shipping Act 1916 AuthorizedRefund

afCertain Freight Charges Statement ofPurpose and Needfor theBill 10 AmendProvisions afthe Shipping Act

1916 to Authorizethe Federal Maritime Commission to Permit a Carrier toRefund a

Portion ofthe Freight Charges

19 F MC
808 FEDERAL MARITIME COMMISSION

The Senate Report states the Purpose of the Bill

Voluntary refunds to shippers and waiver of the collection of a portion of 

charges are authorized where it appears that there is an error in a tariff of a c

nature or where through inadvertence there has been a failure to file a tariff ref

an intended rate

It is therefore found that

1 There was an error due to inadvertence in failing to ftle anew r

2 Such waiver ofcollection of a portion of the freight charges wi

result in discrimination among shippers

3 Prior to applying for authority to waive collection of a portion o

freight charges Sea Land ftled anew tariff which sets forth the ra

which such waiver would be based

4 The application was ftled within one hundred and eighty days 

the date ofshipment

Accordingly permission is granted to Sea Land Service Inc to w

collection ofaportion of the freight charges represented by 4 68

35

S JOHN E COGRAVE

Administrative Law Judg

WASHINGTON D C

April 25 1977

5 Senate Report No 1078 April 5 1968 To accompany H R 9473 onShipping Act 916 Authorized R

Certain Freight Charges under Purpose afthe Bill

19 
S JOSEPHC POLKING

Acting Secretary

FEDERAL MARITIME COMMISSION

SPECIAL DocKET No 498

UNION CARBIDE CORPORATION

v

SEA LAND SERVICE INC

NOTICE OF ADOPfION OF INITIAL DECISION AND

ORDER PERMI ITING WAIVER OF CHARGES

May 18 1977

No exceptions having been taken to the initial decision in this

proceeding and the Commission having determined not to review same

notice is hereby given that the initial decision became the decision ofthe

Commission on May 18 WI7

It is Ordered That applicant is authorized to waive collection of

5 24155 ofthe charges previously assessed Union Carbide Corporation

It is further Ordered That applicant shall promptly publish in its

appropriate tariff the following notice

Notice is hereby given as required by the decision of the Federal Maritime

Commission in Special Docket 498 that effective May 27 1976 for purposes of refund

orwaiver of freight charges on any shipments which may have been shipped during the

period from May 27 1976 through July 23 1976 the rate on Methyl Methylthio

Propionaldehyde from Jacksonville to Marseilles Minimum 17 WT per container is

65 00 W subject to all applicable rules regulations terms and conditions of said rate

and this tariff

Itis further Ordered That waiver of the charges shall be effectuated

within 30 days of service of this notice and applicant shall within five

days thereafter notify the Commission of the date and manner of

effectuating the waiver

By the Commission

19 F MC 809
FEDERAL MARITIME COMMISSION

1 SPECIAL DocKET No 498

UNION CARBIDE CORPORATION

v

SEA LAND SERVlCE INC

Application granted

INITIAL DECISION OF JOHN E COGRAVE ADMINISTRAT

LAW JUDGE 1

Sea Land Service Inc seeks permission to waive collection 

portion of the freight charges on five shipments of Methyl Meth

Propionaldehyde by Union Carbide Corporation aggregating 3 57

pounds from Jacksonville Florida to Marseilles France under b

lading dated June 1 16 and 21 and July 6 and 13 1976 The 

applicable at the time of shipment are alleged to be 76 75 W M

WT per container and 65 00 W Min 18 WT per container These 

resulted in total charges of 131 211 55 The rate sought to be app

ocean rate 65 00 per ton of 2 240 pounds minimum 17 ton

container This rate would have resulted in total charges of 125 9

Permission to waive collection of 5 241 55 is sought

On May 21 1976 the Sea Land sales representative obtained ap

fromSea Land s pricing personnel for arate of 65 00 per long 

apply from Jacksonville Florida toMarseilles France on M

Methylthio Proprionaldehyde an insecticide bearing the trade 

Temik50 shipped by the complainant A minimum of 17 lon

per Sea Land 35 foot container was attached to the agreed rate 

competitive with the quotation of 65 00 per long ton minimum 18 

by a foreign t1ag carrier utilizing 4Ofoot containers A confirming te

requesting publication and effective date of May 27 was sent by th

representative to the pricing department the same day Howeve

publication request to the tariffpublication department dated May 

specifying a telex tiling to be effective May 27 went astray in tran

1 This decision became the decision ofthe Commission May 18 1977

810 19 
UNION CARBIDE CORP v SEA LAND 811

and was not received therefore the required tariff publication was not

made

Shipments of Methyl Methylthio Propionaldehyde began June 1 and

five shipments moved before the failure to publish the agreed rate was

corrected These shipments were assessed the tariff rate then applicable

as named in Item 3790 on 3rd revised page 77 B of Sea Land Tariff No

168B FMC No 73 When the failure to publish the required rate was

discovered it was rectified by telegraphic filing of new Item 5047

containing the proper commodity description and rate effective July 23

1976 and published on 7th revised page 91 ofTariff 168B

Section 18b 3 ofthe Shipping Act 1916 46 USC 817 as amended by

Public Law 90298 and as further implemented by Rule 6 b Special

Docket Applications Rules ofPractice and procedure 46 CFR 502 92 is

the law sought to be invoked Briefly it provides

The Commission may in its discretion and for good cause shown permit a

common carrier by water in the foreign commerce of the United States to refund a

portion of the freight charges collected from a shipper or waive the collection of a

portion of the charges from a shipper where it appears that there is an error in a

tariff of a clerical or administrative nature or an error due to an inadvertence in failing to

file a new tariff and that such refund or waiver will not result in discrimination among

shippers Furthermore prior to applying for such authority the carrier must have filed

a new tariffwhich sets forth the rate on which such refund or waiver would be based

The application for refund must be filed with the Commission within one hundred and

eighty days from the date of shipment Finally the carrier must agree that if permission

is granted an appropriate notice will be published in its tariff or such other steps taken

as may be required to give notice of the rate on which such refund or waiver would be

based

The legislative history ofthe amendment to section 18 ofthe Shipping

Act Public Law 90298 2

specifies that carriers are authorized to make

voluntary refunds and waive the collection of a portion of their freight

charges for good cause such as bona fide mistake The nature of the

mistake was particularly described

Section l8 b appears to prohibit the Commission from authorizing relief where

through bona fide mistake on the part of the carrier the shipper is charged more than he

understood the rate to be For example a carrier after advisinga shipper that he intends

to file a reduced rate and thereafter fails to file the reduced rate with the Federal

Maritime Commission must charge the shipper under the aforementioned circumstances

the higher rates

The Senate Report3 states the Purpose ofthe Bill

Voluntary refunds to shippers and waiver of the collection of a portion of freight

charges are authorized where it appears that there is an error in a tariff of a clerical

nature or where through inadvertence there has been a failure to file a tariffreflecting

an intended rate

It is therefore found that

I House Report No 920 November 14 1967 To accompany H R 9473 onShipping Act 1916 AuthorizedRefund

of Certain Freight Charges Statement of Purpose and fleed for the Bill toAmend Provisions of theShipping Act

1916 toAuthorize theFederalMaritime Commission to Permit aCarrier toRefund a

Portionof the Freight Charges

3

Senate Report No 1078 April S 1968 Toaccompany H R 9473 on ShippingAct 1916 AuthorizedRefund of

Certain Freight Charges under Purpose of the Bill

19 F MC
812 FEDERAL MARITIME COMMISSION

1 There was an error due to an inadvertence in failing to me a 

tariff

2 Such waiver of collection of aportion of the freight charges wil

result in discrimination among shippers

3 Prior to applying for authority to waive collection of aportion o

freight charges Sea Land fded a new tariff which set forth the rat

which such waiver would be based

4 The plication was fded within one hundred and eighty days 

the date of shipment

Accordingly permission is granted to Sea Land Service Inc to w

collection of a portion of the freight charges represented by 5 

S JOHN E COGRAVE

Administrative LawJudg

WASHINGTON D C

April 25 1977

19 F 
S JOSEPH C POLKING

Acting Secretary

FEDERAL MARITIME COMMISSION

SPECIAL DocKET No 499

LETRASET CONSUMER PRODUCTS INC

v

LYKES BROS STEAMSHIP CO INC

NOTICE OF ADOPTION OF INITIAL DECISION AND

ORDER PERMITTING REFUND OF CHARGES

May 18 1977

No exceptions having been taken to the initial decision in this

proceeding and the Commission having determined not to review same

notice is hereby given that the initial decision became the decision ofthe

Commission on May 18 1 77

It is Ordered That applicant is authorized to refund 2 690 97 ofthe

charges previously assessed Letraset Consumer Products Inc

It is further Ordered That applicant shall promptly publish in its

appropriate tariff the following notice

Notice is hereby given as required by the decision of the Federal Maritime

Commission in Special Docket 499 that effective December I 1975 for purposes of

refund or waiver of freight charges on any shipments which may have been shipped

during the periOd from December I 1975 through June 30 1976 the non contract rate

on Powder Molding Papier Machze notexceed 100 per LT is 150 25 W subject to all

applicable rules regulations terms and conditions of said rate and this tariff

Itis further Ordered That refund of the charges shall be effectuated

within 30 days of service of this notice and applicant shall within five

days thereafter notify the Commission of the date and manner of

effectuating the refund

By the Commission

19 F MC 813
FEDERAL MARITIME COMMISSION

SPECIAL DocKET No 499

LETRASET CONSUMER PRODUCTS INC

v

LYKES BROS STEAMSHIP CO INC

Application granted

INITIAL DECISION OF JOHN E COGRAVE ADMINISTRAT

LAW JUDGE 1

By application med December 1 1976 Lykes Brothers Steam

Company Inc seeks permission to refund a portion of the fre

charges on two shipments consigned to Letraset Consumer Prod

Inc asgregating 23 682 pounds or 821 cubic feet from Houston Te

to London United Kingdom on June 4 and 20 1976 The rate appli

at the time of shipment was 208 50 per 2 240 pounds 2 This rate res

in aggregate freight charges of4 279 46 The rate sought to be appl

150 25 per 2 240 pounds This rate would have resulted in total fr

charges of 1 588 49 Therefore permission to refund 2 690 97 i

quested

When the general rate increase ofDecember 1 1975 was incorpo

in the Gulf UK Tariff No 38 FMC 17 the rate covering pow

moulding papier mache was inadvertently dropped by the Gu

U

Conference tarifffiling clerk from 5th revised page 101 by clerical Ihi

in tariff compilation This rate should have been simply carried for

with the general rate increases

The clerical error by the Gulf UK Conference tariff ming cle

dropping the rate was discovered subsequent to the above mentio

shipments Lykes then requested on June 29 1976 the U K Confer

members to me a rate of 150 25 per 2 240 lbs thus reinstating 

previously existing rate This was approved effective June 30 1976 

filed in GuIfIU K Tariff No 38 FMC17 6th revised page 101 The 

remained in effect at 150 25 per 2 240 lbs through 93M6 at which 

1

This decision became thedecision ottbe Commission March 18 1977

Oeneral Carao NOS Gulf United Kinadom TariIf No 38 FMCl7

814 19 F 
LETRASET CONSUMER PRODUCTS v LYKES BROS 815

it took a 8 12 general rate increase and effective October 1 1976

became the following

Contract Non Conlracl

Thru 9 3076 127 75 2240 150 25 2240

Eff 10 176 uuuuu 138 50 2240 162 90 2240

Lykes reproposed the 150 25 per 2 240 lbs rate to the GulfU K

Conference on ll1676 and it was approved by the Conference 11 167

and was fIled and became effective November 18 1976 therefore from

1211175 until rates were re fIled on June 30 1976 there was no tariff entry

to cover this commodity other than General Cargo rate of 208 50 per

2 240 lbs or 40 cuft whichever results in greater revenue which rate was

assessed on shipments listed herein Payment was received in the amount

of 4 279 46 basis the General Cargo rate Respondent believes no

discrimination among shippers will result from the refund of 2 690 97

being granted this refund representing the freight differential between the

150 25 2240 and application of the 208 50 2240 or 40 cubic ft tariff

rate Respondent also agrees to publication of a notice or of such action

that the Commission may direct if permission to refund is granted

Section 18b 3 ofthe Shipping Act 1916 46 USC 817 as amended by

Public Law 90298 and as further implemented by Rule 6b Special

Docket Applications Rules ofPractice and procedure 46 CPR 502 92 is

the law sought to be invoked Briefly it provides

The Commission may in its discretion and for good cause shown permit a

common carrier by water in the foreign commerce of the United States to refund a

portion of the freight charges collected from a shipper or waive the collection of a

portion of the charges from a shipper where it appears that there is an error in a

tariffqf a clerical or administrative nature or an error due to an inadvertence in failing to

file a new tariff and that such refund or waiver will not result in discrimination among

shippers Furthermore prior to applying for such authority the carrier must have f1ed

a new tariff which sets forth the rate on which such refund or waiver would be based

The application for refund must be f1ed with the Commission within one hundred and

eighty days from the date of shipment Finally the carrier must agree that if permission

is granted an appropriate notice will be published in its tariff or such other steps taken

as may be required to give notice of the rate on which such refund or waiver would be

based

The legislative history ofthe amendment to section 18 ofthe Shipping

Act Public Law 90298 3

specifies that carriers are authorized to make

voluntary refunds and waive the collection of a portion of their freight

charges for good cause such as bona fide mistake The nature ofthe

mistake was particularly described

Section 18 b appears to prohibit the Commission from authorizing relief where

through bona fide mistake on the part of the carrier the shipperis charged more than he

understood the rate to be For example a carrier after advising a shipperthat he intends

to file a reduced rate and thereafter fails to file the reduced rate with the Federal

Maritime Commission must charge the shipper under the aforementioned circumstances

the higher rates

3 House Report No 920 November 14 1967 Toaccompany H R 9473 onShipping Act 1916 AuthorizedRefund

of Certain Freight Charges Statement of Purpose andNeed for theBill toAmendProvisions of the Shipping Act

916 to Authorize theFederalMaritime Commission toPermit a

Carrier to Refund aPorion ofthe Freight Charges

19 F M C
816 FEDERAL MARITIME COMMISSION

The Senate Report 4

states the Purpose ofthe Bill

Voluntary refunds to shippers and waiver of the collection If a portion of fr

charges are authorized where it appears that there is an error in a tariff of a cle

nature or where through inadvertence there has been a failure to me a tariff refle

an intended rate

The inadvertent failure of Lykes to extend the rate when it cle

intended to do so presents the kind of situation section 18 b 3 

intended to remedy and requested waiver should be granted

It is therefore found

1 There was an inadvertent failure to include the intended rate in 

published general rate increase

2 The waiver requested will not result in discrimination am

shippers

3 Prior to requesting permission for the refund of a portion o

freight charges Lykes fded anew tariff setting forth the rate upon w

the waiver would be based and

4 The application was roed within ISO days ofthe date of shipmen

Accordingly Lykes will be permitted to refund 2 690 70 to 

Complainant

8 JOHN E COORAVE

Administrative Law Judg

WASHINGTON D C

April 25 1977

Senato Report No 1078 April s 1968 To accompany H R 9473 onShipping Act 1916 AuthorizedRe

Certain Freight Chargef under Purpose of theBill

19 F 

819

INDEX DIGEST

Numbers in parentheses following citations indicate pages on which the particular

subjects are considered

ACCOUNTING REPORTS

The Commission s accountingregulations do notrequire carriers to maintain particular

types of accounts or any uniform accountingsystem General Order 5 46 CFR Part 511

and General Order 11 46 CFR Part 512 provide only that carriers using the uniform

system of accounts prescribed by the Maritime Administration must file annual financial

reports based upon that system A carrier employing a different accounting system must

thoroughly describe that system to the Commission Petition for Declaratory Order of

MatsonNavigation Co 462 463

Whether the capitalization of interest expended for vessel construction represents a

generally accepted accounting procedure within the meaning of the rules applicable to

the uniform system of accounts prescribed for subsidized carriers by MARAD 46 CFR

Part 282 1 359 is a matter for the Maritime Administration and not for the

Commission to determine Id 4634

Accounts or accounting methods acceptable to the Maritime Administration may be

filed with the Commission in connection with annual accounting reports Such annual

financial reports do not themselves establish the validity of any revenue account vessel

investment account or total rate base calculation but merely guide the Commission s

staff in its regulatory responsibilities The Commission s major concern with regard to

such filings is that the methodology employed in preparing the reports be plainly

identified Id 464

The Commission s General Order 5 and General Order 11 regulations 46 CFR Parts

511 and 512 do not state whether interest expenditures incurred during vessel

construction should be capitalized orwhether Interest During Construction Accounts

shonld be maintained The Commission has accepted annual financial reports which

included entries for capitalized interest on borrowed capital and reports which did not

Id 464

AGREEMENTS UNDER SECTION 15 See also Section 19 Regulations Terminal

Leases

III geM al

Terminal lease agreement between the City of Anchorage and Sea Land Service Inc

providing for a shift of Sea Land s preferential berth from Terminal I to Terminal 2 on

February I 1976 will not be temporarily approved Severe icing occurs at Anchorage

and there is the real possibility that Totem s vessel could be damaged because of the

mooring and weather conditions Totem will not berth at Terminals 2 and 3 during the
820 FEDERAL MARITIME COMMISSION

severe icing conditions because of the risk to the vessel and her crew IfTotem c

use POL Terminal I

even on a flrst come first served basis It may be forced to 

the trade at least temporarily Totem s refusal to use Terminals 2 and 3 is reason

Continuation of Totem s service to Anchorllle is In the public interest and shou

maintained if possible Continued use of Terminal I by Sea Land in a preferential 

is contrary to the public interest in violation of section 15 of the 1916 Act in that 

is a real possibility that it will serve to effectively preclude Totem from offer

competitive service during severe icinl conditions Therefore the presently app

asreement between the City and Sea Land which lives Sea Land preferential be

rights at Terminal I will be disapproved effective February 5 1976 unless the pa

prior to that date amend the asreement to provide that effective February 5 1976 

preferential berthins rights shall notapply durins the months of February through 

1976 Agreement Nos T 1685 as mended and T 1685 6 Between the C

Anchorllle and Sea Land Service Inc 69 7980

Respondents six Japanese fllll carriers seekins continuation of asreements pur

to which they cooperate among themselves so as to provide a coordinated 

containerized service between Japan and California entered into those asrlleme

facilitate the transition from a breakbulk to a fully containenzed service respond

have recaptured the sl1are of conference carloes which they el loyed prior to comm

ins the transition and the conduct of respondents pursuant to the asreements ha

been shown to have been ul lustly discriminatory or unfair as between car

Asreements No 97183 and 9731 5351 364

The transpacific trades throuah 1974 hl da sisnificant excess of caplll ity over 

offered for carriase Agreements amons six Japanese flas carriers for cooperation a

themselves to provide a coordinated fully containerizedservice between Japa

California permit these carriers to offer the level of service Which they consid

competitively necessary with substantially less capacity than would be required fOr 

carrier to individually offer thatlevel of service The asreements therefore te

ameliorate the overtonnagns problllm in the trades and tend to keep a blah num

common carriers in those trades Both of these results are beneficial to the publi

outweish the anticompetitive effects of the asreements sufliclently to justify cont

implementation of the agreements untlI Ausust 27 1977 when they wlIl termina

accordance with amendments now before the Commission for approval Consequ

the asreements are not contrary to the public Interest or detrimental to the comme

the lJnited States lei 365

The record does not show that asreements amons six Japanese flas carriers pur

to which the carriers cooperateamons themselves so as to provide a coorlllnated 

containerized sorvlce between Japan and California have resulted in unfairly dep

members of the Marine Cooks and Stewards Union of employment by U S fllll ca

in the trades The decline In employment Is the result of several factors Incl

modernization of the equipment used by the steamship comp llljes emplpylns the 

members the transfer of vessels previously employins union members to other tr

and the decline In the share of conference carso carried by the steamship 

employing the union s members The decline in the share of conference cargo 

attributable in large part to the Increase In the share carried by a steamship com

which does not employ the union s members Even thouah the success el loyed b

Japanese flag carriers has contributed to the decline in union employment It wa

proved that the agreements have beenul llst1y discriminatory or ulfair as be

carriers Thus the union did not prove that the agreements have unfairly deprive

union members of employment Id 366
INDEX DIGEST 821

In a proceeding brought by one carrier against other carriers alleging the other carriers

had entered into and implemented agreements which had not been submitted to the

Commission for approval pursuant to section 15 of the 1916 Shipping Act the questions

of possible past section 15 violations could be considered apart from the complaint and

would not bar dismissal of the complaint after the parties had entered into approved

section 15 agreements resolving the private controversy Refrigerated Express Lines N

Asia Ply Ltd v Columbus Lines 581

Complaint by one carrier against other carriers alleging that they had entered into and

implemented agreements relating to the carriage of meat from Australia which would

give them exclusive rights in such trade in return for observing maximum rates set by

the Australian Meat Board and that those agreements had not been submitted to the

Commission for approval pursuant to section 15 of the 1916 Shipping Act would be

dismissed with prejudice The parties had entered into agreements relating to such

carriage those agreements had been approved by the Commission and it appeared that

the private controversy between complainant and respondents had been terminated Id

582 584

The Presiding Officer properly dismissed as a matter of law the complaint of Lykes a

member of the Far East Conference that the conference was violating sections 15 14b

14 Third 16 First and 17 of the 1916 Shipping Act by implementing a modified and

unapproved version of the conference agreements by failing to impose sanctions against

its members who wereminibridge carriers Lykes is unable to make vessel calls at West

Coast ports and the ability to call at such ports is necessary to engage in westbound

minibridge service U S Atlantic or Gulf Coast ports by rail to West Coast ports and

thence by vessel to the Far East The FEC may not itself engage in or prevent its

members from engaging in any type of intermodal service without first receiving

Commission approval of an express amendment to the conference agreement Had the

FEC acted to curb encourage or regulate minibridge competition by its member lines

the lines joining in such action would have violated section 15 and possibly sections 14

Third and 14b of the Shipping Act Lykes Bros Steamship Co Inc v Far East

Conference 589 593

Proceedings designed inter alia to codify in one rule the various general provisions

regarding section 15 agreements is discontinued Time and events have overtaken the

original proposals The more efficient procedure would be to fashion new rules for

further comment Section 15 Agreements Under the Shipping Act 1916 547

AnIilru t Law

Respondent carriers pursuant to agreements under which they cooperate among

themselves so as to provide a coordinated fully containerized service between Japan and

California have reduced the level of competition among themselves As such the

agreements run counter to the policies of the U S antitrust laws It is necessary

therefore to examine what benefits if any the agreements confer upon the public for

the Commission will not approve an agreement if it invades the antitrust law policies

more than is necessary to serve the regulatory purposes of the Shipping Act Agreements

Nos 97183 and 9731 5 351 364

A m nt formula

The Administrative Law Judge erred in finding that the Commission has not already

determined that the State Marine Group consisting of 12 breakbulk lines had been
822 FEDERAL MARITIME COMMISSION

overassessed by tbe New York Shippinll Association for tbe period 1969 1971 

improper basis of assessment for tbe Puerto Rican carriers resulted in the underas

ment of that group It necessarily follows since tbe total assessment obligation is 

tbat tbe Stales Marine Group was overassessed Tbe fact tbat the Commission di

in earlier phases of tbe proceediRll require anacijustment of the tonnase manhour 

upon which the Group scarso was assessed as was done with respect to automo

newsprint and Puerto Rican trade carlloes does not mean that in implementin

Commission s order requiring acijustments of assessments the breakbulkcarriers c

be compensated for overassessments caused by tbe underassessments on the P

Rican carriers Agreement No T 2336New York Shipping Association Coope

Working ArraRllement 248 2S3

Incomputinll any liability to the States MlUine Group by the New York Sb

Association for overassessments for the benefits for lonllshoremen for tbe 196

period account must be taken of any valid claims that reduce tlte size of tbe lia

allainst which tbe Group s claims are to be oftset The present amount of sucb 

liability ie tbe underassessment of tbe Puerto Rican carriers for tbe 19691971 

has by virtue of Commission approved settlement been reduced by credits by N

to the automobile interests As thus reduced tbe amount of overassessme

689 S99 Id 2S32S4

The States Marine Group s claim for overassessment by the New York Sb

Association for tbe benefit for lonllshoremen for tlje period 19691971 has no

satisfied by virtue of the Group s assessment treatment durinll tbe 1971 1974 and 

1977 assessment periods Once liability bas been established it cannot be remov

contentions that since assessments are raised continuously over successive perio

periods must be considered in determiniRll assessmentJiabilities Id 2S4

Since payments are made for lonllshoremen benefit funds on a continuing basis 

many assessment periods it is arauab1e that liability to certain carriers for overpa

for earlier periods could be discharlled by assessment reductions for later periods 

is not the case with respect to overpayments made by the States Marine Group f

period 19691971 vs alleged compensation because of increased payments by the 

Rican carriersfor the 1971 1974 assessment period The arllumentthat such is tb

rests on many assumptiolls noneof which has been or can be proved in tbe con

the present proceeding The weakest link in the argument is tlte assumption as to 

would have happened witb respect totbe assessment for cargo in the Puerto Rican 

if the assessment formula for tbe period 1971 1974 had been litigated Tbe asses

formulas for Puerto Rican cargo for tbe 1971 1974 and 19741977 periods were ap

in the context of settlements Considerations underlying settlements do notnece

coincide with the process of making findings on a record in a

litigated proceeding 

it cannot be sbown that the Puerto Rican carriers were overassessed for tbe 197

periods it follows ipso facto that the States Marine Group cannot be shown to 

been underassessed by virtue of such overassessment Id 2SS2S8

The States Marine Group did notallree notto pursue and did notwaive its 

against tbe New York Shipping Association for overassessments for the ben

lonllshoremen for the 19691971 period NYSA remains liable for the satisfaction 

claim NYSA is itself an entity subject to the Shipping Act 1916 and bea

responsibility to make such acijustments as are necessary to implement Comm

approval of the assessment agreement Id 260

Claim of the States Marine Group for interest as part of the outstanding liability 

New York Sbipping Association for assessment overpayments by the Group f

period 19691971 is denied Whether to grant interest is a matter for Comm

discretion and neitber equity norpromotion of effective regulation requires such 
INDEX DIGEST 823

here NYSA has notengaged in any conduct which it should have known was improper

at the time has notbeen shown to have improperly delayed the proceeding and did not

hold but promptly paid overthe assessments it collected forthe use and benefit of ILA

which was their intended and proper purpose Id 261

Complaints by carriers relating to the authority ofthe New York Shipping Association

to raise the level of assessments on excepted cargoes are dismissed as moot following a

Commission decision in a related proceeding Transamerican Trailer Transport Inc v

New YorkShipping Association Inc 739 740

MollOpoly

Tbe relevant market for purposes of determining whether respondents six Japanese

flag carriers seeking continuation of agreements pursuant to which they cooperate

among themselves so as to provide a coordinated fully containerized service between

Japan and California have a monopoly cannot be geographically less than the U S

Pacific Coast Respondents are liner operators In addition to the liner operators which

are members of the Trans Pacific Freight Conference of Japan and or the Pacific

Westbound Conference at least ten other carriers provide liner services between Japan

and the U S Pacific Coast To determine respondent s share of the relevant market it is

necessary to consider the carryings of all liner operations in that market both

conference and nonconference The record is insufficient to support a finding that

respondents have a monopoly of the relevant market because it is not possible to

determine the shlllir which respondents have of any market greater than the inbound

conference trades Agreements Nos 97183 and 9731 5 351 356358

Pooling agreemellls

Petitioner the Marine Cooks and Stewards Union failed to prove that an agreement

among six Japanese flag carriers to pool revenues in the trade between the Pacific Coast

of the United States and Japan is unjustly discriminatory or unfair as between carriers

The Commission had previously held that petitioner failed in its proof and no further

evidence bearing on monopoly or unfairness was adduced Agreement No 101161

Extension of Pooling Agreement 595 597

Petitioner the Marine Cooks and Stewards Union failed to prove that an agreement

among six Japanese flag carriers to pool revenues in the trade between the Pacific Coast

of the United States and Japan resulted in the strongest member sustaining the weakest

which would have otherwise failed or resulted in the members increasing their share of

the conference trades Id 597 598

Rate

Agreement granting the Pacific Westbound Conference authority to fix intermodal

rates is approved for 18 months on condition that the agreement be modified to permit

member lines to individually offer intermodal service notonly as to minibridge but as to

interior intermodal as well until such time as the conference implements the authority

granted to it by the ftIing of appropriate tariffs Agreement No 57 96 Pacific Westbound

ConferenceExtension of Authority for intermodal Service 289 295 307

Aside from the fact that the Far East Conference s proposal to control minibridge is

inconsistent with its existing authority and would at the very least require a major

amendment to the FEC agreement FEC failed to present any convincing arguments

why it rather than the Pacific Westbound Conference should be adjudged to be the
824 FEDERAL MARITIME COMMISSION

appropriate conference to exercise westbound minibridge jllrisdiction to the Far 

Id 296297

Agreement granting the Pacific Westbound Conference authority to fIX inter

rates as to minibridge and interior intermodal is justified by the need to elim

multiple tariffs and desirability of uniformity of tariffs and by the potential fo

instability and malpractice which exists in the trade by reason of the fact that the 

is overtonnlllled Id 2989

By restricting and precluding individual member lines from publishing tarif

through intermodal transportation and fixing the rates and charges at which 

transportation will be offered qreement of the Pacific Westbound Conference c

tutes a clear illeaal restraint of trade As such the qreement is contrary to the 

interest unless it can be shown to be justified or warranted in terms of legit

commercial objectives The Conference mullt demonstrate that the agreement se

serious transportation need is necessary to secure important pUblic benefits o

furtherance of a valid regulatory purpose of theShipping Act Id 299

Argument that conference ratemaking agreements are somehow immune fro

approval standards of section 15 of the Shipping Act including the public In

considerations of Svenska is whoUy inconsistent with the clear ianguaae of sect

itself Section 15 explicitly requires that the Commission subject to its ap

requirements any agreement which provides for one or more of the act

specifically set forth in the seven categories enumerated therein one of these bei

fixing or regulating of transportation rates AD conference ratemaking arraiJae

are subject to the approval standards ofsection 15 Id 300

While aU conference ratemaking lIlIreements are required to meet the standar

approval set forth in section IS the extent of the justification that need be sho

such approval wiD vary from case to case with the intensity of the otherwise 

restraint involved Thus the legitimate commercial objectives which the Co

sion wiU accept as evidencing the necessity for the restraint willgeneraUy be deter

by the type and scope of the agreement under co1slderation The Commission do

agree that because of the intermodal aspects of the hlstant IIIlreement the 

stringent proof of a serious transportation need is required Id 3001

The COmmission has generaUy found IIIlreements giving conferences inter

ratemaking authority to be in the public interest These types of agreemen

generaUy acceptable However such agreements will not be sllll1lnal iJy approved m

because similar agreements have been found warranted and have been approved 

section 15 in the past The Commission will not abdicate its responsibility to assur

the conduct legalized by such agreements does not invade the prohibitions 

antitrust laws any more than is necessary to serve the purpose of the statute Id 

Applying the standards of section 15 as interpreted inSvenska approval of agre

giving the Pacific Westbound Conference authority to fIX intermoda1 rates is requi

a serious transportation need and will serve to secure important public benefits 

are some definite legitimate objectives to be derived from approval one of wh

elimination of the multiplicity of mim bridge tariffs which exists under the present s

of aUowing each PWC member to me its own individualtarift The single most imp

public benefit derives from the advanll lle that conference authOrity over interm

rates will offer The intermoda1 movement of cargoes aUowing for continuous mov

under a single biD of lading with less handling provides an essential tr 

service to shippers and consignees The conference system provides the mann

19 F 
INDEX DIGEST 825

which the development of intermodalism can be most effectively accomplished in the

individual trades Uniformity of tariff rules is one of the desirable benefits that can be

expected to result from approval Clearly conference authority overintermodal rates

and traffic is an important public benefit that militates in favor of the approval of

intermodal activity Id 301 303

In addition to the clear and present benefits that can be derived from an agreement

authorizing the Pacific Westbound Conference to fix intermodal rates by virtue of the

elimination of multiple intermodal tariffs approval of the agreement is also warranted by

transportation circumstances and therefore will serve to fulfill a transportation need

Although the conference did not demonstrate any present rate instability or malpractice

there is a definite potential for both The trade is overtonnaged and overtonnaging

invariably gives rise to rate stability and malpractices The threat to stability which can

be expected to continue as minibridge grows coupled with the disadvantages inherent in

a multi tariff system fully support conference jurisdiction over intermodal tariff and

traffic bothinterior and minibridge Id 303

Interior intermodal presents an equal if not greater threat to rate stability than does

minibridge if only because the volume of cargo potentially available in intermodal

operations from the industrial heartland of the United States exceeds the volume

involved in minibridge Likewise the multiplicity of tariffs can be expected to present

even greater difficulties than with minibridge because of the number of tariffs involved

Under the circumstances there is no reason or regulatory purpose to be served by

limiting the Pacific Westbound Conference s intermodal authority to minibridge Id

304

Failure of the Pacific Westbound Conference to expeditiously publish an interior

intermodal tariff could deprive the shipping public of benefits which it might otherwise

receive if a member line published an intermodal tariff Accordingly the conference will

be required to modify its agreement giving it authority to fix intermodal rates to permit

member lines to individually offer intermodal service notonly as to minibridge but as to

interior intermodal as well until such time as the conference implements the authority

granted to it by the fIling ofappropriate tariffs Id 304

The Commission cannot itself modify the agreement of the Pacific Westbound

Conference giving it authority to fIX intermodal rates without the unanimous approval of

the member lines including those lines which had no part in the original submission of

the agreement The Commission s standing to amend or modify an agreement under

section 15 is always subject to the subsequent acceptance of the amendment or

modification by the parties thereto However the Commission is not powerless to

rectify a situation created when asingle conference member line consistently frustrates

the wishes of the vast mliority by continually casting a dissenting vote Id 305

Voting rules

Where conferences submitted to the Commission for approval proposed amendments

to their agreements which had been unanimously adopted by the conferences members

as required a prospective member of the conferences objected to the amendments and

later on becoming a member of the conferences the carrier pursued its objections and

filed protests with the Commission which ordered an investigation and hearing the

Presiding Officer erred in discontinuing the proceeding on the ground that the new

carriermember had destroyed the required unanimity and thus there wereno agreements

before the Commission to approve The entry of a new conference member does not

invalidate a prior unanimous conference action even though that action has not yet

received Commission approval However failure of any party to the proceeding to file

19 F MC
826 FEDERAL MARITIME COMMISSION

exceptions to the Presidinll Officer s

rulinll was tantamount to acquiescence an

construed as an effective withdrawal of the amendments from Commission consid

tion and therefore the proceeding is discontinued Agreement No 808011 Am

ment to the Atlantic and GulfIIndonesia Agreement 500 502503

COMMONCARRIER See also Jurisdiction

Althoullh neither section 1 of the Shipping Act 1916 nor section 5 of the 1933 

defines the term common carrier it has long been held that this term means 

common carrier at common law The determination of common carrier status ca

made by reference to a number of indicia e g variety of cargo carried numb

shippers type of solicitation regularity of service port coverage responsibility tow

the cargo issuance of bills of lading etc It is not necessary that a carrier s opera

encompass everyone of these factors Possible Violations of Section 18 a o

Shipping Act 1916 and Section 2 of the Intercoastal Shipping Act Arising 

Charging Hi gher Rates than Specifiedby Current Tariff 43 SO

The fact that a carrier does not itself own or operate transportation equipment 

not destroy its common carrier status The Commission has recognized the so c

nonvessel operatiilg common carrier a common carrier publishing a tariffand offer

transportation service to the shipping public who neither owns noroperates vesse

motor vehicles Id 51

A nonvessel owning carrier which offered to the general public a coordin

transportation service including consolidation at its terminals transportation by w

and distribution to consignees in Hawaii with the shippers having no authority to 

the service was not merely a shipper s agent Such operation is that of a com

carrier subject to the provisions of section 18a of the Shipping Act 1916 and se

2 of the Intercoastal Shipping Act Contention that disclaimer of liability in its tar

bill of lading signified that its service was not that of common carriage was wit

substance The carrier honlred some claimsand shippers were not aware o

disclaimer Even if the carrier had fully implemented the disclaimer provision this 

alone had no legal significance in determining carrier status Liability is imposed by 

Id 53 56

The reason why assumption of liability need not be included in any definitio

common carriage is that once a person holds himself out generiilly to carry for hir

whomever wishes to employ him he has undertaken the occupation of a common c

and liability will be imposed on him as a matter of law So strict is this doctrine t

common carrier s liability has been likened to that of an insurer Id 55

At the common law a tender of cargo consisted of an unconditional offer to per

coupled with a manifested ability to carry out the offer and production of the su

matter of the tender Dow Chemical International Inc v American President L

Ltd 531 537

A sequence of events whereby a shipper presented its containers at the entrance 

carrier s terminal yard was given a pass and was directed to the carrier s cont

yard did not constitute an offer to deliver the container and thus was not a te

However tender of the container did occurwhen the shipper arrived at the gate t

carrier s container yard and offered the carrier the bill of lading for the conta

Arrival at the gate and offer of the bill of lading constituted an offer to delive

container the shipper had the container at the gllte and had there the ability to d

the container to the carrier Id 537

19 F 
INDEX DIGEST 827

COMPLAINTS See also Jurisdiction

Itis one thing to permit an amendment to a complaint which merely affixes a notary s

seal adds a supporting sworn statement or alters the type of relief requested without

changing the essential nature of the cause of action or the respondents involved It is

something else to name a totally different respondent The latter amendment

constitutes a new proceeding and goes beyond the type of amendments permitted by

Rule 502 70 Trane Co v South African Marine Corp N Y 374 384

Amendments to complaints are liberally permitted under the Commission s rules so as

to protect rights which might expire under the two year period of limitations contained

in section 22 of the Shipping Act However amendments which do notmerely add

parties having a cOmmunity of interest with an original complainant to a suit properly

brought but substitute parties especially when such parties arejurisdictionally indispen

sable are not merely clarifying amendment but new complaints which should be so

treated despite the possible effects of the period of limitations Id 385

The GSA and other government agencies are persons under section 16 First of the

1916 Shipping Act Such treatment is not only appropriate and consistent with public

policy but is also in keeping with the Commissions longstanding practice of treating such

agencies as persons for the purpose of ftling a complaint under section 22 of the Act

Freight Forwarder Bids on Government Shipments at United States Port Possible

Violations of the Shipping Act 1916 and General Order 4 619 622

DEVICES TO DEFEAT APPLICABLE RATES

A freight forwarder did not violate section 16 of the 1916 Act when it allegedly

breached its duty to its principal by preparing shipping documents describing the goods

in a manner contrary to the principal s express instructions with the result that a higher

rate was charged for the shipments The principal a shipper was unable to show any

competitive relationship with any other shipper The forwarder was not under an

absolute obligation to follow the instructions of its principal What the shipper is

alleging under the color of section 16 is a violation of an agent to its principal under

COmmon law principles The Commission has nojurisdiction oversuch a claim Further

were the Commission to espouse the sort of duty allegedly owed by the agent to its

principal compliance by a forwarder with such a duty could well result in itself in a

violation of the Shipping Act European Trade Specialists v Prudential Grace Lines

148 152154

DISCRIMINATION See also Freight Forwarding Section 19 Regulations

Carrier did not violate section 16 of the 1916 Shipping Act by discriminating in favor

of Norfolk forwarders and against forwarders in ports and at airports In this case the

forwarder was selected by the shipper As to alleged discrimination in favor of another

shipper there was no evidence that the carrier had evercarried cargo for that shipper

European TradeSpecialists Inc v Prudential Grace Lines Inc 148 158

Not all preferences or advantages offered by carriers are condemned by law but only

those that are unjust or unreasonable violate the Shipping Act 1916 Moreover the

existence of unjust discrimination or prejudice must be demonstrated by substantial

proof Port of Houston Authority v Lykes Bros Steamship Co Inc 192 199

Proceeding instituted by order to show cause for the purpose of eliminating inbound

outbound rate disparities in the U S North Atlantic Continental European trade is

discontinued Many of the items of alleged disparity had been eliminated or it was

19 F MC
828 FEDERAL MARITIME COMMISSION

shown that no meaningful disparity existed Some items of disparity remained cons

ing the length of time since institution of the proceedina and the real possibility 

subsequent rate actions have either eroded previous remedial rate actiolls created 

disparities on other items or eliminated disparities continuation would serve little us

purpose The Commission will use other approaches whereby meaninaful disparities 

be identified and eliminated Publication of DiscriminatorY Rates in the U S N

Atlantic Continental European Trade 477

The intent of Congress in repealina section 6 and amendina section 5 of 

Intercoastal Shippina Act of 1933 was to require that the rates on aovernment cara

be established on the same basis as commercial rates The government is nolon

statutorily entitled to reduced rates but mustjustify such rlltes on valid transporta

factors While the repeal of section 6 does not preclude as a matter of law a sepa

simplified rate system for military cargoes such a rate structure must be based on v

transportation factors Department of Defense and Military Sealift Command v Ma

Navigation Co 503 507

DUAL RATE CONTRACTS

The sounder interpretation of the 1961 chanaes to the Shipping Act 1916 and the 

which is more ful1y supported by the lellislative history is that section 14b 2 whene

a tariff rate for the carrilllle of goods under contract becomes effective It shal

be increased before a reasonable period but In no case less than ninety days 

notice provision governing the filing ofrates covered by a dual rate contract and sec

18 b 2 is a notice provision limited to the fllina of noncontract rates The contract 

need notbe in effect for 90 days before a rate increase can be made effective Petitio

North AtlanticFrench Freight Conference 660 66972

ENVIRONMENTAL IMPACT STATEMENT

Environmental issues relatlllg to the malter of approvability of preferential bert

lllIreements at Allchorlllle do notconstitute alIuijor federal action sianificantly affec

tlie quality of the human environment within the meanina of the Natlonill Environme

Policy Act of 1969 and preplU lltion of a detailed environmental impact statement is 

required Agreement No T 1685 as Amended and T 1685 6 Between the City 

Anchorage and Sea Land Service Inc 440 459

FREETIME ANDDEMURRAGE See Truck Detention

FREIGHT FORWARDING

j

i

A licensed ocean freight forwarder must be independent He cannot be one wh

directly or indirectly controlled by a shipper The Commission has consistently 

unequivocally held that one who is employed by a

shipper is not independent within 

meaning of the 1916 Shipping Act and therefore cannot be licensed or continue to 

a license as a

freight forwarder Cleto Hernandez R dba Pan Inter 104 108

No weight can be given to the proposition that the holder of a

freight forward

license having no shipper connection at the time of licensing has a riaht to 

continuation of that license when a subsequent connection arises It is immaterial 

such control arises after a license Is issued rather than prior to an application there

Shipper control negates the Commission s authority notonly to issue a license in 

fUst instance but to allow it to continue regardless of any conditions that the licen

may propose Id 109
INDEX DIGEST 829

Whenever a shipper connection is found to exist that relationship alone is sufficient

to revoke a

freight forwarder license notwithstanding any other merits or demerits of

the particular forwarder involved Id 109

A freight forwarder who failed to remit money to a shipper and entrusted to him by a

consignor until more than five months after that money was due and owing and who

apparently did not have sufficient funds to remit that money during the five month

period was not qualified to remain afreight forwarder There was overwhelming

evidence that the licensee had used the funds for his personal requirements during that

time Id 110 111

The phrase fit willing and able to carryon the business of forwarding as set forth

in section 44 b of the 1916 Shipping Act means that a forwarder is unfit and unable to

perform his duties when he uses funds entrusted to him for uses not intended or fails to

pay bills incurred in connection with the freight forwarding activities These standards

pertain not only to complete independence from shipper control the ability to pay bills

and properly use funds entrusted to him by others but also means that a forwarder must

act with the highest degree of business responsibility and integrity Id 111

It is well established that the burden of proof in a freight forwarder licensing

proceeding is on the applicant The plain language of section 44bof the 1916 Shipping

Act indicates as much by providing that aforwarding license shall only issue if the

Commission finds that the applicant meets the statutory criteria and that otherwise

such application shall be denied By applying for its initial federal license as an

independent ocean freight forwarder an applicant seeks to change the status quo and it

has been held that the burden of proof in administrative proceedings falls upon the party

seeking to change the status quo Lesco Packing Co Inc 132 136

An applicant for an independent ocean freight forwarder license was under no

obligation to secure counsel to represent itself in the application proceedings and that

portion of the initial decision denying the application which relied on the applicant s

clumsiness in representing itselfpro se was erroneous Id 137

An applicant for an independent ocean freight forwarder license whose principal had

engaged in a course of misconduct overthe years lacked the character qualifications to

be a licensee The principal had been found guilty of violating the Bills of Lading Act

had made knowing and false statements to the Commission on a freight forwarder

license application had falsely obtained grandfatherrights in violation of section 44a of

the 1916 Shipping Act his firm has been denied export rights by the Department of

Commerce because of the improper export of strategic commodities and the principal

had previously been found by the Commission to have engaged in a scheme to permit

himself to engage inocean freight forwarding without a license Id 137

A freight forwarder did not violate section 16 of the 1916 Act when it allegedly

breached its duty to its principal by preparing shipping documents describing the goods

in a manner contrary to the principal s express instructions with the resultthat a higher

rate was charged for the shipments The principal a shipper was unable to show any

competitive relationship with any other shipper The forwarder was not under an

absolute obligation to follow the instructions of its principal What the shipper is

alleging under the color of section 16 is a violation of an agent to its principal under

common law principles The Commission has no jurisdiction oversuch a claim Further

were the Commission to espouse the sort of duty allegedly owed by the agent to its

principal complaince by a forwarder with such a duty could well result in itself in a

violation of the Shipping Act European Trade Specialists v Prudential Grace Lines

148 152154

A freight forwarder did not violate section 17 of the 1916 Act by its inability to secure

19F MC
1

830 FEDERAL MARITIME COMMISSION

classification of its principal s

cargo under a particular tariff item thus betraying 

shipper by misdescribing the cargo The description furnished by the forwa

accuratelydescribed the commodity shipped and accordingly no uqiust orunreasona

practice was engllled in by the forwarder Id lS4

A shipper did not sustain its burden of proof that a freight forwarder violated sec

17 of the 1916 Act by failing to apprise its principal the shipper of any dispute 

discrepancy as to the rate to be applied to the principal sgoods The record would 

aIlow any conclusion on whether the forwarder had properly informed its shipper p

to shipment of a discrepancy in the applied rate Id lSS

Section 17 of the 1916 Shipping Act does not require that forwarders publish t

regulations and procedures Nor has the Commission either in General Order 

elsewhere by rule or decision mandated that a licensed freight forwarder must esta

and publish a special body of regulations Id lS6

A freight forwarder did not violate section 17 of the 1916 Shipping Act when it fa

to abide by its shipper s instructions in describing the commodity shipped There was 

evidence of collusion between the forwarder and the carrier The forwarder prop

described the cargo as it was required by the Act to do The aIleged scienter of 

forwarder was irrelevant to a proceeding in which the issue was simply a determina

ofthe nature of the commodity shipped Id lSiIS7

The matter of whether a freight forwarder violated section 17 of the 1916 Shipping 

by aIlegedly not following the usual routine of a forwarder in informing its shipper 

the carrier was objecting to a proposed tariff classification and In obtaining additi

product classification from the shipper is remanded for further hearing with respe

the forwarder s obligations Id lS7

Carrier did not violate section 16 of the 1916 Shipping Act by discriminating in fa

of Norfolk forwarders and against forwarders In ports and at airports In this case 

forwarder was selected by the shipper As to alleged discrimination in favor of ano

shipper there was no evidence that the carrier had ever carried cargo for that ship

Id lS8

Carrier did not engage in an uqiust and unreasonable practice in violation of sec

17 of the 1916 Shipping Act in that its agent did not Inform the shipper of the age

inability to bind the carrierto a rate initially quoted by the agent The age

representation was not conclusive as to the rate applicable and the shiper s presi

was thoroughly aware through experience of the inability of an agent to quote 

authoritative rating since the conference and carriers werethe final arbiters of the pro

rate to be charged Id 160

An application for an oceanfreight forwarder license which was commonly ow

with a produce broker for a client engaged in the movement of produce in the ex

commerce of the United States was independent from shippers within the meanin

section 1 of the 1916 Shipping Act and Its application would be granted Seq

Forwarders Co 182 186 190

The Zane licase does not stand for the proposition that every agency or o

relationship between a forwarder and an export shipper Is proscribedby the indep

ence requirement of section I of the 1916 Shipping Act The statutorY lequiremen

absolute independence is absolute only to the extent that it absolutely bar

licensing of any applicant whose activities cause it to be included in one of 

prohibited categories of section 1 of the Act It is not a standard requiring an appl

to be absolutely independent of shipper interests The section I independ

requirement does not preclude all relationships between forwarders on the one h

and shippers and consignees onthe other Id 187 188

19 F M
INDEX DIGEST 831

A produce broker for a client engaged in the movement of produce in the export

commerce of the United States was neither a shipper consignee seller or

purchaser of export shipments within the meaning of section 1 of the 1916 Shipping

Act Id 188

There was no reason to believe that an arrangement between a produce broker

commonly owned with an applicant for freight forwarder license and a client providing

25 of the broker s business was such that the client directly orindirectly controlled

the broker within the meaning of section 1 of the 1916 Shipping Act Neither firm had

any employees in common nordid they own stock have a proprietary interest in or a

corporate connection with one another Such a relationshipis not the type of relationship

which the Commission has in the past found to allow for the granting of illegal rebates

and therefore prohibited by section I of the Act Id 188189

That an applicant for an independent ocean freight forwarder license might possibly

use confidential information obtained as a forwarder for the benefit of a commonly

owned commodity broker and its principal client was not grounds for denying its

application What an applicant might do if licensed is insufficient to justify the denial

of a license if the applicant is otherwise qualified in fact and law Once licensed

however the forwarder is subject to all Commission rules and regulations and any

unlawful conduct oractivity can be dealt with in an appropriate proceeding Id 189

The purpose of section 510 24c of the Commission s rules is to prevent illegalrebates

by prohibiting a licensed forwarder from sharing any part of its revenue with a shipper

or agent thereof since were it to do so the shipper would be in fact receiving a rebate

Thus while a commodities broker which was commonly owned with an applicant for an

independent oceanfreight forwarder license was the speciallgent for a client involved

in the movement of produce in the export commerce of the United States and was

registered as such under the Agricultural Commodities Act it did notnecessarily follow

that this type of special agency was of the nature so as to invoke the prohibition of

section 510 24 c That section is directed at agency arrangements which gi ve rise to

direct or indirect rebates to the shipper ie where the agent is controlled by the shipper

orconsignee principal Id 190

Assuming arguendo that an applicant for a freight forwarder license had an officer

qualified to conduct ocean freight forwarding there remains the matter of another officer

submitting false information to the Commission and its representative with the presumed

knowledge of yet another officer who together hold most of the applicant s stock This

activity alone calls into question the applicant s fitness to conduct a

freight forwarder

business International Freight Services Ltd 224 225

A freight forwarder license is somewhat more than a mere license to do business The

holder of a license occupies a position of enormous competitive and economic power

and enjoys a fiduciary relationship with shippers A licensee s integrity must be above

repraoch The giving of false information to the Commission or its representative is to

be considered in determining the fitness of an applicant Id 232

Questions of legal fraud have no place in determining whether an applicant for a

freight forwarder license has been truthful in his representations to the Commission

about his qualifications for a license Ability to serve the public in an endeavor as

sensitive as forwarding shonld notturn on nice legal distinctions Id 236237

Applicant for a freight forwarder license who made numerous misrepresentations to

the Commission or its representative must be denied a license To do otherwise would

be to condone a cavalier approach to misrepresentation made by the applicant himself

to overlook the fact that he induced others to falsely represent themselves to finally

accept those proven facts as peccadillos which should be overlooked for the sake of

19 F MC
832 FEDERALMARITIME COMMISSION

permitting the applicant to provide expanded service to the shipping public an

accept applicant s concept of normal competition practices which were found to 

unlawful in open court The applicant is unfit to carry on the business of forwarding 

246241

Applicant for afreight forwarder license one of whose two principals had no ac

experience in forwarding while the other s experience was limited to one shipm

which he personally handled was not able to conduct the business of an ocean fre

forwarder The principal who handled one shipment claimed that he was qualified on 

basis of beina in charae of the London olllce of a company when it handled some oc

shipments and on the basis of his experience in handlina air shipments There was 

evidence as to the alleged similarity of air and ocean shipments liavina observed 

demeanor of the principal on the witness stand and having considered the whole of 

testimony and the entire record in the case it cannot be concluded that the experie

of the principal renders him sufficiently lble to conduct the freiaht forward

business so as to be the qualifying olllcerfor the corporate applicant Id 24243

GENERAL ORDER 4 See Freight Forwarding

GENERAL ORDER 5 See Accountina Reports

GENERAL ORDER II See Accounting Reports

GENERAL ORDER 13 See Rates

GENERAL ORDER 20 See Security for the Protection of the Public

GENERAL ORDER29

Two proceedings investigating the lawfulness of certain rates bid by a carrier for 

carriage of military cargo which had been continued beyond the life of the r

challenged therein for the purpose of establishing prospective guidelines regarding 

application of General Order 29 of the Commission were discontinued without preju

due to the amount of time that had elapsed since the institution of the proceedings 

in view of the imminent introduction of a new standardized cost information syst

which would necessitate further revision of the General Order when implement

American Export Lines Inc Sea Land Service Inc and United States Lines In

Possible Violations of Section 18 b 5 of the Shipping Act 1916 in connection w

Rates on Military Cargo 391 392

JURISDICTION

The jurisdictional problem of the failure of a complaint to establish that complain

has paid the freight or has otherwise validly succeeded to the claim goes to the issu

standing to recover reparation although not to standina to file a complaint not see

reparation Trane Co v SouthAfrican Marine Corp N Y 374 378

A complaint seeking reparation for overcharaes which failed to alleae that a comm

carrier by water subject to the jurisdiction of the Shippina Act viollted section 18b 

of the Act is jurisdictionally defective and must be dismissed Id 381

A complaint alleging a violation of section 18b 3 of the Shipp na Act by a comm

carrier but namina only the carrier s aaent as respQndent is jurisdictionally defect

19 F M
INDEX DIGEST 833

Section 18 b 3 is limited by its terms to common carriers or conferences of such

carriers A carrier s agent does not transport property is not a party to a conference

agreement consisting of carriers and has no tariffof its own there is no doctrine that a

carrier may stand aloof while the agent assumes full responsibility for violation of the

carrier s duties under the Act Id 382383

Section 33 of the Shipping Act does not preclude the Federal Maritime exercise of

jurisdiction over a company engaged in the transportation of passengers for hire between

various points on the Atlantic Coast of the United States pursuant to P L 89 777 Not

only was P L 89 777 not enacted as part of the Shipping Act but section 33 only

precludes concurrent with the ICC subject matter jurisdiction While the carrier here is

subject to Part III of the Interstate Commerce Act none of its provisions are even

similar to provisions of section 3 of P L 89777 American Cruise Lines Inc 420 422

Part III of the Interstate Commerce Act does not contain a provision requiring parties

subject to that Part to establish financial responsibility for passenger indemnification as

required by P L89 777 Accordingly the FMC in exercising jurisdiction over an

interstate common carrier subject to ICC jurisdiction under P L 89 777 is not

exercising concurrent jurisdiction with the ICC Not ouly does the ICA not prohibit

carriers subject to it from complying with the rules and regulations of other agencies

but it specifically provides in Part III thereof that nothing in this chapter shall be

construed to affect liabilities of vessels and their owners for loss or damage

Id 4223

The 1916 Shipping Act limited the Commission s in personam jurisdiction in only

three respects I

there must be a common carrier by water which is not a tramp or

ferryboat 2 the carrier must transport cargo between the United States and a foreign

country and 3 the Commission may not exercise concurrent jurisdiction over any

matter within the jurisdiction of the ICC The FMC s foreign commerce jurisdiction is

notrestricted to ocean carriers operating vessels which physically call at United States

ports A common carrier engaged in through transportation of goods between the United

States and a foreign country by water is subject to section I of the 1916 Act Austasia

Container Express 512 518

The 1916 Shipping Act does not permit the Commission to directly reach the port to

port rate of an ocean carrier operating ouly between two foreign countries Nordoes the

Commission envision section I of the Act as encompassing joint rate through route

international transportation offered by ICC regulated carriers via foreign ports in

conjunction with ocean carriers which are themselves subject to the Shipping Act Id

518

American goods exported to Canada on one bill of lading may be shipped elsewhere

under a second bill of lading without directly involving the Commission s jurisdiction

However extraterritorial aspects of section 15 agreements or other anticompetitive

actions by section I carriers violative of sections 16 or I7 may be within the scope of the

Shipping Act Id 518

Nonvessel operating carriers are section I carriers They undertake to provide ocean

transportation to the public and are subject to the same tariff filing requirements as

vessel operating carriers Id 518519

Carrier which holds itself out as offering a through common carrier service from

Detroit to various Australian ports truck to Windsor Ontario rail to Vancouver

Canada vessels to Australia and which issues a single bill of lading for the entire

movement when the cargo reaches Canada is a nonvessel operating common carrier in

the foreign commerce of the United States within the meaning of section I of the 19 I6

Shipping Act To accord jurisdictional significance to the fact that the bill of lading is

19 F MC
834 FEDERAL MARITIME COMMISSION

not issued until the goods reach Canada and that the underlying water carrier doe

call at a United States port would exalt form over substance It would lea

significant loophole in the Shipping Acts protective mantle Id 513 518 519

So long as a nonvessel operating carrier solicits and musters cargo in the U

States and uses exempt ICC motor carriage to transport the cargo from the U

States on a through route containing a significant transoceanic segment Detr

Windsor Ont to Vancouver B C to Australia the carrier can and shou

effectively regulated by the Maritime Commission The ICC s limited regulati

carriage to Windsor is not an obstacle to exercise of FMC jurisdiction The 

exercise of ICC and FMC authority overa particular person does not constitute the 

of concurrent power forbidden by section 33 of the 1916 Shipping Act that prohi

only prevents the two agencies from regulating the same commercial activities a

same time Id 520

The true purpose of the Commission s previous descriptions of its jurisdicti

port to port was to disclaim any encroachment into the legitimate regulatory rea

the ICC at a time before the FMC and ICC had developed mutual procedures fo

filing of joint through intermodal tariffs Id 520

Nonvessel operating carrier which offers through transportation of goods from D

to Australia via truck to Windsor Ont rail to Vancouver and vessels to Austra

required by section 18 b of the 1916 Shipping Act to file a tariff covering the th

route transportation Moreover the Commission s rules requiring filing tariffs i

jurisdictionally limited by section 18 b Since 1961 the Commission s rule m

authority has resided in Shipping Act section 43 This authority has been br

interpreted by the courts and permits the adoption of substantive rules in furtheran

general Shipping Act objectives without a prior finding thlt a specific Shipping 

violation has occurred The Commission s obligations to define and eliminate unre

able preference and discrimination by ocean carriers pursuant to sections 16 First a

of the Act are sufficient to support adoption of the tarifffiling rules and their applic

to all foreign commerce carriers as defined in section I of the Act Id 521 522

OVERCHARGES See Reparation

PRACTICE AND PROCEDURE

In g n ral

A finding made by a Settlement Officer which was not reviewed by the Comm

was of a procedural value and was dispositive 9f a similar issue in a

subsequent 

Vandor Imports v Orient Overseas Container Lines 396 398399

Where the complaint in a proceeding for reparation was served by mail 

respondent on October 29 1975 accompanied by a Commission coverletter statin

complainant had requested the shortened procedure provided in Rule II o

Commission s Rules of Practice and Procedure but referring by error to the inf

procedure under which an answer should be filed respondent filed an affid

received by the Commission on November 20 1975 consenting to the info

procedure under Subpart S of the Rules applicable only to proceedings involving c

of less than 5 000 whereupon respondent received a letter from the presiding o

stating that the informalprocedure was not applicable and that complainan

requested the shortened procedure and urlling respondent to enter an appearance 

proceeding the presiding officer s letter constituted a grant of an extension of tim

19 F 
INDEX DIGEST 835

respondent to state whether it consented to the shortened procedure and to answerthe

complaint The granting of such an extension was authorized by Rule lO g of the

Commission s Rules E S B Inc v Moore McCormack Lines Inc 480 481

Where the presiding officer in a proceeding for reparation granted pursuant to Rule

100g of the Commission s Rules of Practice and Procedure an extension of time for

respondent to state whether it consented to the use of the shortened procedure and did

file an answer permission from the Commission or the Chief Administrative Law Judge

to grant the extension pursuant to Rule 5 d was unnecessary Rule ll i provides that

Subpart E Rule 5 applies only where the respondent does not consent to conducting

the proceeding under the shortened procedure Rule 5 was inapplicable Id 481

The presiding officer in a proceeding for reparation properly denied complainant s

motion for judgment on the pleadings which was based on the respondent s failure to

answer the complaint within the twenty day period provided by Rule 5 d of the

Commission s Rules of Practice and Procedure Even where agencies act in a quasi

judicial capacity the strict rules which prevail in suits between private parties and the

hard and fast rules as to pleadings which govern courts of law do not apply to

administrative proceedings where inquiries should not be too narrowly constrained by

technicalities Respondent was unaware of the Commission s procedural requirements

but when instructed how to proceed made what appeared to be a good faith effort to

comply with the Commission s Rules Moreover the complaint alleging a violation by

the respondent of section 18b 3 of the Shipping Act 1916 raised issues of fact which

could not be resolved by default but were required to be properly established on the

basis of all the available evidence Under the circumstances the presiding officer had

the authority to grant respondent an extension of time in which to answer and did not

act arbitrarily in acceptingthe filing ofrespondent s answer Id 481

The Commission amends its Rules of Practice and Procedure to authorize presiding

officers to enter such order or rule as they deem proper when no answer to a complaint

is timely filed and to extend the time for filing answers to permit the filing on the

following business day when the two year statutory limit for filing complaints seeking

reparation expires on a Saturday Sunday or legal holiday and to authorize presiding

officers to order a hearing as wen as the submission of additional evidence in

proceedings conducted under the shortened procedure Rules of Practice and Procedure

656

Where an administrative law judge dismissed the proceeding observing that complain

ant had flied no replies to respondents motions to dismiss and upon being informed by

complainant that he had notreceived copies of the reply due to clerical error entered an

Order upon Sua Sponte Reconsideration wherein he took account of complainant s

replies and again dismissed the proceeding the sua sponte reconsideration order

constituted an adequate response to complainant s subsequently filed motion for

reconsideration in which complainant raised the same arguments The administrative

law judge was accordingly not required to address the latter motion separately

Interconex Inc v Sea Land Service Inc American Export Lines Inc and U S

Lines Inc 714 715

Complainant in docket proceeding is dismissed without prejudice The case was

almost four years old and there were no signs whatsoever that complainant would

proceed to hearing The practices complained of had long since been terminated and

whatever issues which have remained were removed by complainant when it amended

the complaint to delete its claim for reparation The case was therefore essentially

academic and at best would lead to a declaratory order type decision establishing the

rights of the parties However the dismissal would not be with prejudice and the AU

19 FM C
836 FEDERAL MARITIME COMMISSION

would not make findings on the merits Complainant had succeeded in dismissin

claim for reparation with pr udice by its amendment since that claim was now b

by the statute of limitations Dismissal of the remainder of the complaint with prej

was notwarranted since cOllJplainant had not been guilty of contumacious conduc

had notbeen in willful default As to the request that the record be made a part o

future proceedina between the parties relating to the same controversy claim

reparation were now time barred and in view of the fact that complainant was 

seeking damages in an antitrust suit it appeared unlikely that complainant would re

litigation before the Commission with no prospect of recovering damaaes Moreov

evidentiary record existed in the case merely proffered documents and other ma

which had not been admitted into evidence Consolidated Express Inc v Sea 

Service Inc 722 723725

Altom

The Commission expects attorneys and other persons practicing before it to ob

the same code of conduct and staOdard of diligence as would be required of them 

court oflaw The Commission quasi judicial character must be recognized and resp

notsolely for its own sake but more importantly to assure that the basic procedur

substantive rights of party litigants be properly protected and represented Windja

Cruises Inc and Windjammer Cruises Ltd 112 l13

The Commission s Rules of Practice limit practice before the Commission to atto

persons admitted to practice or officers or regular employees of a party to a proce

practice before the Commission by firms or corporations on behalf of oth

specifically prohibited Accordingly where a claim was submitted by one firm on 

of another and there was nothing in the Commission s mes to indicate that the p

ming the claim was an attorney or a person admitted to practice before the agenc

complaint was not properly submitted under the Rules of Practice and could n

considered on its merits The complaint was dismissed without prejudice to resubm

within the two year statutory time period for the filing of such claims W

Engineering Co v United States Lines Inc 403

D ealltory orders

A petition for declaratory order seeking authority to capitalize the cost of monies 

to acquire a containership under construction which cost would include the net in

paid on borrowed funds or actual interest and income foregone as a result of 

existent company funds or foregone interest and further requesting the Comm

to state that such capitalized interest would be recognized as part of the petitio

vessel investment account in all rate making proceedings involving the new vesse

future vessels constructed by the petitioners presented involved questions of polic

fact not effectively treatable by issuance of a declaratory order and was the

denied Petitioner did not request the resolution of a particular controver

uncertainty arising from prior actions of the Commission or even allege tha

controversy existed but desired a personal exemption from the Commission s ord

approach to rate base valuation before a conclusion could be reached on s

petition for special relief close examination of the petitioner s financial positio

rate structure would be required an action for which there did not appear to b

current public interest basis Petition for Declaratory Order of Matson Navigation 

462 463

19 F 
INDEX DIGEST 837

Designation ofparties to agreements

Rules of Practice and Procedure are amended by designating parties to agreements as

proponents and parties opposing approval as protestants General Order 16 Arndt

16 509

Dismissal orders

Rules of Practice and Procedure are amended to provide specifically for review of

orders of dismissal by presiding officers General Order 16 Arndt 16 509 511

Government in the Sunshine Act

The Commission adopts regulations to implement the Government in the Sunshine

Act Commission meetings will be announced by appropriate methods in addition to

publication in the Federal Register Notices will be provided in the public reference

room Public Information 559

The Commission amends its Rules of Practice and Procedure relating to ex parte

communications in order to conform them to the requirements of section 14 of the

Government in the Sunshine Act The rules do notauthorize Hearing Counsel to engage

in forbidden ex parte practices Ex Parte Communications 601 602

Production of witnessesand mnJerials

Rules of Practice and Procedure are amended to provide that presiding officers will

rule on the production of witnesses and materials located in a foreign country Only the

Commission shall enforce orders and enforcement is discretionary General Order 16

Arndt 16 509 510

PRACTICES See also Terminal Operators

A freight forwarder did not violate section 17 of the 1916 Act by its inability to secure

classification of its principal s cargo under a particular tariff item thus betraying the

shipper by misdescribing the cargo The description furnished by the forwarder

accurately described the commodity shipped and accordingly no unjust or unreasonable

practice was engaged in by the forwarder European Trade Specialists Inc v

Prudential Grace Lines Inc 148 154

A shipper did not sustain its burden of proof that a freight forwarder violated section

17 of the 1916 Act by failing to apprise its principal the shipper of any dispute or

discrepancy as to the rate to be applied to the principal s goods The record would not

allow any conclusion on whether the forwarder had properly informed its shipper prior

to shipment of a discrepancy in the applied rate Id 155

Section 17 of the 1916 Shipping Act does not require that forwarders publish their

regulations and procedures Nor has the Commission either in General Order 4 or

elsewhere by rule or decision mandated that a licensed freight forwarder must establish

and publish a specialbody of regulations Id 156

A freight forwarder did not violate section 17 of the 1916 Shipping Act when it failed

to abide by its shipper s instructions in describing the commodity shipped There was no

evidence of collusion between the forwarder and the carrier The forwarder properly

described the cargo as it was required by the Act to do The alleged scienter of the

forwarder was irrelevant to a proceeding in which the issue was simply a determination

ofthe nature of the commodity shipped Id 157

19 F MC
838 FEDERAL MARITIME COMMISSION

The matter of whether a

freight forwarder violated section 17 of the 116 Shippin

by allegedly not following the usual routine of aforwarder in infonnins its shippe

the carrier was objecting to a proposed tariff classification and in obl3inlag addit

product classification from the shipper is remanded for further hearing with resp

the forwarder s obligations Id IS7

Carrier did not engage in an lII iust and unreasonable practice in viqJation of se

17 of the 1916 Shipping Act in that its agent did not inform the shipPlr of the ag

inability to bind the carrier to a rate initially quoted by the agent The ag

representation was not conclusive as to the rate applicable and the shipper s pre

was thoroughly aware through experience of the inability of an asent to quo

authoritative rating since the conference and carrierswere the final arbiters of the p

rate to be charged Id 160

Allowance by the West Coast of Italy Sicilian and Adriatic PortsNh At

Range Conference and its member lines of a three percent discount on prepaid fr

does not violate sections 16 and 17 of the 1916 Shipping Act The determinative fac

whether the conference canjustify added expenses for handling collect shipments 

the average difference in time between the receipt of freight prepaid and tbe rece

freight collect is about 30 days and this delay results in additional cost to the carr

llIl ior part of which is attributable to the necessary increase in working calital c

by the delay The impact of the delay is exacerbated by the condition of the It

economy high interest rates and inflation West Coast of Italy Sicilian lIIId Ad

PortsNh Atlantic Range Conference AmendedTariffRule Establishing An Allow

on Prepaid Freight 7S1 7SS

PREFERENCE ANDPREJUDICE See also Freight Forwarding

Terminal lease agreement between the City of Anchorage and Sea Land Service 

providing for a shift of Sea Land s preferential berth from Terminal I to Termina

February I 1976 will not be temporarily approved Severe icing occurs at Ancho

and there is the real possibility that Totem s vessel could be damaged because 

mooring and weather conditions Totem will not berth at Terminals 2 and 3 durin

severe icing conditions because of the risk to the vessel and her crew IfTotem c

use POLTerminal I even on a fllst come fllstserved basis it may be forced to 

the trade at least temporarily Totem s refusal to use Terminals 2 and 3 is reaso

Continuation of Totem s s rvice to Anchorage is in the public interest and shou

maintained if possible Continued use of Terminal I by Sea Land in a preferential 

is contrary to the public interest in violation of section IS of the 1916 Act in that 

is a real possibility that it will serve to effectively preclude Totem from offe

competitive service during severe icing conditions Therefore the presently app

agreement betwecn thc City and Sea Land which gives Sea Land preferential be

rights at Terminal I will be disapproved effective February S 1976 unless the pa

prior to that date amend tbe agreemcnt to provide that effective February S 1976 

preferential berthing rights shall not apply during the months of February through 

1976 Agreement Nos T 168S as Amended and T 168S 6 Between the C

Anchorage and Sea Land Service Inc 69 7980

Not all preferences oradvantages offered by carriers are condemned by law bu

those that are unjust or unreasonable violate the Shipping Act 1916 Moreove

existence of unjust discrimination or prejudice must be demonstrated by subst

proof Port of Houston Authority v Lykes Bros Steamship Co Inc 192 199

Complaint of the Military Sealift Command that a carrier had violated section 1

the 1916 Shipping Act because it had failed to tile appropriate military class rate

19 F 
INDEX DIGEST 839

dismissed Complainant failed to establish that the carrier s rate structure was unreason

able vis a vis other shippers Similarly complainant s request that container rates for

military cargo be established at a level that would provide the carrier a return

equivalent to the fully allocated costs of transporting those classes of cargo plus an

appropriate return on its investment in the trade would to the extent that such a

standard is notapplied to commercial shipments place complainant in a preferred class

This would establish a special class of rates applicable only to military cargoes and

without additional jurisdiction would clearly be contrary to the intent of Congress in

repealing section 6 of the Intercoastal Shipping Act of 1933 Department of Defense and

Military Sealift Command v MatsonNavigation Co 503 507

Practices of the Port of Houston Authority in connection with the rental of heavy

crane equipment under which Houston s cranes have frrst priority onjobs even to the

extent of displacing private crane owners equipment alreadyworking violate sections 16

First and 17 of the 1916 Shipping Act not only as applied against private crane

operators but also with regard to stevedores hiring private cranes Houston has ulliustly

preferred itself to private crane owners and subjected stevedores hiring private crane

owners to bumping and other unreasonable practices while exempting stevedores who

own their own cranes from such practices Perry s Crane Service Inc v Port of

Houston Authority of Harris County Texas 548 549

The Port of Houston s practice of giving itself first priority on cranes must be limited

Prior to the start of any job a stevedore should determine the availability of Houston s

cranes and if there is one equally suitable for the job at hand then Houston should be

given a preference as to furnishing a crane for that job The limited preference is

justified because of Houston s heavy investment in cranes and extensive labor related

expenses and guarantees declining share of available crane work the flexibility of

private cranes in moving from one location to another anoption not open to Houston

the fact that private crane owners are using facilities constructed and paid for by

Houston to conduct their private business and the absence of any evidence that

Houston is attempting to monopolize the crane rental business on its facilities Limiting

of the preference results in a practice which while still preferential is no longer undue

or unreasonable the key determination The frrst call privilege as modified will require

stevedores to select a Houston crane only if that crane is suitable for the job in the

judgment of the stevedore in terms of size and expense as any available crane Id 551

552

Practice of the Port of Houston in connection with the rental of heavy crane

equipment of preferring its own cranes to the extent of bumping other crane

equipment is unlawful and cannot be justified even if modified to allow Houston

bumping privileges if it can furnish a more suitable crane for the job than that

provided by the private crane owner Assuming the unavailability of a Houston crane

and the election by a stevedore to use a private crane for a particular job that private

crane ownershould be permitted to perform the job to completion without bumping

by a Houston crane Id 552

Contention that the failure of the Far East Conference and its member lines to take

action against the member lines engaging in minibridge activities even if consistent with

the conference agreement still results in unjust prejudice to complainant a member line

which cannot engage in the particular minibridge activities involved is rejected The

argument ignores the fact that overland competition from the Pacific Westbound

Conference lines the majority of which are also FEC members has existed for over 50

years Lykes Bros Steamship Co Inc v Far East Conference 589 593594

The contention that the costs of freight forwarders in processing GSA accounts can be

19 FM C
840 FEDERAL MARITIME COMMISSION

absorbed without additional personnel and without incurring sianificant costs and 

therefore costs charged to the GSA for processing shipments should not be compar

costs charged to commercial shippers is rejected The fatal flaw in such an approa

that it is not applied to commercial accounts Respondents failure to even conside

application of the absorption theory to their commercial accounts or to provide 

explanation as to why incremental pricing is appropriate for GSA accounts but lo

commercial accounts renders that approach wijustly and unlawfully discriminato

between shipper customers Freight Forwarder Bids on Government Shipmen

United States PortsPossible Violations of the Shipping Act 1916 ald General 

4 619 624S

The prohibition against uneven treatment embodied under section 16 First of the 

Shipping Act extends not only to persons but also to a description of traffic T

in a proceeding to determine whether practices of freight forwarders as they relat

contracts with the GSA violated section 16 of the 1916 Shipping Act the Comm

could consider those issues even if the GSA were not a

person within the meani

section 16 since GSA shipments describe a particular kind oftraffic Id 622

In order to find that freight forwarders had violated section 16 First of the 

Shipping Act by offering reduced rates to the GSA it was not necessary to find tha

GSA actua11y competes with commercial shippers While a forwarder may notha

perform all services listed in a GSA contract the fact remains that a forward

contractua11y obligated to perform any and all of those services upon request and 

services generally correspond to those olfereda commercial shipper The work inv

in processing a GSA shipment is clearly no less complex or time consuming than w

commercial account and it follows that the costs involved in processing GSA 

commercial shipments should be comparable Id 6234

The contention that that the provision of freiaht forwarding service to the GS

lower rates than to commercial shippers is in the public interest because the aovern

receives quality service at low cost without iqjuring anyone is without merit By en

section 16 of the 1916 Shipping Act among other provisions Congress has estab

the public policy to be the fair and even handed treatment of similarly sit

shippers and localities To the extent that low forwarding fees do notreflect the c

providing such services they have arguably made commercial customers pay 

attributable to GSA shipments If a commercial shipper is called upon to subsidiz

costs of processing GSA shipments it follows that that shipper has been finan

iqjured to some degree Even if it could somehow be shown that the low bids ass

GSA did notresult in measurable financial losses freight forwarders could n

absolved from wrongdoing The potential for iqjury is clear and exists with or W

finding of specific economic damage The extent of iqjury is only critical in arepa

context Id 62S6

Requiring freiahtforwarders to establish reasonable and equitable charaes fo

handling of GSA shipments would notruncontrary to the public interest by substa

restraining competition in the forwarder industry Such a

requirement would m

ensure that forwarders honor an obligation imposed on them by law that o

particular forwarding fee is established by a forwarder for a particular service bas

the circumstances of his operatioll that fee be made avallable to all shippers eq

Even if such a

requirement might essen competition such action is dictated b

requirements of the 1916 Shipping Act Id 626

Freight forwarders who charged the GSA less for freiaht forwarding service 

commercial shippers violated section 16 First of the 1916 Shipping Act Id 627

Freight forwarders who charged the GSA less for friehgt forwarding services 

19 F 
INDEX DIGEST 841

commercial shippers in violation of section 16 First of the 1916 Shipping Act also

violated section 51O 24 b of Commission General Order 4 The variation in the

magnitude of the fees charged the GSA and commercial shippers was sufficient to give

rise the reasonable probability that the low bids offered by the forwarders were in

consideration of those forwarders receiving compensation from carriers in violation of

section 51O 24 b rd 6289

Because section 51O 24b of Commission General Order 4 makes it unlawful for a

licensee to render or offer to render any forwarding service free of charge or at a

reduced fee a licensee who only offered to render but never actually rendered such

service free or at a reduced charge would stiD runafoul of that section rd 629

There is nothing in the 1916 Shipping Act or its legislative history to support the

conclusion that government agencies are to be given preferred treatment on forwarding

services If a government shipper here the GSA must pay the same terminal and ocean

transportation charges as do commercial shippers there is no reason why the GSA

should acquire a preferred position with regard to forwarding services Any amendment

to section 51O 24b of Commission General Order 4 which would place GSA shipments

in the same category as charitable and relief agencies would in effect permit forwarders

of GSA shipments to rely on brokerage from ocean carriers to cover the cost of

processing such shipments Such an amendment would clearly be inconsistent with the

intent of Congress rd 630

Freight forwarders issuing bids to the GSAwill be required to determine and establish

based on the costs and the circumstances of their operations the fee that will be

assessed the GSA for processing its shipments Whatever GSA fee is established shall

be compensatory equitable and nondiscriminatory vis a vis commercial accounts rd

6312

Allowance by the West Coast of Italy Sicilian and Adriatic PortsNh Atlantic

Range Conference and its member lines of a three percent discount on prepaid freight

does not violate sections 16 and 17 of the 1916 Shipping Act The determinative factor is

whether the conference can justify added expenses for handling collect shipments Here

the average difference in time between the receipt of freight prepaid and the receipt of

freight collect is about 30 days and this delay results in additional cost to the carrier a

major part of which is attributable to the necessary increase in working capital caused

by the delay The impact of the delay is exacerbated by the condition of the Italian

economy high interest rates and inflation West Coast of Italy Sicilian and Adriatic

PortsNh Atlantic Range Conference Amended TariffRule Establishing an Allowance

onPrepaid Freight 751 755

The mere fact that military household goods are transported at one rate when shipped

directly by the Military Sealift Command and at another rate when a nonvessel operating

common carrier intermediary is employed does not establish a violation of section 17

first paragraph of the 1916 Shipping Act The Commission has not been presented with

a clear case of two shippers of like traffic moving under the same circumstances and

conditions being charged different ratesto the detriment of one of them Nothing on

the record indicates that MSC Cargo N O S and Household Goods of Government

Personnel Shipped by NYO s Under Government Bills of Lading are not different

commodities for rate making purposes Although both include military household goods

each description legitimately includes other items as well While two shippers are

technically involved the special circumstances of the case indicate that the NOY s are

not operating independently but as the ailer ego of the Defense Department The real

party in interest is not injured by the different rates these shippers pay within the

meaning of section 17 Household Goods Forwarders Association of America v

American Export Lines 787 790792

19 F M C
19 F MC

842 FEDERAL MARITIME COMMISSION

RATES See also Agreements Under Section 15 Discrimination

Nonvessel operating common carrier which charged higher rates than specified in its

tariff violated section 18 a of the 1916 Act and section 2 of the Intercoastal Shipping

Act and its tariff is canceled Possible Violations of Section 18 a of the Shipping Act

1916 and Section 2 of the Intercoastal Shipping Act Arising from Charging Higher Rates

than Specified by Tariff 43 49 5657

There is no requirement under the Shipping Act that obligates a carrier to acquiesce

to a particular description of cargo desired by the shipper particularly when the

description desired appears to be inaccurate The carrier s obligation in general is to rate

the goods accurately according to the descriptions available to it European Trade

Specialists Inc v Prudential Grace Lines Inc 148 161

The standard for whether or not a

cargo is properly rated is only a determination of

what the goods transported actually were There is no unreasonable man standard as

applied to torts at common law The administrative law judge was completely justified in

relying on the shipper s own sales literature and samples of the commodity itself in

attempting to determine the true nature of the goods The next question should involve

the propriety of the rates applied to these goods In this case the record is inadequate

and the proceeding is remanded to resolve the exact nature of the goods shipped and the

properly applicable rate Id 163164

Section 18 b of the Shipping Act 1916 requires that carrier conferences in foreign

commerce fIle with the Commission rates and charges for transportation between all

points on its route and on any through route which has been established Thus the

requirement clearly applies not only to point topoint traffic but to through routes as

well Therefore and until exempted pursuant to section 35 of the Act the law requires

the filing of through rates with the Commission notwithstanding that such rates are also

on filewith another agency Filing of Freight and Passenger Rates Etc 203 205

Nonvessel operating common carriers by water engaged in providing transportation

for military household goods and personal effects where there is also a domestic

movement within the United States are granted continuing special permission to me

supplements andor revised tariff pages for such transportation onless than the 30 days

notice requirements of sections l8a and h of the Shipping Act 1916 but not less than

one days notice and a waiver of the tariffformat requirements of Tariff CircularNo 3

and General Order 13 is granted Id 205206

Reasonable rates are determined by establishing a fair value of the carrier s property

devoted to public service This return on rate base should be sufficient to cover

operating expenses and the cost of attracting capital Petition for Declaratory Order of

Matson Navigation Co 462 464

Carrier s general rate increase in the Virgin Islands trade is found to be just and

reasonable Respondent has experienced increased costs of operation and respondent

operates efficiently Some indication of the need for the increases was shown and no

computation made with respect to the increases showed them to be improper The rates

withstand the test of operating ratio and rate of return on rate base Transconex Inc

Proposed General Rate Increase in the Virgin Islands Domestic Offshore Trade 492

495

While a bill of lading description of a commodity is ordinarily neither conclusive no

binding in a determination of legal freight charges where the consignor or shipper is the

manufacturer of the commodity shipped the description in the bill of lading may notbe

ignored CSC International Inc v WatermanSteamship Corp 523 527

There is no better entrenched rule in the making of rates and ratings than the one that
INDEX DIGEST 843

a commodity cannot be lawfully classified according to the uses to which it is put Id

528

One use of a commodity does not necessarily determine the transportation nature for

tariff purposes of the commodity Different rates on the same commodity dependent

upon the use made of the commodity would lead to unjust discrimination Id 528

The nature and character of each shipment at the time tendered determines its status

for rate purposes and the use which may subsequently be made of the material shipped

is not controlling Id 528

Complaint alleging carrier misrated a commodity as a chemical instead of as a

detergent and therefore applied an improper rate is dismissed Complainant was a

manufacturer and distributor of chemicals the bill of lading described the commodity as

a chemical the consignee was a chemical company the commodity is defined in a

chemical dictionary and one of the uses of the commodity is in chemical synthesis

Moreover the classification of the commodity as a chemical was clearly in conformity

with the classification of the commodity contained in the Statistical Classification of

Domestic and Foreign Commodities Exported from the United States published by the

Department of Commerce Id 528

There is no conflict between the requirements imposed by the Federal Property Act

and the 1916 Shipping Act The GSA s authority to obtain transportation at the lowest

overall cost does not overrule the requirement that the rate agreed upon for such

transportation be lawful under the 1916 Shipping Act This is particularly so since the

1916 Shipping Act contains no exemption of the type appearing in section 22 of the

Interstate Commerce Act granting the government preferred status Rates and charges

assessed the government must therefore be reasonable and nondiscriminatory and

otherwise comply fully with the substantive provisions of the 1916 Shipping Act

Freights Forwarder Bids on Government Shipments at United States Port Possible

Violations of the Shipping Act 1916 and General Order 4 619 632

On reconsideration and giving due regard to the fact that carriers notpreviously

participating in the proceeding represent a substantial portion of the entire capability in

the very trades i e domestic offshore the Commission s final rules were intended to

address the promulgated rules revoking rules requiring the maintenance of records and

submission of data with regard to rate base are withdrawn Reports of Rate Base and

Income Account 745 746

REPARATION

III general

The proviso portions of section 18b 3 of the 1916 Shipping Act which empower the

Commission to permit a refund or waive collection of a portion of freight charges are

notof a discretionary procedural nature In order for the Commission to be vested with

the authority to grant refunds or waivers it must frrst ascertain that all requirements set

forth in section 18 b 3 of the Act have been complied with Commodity Credit

Corporation v Surinam Navigation Co Ltd 65

Application to waive collection of a portion of freight charges is denied where

complainant merely submitted the conclusory statement that there had been a misfIling

due to clerical error and supporting documents submitted by complainant did not

reveal the nature of the alleged clerical error A determination as to the propriety of a

waiver could not be made on such a record The Commission may notpermit deviations

from the rates onfIle UnionEngineering Kuwait v Iran Express Lines 93 9697

19 F MC
844 FEDERAL MARITIME COMMISSION

Reparation is awarded to a shipper whose shipment was incorrectly rated by 

carrier The shipment consisted of fiber drums of polyethylene synthetic resin t

was a

specific tariff in force for such material end the carrier had applied the h

synthetic resin N O S rate for the material The carrier had specific knowledlle from 

bill of ladinll that the material was shipped in drums Union Carbide InterAmerica 

v Venezuelan Line Compania AnonimaVenezolana deNavepclon 97 99

Reparation is awarded where the carrier had failed to charlie complainant s subsi

the contract rate although the shipper had not been listed as the fuIIy owned subsi

of complainant and the bills of ladinll failed to contain the appropriate proprie

clauses The contract shipper later notified the carrier of the subsidiary status o

shipper and that the cargo was proprietary carso Cities Service International In

Lykes Bros Steamship Co Inc 128 129

With respect to domestic intercoastal commerce 1I0verned by section 18a of the 

Shipping Act and section 4 of the Intercoastal Shippina Act of 1933 an error in a 

is not standing alone and in the absence of a

findina of unreasoQableness around 

permitting a carrier to charge rates other than those on file and in effect at the tim

the shipment Accordingly a carrier was denied permission to refund a portion an

waive collection of a portion of the freight charaes on three shipments of sterilized 

in hermetically sealed containers from Oakland California to Guam where the ca

was notable to prove that the rate charaed was unreasonable but only that the rat

milk steril in hermetically sealed containers with orwithout added flavoting 

mistakenly been changed to WM from wrr with the result that the charae

question had incorrectly been on a measurement rather than a weight basis Real Fr

Inc v Matson Navigation Co 215 216217

In denying a ctalm for a refund under a tariff rule providing that the carrierbears 

cost of transportil1ll the cargo from the actual port of discharge to the POrt of disch

named in the bill oflading on the arounds that the shipper haI

failed to provide adeq

proof of the port of discharge named in the bill of ladil1ll the settlement officer erre

falling to request the shipper or the carrier to supply additional documentation purs

to 46 CFR 502 304a and e F Powers Co Inc v Orient Overseas Container Li

219 221

Since the carrier s tariff rule provided for the forwardinll of carlO at carr

expense from the port of discharge to the bill of lading port without distinlluis

between less than trailer load LTL lots and trailer load shipments the shipper 

awarded a refund of the cost of transportinll by truck LTDcargo from the po

discharge to the bill of lading port The carrier could not by a statement of policy 

matter how widely published establish a rule binding on shippers unless such rule 

first filed with the Commission under section 18 b of the Shipping Act of 1

Accordingly the carrier s unmed rule distinguishing between LTL and trailer 

shipments could notbe reliedupon to deny reparation but Itselfviolated section 18b

of the Act by denying transportation privileges to LTL shippers in a mannernot st

inthe carrier s tariff Id 221 222

While a carrier s argument in a misclassification case that an award for the claim

would force it and other carriersto inquire of every shipper as to whether the descrip

of cargo in the bill of lading is correct constituted a compelling equitable considera

it was not a cognizable legal defense to an award of a refund of overcharges pursua

section 18b 3 of the 1916 Shipping Act The Commission Is not empowered to cons

arguments addressed to equitable considerations in matters arising under section 18b

of the Shippil1ll Act of 1916 Andes Products Export Emport v Prudential Lines 

244 246247

19 F M
INDEX DIGEST 845

Since the Commission is notempowered to consider arguments addressed to equitable

considerations in matters arising under section 18 b 3 of the Shipping Act of 1916

there was no merit in a misclassification dispute to respondent s contention that the

claimant was not entitled to a refund of overcharges because the claimant had been

delinquent in researching the applicable tariff and in describing the cargo in the bill of

lading Id 247

An action seeking reparation for alleged overcharges was dismissed as a nullity where

the complaint named only the carrier s agent as a respondent and did notname the

carrier itself While the named respondent had agreed to a stipulation which stated that

it in fact acted as the agent of the carrier and while it may have been the intent of the

stipulation to indicate that the agent orits attorney had informed the carrier of the

complaint section 22 of the Shipping Act of 1916 places exclusive responsibility for

furnishing acopy of the complaint on the Commission Even if section 22 could be

interpreted so as to permit the function of furnishing a copy of the complaint to the

carrier to be performed by an agent it would not follow that knowledge of a proceeding

commenced against an agent makes the principal a named party to that proceeding

CaterpillarOverseas S A v South African Marine Corporation N Y 315 318

A tariff item which stated that the charge for a shipment of lesser weight or

measurement quantity shall not exceed the charge for shipment of a greater weight or

measurement quantity of the same commodity provided justification for the carrier to

waive collection of a portion of certain freight charges by applying a rate which covered

only shipment of a minimum of 30 000 lbs to a shipment which actually weighed 29 723

lbs where the waiver application otherwise satisfied the criteria of section 18 b 3 of

the 1916 Shipping Act Riviana Foods v Sea Land Service Inc 320 322323

A tariff item which stated that the charge for a shipment of a lesser weight or

measurement quantity shall not exceed the charge for shipment of a greater weight or

measurement quantity of the same commodity provided justification for the carrier to

waive collection of a portion of certain freight charges by applying a rate which covered

only shipment of a minimum of 30 000 Ibs to a shipment which actually weighed 24 642

Ibs where the waiver application otherwise satisfied the criteria of section 18 b 3 of

the 1916 Shipping Act Douglas Material Company v Sea Land Service Inc 328 330

Ruling of the Settlement Officer dismissing complaint for reparation of freight

overcharges is vacated The SettlementOfficer in his dismissal had noted that as a tariff

applicable to the shipment could not be located a determination on whether the carrier

had collected the proper charges could not be made Dismissal of the complaint under

such circumstances would deprive complainant of obtaining relief notbecause it had

been established that it was notentitled to reparation but because of lack of information

needed to decide the merits Questions as to whether the charges collected were based

ona tariffwith the Commission the identity of the underlying oceancarrier and whether

it had an applicable tariff on me the identity of the shipper on the bill of lading and

whether the bill of lading identified any of the carriers as independent ocean freight

forwarders remained unanswered Since resolution of those questions among others

might require an evidentiary hearing not available under Subpart S of the Rules the

proceeding would be referred to the Office of the Administrative Law Judges for

adjudication under the formal procedure provided in Subpart T of the Rules The

Federal Minister of Defense Federal Republic of Germany v Republic International

Forwarding Co and Republic Van and Storage Co of Los Angeles Inc 337 338

Any person may file a complaint under section 22 of the 1916 Shipping Act whether

or not such person has suffered injury However to seek reparation a person must show

injury and proof of pecuniary loss Also the complainant must show that it has suffered

19 F MC
846 FEDERAL MARITIME COMMISSION

real damage In a claim for refund of freight charges the complainant must show th

has paid freight or has succeeded to the claim in a valid fashion such as by assignm

Noauthorities are cited holding that a parent corporation without more has standin

seek recovery of damages suffered by its wholly owned subsidiary corporation T

Co v South African Marine Corp N Y 374 378

Reparation was denied to a shipper which had been told by an agent of the carrie

the rate applicable to a shipment of motor oil was 961cubic foot a

temporary 

applicable only to shipments between certain listed ports which was subsequ

advised that the quoted rate was in error and that the shipment rate would be 12

cubic foot the general commodity rate applicable to motor oil under the carrier s

ta

and which paid the higher rate under protest The port of destination stated on the b

lading was not among the ports eliaible for the reduced temporary rate accordingly 

shipment was required to be billed at the general commodity rate Celestial Merca

Corp v M Golodetz Co Inc 404 4056

In considering claims for reparation the determination of the applicable rate sha

based on what can be shown is the true nature of the commodity shipped Su

determination will be based on all the evidence of record with no single docume

piece of evidence necessarily being controlling Kraft Foods v Moore McCorm

Lines Inc 407 40910

In preparing a bill of lading it is usually the case that the carrier in classifying 

rating a shipment must look to the information supplied to him by the shipper or fre

forwarder Elementary fairness dictates that the carrier should be entitled to rel

such information and to charge and collect freisht in accordance with the descri

supplied by the shipper To require a carrier to inquire of a shipper whether the lat

description of the goods shipped is correct would place an undue burden on the ca

PanAmerican Health Organization v Prudential Lines Inc 412 414

The importance of declaring in bills of lading the correct description of the c

shipped cannot be overemphasized The carrier has the right to expect that a shi

will properly identify his shipment just as the shipper has the right to expect the ca

to charge the proper rate for the type of goods actually carried An equitable rule w

seem to limit reparations based on misidentification and misrating to those cases w

the actual language used on the face of the bill of lading indicates an impro

misclassification or obvious disregard by the carrier of the descriptive language use

the shipper Further a shipper who insists upon using a trade name rather tha

appropriate and readily available commodity index description in the filed tariff sh

be held to do so at his peril Id 4145

A shipper was entitled to reparation where due to misdescriptions of cargo by 

shipper the bill of lading covering the shipment placed the goods shipped in an inco

class of commodities having a higher shipping rate than that actually authorized fo

goods shipped That the carrier was without fault with regard to the error 

immaterial Id 415

A carrier which did notdeny the merits of a shipper s claim of overcharge 

nonetheless denied the claim on the ground that it was not timelyfiled under atarif

was not only within the rights under its governing tariff but was required to take 

action which it had taken The unauthorized payment of an otherwise legitimate cla

response to the application of stimi1li e g

the filing of a

reparation complaint with 

Commission while denying all other similar claims in the absence of such st

represents precisely the type of discriminatory practice proscribed by section 16 Fir

the Shipping Act 1916 SCM Corporation v Seatrain International S A and Sea

U K Ltd 417 419

19 F
INDEX DIGEST 847

A shipper which conclusively proved that goods shipped under the bill of lading

description raw drugs consisted entirely of Cerelose powder a form of dextrose was

entitled to reparation in the amount of the difference between the shipping rate for

dextrose and the higher rate charged by the carrier applicable to harmless drugs

That the rate charged by the carrier had been based on the shipper s own raw drugs

designation did not detract from the conclusion that a misrating had occurred Section

18b 3 of the Shipping Act 1916 prohibits a carrier from assessing a charge greater

less or different than the rate specified in its tarifffor a particular commodity or service

aod does not distinguish between knowing and inadvertent misratings Abbott Labora

tories v Venezuelan Line 426 429

Whether or not an uulawful charge has been assessed knowingly may be a matter for

consideration in determining whether to seek penalties for a violation of the Shipping

Act 1916 it is immaterial however to the question whether a violation of the Act has

occurred Id 429

A tariffrule barring a claim by a shipper for adjustment of freight charges based on an

error in description uuless made in writing sufficiently in advance to permit verification

of description before the cargo leaves the carrier s possession cannot act as a bar to

Commission consideration of the claim on its merits Carborundum Co v Royal

Netherlaods Steamship Co Antilles N V 431 434

Complainant shipper s product properly described as Trimet its registered trade

name orTrimet Technical Trimethylolethane or Technical Trimethylolethane was an

alcohol and an ingredient of synthetic resin as contended by respondent carrier and not

a raw material within the contemplation of respondent s tariff as contended by

complainant The shipper s claimfor reparation in the amount ofthe difference between

the charged rate for alcohols not hazardous and the lower rate for general organic

chemicals or that for synthetic resin was accordingly denied CSC International Inc v

Orient Overseas Container Line Inc 465 474 4756

A shipper of mine safety hats described by the shipper as safety hats Topgard

hats and V Gard Caps was entitled to reparation in the amount of the difference

between the rate for Hats N O S at which the goods were shipped and the lower

rate for Helmets N O S In view of the goods function as protective headgear

designed to resist impact from overhead objects the goods were more akin to helmets

or safety hats which share the characteristic of being protective head coverings made of

materials capable of resisting impact to avoid iqiury to the wearer then they were to

mere hats MSA International v Chilean Line 478 479

It is not Commission policy to award costs or attorney s fees as reparation except in

the most unusual circumstances Refrigerated Express Lines AlASIA Ply Ltd v

Columbus Lines 581 585

On review of the Settlement Officer s decision granting reparation on an overcharge

claim involving the carrier s trade name tariff rule the decision is affirmed The

SettlementOfficer referred to the Commission decision in Ocean Freight Consultants v

Royal Netherlands Steamship Co Okt 7Z39 Report on Reconsideration served Jan

30 1975 as having modified if not overruled the decision in Dockets 303 F and 304F

Johnson Johnson International v Prudential Grace Lines Inc The Officer s

statement is misleading inasmuch as the final decision of the Commission in Johnson

Johnson is in fact totally consistent with Ocean Freight Consulants and could not have

been overruled thereby because it was issued later in time The decision that was

modified by Ocean Freight Consultants and by the later decision in Johnson

Johnson was the initial decision in Johnson Johnson Johnson Johnson Interna

tional v RoyalNetherlands Steamship Co 678

19 FM C
848 FEDERAL MARITIME COMMISSION

Although the record offers no reason to disapprove the minimax concept or 

particular charges proposed in lease aareements between the Port Authority and car

or terminal operators the Commission cannot ill110re the fact that the only basis fo

lessees use of the involved piers to date which was not violative of section IS 

under the Port Authority s public tariff and the parties have not adhered to that t

The tariff contains no provisions for monthly on account biUing pending approv

the aareements with subsequent adjustments nordoes it permit extensions of cred

the unusual amounts and periods which have been extended to several proposed less

Moreover in the case of two piers one lessee was allowed to continue its exclu

occupancy for five months after the prior lease expired before the Port even decl

those facilities to be public piers This course of conduct represents at lea

cooperative working arrangement which was not reduced to writing filed and appr

by the Commission as required by section IS and constitutes a violation of that sta

It also represents a violation of the Commission s Rules by the Port Authority 

section IS violation has notproximately iQjured an objecting terminal operator and 

notentitled to reparations Aareement No T 2880 asAmended 680 6845

The appeal of a nonvessel operating common carrier from the dismissal o

complaint in a proceeding in the nature of a crossclaim seeking indemnificat

from other carriers named as correspondents of complainant in a previously instit

reparation proceeding was denied on the ground of mootness where the previo

instituted reparation proceeding had been dismissed by its presiding officer and 

dismissal had not been appealed to the Commission The crossclaim proceeding 

not state an independent claim of the complailUl lt but was entirely continaent up

finding against the complainant in the previous proceeding that contingency fa

however when the prior claimwas dismissed by the presiding officer and that dismi

going unappealed became the decision of the Commission Thus complainant ha

claim as to which it could prevail under any circumstances and the administrative 

judge properly dismissed the cross claim action Inten onex Inc v Sea L

Service Inc American Export Lines Inc and U S Lines Inc 714 7 6

The denial of complainant s appeal from the dismissal of its proceeding in the na

of across claim which proceeding was contingent for its vitality upon a conting

which had been destroyed by prior action of the Commission did not deprive 

complainant appellant of its right to due process oflaw Id 716

Administrative orclerical error see also negotiated rates

Application for permission to refund a portion of freight charges is granted w

through oversight the contract rate was not extended for the tariff quoting period 

inadvertent failure to extend the rate fell within the intended grounds for such refu

Andrew Corporation International v Atlantic Gulf Service 139 141

Application to refund a portion of freight charges is granted where the applicable 

had inadvertently been omitted from a revision of the conference tariff The confere

had changed the format of its tariffto conform to the U S Customs Shipper s Ex

Declaration and the rate for the commodity had been omitted in the revision 

conference stated that it was not its intent to increase the shipper s rate on 

commodity at the time the tariff format was changed Phillips Petroleum Co v Pa

Westbound Conference 143 147

Application to refund a portion of freight charges is granted where the tarifffor 

cargo was inadvertently omitted from a revised tariff The item had been carrie

previous tariffs for over 20 years The administrative error by which the item 

omitted from the revised tariffwas clearly of the type for which relief was contempl

19 F M 
INDEX DIGEST 849

under section 18 b 3 of the 1916 Shipping Act The Goodyear Tire Rubber Co v

Delta Steamship Lines Inc 174 176

Pursuant to section 18 b 3 of the 1916 Shipping Act as amended by Public Law 90

298 and as further implemented by 46 CFR 502 92 the carrier was permitted to waive

collection of a portion of certain freight overcharges where due to an administrative

oversight the carrier had inadvertently failed to extend a lower rate beyond its

applicable expiration date The waiver would not result in discrimination among

shippers prior to requesting the waiver the carrier had fIled a new tariffsetting forth the

rate upon which the waiver would be based and the waiver application had been filed

within 180 days of the date of shipment Riviana Foods v Sea Land Service Inc 320

322323

The carrier was permitted to waive collection of a portion of certain freight charges

where due to a clerical error the carrier s tariffpublishing personnel had published the

applicable rate with an incorrect reference which rendered the rate not subject to a

certain discount and thus not competitively equal to the rate applicable via other

carriers The waiver would not result in discrimination among shippers prior to

requesting the waiver the carrier had filed a new tariff setting forth the rate upon which

the waiver would be based and the waiver application had been filed within 180 days of

the date of the shipment Kurtin Wool Stock Corp v Sea Land Service Inc 324 326

327

The carrier was permitted to waive collection of a portion of certain freight charges

where due to a clerical error the carrier s tariffpublishing personnel had published the

applicable rate with an incorrect reference which rendered the rate not subject to a

certain discount and thus not competitively equal to the rate applicable via other

carriers The waiver would not result in discrimination among shippers prior to

requesting the waiver the carrier had fIled a new tariff setting forth the rate upon which

the waiver would be based and the waiver application had been fIled within 180 days of

the date of the shipment Douglas Material Company v Sea Land Service Inc 328

330331

A common carrier s application for permission to waive collection of a portion of

certain freight charges was granted where there had been a tarifffiling error due to

inadvertence the granting of the requested waiver would notresult in discrimination

among shippers the shipper had fIled a new tariff setting forth the rate upon which the

waiver was to be based prior to applying for permission to waive collection and the

application had been filed within 180 days of the shipment involved Raytheon Co Inc

v Sea Land Service Inc 343 346

A common carrier s application for permission to waive collection of a portion of

certain freight charges was granted where there had been a tariff filing error due to

inadvertence the granting of the requested waiver would not result in discrimination

among shippers the shipper had fIled a new tariffsetting forth the rate upon which the

waiver was to be based prior to applying for permission to waive collection and the

application had been filed within 180 days of the shipment involved Raytheon Co Inc

v Sea Land Service Inc 347 350

Application to waive collection of a portion of freight charges is granted where the

carrier through clerical and administrative oversight had failed to extend the expiration

dateof the special rate for the commodity shipped The oversight had occurred during a

general rate increase by the carrier and the carrier had stated that it did not intend to

raise the special rate This type of clerical and administrative error is of the type within

the intended coverage of section 18 b 3 of the 1916 Shipping Act Shuman Plastics

International Ltd v Sea Land Service Inc 496 498

19 F MC
I

I

850 FEDERAL MARITIME COMMISSION

Where due to a clerical errorin connection with the reissuing of certain tariffpa

specialrates for articles of plumbing fIXtures were overlooked the carrier was p

t

to refund a portion of the freight charges which it had collected pursuant to a gen

rate for the commodities The error in the tariffwas of a clerical or administrative na

and resulted in the failure to withhold a general rate increase from the special rates 

had been promised to the shipper a refund of a portion of the freight cl1araes would 

result in discrimination among shippers prior to applying for authority to refund 

carrier had fded a new tariff which set forth the rate on which such refund would 

based and the refund application had lpeen flied within 180 days from the date 

shipment Kohler International Ltd v Sea Land Service Inc 565 568S69

Where through inadvertence the carrier s tariff agent had not been informed th

certain rate was not to include a congestion surcharge the carrier was permitted 

waive collection of that portion of freight charges on a

shipment subject to the 

which was equal to the amount of the surcharge A waiver of collection of a portio

the freight charges would not result in discrimination among shippers prior to appl

for the waiver the carrier had fded a new tariff which set forth the rate on which 

waiver would be based and the waiver application had been fded within 180 days f

the date of shipment U S Department of Agriculture v Waterman Steamship Co

577 57880

Application for permission to waive collection of a portion of freight charge

granted where the carrier had fded the wrong rate for the commodity The carrier 

stated that the incorrect rate had been filed in error and that the proper rate had b

substituted This is the type of clerical and administrative error within the coverag

section 18b 3 of the 1916 Shipping Act United States Mahogany Corp v S

International Shipping Agency Inc 608 611

Permission to waive collection of a portion of freight charges is granted where 

carrier s tariff clerk had inadvertently published 222 30 instead of the proper rat

122 30 during a tariff revision This type of clerical and administrative error is wi

the intended scope of coverage of section 18b 3 of the 1916 Shipping Act Un

Forwarders Service Inc v Sea Land Service Inc 636 638

Application to waive collection of a portion of freight charges is granted where 

rate was erroneously shown in a revised tariffas 270 WM instead of 279 W Th

the type of clerical and administrative error within the intended scope of coverag

section 18 b 3 of the 1916 Shipping Act International Paper Co v Gulf Un

Kingdom Conference 652 654

Permission to waive collection of a portion of freight charges is denied The ag

upon rate had been subject to a minimum of 300 revenue tons and a falldown 

production schedule prevented delivery of that minimum quantity for the vesse

falldown in production by the manufacturer is not an error in tariff of a clerica

administrative nature norit it an errordue to inadvertence in failing to file a new ta

Collins Aikman Export Corp v Barbar Steamship Lines Inc 709 711

Application to waive collection of a portion of freight charges is granted where 

rate for the commodity shipped was inadvertently dropped by the conference tariff f

clerk during the incorporation of a general rate increase The carrier stated that 

omission was the result of clerical mistake and that the rate should have simply b

carried forward with the general rate increases The inadvertent failure of the carrie

extend the rate when it clearly intended to do so presents the kind of situation sec

18b 3 of the Shipping Act was intended to remedy Letraset Consumer Products 

v Lykes Bros Steamship Co Inc 813 816

19 F M
INDEX DIGEST 851

Burdell ofproof

In an action for freight overcharges complainant has a heavy burden of proof once

the shipment has left the custody of the carrier In this case the complainant met its

burden of proof and accordingly reparation was awarded Rohm and Haas Comapny v

Venezuela Line 9 II

The test the Commission applies onclaims for reparation involving an alleged error of

a commodity classification is what the complainant can prove based on all the evidence

as to what was actually shipped even if the actual shipment differed from the bill of

lading description However the complainant has a heavy burden of proof once the

shipment has left the custody of the carrier In this case the shipper was able to prove

that the carrier had incorrectly applied the higher rate for automobile bus and truck

parts viz other parts to shipments of connecting rod assemblies and engine

components which should properly have been classified under the lower rate for

automoblie bus and truck parts viz cyclinder block assemblies with or without

crankshafts Accordingly reparation was awarded Cummins Engine Co Inc v

United States Lines Inc 100 101

In an action for reparation to recover overcharges the complainant has a heavy

burden of proof once the shipment has left the custody of the carrier In this case the

carrier met his burden of proof and was awarded a refund Union Carbide Inter

America Inc v Venezuela Line 126 127

The general rule in a misclassification dispute is that what is actually shipped

determines the applicable rates However where the shipment has left the custody of

thecarrierand the carrieris thereby prevented from verifying the claimant s contentions

the claimant has a heavy ultimate burden of proof to establish its claim In this case

claimant was able to substantiate its claim on the basis of invoices and statements from

the supplier and from the merchandiser that pencils carried by respondent were not

mechanical and therefore should have had applied to them the rate for Pencils Not

Mechanical rather than the rate for Pencils N O S Andes Products Export Import

v Prudential Lines Inc 244 246247

Reparation is denied where the shipment left the custody of the carrier and the carrier

was prevented from verifying the claimant s contention as to the total measurement of

the shipment Claimant failed to sustain the heavy burden of proof required in such

cases Claimant spacking list indicated a total measurement of 798 cubic feet whereas

the Mate s receipt showed that the cartons were measured on receipt of the cargo at the

dock prior to shipment and measured 898 cubic feet Claimant had had ample

opportunity to request remeasurement by the carrier in accordance with provisions of

the bill oflading United DecorativeFlower Co Inc v Maersk Line 340 341 342

In considering claims involving disputes as to the nature of cargo either weight

measurement or description if the cargo has left the custody of the carrier before the

claim is brought and the cargo cannot be reexamined the complainant bears a heavy

burden of proof In the instant case complainant met that burden of proof Kraft Foods

v Moore McCormack Lines Inc 407 4101

In a reparation proceeding based upon incorrect description on the bilI of lading of the

goods shipped where the shipment has left the custody of the carrier and the carrier is

therefore prevented from personally verifying the shipper s claimed description of the

goods shipped the shipper has a heavy burden of proof and must establish with

reasonable certainty and definiteness the validity of its claim Pan American Health

Organization v Prudential Lines Inc 412 414

While the carrier has a

right to expect that the shipper will properly identify the goods

contained in a

shipment the shipper similarly has the right to expect the carrier to

19 F MC
852 FEDERAL MARITIME COMMISSION

charge the proper rate for the actual goods carried Where a mistake occurs the p

who commits it has the heavy burden of proof to support a claim for rectificat

Abbott Laboratories v Venezuelan Line 426 428

In determining whether complainant has met its burden of provilll the true nature 

a commodity shipped considerations of size and experience of shipper and frequenc

shipments made have nothing to do with proof of the nature of the commodity an

any event the Commission has previously disavowed equity theories regarding o

charge claims Carborundum Co v Royal Netherlands Steamship Co AntlUes N 

431 4356

Complainant carried its burden of proof on an overcharlle claim to show the 

nature of the commodity shipped by affirmative evidence especially inasmuc

respondent failed to answer plead or otherwise appear throullhout the course of 

proceeding Id 436

In rating a shipment of chemicallloods respondent shipper properlyapplied Rule 

its North Atlantic Far East Tariff FMC 6 which provides that a correct descriptio

the goods may be arrived at by comparison of the shipper s bill of lading description 

the description contained in the shipper s Export Declaration Such use of the Ex

Declaration does not constitute an extension of the bill of ladinll but operates 

check and balance similar to those exercised by the various branches of governm

under the U S Constitution Such a check and balance is desirable particularly In 

age of containerization a carrier should notbe bound by a shipper s misdescriptio

the goods in the bill of lading CSC International Inc v Orient Overseas Conta

Line Inc 465 4712

Complainant s contention that the presiding officer in a

reparation proceeding held 

bills of lading to be the sole proof of the transaction between the parties to 

exclusion of all other evidence was rejected The presiding officer recognized 

making his decision that even though the bill of lading sets forth the terms 

conditions in the contract of affreightment it is not conclusive as to the descriptio

the goods shipped and that a shipper who challenlles that description may introd

whatever evidence he has to prove his allellations as to what actually moved e

where the bills of lading and other shipping documents were prepared by the shippe

his agent E S B Inc v Moore McCormack Lines Inc 480 481

The presiding officer in a

reparation proceeding correctly found that complain

shipper had presented insufficient evidence to prove that certain cartons were not 

skidded but also externally crated onall sides so as to qualify for a lower freight cha

The bills oflading covering the goods described the packll8es as skidded cartons 

made no reference to crates letters from the goods packers statilll that the cart

were packed in wooden crates made no reference to any records prepared at the t

that goods were packed nor any mention of the date the packaginll was do

complainant did not answerthe respondent s arsument that had the cartons been cra

the measurements on the packing lists and those shown on the packer s letters and 

bill of lading could not have been identical as they were complainant s packing 

referred to the shipments only as box wood box and pallet box and 

explanation of the reason for the use of any special packaglnll for the shipment 

offered Accordingly the shipper failed to meet its heavy burden of provinll 

respondent carrier had violated section 18b 3 of the Shipping Act 1916 and its c

for reparation was properly denied Id 482 48990

In a misclassification dispute where the articles shipped are no longer in 

possession of the carrier the claimant had a heavy burden of proof to establish 

claim In this case claimant was able to prove that a commodity described in the bi

19 F M
INDEX DIGEST 853

lading as Dental Investment Multi Vest and rated on the basis of a Cargo N D S

was a refractory material and should have been rated on the basis ofthe commodity

description refractory mixes plastic and castable Hoblemann International Inc v

Moore McCormackLines Inc 572 573 575 576

The Export Declaration Schedule B Commodity Numbers established by the United

States Customs Service are not the commodity descriptions controlling in a misclassifi

cation dispute What counts is the commodity description and rate on file with the

Federal Maritime Commission at the time of shipment Accordingly where the claimant

had been able to prove that a commodity described in the bill of lading as Dental

Investment Multi Vest was a

refractory material which had improperly been rated on

the basis of a Cargo N D S the claimant was entitled to reparation based on the

only commodity description in the applicable tariff closely resembling the shipment

refractory mixes plastic or castable and not on the basis of the Schedule B rate for

fire ground clay Id 573 574 576

Reparation is awarded on a shipment of food freezers The carrier had rated the

shipment as Food Freezers Mechanical N D S The shipper introduced evidence

showing that the freezers should have been rated as Food Freezers Mechanical

Household While the bill of lading had identified the commodity as Electric Commercial

Freezers complainant had corrected the export declaration form to state Electric

Household Freezers and had requested correction of the consular invoice to reflect that

change Complainant submitted information from the manufacturer showing the freezers

to be household freezers as well as its order to the manufacturer which specified

freezers identified by the manufacturer as household freezers Alfred Kubies Western

Corp v Royal Netherlands Steamship Co 633 635

In a proceeding to recover alleged freight overcharges resulting from the misrating of

a shipment as Tractors and parts N D S packaged rather than Tractor parts for

assembly purposes not replacement packaged aspecial note offered in lieu of an

unavailable packing list provided little in the form of proofas to the nature of the goods

shipped The note was a statement prepared almost two years after the date of shipment

was written on plain white paper and was signed by an individual purporting to be an

export rate analyst The note asserted that the shipment consisted of tractor parts

for assembly No mention was made in the note of whether the individual was at the

time of the shipment or was now in the shipper s employ nordid it state what was the

source of the individual s knowledge on the matter Caterpillar Tractor Co v United

States Lines Inc 673 674

In a proceeding to recover alleged freight overcharges resulting from the misrating of

a shipment as Tractors and parts N D S packaged rather than Tractor parts for

assembly purposes not replacement packaged shipper s invoice sheets submitted to

show the nature of the shipment were of little probative value The only nexus between

the invoices and the bill of lading consisted of a handwritten notation number and even

assuming that the handwritten annotations were made at the time and reflected the

dates the listed items were forwarded to the carrier there was no indication norcould

it be ascertained on the face of the invoices that they represented a complete list of

whatthe two containers in the shipment actually held Id 674

In a proceeding to recover freight overcharges resulting from the alleged misrating of

a shipment as Tractors and parts N D S packaged rather than Tractor parts for

assembly purposes not replacement packaged the fact that the Caterpillar Tractor

Co was the shipper and the bill of lading described the shipment as Manufacturer s

parts for assembly did not compel the conclusion that the shipment consisted of tractor

parts for assembly The Caterpillar Tractor Co is not synonymous with tractor and the

19 F M C
854 FEDERAL MARITIME COMMISSION

complaint described that company as being engaged in the manufacture of mo

equipment not limited to tractors Id 6745

Where containers were loaded by the shipper and the bill of lading was prepared 

the shipper s agent it was reasonable to presume in the absence of proof to 

contrary that the agent knew the contents of the containers and properly classified 

rated the cargo Id 675

The failure of a

respondent in a

reparation proceeding to answerdoes not prec

examination of the proof offered by complainant by the Commission Thus comp

ant s contention that its claim should be treated as beiilll established because respond

did notreply to the complaint was without merit Id 675

The settlement officer in a reparation proceeding alleging overcharges as the resu

the misrating of certain cargo properly denied reparation The rating of the cargo 

been consistent with the bill oflading and the shipper s agent s description of the ca

Complainant failed to offer sufficient evidence of misrating Id 676

A shipper was entitled to reparation for overcharges paid in connection with shipm

of beads where the shipments had been charged at the rate for beads having valu

excess of 1 400 per revenue ton but had actually included some cartons of b ads ha

values below 1 400 per revenue ton which were subject to lower rate While the b

lading covering the shipments did not state the value of the beads shipped the shipp

claim based on commercial invoices stating the invoice value of identifiable cartons 

certificates and lists of measurement and weight for each group of cartons was prop

computed and adequately substantiated and established the existence of the overcha

alleged Stanislaus Imports Inc v Sea Land Service Inc 757 759760

A carrier s application for permission to refund a portion of certain freight cha

was granted where the shipper s claim of overcharge was clearly valid and where 

carrier had stated in its reply that the claim was correct and that it had previo

declined to refund the overcharge solely because such action was time barred by 

applicable tariff Bristol Myers Co v Sea Land Service Inc 761 762763

In a

reparation proceeding alleging improper designation of cargo value by the car

where critical information concerning the disputed shipment is entirely in the posses

of the shipper the Commission has consistently required that the shipper present c

proof that the original shipping documents were in fact erroneous before the carrier 

be found to have violated section 18 b 3 of the Shipping Act 1916 Accordingl

shipper s claim for reparation alleging improper valuation ofthe cargo by the carrier 

denied where the carrier s copy of the Export Declaration provided by an allent of 

shipper upon which the valuation of the cargo had allegedly been based had b

misplaced and where the shipper which based its claim entirely on the value stated 

sales invoice bearing an incomplete date failed to introduce its copy of the Ex

Declaration or any other evidence to corroborate or verify the accuracy of the s

invoice or to refute the carrier s assertions Borden Interamerica Inc v Venezu

Lines 777 778

Carrier xmomh tariffrule

The ming pf a

timely complaint with the Commission effectively overrides any t

technicality under which an overcharge claim legally may be denied by a water clj

subject to the Commission s

jurisdiction during the two yellr period for rec6

reparation set forth in section 22 of the Shipping Act of 1916 Accordingly complai

was entitled to a refund of ocean freight charges on a shipment of industrial tires w

were in excess of those lawfully applicable at the time of the transportation in viola

19 F M 
INDEX DIGEST

of section 18b 3 of the Act where the carrier denied the claim solely on the basis of a

tarifIprovision which time bars claims for adjustments of freight charges not received by

the carrier within six months after date of shipment Uniroyal Inc v Hapag Lloyd

AktiengeseUschaft I 23

Complaint for freight overcharges was timely filed with the Commission where it was

filed approximately 13 months after the bill of lading date even though complainant had

failed to comply with a provision of the applicable tariffthat claims for adjustment be

presented to the carrier within six months after the date of shipment The Commission

in Colgate Palmolive Company v United Fruit Company Informal Docket No 115 1

ruled that a claim rued with the Commission within two years from the date the cause of

action arose must be considered on its merits Rohm and Haas Company v Venezuela

Line 9 1011

Complainant was entitled to a refund of freight overcharges where the merits of its

claim were not at issue and carrier had denied the claim solely on the basis of a tariff

provision which time bars claims for adjustments of freight charges not received by the

carrier within six months after date of shipment The complaint was filed within two

years of the alleged il1iury and thus was timely flled in accordance with section 22 of the

1916 Shipping Act Union Carbide Inter America Inc v Venezuela Line Cia Anonima

Venezolana de Navegacion 85 87

A claim for reparation which is brought under the 1916 Shipping Act cannot be barred

on the merits by a conference rule if the claim is fIled with the Commission within two

years of its accrual Union Carbide Inter America Inc v Venezuelan Line Cia

Anonima Venezolana deNavegacion 97 99

The Commission has ruled that a claim filed within two years froin the date the cause

of action arose must be considered on its merits Accordingly shipper s claim for

reparation was timely flled where the shipment moved on February 28 1974 and the

claim was flled with the Commission on November II 1975 The fact that the shipper

had failed to comply with a tariffprovision requiring that claims be flled with the carrier

within six months after the date of shipment was not material Union Carbide Inter

America Inc v Venezuela Line 126

A shipper was entitled to reparation for an overcharge resulting from the application

of an admittedly incorrect rate where the shipper f1ed its complaint for reparation within

two years of the carrier s denial of its claim for return of the overcharge and where the

shipper s evidence was sufficient to establish the fact and amount of overcharge The

carrier s denial of the shipper s claim had been based not upon any dispute with the

shipper s assertions but on the ground that its lawfully f1ed tariffdid notpermit refunds

on claims flled more than six months after the date of shipment the filing by the shipper

of a timely complaint to the Commission effectively eliminated this tariff technicality

National Starch Chemical Corp v Atlantic Container Line Ltd 393 395

Where a tariff rule provided that Except for those claims for obvious errOr in

calculation or misapplication of rate or rate basis all claims of adjustment of freight

charges must be presented to the carrier in writing within six months after the date of

shipment the assessment of a rate which differed from that provided by the tariff

clearly feU within the exception provided in the tariff rule as it related to misapplica

tion of a rate Caterpillar Overseas S A v Springbok Line Ltd 640 642 643

Caterpillar Overseas S A v South African Marine Corp Ltd 644 646 647

CaterpillarOverseas S A v Springbok Shipping Co Ltd 648 650651

In instances where the misapplication of a rate has occurred and a direct claim to the

carrier is time barred by rule contained in the applicable tariff the shipper s remedy is

to flle a complaint seeking redress before the Commission within the two year period

19 F MC

855
856 FEDERAL MARITIME COMM SSION

specified by section 22 of the Shipping Act 1916 Bristol Myers Co v Sea L

Service Inc 761 763

Inurukd u e ofcargo

In a misclassification dispute as to whether the carrier had properly refused to clas

a

cargo under the tariff item for rubber commodities titled Synthetic No Articles 

Materials manufactured therefrom the clQimant s request thllt the presidina offic

initial decision denying a refund be clarified was granted where the presidinl off

apparently based his decision inter alia on the intended use of the rubber goods by 

ultimate userand on the officer s assessment of the hazards involved in transportina 

cargo into a troubled zone of the world A more disciplined and 10lical approa

relying on the settled principle that the final application of a product with sev

possible end uses is immaterial to the proper classification of the commodities for t

purposes was required foUowinl such an approach an order denyinl the compl

was issued Crest1ine Supply Corporation v The Concordia Line and Boise Gr

Steamship Co Inc 207 209 211 213

In a misclassification dispute where the primary factual question was whether a

ca

of rubber sheets and tapes had been manufactured from synthetic rubber at the t

it was shipped there was no relevance to claimant s evidence aimed atprovina that 

goods were not completely finished in that further processina was required be

they could be finaUy instaUed in the water cons rvation equipment for which they w

ultimately intended The final application of a product with several possible end use

immaterial to the proper classification of commodities for tariffpurposes The applica

freight rate should depend upon the intrinsic nature and market value of the 1l0

themselves rather than a shipper s

representation as to the intended use of Iloods a

would be virtually impossible for ocean carriers to ascertain whether each i

transported is subsequently put to the use for which it was rated for ocean transpo

tion Id 211

In 1

A shipper of mine safety hats described by the shipper as safety hats Topa

hats and V Gard Caps who was overcharged when the safety hats were rated 

hats and not as helmets by the carrier was notentitled to an award of interes

the amount of the overcharge since the carrier s lIIisclassification was due to a g

extent to the shipper s failure to describe its product properly MSA Internationa

Chilean Line 478 479

Mlslnterp laIion oflarII

Application for permission to wQive coUection of a portion of freight charges is den

where both the consianor and his forwarder shipped the cargo without lirst checkina 

rate Misinterpretation of a tariff is neit subject to rectification under P L 90298 

the failure of a consianor or forwarder to check a rate prior to shipment is not the k

of circumstance for which section 18 b 3 of the 1916 Shipping Act affords re

Homasote Co v United States Lines Inc 89 91

Ne otlaled dies

Waiver of collection of a portion of freight charges will be permitted where the car

19 F M 
INDEX DIGEST 857

failed to me the negotiated rate in its tariffs There was an error due to inadvertence in

the failure to file the rate Commodity Credit Corporation v Surinam Navigation Co

Ltd 65 68

Permission to waive collection of a portion of freight charges arising from the

shipment of goods to Spain is granted where through inadvertence the tariffpublishing

officer instructed publication of the agreed upon rate to other ports instead of Spanish

ports This is the type of error that can be remedied pursuant to section 18 b 3 of the

1916 Shipping Act The Buckeye Cellulose Corp v Sea Land Service Inc 170 173

Application to waive a portion of freight charges is granted where through oversight

the agreed upon rate was not published before the sailing on which the cargo was

carried The carrier s tariff publishing officer was unaware that the rate was to be

published on the day it was received but had followed the usual practice of posting the

rate for the following sailing This type of error was quite clearly an administrative

oversight of the kind contemplated by section 18 b 3 of the 1916 Shipping Act

Wyandot Exporting Co v Sea Land Service Inc 178 181

The inadvertent clerical omission of agreed freight rates from a carrier s

tariff which

was compounded by a second error the insertion of an inaccurate freight rate in place

of the agreed rate upon discovery of the original omission constituted an error

permitting waiver of collection of freight charges within the contemplation of section

18 b 3 of the Act Raytheon Co Inc v Sea Land Service Inc 343 344346

The inadvertent clerical omission of agreed freight rates from a carrier s

tariff which

was compounded when upon discovering the omission the clerk inserted an inaccurate

freight rate in place of the agreed rate constituted an error permitting waiver of

collection of freight charges within the contemplation of section 18 b 3 of the Act

Raytheon Co Inc v Sea Land Service Inc 347 348 350

Where due to a clerical error the carrier had failed to file a special rate for shipments

of caustic soda weighing a minimum of 599 tons per vessel as had been promised to the

shipper the carrier was permitted to waive collection from the shipper of a

portion of

freight charges on a shipment of the subject commodity A waiver of collection of a

portion of the freight charges would notresult in discrimination among shippers prior to

applying for the waiver the carrier had filed a new tariff which set forth the rate on

which the waiver would be based and the waiver application had been filed within 180

days from the date of shipment Dow Chemical International Inc v Far Eastern

Shipping Co 604 6057

Application to waive collection of a portion of freight charges is granted where the

agreed upon rate of 210 00 W M minimum weight 22 5 measurement tons was

incorrectly transcribed as 210 W M minimum weight 25 measurement tons The carrier

had stated that the transmittal of the incorrect minimum weight was due to clerical

error This is the type of administrative or clerical error within the intended scope of

coverage of section 18 b 3 of the 1916 Shipping Act Footner and Co Inc v Sea

Land Service Inc 718 719

Application to waive collection of a portion of freight charges is granted where

through clerical error the agreed upon rate was erroneously symbolized as an increase

effective on full statutory notice of 30 days whereas it should have carried a teardrop of

R reduction symbol which would have permitted it to be in effect at the time of the

shipments in question some two weeks later This type of clerical error is within the

intended scope of section 18 b 3 of the 1916 Shipping Act Kuhne Nagel v Sea

Land Service Inc 725 729

Permission was granted to waive collection of a portion of the freight charges assessed

by a carrier in connection with the shipment of an automobile where due to poor

19 F M C
858 FEDERAL MARITIME COMMISSION

communications and a lack of understanding of the Commission s

regulations b

foreign agent of the carrier an agreed lump sum rate for the shipment was 

transmitted to the carrier s office in New York until after the shipment had be

completed which resulted in an overcharge The carrier s error was an error due 

inadvertence in failing to tile a new tariff within the meaning of section 18 b 3 of 

Shipping Act 1916 waiver would not result in discrimination among shippers 

carrier had tiled a new tariffsetting forth the agreed rate prior to applying for autho

to waive collection and the carrier s application had been flied within 180 days from 

date of shipment The Permanent Mission of the Socialist Republic of Romania 

Prudential Lines 731 733

A carrier was granted permission to waive collection of a portion of freight char

assessed in connection with a shipment of empty metal shipping containers where a

agreeing with the shipper on a rate per weight ton to cover the shipment the carri

Oakland office mistakenly transmitted to a second office a weight or measurem

option for the rate which error was carried forward to the actual publication of the 

tariff resulting in an overcharge The carrier s transmission error was an error i

tariffof a clerical or administrative nature within the meaning of section 18b 3 of 

Shipping Act 1916 waiver of collection would not result in discrimination am

shippers the carrier had tiled a corrected tariff prior to applying for permission to wa

collection and the application for permission to waive was flied within 180 days fr

the date of the subject shipment Ford Motor Co v Sea Land Service Inc 741 7

744

A carrier was permitted to waive collection of freight charges assessed in connec

with a shipment of Gilsonite where the carrier had erroneously caused the rate agr

upon with the shipper to expire prematurely and had then failed due to oversight 

extend the rate and apply it to the shipment involved causing an overcharge T

carrier s clerical and administrative errors were of the type within the intended cover

of section 18 b 3 of the Shipping Act 1916 and section 502 92 of the Commissio

Rules of Practice and Procedure waiver of collection would notresult in discrimina

among shippers the carrier had filed a new tariff setting forth the rate on which 

application for permission to waive collection was based prior to tiling the applicat

and the application was tiled within 180 days from the date of the shipment involv

American Gilsonite Co Inc v Lykes Bros Steamship Co Inc 747 74S749

Where due to clerical error the carrier s tariffagent had failed to tile a reduced rate 

had been promised the shipper the carrier would be permitted to waive collection fr

the shipper of a portion of the freight charges on carllo it had transported under a hig

tariff rate A waiver of collection of a portion of the freight charges would notresu

discrimination among shippers prior to applying for authority to waive collection of 

freight charges the carrier had ftled a new tariff which set forth the rate on which 

waiver would be based and the waiver application had been ftled within 180 days fr

the date of the subject shipment P C International Ilic v Sea Land Service Inc 

767 769

The Commission s settlement officer was required to consider on its merits a tim

flied reparation claim despite the fact that the claim had already been settled betw

the parties by payment in full of the reparation sought White Westinghouse Inl1 

for N V Technische Handelmaatschappiz v Sea Land Service Inc 770

A reparation proceeding involving an overcharge of freight charges assessed 

connection with a shipment of refrigerators was dismissed upon findings by 

settlement officer that respondent carrier had concurred in and had paid in full 

19 F M 
INDEX DIGEST 859

amount of the reparation sought and that the validity of the shipper s claim was

adequately established by the pertinent documentation Id 771 772

Where due to clerical errorthe carrier had failed to file a

special reduced rate as had

been promised the shipper the carrier would be permitted to waive collection from the

shipper of a portion of the freight charges assessable on cargo it had transported under

a higher general tariff rate A waiver of collection of a portion of the freight charges

would not result in discrimination among shippers prior to applying for authority to

waive collection of the freight charges the carrier had filed a new tariffwhich set forth

the rate on which the waiver would be based and the waiver application had been filed

within 180 days from the date of the subject shipment Universal Nolin UMC Industries

Inc v Sea Land Service Inc 779 781 782

Where due to an administrative error the carrier had failed to except a certain rate

which it had promised the shipper from a general rate increase the carrier would be

permitted to refund to the consignee who bore the cost of transportation a portion of

the freight charges on one shipment of the subject commodity and to waive collection

from the consignee of a portion of the freight charges on three other shipments of the

commodity A refund or waiver of collection would not result in discrimination among

shippers prior to applying for authority to refund or waive collection of a portion of the

freight charges the carrier had filed a new tariff which set forth the rate upon which the

refund and waivers would be based and the refund and waiver applications had been

filed within 180 days from the date of the subject shipment Toei Kogyo Co Ltd v

Sea Land Service Inc 783 784786

Carrier s application for permission to waive collection of freight charges was granted

where the carrier after agreeing with shipper to maintain a special rate beyond its

scheduled expiration date to the end of the year failed due to administrative error to

except the special rate from a general increase in the applicable tariffwhich had been in

process at the time of the carrier s agreement with the shipper and which went into

effect prior to the agreed expiration date of the special rate causing an overcharge The

carrier s error was an error in a tariffof a clerical or administrative nature within the

meaning of section 18 b 3 of the Shipping Act 1916 and section 502 92 of the

Commission s Rules of Practice and Procedure and the carrier s application complied in

all respects with the requirements specified in the Act Brunswick Corp v Sea Land

Service Inc 801 803804

Application to waive collection of a portion of freight charges is granted where the

negotiated rate was incorrectly named to Lisbon Portugal instead of Bilbao Spain The

naming of the rate to the wrong port was due to clerical and administrative error

Carriers are authorized to make voluntary refunds and waive collection of a portion of

freight charges for good cause such as bona fide mistake Smith Johnson Shipping

Inc v Sea Land Service Inc 805 808

Application to waive collection of a portion of freight charges is granted where a

confirming teletype requesting publication and the effective date of the agreed upon rate

went astray in transmittal between the carrier s sales agent and its tariff publication

department As a result the required tariff publication was not made Thus there was

an error due to inadvertence in the failure to me the tariff Union Carbide Corp v Sea

Land Service Inc 809 812

Port equa1i1 6lio1l

A carrie was not permitted to charge the consignee the entire cost of ground

transportation of the cargo from Oakland the port of its actual discharge to a

19 F MC
860 FEDERAL MARlTlME COMMISSION

destination point designated by the consillnee but was permitted to collect an amo

equal to the cost of drayaae from San Francisco the port of discharae named in the 

of ladinll to the designated destination point where a rule in the applicable ta

provided that when cargo is discharlled at a port other than that named in the bil

ladinll and is then transported by the carrier toa destination point designated by 

consignee the consignee remains responsible for the cost which it normally would ha

incurred to move the cargo to its point of destination had the carllo been discharged 

the port named in the bill of lading There was no merit to the carrier s contention t

the tariff rule was not applicable since Oakland and San Francisco are Bay a

ports Konwal Co Inc v Orient Overseas Container Line 8 960

A shipper was able to establish with sufficient clarity that the port of discharlle nam

in certain bills of lading was San Francisco and notOaklancj whore the carllO h

actually been discharlled notwithstandinll that the shipperwas not able to produce 

bills of lading but only invoices which indicated Oakland as the port ofdischarlle It 

common steamship practice to identify bills of ladina by port of loadinll and port 

discharge and the invoices in question in referrina to the bills of lading contained 

annotation B L HK SF In addition the carrier failed either to deny that S

Francisco was the bill of ladinll port or to provide copies of the bills of ladinll 

merely asserted that the shipper s

proof was insufficient This characterization of 

shipper s proof did notconstitute a sufficient denial of material facts alIelledin 

complaint for purposes of complyinll with Rule d of the Commission s Rules 

Practice and Procedure which provides that material facts in a

complaint will be ta

as admitted unless specifically denied AccordinaIy the shipper was entitled to a refu

of the cost of transporting the carllo by truck from Oakland to San Francisco unde

tariff rule which provided that if a

carllO is notdelivered to the port of discharllenam

in the bill of lading the carrier is oblillated to pay the cost of lransportina the cargo fr

the actual port of discharlle to the port of discharlle named in the bill of lading 

Powers Co Inc v Orient Overseas Container Lines 219 219221

Where a carrier discharged lIoods destined for the port of San Francisco at its port 

delivery at Oakland and moved the goods overland truck collect to the port of discha

shown on the blll of ladinll the shipper was entitled to reparation in the amount of 

port equalization claims based on the el less of the trucking rates from Oakland 

San Francisco overthe drayalle rates within San Francisco which the shipper wo

have had to pay in any case Rule 28 of the carrier s Honll Kona Eastbound Pac

Coast TariffNo 1 FMC I provided that a carrier discharllinll carllO at a point ot

than that specified in the blll of ladlnll could arrange for movement of thelloods at 

own expense to that designated by the consignee of the goods since such moveme

had been undertaken at the expense of the shipper the carrier was liable for 

overcharge under section 18b3 of the Shippinll Act 1916 Vandor Imports v Ori

Overseas Container Lines 396 397 398

S nkm1ls

Where a shipper s claim for refund of overcharges was denied by the carrier on 

ground that it was not timely med under the applicable tariff and the shipper thereup

brought a complaint for reparation before the Commission whereupon the car

offered to pay the shipper s claim and requested that the settlement officer discontin

the docket the request for discontinuance could notbe aranted prior to determining 

merits without placing the carrier in violation of its governinll tariff and the Comm

sion s statutes Accordingly in order to prevent the carrier from being charged wit

19 F M
INDEX DIGEST

violation of section l8b 3 of the Shipping Act 1916 as amended the requested

reparation was granted on a finding that the shipper proved its case SCM Corp v

Seatrain International S A and Seatrain U K Ltd 417 4189

The Commission could not ratify the presiding officer s approval of a settlement

agreement entered in a proceeding on a claim for reparation on an alleged freight

overcharge where a violation of section 18 b 3 of the Shipping Act of 1916 had not

been established by the presiding officer and where respondents had specifically advised

the Commission that the settlement was not to be construed as an admission of any

violation on their part An agreement to settle a claim for reparation based on an

allegation of a violation of section 18 b 3 can be approved only on an affirmative

finding that such violation occurred The Federal Minister of Defense Federal Republic

of Germany v Republic International Forwarding Company and Republic Van and

Storage of Los Angeles Inc 569 570

A presiding officer s ruling dismissing a proceeding on a claim for reparation for an

alleged freight overcharge was vacated and remanded for whatever action the officer

and the parties deemed warranted where the dismissal had been premised on the

Commission s approval of a settlement agreement between the parties which did not

contain a finding of a violation of section l8b 3 and which the Commission was thus

without authorityto approve Id 570

The fact that the law and Commission rules encourage settlements and engage in

every presumption that such settlements are valid and lawful does not mean that the

Commission must act as a rubber stamp in evaluating settlements especially when the

settlements themselves require approval under section 15 of the 1916 Shipping Act

Refrigerated Express Lines AASIA Pty Ltd v Columbus Lines 581 582 584

Complaint alleging improper eviction of vessel to permit berthing of respondent s

vessel and that respondent s vessel caused a break in the bus bar conductor system

which had the effect of precluding the movement of container cranes at another terminal

with the result that complainant could not utilize dockside space at that terminal is

dismissed with prejudice The parties had entered into a statement of satisfaction and

settlement whereby respondent had agreed to pay complainant 10 000 in satisfaction of

the alleged claims upon dismissal of the complaint with prejudice Sea Land Service

Inc v The City of Anchorage Alaska and Totem Ocean TrailerExpress Inc 617

Complaint seeking refund of overcharge is dismissed where the claim at issue had

been properly settled subsequent to the filing of the docket with the Commission There

was no tariff or regulatory provision which barred the parties from informally taking

such action Caterpillar Overseas S A v Springbok Line Ltd 640 643 Caterpillar

Overseas S A v South African Marine Corp Ltd 644 647 Caterpillar Overseas

S A v Springbok Shipping Co Ltd 648 651

While in ordinary circumstances a carrier could be admonished for taking unilateral

action in settling aclaim for overcharges while a proceeding was before the Commission

relating to the claim and thereby prejudging the decision that might be rendered the

settlement officer finds from a regulatory standpoint that the conference tariff did not

prohibit an informal settlement of the rate issue and there was therefore no legal

necessity to bring the matter before the Commission for decision This position is based

upon the fact that an informal settlement of the claims was not time barred by Rule 16 of

the tariff as the carrier apparently believed A careful review of the applicable rule

revealed that it did not extend to errors involving the mere misapplication of a rate

which was the issue in the docket Id 642 647 650

It is preferable that a settlement officer who dismisses a claim for reparation for

alleged overcharges on the grounds that the claim has been paid in full make specific

19 F MC

861
862 FEDERAL MARITIME COMMISSION

findings in the order of dismissal on the question of whether settlement by paym

results in payment of applicable tariffrates under section 18 b 3 of the 1916 Shipp

Act While settlementof litigation is to be encouraged it is the Commissio

responsibility to assure that such settlements in matters involving section 18 b 3 do 

result in payment of charges for transportation which would not otherwise be permitt

To do otherwise could result in use of the Commission s offices to gain approva

inapplicable rate Soko Hardware v Y S Lines 708

A complaint alleging that the carrier had refused to honor an otherwise legitim

overcharge claim was dismissed and the proceeding initiated thereby discontinu

where complainant advised the settlement officer that it had received a refund ch

from the carrier as full settlement of the overcharge claim and where a review of 

complaint support documentation and the involved tariff contirmed the complaina

overcharge allegation and justified the carrier s refund action GTE International Inc 

Atlantic Lines Ltd 764 76S

Shipper s complaint seeking reparation for freight overcharges was dismissed and 

reparation proceeding discontinued where respondent carrier which had concurred 

the shipper s claim but had been unable to refund the charges on the ground that 

shipper s direct claim to the carrier was time barred by the applicable tariff had sent 

shipper a check in full payment of the claim and where an analysis of the complaint 

supporting documentation and of validity of the shipper s claim and consequently 

propriety of the carrier s refund National Starch Chemical Corp v Sea La

Service Inc 799 800

Statu ofIlmlltlllom

Authority to refund a portion of freight charges is denied where the carrier failed 

ftle with the Commission a tariffsetting forth the rate upon which the refund would 

based within 180 days from the shipment Airtlex Industries Reliable Cargo Shipping 

C v Lykes Bros SIS Co Inc 16 17

Complainant shipper whose application for a refUnd of a

portion of freight char

was denied because of the carrier s failure to file with the Commission a tariff sett

forth the rate upon which the refund would be based within ISO days from the date 

the shipment was not precluded from filing II complaint under section 22 of the A

alleging violation of any section of the Act such as sections 16 or 17 and ask

reparation for any iqjury caused by such alleged violation Id 17

Authority to refund a portion of freillht charges is denied where the carrier failed 

ftle with the Commission a tariffsetting forth the rate Upon which the refund would 

based within 180 days from the shipment Perkins Goodwin Co Inc v Lykes Br

Steamship Co Inc 21 22

Complainant shipper whose application for a refund of a portion of freight charg

was denied because of the carrier s failure to file with the Commission a tariff sett

forth the rate upon which the refund would be based within ISO days from the date 

the shipment was not precluded from filing a complaint under section 22 of the A

alleging violation of any section of the Act such as sections 16 or 17 and ask

reparation for any iqjury caused by such alleged violation 1d 22

Pursuant to the Commission s formal complaint procedures 46 CPR A 505 62 a

informal docket procedures 46 CFR A 502 301 et seq a claim for reparation 

overcharges of ocean freight may be ftled within two years from the date of the accr

of a cause of action Homasote Co v United States Lines Inc 89

Complaint seeking reparation of freight overcharges was timely tiled when tiled on 

19 F M
INDEX DIGEST

Monday after Sunday the last day of the two year limitation period The Commission s

offices were also closed on the preceding Saturday Dismissal of the complaint for late

rding would have caused undue hardship Therefore theCommission in its discretion

waived pursuant to Rule ljthe exception of Rule 5 c contained in Rule 7 a so that by

making Rule 7 a applicable to the computation of the two year limitations period the

filing of the complaint was timely CSC International Inc v Waterman Steamship

Corp 332 333

The only reference in the Commission s rules to the computation of the two year

statutory period is found in Rule 7 a which by express terms makes that method of

computing time inapplicable to filings under Rule 5 c such as complaints seeking

reparation under section 22 of the 1916 Shipping Act The Commis ion however has

reserved the right in Rule ljto waive all but one of its rules provided such waiver is

not inconsistent with any statute and is warranted to prevent manifest injustice or undue

hardship Id 333

A tariffprovision such as one requiring that a claim for adjustment of freight charges

if based on alleged errors in description weight andlor measurement will not be

considered unless presented to the carrier in writing before the shipment involved leaves

the custody of the carrier cannot be used to defeat a claim for reparation which was

otherwise properly f11ed within the two year statute of limitation period Properly f11ed

claims must be considered on the merits Kraft Foods v Moore McCormack Lines

Inc 407 409

An overcharge complaint relating to shipments delivered on November 12 1973

which complaint was filed on November 12 1975 was not filed within the two year

statutory period provided in section 22 of the Shipping Act 1916 and was accordingly

dismissed as untimely The last day on which the action could have been brought was

November 11 1975 and as the Commission s offices were open for business on that

day no undue hardship permitting waiver of the timeliness requirement was found to

exist Commercial Solvents Corporation International Inc v Moore McCormack Lines

Inc 424 425

An overcharge complaint relating to a shipment delivered on November 9 1973

which complaint was f11ed on November 12 1975 was not filed within the two year

statutory period provided by section 22 of the Shipping Act 1916 and was accordingly

dismissed as untimely The last day on which the complaint could have been timely filed

was November 8 1975 however as that day was a Saturday and the Commission s

offices were closed the complainant would have been permitted to file its complaint

through Monday November 10 Rejection fthe complaint at any time thereafter did

not constitute an unfair hardship warranting the issuance of a waiver of the timeliness

requirement Id 425

Claims for reparation filed on December 29 1975 which related to shipments shipped

according to their bills of lading on December 21 1973 and January 28 1974 and on

which freight charges were collected respectively on July 2 1974 and April 2 1974

were filed within the two year statutory period provided in section 22 of the Shipping

Act 1916 A cause of action based upon a claim for reparation accrues at the time of

shipment or at the time of payment of freight charges whichever is later in the instant

case the payment of freight charges occurred later than the time of shipment and the

cause of action accrued at the time of collection CSC International Inc v Orient

Overseas Container Line Inc 465 470

A cause of action on a claim for reparation for freight overcharges accrues at the time

of shipment or payment of the freight whichever is later Hobelmann International Inc

v Moore McCormack Lines Inc 572 574

19 F MC

863
864 FEDERAL MARITIME COMMISSION

In accordance with the requirement of section ZZ of tile Shippinll Act of 196 

complaints MUst be filed within two years from the time the cause of action accrue

order for an award of reparation to be entered a miscJassification claim was timely f

where it was tiled within two years of the paYl entof the freipt notwithstanding tha

request for an adjustment based on the alleged error in description had not b

presented to the carrier in writing before the shipment left the carrier s

custody 

S74

Tar1l1 d II ltatlolU aIflbl uUy

Where the bill of lading described the commodity as beinll in balls and t

description was found in the carrier s tariff carrier was not permitted to sub

additional billinll based on a hiper tariff for the commodity in other pack ing 

United States v Gull Reflnin Company Z68 uS S4Z 19ZS it was held that whe

commodity shipped is incl lded in more than one tariff desillllation thllt which is m

specific will be held applicable and where two descriptions and tariffs are equa

appropriate the shipper is entitled to have applied the one specifying the lower ra

Union Carbide Inter America Inc v Venezuelan Line 166 169

In a misclassification dispute where the shipper claimed that a

carllo of rubber she

and lapes should have been classified Under the tariffitem Jar rubber commodities tit

Synthetic Not Articles or Materials manufactured therefrom there was no meri

the shipper s contention that the carrier s tariff was ambiauous inasmuch as all synth

rubber is manufactured from petroleum products and other hemicals Other th

Rubber Synthetic and Rubber Crude or Raw all rubber catellories in the ta

described specific products orlIroups of products and the item in question w

sufficiently clear as published to advise synthetic rubber experts and laymen alike t

butyl bales or other unprocessed unvulcanized forms of synthetic rubber were the o

types of goods entitled to the Rubber Synthetic rate Crest1ine Supply C01 lQration

v The Concordia Line and Boise Griffin Steamship Co Inc Z07 ZIZ

Where the provisions of a conference tariff relatinll to the assessment of handl

charges oncertain containers tendered at the carriers container yards was ambiauous 

to whether such charges were applicable to tenders made at yards within terminal do

areas the ambiguity would be resolved in favor of the shjppers Thus reparation w

awarded to shippers which had tendered containers to llontainer yards within termi

dock areas It appeared that the conference intelded to assess a handling charlie 

some containers and not others and in view of the fact that some carriers maintain

container yards within theIr terminal docllJacilitles while others did not the f

construction of the tariffwould be that a

handlinll charae could properly be assessed 

containers tendered at container yards notwithin the terminal dock area It would 

expected all other things belnll equal that the costs incurrel by carriers maintai

ing

container yards outside thelr terminal dock areas would be areater Thus it would n

have been unreasonable for carao tendered at a cOntainer yard within a termInal do

area not be assessed such a charge Dow ChemicaiInternational Inc v

Aleric

President LInes Ltd S31 S40S41

Tnul 1UUIl ruJ

Trade name rules items of carriers tariffs which prohibit the use for commod

rating pU1 lQses of bUls of lading describing goods by trade name govern only the rati

of cargo by the carrier at the time of shipment and cannot be Invoked as a bar to a la

showing in a proper proceeding before the Commission as to the exact nature of t

19 F M
INDEX DIGEST

commodity shipped The trade name rule only governs the rating of cargo based on

description in the bill of lading Accordingly in a Commission proceeding seeking refund

of an alleged overcharge a shipper was entitled to show that the goods shipped which

were described in the bill of lading as raw drugs consisted of Cerelose power a trade

name for dextrose and should therefore have been shipped at the rate for dextrose

and not at the higher harmless drugs rate Abbott Laboratories v Venezuelan Line

426 428

Tariff rule requiring the application of a

cargo N O S rate where a bill of lading

describes articles by trade names can only be invoked when an article is described on

the bill of lading by trade name In any event claims cannot be defeated by simply

reference to the rule but must be determined on the basis of the evidence as to the true

nature of the cargo If the evidence shows that a more specific tariff item fits the

commodity shipped claimant is entitled to be rated under that item Carborundum Co

v Royal Netherlands Steamship Co Antilles N V 431 4345

SECTION 19 REGULATIONS

Regulations to adjust or meet conditions unfavorable to shipping in U S foreign trade

are amended to make it clear that Commission action under the regulations is

discretionary to indicate that the Commission was not concerned with mere differences

in treatment of the vessels in U S foreign trade but is concerned with the effect those

differences in treatments have upon U S foreign trade to make it clear that the

regulations apply to the acts of foreign governments orforeign owners operators

agents or masters to indicate that the Commission is not limiting the application of the

section dealing with who may file petitions for section 19 relief by specifically naming

some of the persons who may file to give foreign countries notice that the Commission

wiD notify the Secretary of State when conditions unfavorable to shipping in the U S

foreign trade apparently exist and that it may request ihat he seek resolution of the

matter through diplomatic channels Section 19 Regulations 13 14

Regulation requiring the Commission to find conditions unfavorable to shipping in the

U S foreign trade when there was a failure to produce any information ordered by the

Commission to be produced is amended to make such action by the Commission

discretionary Id 15

Regulations promulgated to meet conditions unfavorable to shipping in U S foreign

trade are not to be construed in any way whatsoever as a substitute vehicle by which

agreements approved under section 15 of the 1916 Act might be contested Likewise the

new rules are not intended in any way to replace modify or limit the traditional criteria

considered in connection with applications under section 15 Id 15

SECURITY FOR THE PROTECTION OF THE PUBLIC

Since respondents were not the owners operators or charterers of the vessels

involved in the case they did not violate section 2 of Public Law 89 777 which provides

that each owner or charterer of an American or foreign vessel having berth accommo

dations for fifty or more passengers and embarking passengers at U S ports shall

establish under Commission regulations his financial responsibility to meet any liability

he may incur for death or injury to passengers or other persons on voyages to or from

U S ports Windjammer Cruises Inc and Windjammer Cruises Ltd 112 122

In boarding passengers for a

cruise on a vessel at Mayaguez P R respondent

violatedboth section 3 of Public Law 89777 and the implementing regulations in that it

did in the United States arrange offer and sell passage to 29 passengers on a vessel

19 MC

865
866 FEDERAL MARITIME COMMISSION

having berth or stateroom accommodatiQns for SO or more passengers embark

passengers at a U S port without there first having been filed with the Commiss

such information as the Commission deemed necessary to establish responden

flllllncial responsibility or other security for indemnification of passengers for nonp

formance of transportation and without there being in force and etTect a Certific

Performance issued to or covering respondent The law makes no exception for sin

occurrences Id 122123

The language of P L 89777 is clear and unambiauous and leaves no doubt that 

provisions apply to all vessels which embark passengers at U S ports and which h

stateroom accommodations for SO or more persons even if the operations of the ves

otherwise fall within the jurisdiction of the ICC The legislative history shows the int

of Congress to protect passengers from default by any passenger vessel and to av

evasions oflaw American Cruise Lines

Inc

420 422

SURCHARGES

The Commission promulgates a regulation to provide nonexclusive procedure 

which a conference of carriers operating in U S foreign commerce and under 

approved dual rate system may justify and impose uniformly applied curren

surcharges on all rates within the scope of its dual rate contract on less than 90

notice when necessary because of depreciation of the conference s taritT curren

Currency Acijustment Surcharges 4

The computation and justification for currency acijustment surcharges by a confere

is founded on a calculation of mlijor operating currencies and the percentage 

expenses incurred by a conference and its members in those currencies The percent

of expenses information is to be maintained up to date by the conferences and th

flgUl es submitted to the Commission ona quarterly basis Id S

Currency surcharges imposed must be removed or reduced when the tariff curren

appreciates in relating to other mlijor operating currencies Id 6

A conference may select its own base date to compare relative currency values 

connection with imposition of a

currency acijustment surcharge The date must 

specified in the conference dual rate contract No base date may be chosen wh

antedates the day on which the amended contract is submitted to the Commission 

approval Id 6

Currency acijustment surcharges imposed by a conference may be made applicable 

the conference trade as awhole or to particular trades or segments of trades covered 

the terms of the dual rate contract and the taritTof the conference involved Id 6

Any currency acijustment surcharae imposed by a conference must be kept complet

separate from the general rate structure of the conference Id 7

A currency adjustment surcharge imposed by a conference shall take place 

increments of two percent or more Id 7

TARIFF CIRCULAR NO 3 See Rates

TARIFFS

Where an ambiguity exists in a tariff then the taritT must be construed in suc

manner so as to resolve the ambiguity in favor of the shipper Moreover 

Commission has long recoanized that taritT terms should be interpreted reasonab

United States Lines Inc 100 102

If an ICC regulated carrier and a section I water carrier otTer a through internatio

19 F M 
INDEX DIGEST

service they must file a tariff listing their through rate and their respective rate

divisions or portions Austasia Container Express 512 519

Inasmuch as respondent is a common carrier by water in foreign commerce within the

meaning of section I of the 1916 Shipping Act it must file a tariffwhich fully complies

with Part 536 of the Commission s Rules Id 521

Complainant shipper in areparation proceeding alleging that it should not have been

assessed handling charges on certain containers pursuant to conference tariff which had

admitted that such charge was proper pursuant to the tariff on containers tendered to

carriersat their container yards was not estopped from asserting that tender at container

yards within the carrier s terminal dock area was tender at the docks within the meaning

of the tariff Dow Chemical International Inc v American President Lines Ltd 531

538

Proceeding to determine the legality under sections 16 17 and 18 b of the 1916

Shipping Act as amended consolidation allowance provisions contained in tariffs is

discontinued The amended rules had been replaced under court order by the original

rules to the satisfaction of all affected interests The order of investigation referred only

to the amended rules and did not covera broad study of consolidation rules in general

The Commission takes no position at this time as to merits of issues alleged by Hearing

Counsel to have survived the cancellation of the amended rules Consolidation

Allowance Rules 735 736738

Tariffs of 35 nonvessel operating common carriers are cancelled in view of the fact

that they do not actively solicit orprovide common carrier services It is misleading to

the public potentially unfair to competing carriers and an administrative burden on the

staff for paper tariffs to be kept on me for possible use if it should suit the narrow

purposes of the persons issuing them to quickly enter the trade but otherwise describing

a nonexistent service Such a situation contravenes the implicit requirements of sections

18 b 1 through 3 of the Shipping Act which necessitate the prompt submission of

accurate information concerning the services offered by a common carrier including the

suspension of all or any part of the operations described by its published tariff

Publication of Inactive Tariffs by Independent Carriers in the Foreign Commerce of the

United States 774 775

A transshipment tariff was cancelled on the date notice of cancellation was received

by the Commission not on the prior date when the Commission received notice of the

cancellation of the underlying transshipment agreement The Commission s rules do not

provide for the automatic cancellation of transshipment tariffs on receipt of notice that

an underlying transshipment agreement has been cancelled As long as the tariffdid not

include an amendment orprovision which purported to cancel it the tariffcontained the

only legal rates the carrier could have charged for the transshipment service covered by

that tariff even though the actual provision of such service would have violated section

15 of the Shipping Act States Steamship Co Far EastUSA Household Goods Tariff

No 2 FMC 9 793 796797

A tariff has one mlior purpose to prevent rebates and other types of unjust

discrimination by publicly stating the rates to be charged all eligible shippers Tariff

fdings are neither adjudicatory matters norfinally determinative of individual rights or

privileges Once accepted by the Commission a tariff must be adhered to by the

publishing carrier and shipper alike To retroactively declare a duly accepted tariff void

for noncompliance with the Commission rule which requires that a permanent tariff

modification here cancellation of a tariff be filed within 15 days of receipt of a

temporary amendment would contravene the regulatory scheme established by most

federal common carrier statutes including the Shipping Act Id 797

19 F MC

867
868 FEDERAL MARITIME COMMISSION

A tariff notice was effective on receipt by the Commission where it did not incre

rates but eliminated the services altogether Id 797

The Commission s Rules do not indicate how or when a tariff submission is acce

for filing but provide for the rejection of tariff matter in certain instances 

generally assumed that a tariff which is notrejected by the close of business on 

stated effective date has been accepted for fllins Where there is an after hours t

ming a rule of reason applies Ifthe tariffsubmission is in proper form it is acce

retroactively If significant errors exist then the tariff is rejected as expeditious

possible on the theory that it was never accepted and not on the theory that it was 

ab initio Id 797

TERMINAL LEASES

Terminal lease agreement between the City of Anchorage and Sea Land Service 

providing for a shift of Sea Land s preferential berth from Terminal I to Terminal 

February I 1976 will notbe temporarily approved Severe icing occurs at Anchor

and there is the real possibility that Totem s vessel could be damaged because o

mooring and weather conditions Totem will not berth at Terminals 2 and 3 during 

severe icing conditions because of the risk to the vessel and her crew If Totem ca

use POL Terminal I even on a flrst come flTst served basis it may be forced to l

the trade at least temporarily Totem s refusal to use Terminals 2 and 3 is reason

Continuation of Totem s service to Anchorage is in the public interest and shoul

maintained if possible Continued use of Terminal I by Sea Land in a preferential b

is contrary to the public interest in violation of section IS of the 1916 Act in that t

is a real possibility that it will serve to effectively preclude Totem from offerin

competitive service during severe icing conditions Therefore the presently appro

agreement between the City and Sea Land which gives Sea Land preferential bert

rights at Terminal I will be disapproved effective February S 1976 unless the par

prior to that date amend the agreement to provide that effective February S 1976 

preferential berthing rights shall notapply during the months of February through A

1976 Agreement Nos T 168S as Amended and T 168S 6 Between the City 

Anchorage and Sea Land Service Inc 69 7980

Agreements providing for preferential berthing rights at Anchorage Alaska 

ambiguous in that no agreement between the parties exist as to what charges can be 

once the preferential calls provided in the agreements are exceeded As long as 

ambiguity exists the agreements are contrary to the public interest and cannot 

approved Therefore before approval can be accorded to the agreements the pa

must modify them to clarify the ambiguity Agreement No T 168S as Amended and 

168S 6 Between the City of Anchorage and Sea Land Service Inc 440 44S

Agreements giving carriers preferential berthing rights at Anchorage Alaska 

contrary to the public interest and notapprovable unless modified to ensure that ano

carrier has sufficient terminal space available for cement discharging operations 

446

The critical determination with respect to the approvability of preferential berth

agreements at Anchorage Alaska is whether they are unjustly discriminatory or un

as between carriers exporters or importers or operate to the detriment of the comm

of the United States or are contrary to the public interest or are otherwise in violat

of the Shipping Act While admittedly both agreements will result in certain delays 

disruption of operations of other carriers overall these delays and disruptions wil

minimal and certainly not of such magnitude as to preclude approval Commiss

19 F M
INDEX DIGEST

consideration of both agreements must take into account the public interest factor as it

exists at the time of approval however the fact that the only carrier vigorously

opposing approval will have significantly less dependency upon the Anchorage docking

facilities once the oil pipeline is completed cannot be ignored The record will not

support afinding that either agreement as modified is contrary to the public interest

Id 4501

Agreement between Anchorage and a carrier providing for construction by and use

by the carrier of trestles was part and parcel of an agreement between the parties giving

the carrier preferential berthing rights at Anchorage and the construction and use of the

trestles prior to approval of the berthing agreement was a clear violation of section 15 of

the Shipping Act The construction and preferential use of the trestles was described

with sufficient particularity to include it within the berthing agreement That agreement

was replete with references to the trestles and whole sections of the trestle construction

agreement were repeated verbatim therein Id 454

Violation of section 15 of the Shipping Act by construction and use of trestles at

Anchorage Alaska prior to Commission approval does not preclude approval of the

underlying preferential berthing agreement between Anchorage and carrier which

constructed and used the trestles if the agreement is otherwise approvable under the

standards of section 15 Id 454

Carrier party to a preferential berthing agreement will be held to the terms of its

agreement and required to berth its vessels on a preferential basis approximately one

time per week Approximately means that the carrier will be limited to one

preferential call per week unless it is unable by reason of weather conditions an

emergency to its scheduled vessel or other conditions beyond its control to make a

preferential call during a given week In such circumstances the carrier will be permitted

to double its preferential calls in a subsequent week As an alternative to doubling its

calls the carrier may employ a

replacement vessel to make a scheduled preferential call

without providing the required 15 days notice Further the carrier must provide the

port with prompt notice of its inability to make a preferential call as scheduled and its

intent to utilize one of the two alternatives Id 4556

Leases to certain back up areas at Anchorage Alaska are notsubject to section 15 of

the Shipping Act This determination is based notonly on a review of the leases but on

a consideration of the interrelationship between preferential berthing leases and the

back up area leases There is no basis in the record on which it can be found that the

back up leases were part of the total understanding between the parties Id 4578

To the extent that certain modifications of preferential berthing agreements reflect the

understanding of the parties with regard to the future implementation of the agreements

they should be filed for approval pursuant to section 15 of the Shipping Act before they

are implemented Id 459

The Commission has previously disapproved terminal practices under Shipping Act

section 17 second paragraph which did not recover fully distributed costs As a general

rule all terminal users are expected to pay their own way Nonetheless noncompen

satory is not synonymous with unreasonable Justifications can be and have been

accepted for terminal tariffs or leases with noncompensatory features In this case the

terminal lease agreements would be at least incrementaUy profitable and if implemented

as month to month tenancies would not bind either party to a particular level of rents

for more than 30 days Agreement No T 2880 as Amended 680 684

Although the record offers no reason to disapprove the minimax concept or the

particular charges proposed in lease agreements between the Port Authority and carriers

or terminal operators the Commission cannot ignore the fact that the only basis for the

19 F MC

869
870 FEDERAL MARITIME COMMISSION

lessees use of the involved piers to date which was not violative of section 15 

under the Port Authority s public tariff and the parties have notadhered to that ta

The tariffcontains no provisions for monthly on account billing pending approva

the agreements with subsequent lIlljustments nordoes it permit extensions of cred

the unusual amounts and periods which have been extended to several proposed less

Moreover in the case of two piers one lessee was allowed to continue its exclu

occupancy for five months after the prior lease expired before the Port even decla

those facilities to be public piers This course of conduct represents at lea

cooperative working arrangement which was notreduced to writing filed and appro

by the Commission as required by section 15 and constitutes a violation of that stat

It also represents a violation of the Commission s rules by the Port Authority 

section 15 violation has not proximately iqiured an objecting terminal operator and 

notentitled to reparations Id 6845

Terminal lease agreements between the Port Authority of New York and New Jer

and carriers or terminal operators are section 15 agreements within the jurisdiction 

the Commission and all the parties to the agreements are carriers or other pers

subject to the 1916 Shipping Act Id 698

TERMINAL OPERATORS See also Terminal Leases

Action of carriers in stopping payment of heading charges on shipments of co

to Houston but continuing to make such payments at Galveston and Corpus Christi 

not violate section 16 and 17 of the Shipping Act 1916 There was no basis fo

determination that carriers are selectively absorbing costs at Galveston and Cor

Christi which should be paid by their shippers or are otherwise unfairly discrimina

against the Port of Houston The record did not support the argument that 

heading charges paid by the carriers are not true operational costs customa

associated with vessel loading and included in ocean freight rates without itemizat

Nor did the record support the conclusion that the delivery of export cotton bales to 

carriers at Galveston and Corpus Christi was completed only after the challeng

heading services are performed No Shipping Act authority holds that completion 

delivery is the sole criterion for allocating cargo handling expenses between shipper

carrier and a flat policy which makes the validity of a given division of such expen

depend on the moment a carrier chooses to issue acargo receipt would be arbitrary 

the extreme Port of Houston Authority v Lykes Bros Steamship Co Inc 192 2

The Port of Houston failed to establish why its 1963 decision authorizing a unifo

cotton unloading fee paid by the shipper which includes positionina bales in 

transit shed should necessitate a change in Galveston s and Corpus Christi s preexis

cotton handling practices heading charges paid by carriers The burden of proo

a section 22 complaint proceeding is always onthe complainant Id ZOO

The Shipping Act does notrequire all carriers or all ports to offer identical services 

engage in the same practices Competition and innovation are encouraged Lo

differences are permitted up to the point they unfairly iqiure shippers ports or ot

persons protected by the Act Id 200201

There was no basis for fmding that carriers violated section 18b 3 of the Shipp

Act 1916 by falling to ftle tariffs which state when the basic oceanfreight rate w

include heading charges on cotton shipments The Port of Houston did not estab

whether shippers or carriers primarily benefit from any particular aspect of cot

handling at Galveston or Corpus Christi where carriers pay such heading charg

No one other than the carriers was identified as having a duty to pay for heading 

19 F M 
INDEX DIGEST

there was no indication that this practice materially affects the aggregate cost of shipping

cotton at the various ports The gravamen of the dispute lies not with the carriers

tariffs but with those of the Port Authorities whose tariffs should be amended to reflect

the actual unloading and heading practices followed by each port Id 201

Practices of the Port of Houston Authority in connection with the rental of heavy

crane equipment under which Houston s cranes have fIrst priority on jobs even to the

extent of displacing private crane owners equipment already working violate sections

16 First and 17 of the 1916 Shipping Act not only as applied against private Crane

operators but also with regard to stevedores hiring private cranes Houston has unjustly

preferred itself to private crane owners and subjected stevedores hiring private crane

owners to bumping and other unreasonable practices while exempting stevedores who

own their own cranes from such practices Perry s Crane Service Inc v Port of

Houston Authority of Hams County Texas 548 549

The Port of Houston s practice of giving itself fIrst priority on cranes must be limited

Prior to the start of any job a stevedore should determine the availability of Houston s

cranes and if there is one equally suitable for the job at hand then Houston should be

given a preference as to furnishing a crane for that job The limited preference is

justifIed because of Houston s heavy investment in cranes and extensive labor related

expenses and guarantees declining share of available crane work the flexibility of

private cranes in moving from one location to another an option not open to Houston

the fact that private crane owners are using facilities constructed and paid for by

Houston to conduct their private business and the absence of any evidence that

Houston is attempting to monopolize the crane rental business on its facilities Limiting

of the preference results in a practice which while still preferential is no longer undue

orunreasonablethe key determination The fIrst call privilege as modifIed will require

stevedores to select a Houston crane only if that crane is suitable for the job in the

judgment of the stevedore in terms of size and expense as any available crane Id 551

552

Practice of the Port of Houston in connection with the rental of heavy crane

equipment of preferring its own cranes to the extent of bumping other crane

equipment is unlawful and cannot be justified even if modified to allow Houston

bumping privileges if it can furnish a more suitable crane for the job than that

provided by the private crane owner Assuming the unavailability of a Houston crane

and the election by a stevedore to use a private crane for a particularjob that private

crane owner should be permitted to perform the job to completion without bumping

by a Houston crane Id 552

The burden of proofin a proceeding involving the approvability of exclusive terminal

lease agreements was upon the objecting terminal and Hearing Counsel and the

evidence adduced failed to establish that the Port Authority engaged in or is proposing

to engage in anticompetitive unduly preferential or unreasonable practices The Port

Authority knew that the mini max rentals were unlikely to be fully compensatory at

cargo levels projected for 1973 and 1974 but this fact alone does not support a fInding

that the Port Authority was engaging in a predatory price cutting scheme aimed at other

breakbulk terminal operations within the Port When breakbulk tonnages dropped

unexpectedly between 1969 and 1974 the Port Authority as the owner of the modern

relatively expensive facilities could offer them at terms the breakbulk market would

accept orclose them down completely The Port Authority s choice ofthe former course

of action could notbe faulted under the circumstances Ifonly minimum rents are paid

the Port Authority would still net more income than it would closing the facilities Thus

the users of other Port facilities would not be required to unfairly subsidize the

operations Agreement No T 2880 as Amended 680 683

19 F M C

871
872 FEDERALMARITIME COMMISSION

TRUCK DETENTION

With respect to truck detention payments by terminal operators at the Port of N

York the conditions under which a terminal operator would not be assessed a pen

under the rule are expanded to include Acts of God fires and serious accide

However congestion and work slowdown will notbe included Truck Detentio

the Port of New York 25 2627

The purpose of the rule which provides that terminal operators at the Port of N

York shall notbe liable for the time consumed by receipt or delivery of cargo by m

other than by bill of lading provided at the request of the shipper consipee or m

carrier is to provide that the shipper importer will be responsible for delays where 

terminal operator is required to sort or separate shipments by marks Additionally 

rule contemplates that as to a single motor carrier loadingunloading multiple L

shipments time for purposes of the rule shall not be computed sepllrately for 

loadingunloadinll of each shipment but rather shall accrue during the entire period 

vehicle is being loadingunloaded This should notbe confused with the rule dealing 

several vehicles picking up delivering multiple shipments on a single delivery order d

receipt where time shan be computed separately for each vehicle Id 27

The rule establishing procedures to be fonowed by terminal operators at the Por

New York who elect to deliver breakbulk cargo to motorcarriers prior to fun disch

of the vessel is not concerned with situations involving the strippinll of container

cargo Moreover the rule does notrequire but merely permits the terminal operato

effect delivery before the vessel is discharlled Because one particular rule makes it 

particular responsibility of the consignee or his agent motor carrier to determine w

a

cargo is available at non appointment piers and another rule wiD notallow appo

unless the cargo is properly available the terminal operator has to advise the m

carrier only when the cargo is so available For example until breakbulk shipme

have been stripped from the container there is nothing which obligates the term

operator to make delivery as soon as the vessel discharges its unstripped containers 

28

Ruie relating to truck detention at the Port of New York is amended to require 

the terminal operator employee authorizing delivery of cargo prior to the vessel b

funy discharged be identified Id 28

Rule allowing the terminal operator at the Port of New York the option of selec

the system under which it will operate will not be amended to lelete the n

appointment and combination procedures and keepinll only the appointment sys

wherein truck detention time begins when the motor carrier arrives at the g

However the rule is modified to require that any change in the procedures at a g

pier should only be made on 30 days notice and on filing of an appropriate ta

amendment Id 2829

Truck detention rule at the Port of New York which prohibits prelodging of deliv

orders will not be altered When a trucker does not have in his possession a full

complete delivery order on arrival at the pier delay in fact occurs Movement of ca

from the piers is appreciably slowed down while terminal personnel are straightening 

the problems created by anincomplete orlost pre lodged order Id 29

Prelodging of dock receipts with marine terminals at the Port of New York does 

create any significant truck detention at the Port Delay at the Port is due to prelodg

of delivery orders In some situations prelodging of the dock receipt is the only praCt

solution if there is to be a prompt receipt of the export cargo in order that the mo

carrier can unload as soon as it arrives at the piers Prohibiting of dock receipts wo

disrupt pre reserved shipping space since in many instances the ocean car

19 FM 
INDEX DIGEST 873

transporting the goods will insist on knowing in advance the size and amount of the

shipment it has booked and it would be unwise because it would lead to the misuse

of blank dock receipts which would have to be left at inland points if no prelodging is

permitted Id 3031

The Commission will allow the continuance of the practice of preludging dock receipts

with terminal operators at the Port of New York without any service fee A 15

assessment ree would work only as a penalty by unreasonably burdening the shipper

who is trying to export his product as quickly and cheaply as possible and could drive

the small inland shipper outof business Id 31

The practice at the Port of New York of presenting open delivery order dock receipt

documents on less than truckload shipments will not compound the problem of cargo

security at breakbulk terminals By permitting a terminal operator to establish his own

safeguards for the handling of LTLshipments security would be improved Id 32

The Commission will not require that dock receipts lodged with terminal operators at

the Port of New York be in exact conformity with the U S Standard Master or that the

terminal operator be allowed complete discretionto determine the form or content ofthe

dock receipt A terminal operator will have discretion to vary the format of a document

while he will be required to embody information therein to be applicable portwide Id

32

All that is needed for the proper delivery of cargo at the Port of New York is a

document containing information sufficient to properly identify the shipment to all

parties concerned and to authorize its delivery Id 33

Terminal operators at the Port of New York are allowed to refuse to complete or

correct the documents necessary to effect the pickup or delivery of cargo Id 33 34

Rule requiring motor carriers to arrive at a marine terminal at the Port of New York

IS minutes prior to his scheduled appointment is amended to provide that a motor

carrier need only arrive in time to proceed directly for pickup ordelivery of cargo Id

35

Rule requiring that service periods be established for each business day at a terminal

at the Port of New York operating on a nonappointment system will not be revised to

require the terminal operator to publish in its tariff the daily capacity of each terminal

facility and the number of vehicles to be scheduled in each service period To adopt the

revision would stifle any effect the rule would have in alleviating congestion at the Port

Id 36

Rule relating to the procedure for insurance of a time stamped gate pass which will

institute free time for the motor carrierin delivering or picking up cargo at marine

terminals at the Port of New York will not be revised to require motor carriers upon

receiving their time stamped gate pass to proceed to the delivery receiving clerk s office

for the purpose of being time recorded in the terminal operator s security log To permit

a terminal operator to record a different time in its own records for the commencement

of free time is contrary to the purpose of the validation and entry procedures under

which the validation time on the gate pass constitutes the official time for the

commencement offree time Id 36

Truck detention rule at the Port of New York is revised to eliminate the requirement

that customs time stamp documents customs will not issue time stamps and to simplify

the procedure by allowing the motor carrier upon validation of his gate pass on arrival

at the pier to proceed directly to customs for the processing of his papers Thereafter

the motor carrier s papers are presented to the delivery clerk of the terminal operator

for the stamping of the gate pass at which point time for purposes of detention

commences Id 37

19 FM C
874 FEDERAL MARITIME COMMISSION

Rule permitting the terminal operator at the Port of New York to turn away m

carriers when the capacity of a temlinal facility has been reached but not before iss

preference slips for service on the next business day will notbe deleted It is dou

that vehicles will be turned away capriciously if service of those vehicles is poss

Moreover a rule which would require a facility to exceed its capacity would no

workable Id 37 38

Rule assessing a IS penalty against a terminal operator at the Port of New Yor

refusing service to a motor carrier possessing complete documentation is revise

increase the penalty to 30 Id 38

Rule relating to assessment of a penalty ofIS on a motor carrier for failure to me

scheduled appointment at a marine terminal facility at the Port of New York is rev

to add a provision increasinll the penalty to 30 if the motor carrier has been adv

that special equipment will be required and he fails to meet his appointment Id 39

Rule providing that if a motor carrier seeks and gets a scheduled appointment 

marine terminal facility at the Port of New York prior to issuance of a freight releas

the subject cargo the motor carrier will be penalized IS is revised to assess 

penalty onthe terminal operator and to increase the amount to 30 Id 39

Rule providing for the assessment of a 1 S penalty against the terminal operator a

Port of New York for wronllfully advising the motor carrier that cargo is ready 

available is revised to providefor a penaltyof30 Id 40

Rule providing for the assessment of a 6S penalty against the terminal operator a

Port of New York who refuses service to a motor carrier holding an appointment w

the refusal is due to a lack of manpower is revised to reduce the penalty to 30 A 

of the obligationof the terminal operator to complete loadingunloading the motor ca

is the responsibility to foresee labor problems which would tend to delay operation

the case of refusal to service a nonappointment vehicle as a result of labor s refus

work overtime the terminal operator is relieved of any liability Id 41

u s OOVERNMENT PRINTING OFFICE 1979 0274 274

19F M C