Source: http://il.findacase.com/research/wfrmDocViewer.aspx/xq/fac.19800610_0000136.CDC.htm/qx
Timestamp: 2016-12-10 18:58:56
Document Index: 316188165

Matched Legal Cases: ['§ 814', '§ 815', '§ 814', '§ 815', '§ 801', '§ 15', '§ 814', '§ 16', '§ 815', '§ 17']

| 06/10/80 Puerto Rico Ports v. Federal Maritime
06/10/80 Puerto Rico Ports v. Federal Maritime
OF AMERICA, RESPONDENTS SEATRAIN LINES OF PUERTO RICO, INC., INTERVENOR; PUERTO RICO MARITIME SHIPPING AUTHORITY, PETITIONERv.FEDERAL MARITIME COMMISSION AND UNITED STATES OF AMERICA, RESPONDENTS SEATRAIN LINES OF PUERTO RICO, INC., SEATRAIN GITMO, INC., INTERVENORS; PUERTO RICO PORTSAUTHORITY, PETITIONERv.FEDERAL MARITIME COMMISSION AND UNITED STATES OF AMERICA, RESPONDENTS SEATRAIN LINES OF
PUERTO RICO PORTS AUTHORITY, PETITIONER v. FEDERAL MARITIME COMMISSION and UNITED STATES OF AMERICA, RESPONDENTS SEATRAIN LINES OF PUERTO RICO, INC., INTERVENOR; PUERTO RICO MARITIME SHIPPING AUTHORITY, PETITIONER v. FEDERAL MARITIME COMMISSION and UNITED STATES
PUERTO RICO, INC., SEATRAIN GITMO, INC., INTERVENORS
Nos. 78-1950, 78-1969, 78-1970, 78-1978 1980.CDC.136
These consolidated cases arise on petition for review of two Federal Maritime Commission (FMC or Commission) decisions that resulted from a controversy surrounding two high-speed container cranes located on berths at the "Isla Grande" terminal at the port of San Juan, Puerto Rico. In FMC Docket No. 76-38 the Commission found that the Puerto Rico Ports Authority (Ports Authority) and the Puerto Rico Maritime Shipping Authority had violated section 15 of the Shipping Act, 46 U.S.C. § 814 (1976), through their failure to secure Commission approval of agreements concerning the use of terminal facilities. In FMC Docket No. 76-41, the Commission found violations of sections 16 and 17 of the Shipping Act, 46 U.S.C. §§ 815, 816 (1976), through the Ports Authority's failure to condition PRMSA's use of the terminal on, and PRMSA's failure to allow, sharing of PRMSA's high-speed container cranes by a competing carrier. For the reasons hereinafter appearing, we reverse the Commission as to each of the violations determined by it to exist. I
The Puerto Rico Ports Authority, established by the Puerto Rico Legislature in 1942, is a public corporation charged with the ownership, development, and operation of transportation facilities and marine services in, to, and from Puerto Rico. It holds the sole authority to select and assign suitable berths to vessels calling at the Port of San Juan.
Seatrain Gitmo, Inc. is a subsidiary of Seatrain Lines, Inc., whose assets PRMSA had acquired at the outset of its carrier service. Both are intervenors in this litigation and are referred to collectively as Seatrain. After having left the Puerto Rico-mainland trade with the sale of assets devoted thereto in 1974, Seatrain reentered that trade between Atlantic ports and Puerto Rico in January 1976. Its re-entry and concomitant request for berthing facilities in Puerto Rico precipitated this litigation.
The Port of San Juan comprises a number of terminal facilities, among them Isla Grande, Puerto Nuevo, Pan American Dock, Frontier Pier, and Puerto Rican Drydock. For Dcontainership operation, Isla Grande and Puerto Nuevo assume the most significance; Isla Grande, however, is the focus of this litigation.
Puerto Nuevo, the newest docking area in the Port of San Juan, has been planned and developed as the major container facility in the port, with the potential for future expansion. The Ports Authority has constructed ten berths at Puerto Nuevo, four of which have been in use throughout the Commission's proceedings in these cases. Parallel crane rails extend across these four berths and across two others that have not been used for container operations. The remaining Puerto Nuevo berths have no crane rails, but are designed to accommodate them.
Because Isla Grande is the focus of this controversy, a more detailed account of the situation existing at that terminal is required. In accordance with the Ports Authority plan for developing the Port of San Juan, Seatrain helped to improve the Isla Grande terminal. It installed crane rails, container cranes, paving, and other improvements. According to the terms of a 15-year agreement executed in 1972, *fn1 title to these improvements, with the exception of the crane rails, would remain in Seatrain until the expiration of the agreement. Title to the crane rails, in contrast, was to vest immediately in the Ports Authority. In 1974 at Seatrain's request, the Ports Authority released title to the crane rails so that Seatrain could sell them to PRMSA. Thus, when PRMSA entered the carrier trade in late 1974, it purchased Seatrain's vessels and terminal assets, including the cranes and crane rails. For the crane rails, PRMSA paid $512,554.93; for the cranes, $2,204,223.74.
When PRMSA purchased Seatrain's assets in 1974, Seatrain demanded release from its 1972 agreement. The Ports Authority consented only after PRMSA had committed itself to assume, but had not actually assumed, Seatrain's obligations under the 1972 agreement. When the Ports Authority and PRMSA finally executed an agreement in 1976, however, that agreement did not include the crane-sharing obligation. The Ports Authority attributes its failure to require secondary crane use to the pressing financial need for a signed lease for the Isla Grande terminal and, more importantly, to the inconsistency of a crane-sharing requirement with both the Ports Authority's overall plan for the development of the Port of San Juan and the availability of unimproved berths at Puerto Nuevo. This lack of a secondary use requirement and PRMSA's refusal to share its cranes voluntarily with Seatrain, its predecessor at Isla Grande and now its competitor, led to the Commission's finding of sections 16 and 17 violations. In addition, the Commission found that PRMSA and the Ports Authority had implemented an agreement for the use of Isla Grande without prior Commission approval, in violation of section 15 of the Shipping Act. II
Section 15 of the Shipping Act, 46 U.S.C. § 814 (1976), ensures Federal Maritime Commission supervision of designated classifications of agreements pertaining to the common carriage of goods by water. It requires such agreements to be filed with the Commission promptly; vests in the Commission the power to approve, disapprove, cancel, or modify the agreements; and provides that the agreements can be implemented lawfully only after Commission approval. *fn2 The requirements of section 15 extend to every "common carrier by water, or other person subject to this chapter." *fn3 No one disputes that both the Ports Authority and PRMSA come within its purview. Moreover, those parties concede that agreements in which a terminal operator grants a carrier preferential berthing rights in a marine terminal facility require section 15 approval. *fn4 At issue in this litigation is whether such preferential agreements subject to section 15 existed between the Ports Authority and PRMSA.
In Docket No. 76-38, the Commission found violations of section 15 in connection with three agreements between the Ports Authority and common carriers for the use of Isla Grande terminal. *fn5 Although only the Commission's findings as to the arrangement between the Ports Authority and PRMSA are the subjects of appeal in this litigation, an understanding of this arrangement requires a brief explanation of the earlier agreements.
When PRMSA entered the Puerto Rico carrier trade in 1974 Seatrain had been docking at Isla Grande for some 12 years. In 1962 and again in 1968, the Ports Authority and Seatrain had entered into agreements found not to be subject to section 15. In 1972, however, Seatrain entered into another agreement for preferential berthing rights and exclusive use of the marshalling area at Isla Grande. *fn6 The implementation of that agreement, neither filed with nor approved by the Commission, was held in No. 76-38 to violate section 15. In conjunction with PRMSA's purchase of Seatrain's assets in 1974, Seatrain and the Ports Authority executed but did not file a lease termination agreement, also found by the Commission to have violated section 15.
In FMC Docket No. 76-38, the Commission concluded that the Ports Authority and PRMSA had committed two separate violations of section 15. One involved the marshalling or backup area, and stemmed from an oral agreement giving PRMSA exclusive use of the area. The other involved the berthing area, and resulted, not from agreement T-3308, but from an unfiled, unapproved agreement that the Commission inferred from the evidence in this docket and in Docket No. 76-41. Because we find neither conclusion supported by substantial evidence, *fn7 we reverse the Commission's findings of section 15 violations.
According to Commission precedent, a landlord-tenant agreement between a ports authority and a carrier for use of a marshalling area is subject to section 15 approval only when the area is "essential" to use of the berth. *fn8 The Commission's finding that the marshalling area at Isla Grande is essential is therefore critical to its decision and must be supported by substantial evidence in the record. No such substantial evidence exists in Docket No. 76-38. Indeed, the record suggests the opposite conclusion: Seatrain's own statements imply that the marshalling area is not essential for effective use of the berths at Isla Grande. Seatrain's initial written request to gain access to Isla Grande specified its need for a marshalling area of approximately 5 acres, which could be separated from the Isla Grande terminal. *fn9 Moreover, in an affidavit contravening the suggestion that Seatrain's use of the Isla Grande would cause congestion at the terminal, a Seatrain vice president stated that Seatrain could discharge its vessels at Isla Grande and move the container to its marshalling area at the nearby Pan American Dock. *fn10
In the absence of substantial evidence as to the essentiality of the marshalling area to the use of Isla Grande, *fn11 the Commission's finding that the oral lease was subject to section 15 approval must fail. Accordingly, the Commission's decision that the Ports Authority and PRMSA violated section 15 by failing to secure approval of the oral lease is reversed.
The Commission found that "the evidence establishes the existence of an unfiled, unapproved agreement relating to PRMSA's use of the berthing area at Isla Grande." J. A., at 18. To support this conclusion, the Commission noted that no other carrier has used Isla Grande since PRMSA began operations there, *fn12 and cited the presence of PRMSA's assets at the terminal. The Commission also asserted that Isla Grande is virtually useless as a container terminal without PRMSA's cranes, which PRMSA will not share; therefore the terminal is not available to other carriers on any basis. As additional factors in its decision, the Commission cited the Ports Authority's consent to a possible assignment by Seatrain of its rights, covenants, and obligations (presumably, but not explicitly, including Seatrain's secondary crane use provision) to PRMSA, J. A., at 66; a letter from Teodoro Moscoso, Chairman of PRMSA, expressing PRMSA's willingness to assume the obligations established in Seatrain's then-terminated lease, J. A., at 1198; the effective date (1 October 1975) contained in agreement No. T-3308; *fn13 and the unity of PRMSA and the Ports Authority insofar as Isla Grande is concerned. *fn14 The unfiled agreement established by this evidence, the Commission concluded, constituted a violation of section 15. *fn15
The evidence adduced in Docket No. 76-38 is insufficient to support the Commission's finding of an unfiled agreement between the Ports Authority and PRMSA. Rather, uncontroverted evidence shows that PRMSA paid only the standard wharfage and dockage charges prescribed by the Ports Authority tariff, and did not pay any preferential berthing fee. *fn16 Moreover, the critical finding that Isla Grande is unavailable for use by other container carriers without PRMSA's cranes is not supported by substantial evidence in the record. Indeed, the question of Isla Grande's availability to other carriers without PRMSA's cranes was not posed in this proceeding, and no evidence directly on that issue was adduced. *fn17 Thus, the only other source for evidence is Docket No. 76-41, of which the Commission took official notice.
Even if No. 76-41 provided substantial evidence as to the necessity of PRMSA's cranes for the use of Isla Grande, *fn18 the Commission's official notice of that proceeding was improper. The Commission's Rule 226 permits official notice of "such matters as might be judicially noticed by the courts, or of technical or scientific facts within the general knowledge of the Commission as an expert body." *fn19 The issue of Isla Grande's usefulness without PRMSA's cranes, rooted in factual determinations focusing on the structure of the wharf, requires direct evidence, and is not a technical or scientific fact within the Commission's general knowledge. Although in some instances, as the Commission asserts, it may be permissible to take official notice of evidence from one proceeding in another, *fn20 that practice is impermissible when it is prejudicial and the parties have no opportunity to challenge the facts. In a case in which an agency faced with two related proceedings looked to evidence from both in forming its judgment, the Supreme Court stated:
Moreover, evidence introduced in No. 76-38 after the proceeding was reopened, but not considered or relied on in the FMC decision, contravenes the Commission's conclusion that PRMSA was using Isla Grande pursuant to an unfiled section 15 agreement. Evidence entered in the reopened proceeding was directed towards whether the Ports Authority had excluded another carrier, CAROL Lines, from Isla Grande or had offered the facility to CAROL. That evidence, although not without contradiction, *fn21 tends to show that the Ports Authority offered Isla Grande to CAROL Lines on a first-come, first-served basis, *fn22 and weighs against the Commission's finding of a preference toward PRMSA.
After examining the evidence in the reopened proceeding and finding it unnecessary to a decision on issues raised in No. 76-38, the Commission stated it did not rely on that evidence and denied the request of the Ports Authority and PRMSA for an evidentiary hearing on the evidence. J. A., at 21. Having reopened the hearing to admit new evidence, however, the Commission cannot ignore the evidence admitted. The requirement of a hearing "implies both the privilege of introducing evidence and the duty of deciding in accordance with it. To refuse to consider evidence introduced or to make an essential finding without supporting evidence is arbitrary action." The Chicago Junction Case, 264 U.S. 258, 265, 44 S. Ct. 317, 320, 68 L. Ed. 667 (1924). *fn23
We conclude that the Commission's finding of an unfiled, unapproved agreement between the Ports Authority and PRMSA regarding the use of the berthing area at Isla Grande is not supported by substantial evidence in the record. Accordingly, we reverse. III
Section 16 First of the Shipping Act, 46 U.S.C. § 815 (1976), makes it unlawful for any "common carrier by water, or other person subject to this chapter" to confer any undue or unreasonable preference or to impose any undue or unreasonable prejudice or disadvantage on any person, locality, or description of traffic. *fn24 In Docket No. 76-41, the Commission, adopting with clarifications the Initial Decision of the Administrative Law Judge, *fn25 found that both the Ports Authority and PRMSA had violated section 16 First. The Ports Authority violated section 16 First by failing to ensure that the public facilities at Isla Grande did not become dedicated to private exclusive use. J. A., at 287. PRMSA's violation was to grant unreasonable preference to itself, by exclusive use of the public area at Isla Grande and by exclusive use of its own cranes situated on that property. J. A. at 284.
The Commission asserts, and the Ports Authority agrees, that Isla Grande is a public terminal for which no section 15 preferential use agreement has been approved. *fn26 Despite the public character of the terminal, however, the Authority will not assign to Isla Grande a vessel that cannot feasibly work there. And, the Commission continued, a vessel cannot feasibly be worked without the use of PRMSA's shoreside cranes, which PRMSA refuses to share. The Ports Authority's acquiescence in this refusal, in denigration of its authority to require secondary crane use, has the effect of granting to PRMSA both an unreasonable preference and control of berthing at Isla Grande. J. A., at 285-86.
Preliminarily, it must be noted that section 16 imposes no general requirement that a port operator provide terminal equipment to carriers. Moreover, the Commission decision in this proceeding indicates that the Port Authority has no generalized duty to require crane sharing at the Port of San Juan. The Commission decision noted that the crane-sharing requirement was intended to "right a wrong" at Isla Grande, and not "to apply indiscriminately to "docks all over the country.' " *fn27 Thus, the peculiar configuration at Isla Grande and the Commission's conclusions as to its effect have led the Commission to its decision that to avoid a violation of section 16 First, the Ports Authority must require PRMSA to share its cranes at Isla Grande.
Without impugning the accuracy of the conclusion as to Seatrain's vessel, we note that the usability of Isla Grande without PRMSA's cranes by vessels container or noncontainer other than Seatrain's was not at issue in the proceeding, nor did the Administrative Law Judge reach a conclusion as to that broader issue. The Commission decision nevertheless states that "PRMSA acknowledges that a vessel berthing at Isla Grande cannot feasibly be worked without the use of shoreside cranes" J. A., at 285. We find that this conclusion is not supported by substantial evidence. The Initial Decision cites only two pieces of evidence to support its finding that vessels with shipmounted gantries cannot use Isla Grande. *fn28 These do not provide substantial evidence that shipboard cranes cannot reach over the dip. Moreover, the presence of the cranes notwithstanding, evidence in No. 76-41 did not address and therefore did not resolve the issue whether Isla Grande can be used for breakbulk or roll on/roll off vessels.
Assuming, arguendo, that the evidence had shown that Isla Grande cannot be used without PRMSA's cranes, we are not compelled to find that the Ports Authority's acquiescence in PRMSA's refusal to share the cranes constituted a section 16 First violation. That section prohibits preferences and discriminations that are "undue or unreasonable." *fn29 The situation existing at the Port of San Juan involved no undue or unreasonable preference or discrimination. On the contrary, the Ports Authority offered to treat all carriers, including Seatrain, fairly, within the ambit of its passive port development plan. Only four of the ten contiguous container berths at Puerto Nuevo had been in use prior to and during the Commission proceedings, J. A., at 517. Other berths were, and continue to be, available for Seatrain, on the same terms accorded to other carriers, to develop to suit its container trade; alternatively, Seatrain could call at an undeveloped berth and use mobile cranes to move its containers.
Commission precedent establishes that the exclusive assignment of public facilities to one carrier does not violate section 16 unless the challenged lease either fails to compensate the port adequately *fn30 or unreasonably forecloses other carriers from securing adequate facilities. Moreover, the Commission has expressly refused to find discrimination or preference in a situation in which the port indicated willingness to make similar, but not necessarily identical, arrangements available to other carriers. *fn31 At San Juan, the Ports Authority provides similar facilities to all carriers: berths, port dredging, properly constructed wharves, paved transit areas, and the opportunity to lease ready-to-pave backup areas. To satisfy requirements beyond these each carrier is free to lease and improve a berth and backup area, or to work a public facility, using mobile cranes. The Ports Authority suited its berthing assignments to each carrier's operations, with a simultaneous view to both the development of the total Port of San Juan and its own economic needs. *fn32 Its treatment of both PRMSA and Seatrain was consistent with these goals and does not constitute a violation of section 16 First.
Because section 16 First prohibits the imposition of undue or unreasonable prejudice or disadvantage, a violation of that section normally involves a "triangular relationship" between the violator, the preferred party, and the party suffering discrimination. One carrier's preference for itself over another carrier lacks such a triangular relationship, and therefore does not usually constitute a section 16 violation. *fn33 The Commission's assessment of the situation at Isla Grande, however, led it to conclude that PRMSA's refusal to share its cranes was not merely a self-preference. Instead, the Commission found a duality in PRMSA's role at Isla Grande, and characterized PRMSA as both a terminal operator and a common carrier. *fn34 It then found that PRMSA as terminal operator was preferring PRMSA as common carrier. *fn35 Thus, PRMSA was violating section 16 First.
We find, however, that PRMSA does not function as a terminal operator at Isla Grande. Without this critical conclusion, the Commission's decision cannot stand. Although a carrier may at times function as a terminal operator, *fn36 PRMSA's activity at Isla Grande does not present such a situation. PRMSA used its cranes for a purpose incident to its role as common carrier. Its common law and statutory obligations to its shippers include discharging cargo and placing it on the dock. *fn37 Use of the cranes to fulfill these obligations does not invest PRMSA with terminal status. *fn38 Moreover, the evidence in this proceeding showed, and the Administrative Law Judge held, that PRMSA has never allowed other carriers to use its cranes at Isla Grande to serve their shippers. *fn39 Thus PRMSA has not furnished terminal services to other carriers.
Because PRMSA is not a terminal operator, its refusal to share the cranes at Isla Grande lacks the triangular relationship contemplated by section 16 First. The common carrier PRMSA has thus preferred only itself and has not violated section 16 First. IV
The relevant provisions of section 17 apply to every "common carrier by water in foreign commerce" and to every "other person subject to this chapter". Because PRMSA services only routes between the continental United States and Puerto Rico, it is not a common carrier in foreign commerce. *fn40 Therefore, if PRMSA is subject to section 17, it must be an "other person subject to this chapter," which is defined as "any person not included in the term "common carrier by water,' carrying on the business of . . . furnishing . . . terminal facilities in connection with a common carrier by water." 46 U.S.C. § 801 (1976). Contrary to the Commission's finding, PRMSA cannot be an "other person subject to this chapter." PRMSA is clearly a "common carrier by water," a category specifically excluded from the definition of "other person." On this basis alone, PRMSA is beyond the purview of section 17. In addition, however, PRMSA is not subject to section 17 because it is not an "other person" by reason of furnishing terminal facilities. As we held with regard to section 16 First, PRMSA's use of its cranes in the context of service to its own shippers does not make it a terminal operator. PRMSA's refusal to permit secondary use of the cranes by other carriers also negates the conclusion that it provides terminal facilities.
In accordance with its responsibility to operate the Port of San Juan for the public good, the Ports Authority must allocate berth assignments to promote full port development and utilization. As we noted above, in early years, when adequate facilities were limited, efficient port management, in the Ports Authority's judgment, required crane sharing. Now, with a number of berths at Puerto Nuevo remaining under-developed and unprofitable despite huge investments, that sharing is no longer necessary. Indeed, by minimizing the carrier's incentive to improve a berth suitable for its own operations, the continued requirement of crane sharing may inhibit the development of the Port of San Juan. In tailoring its berth assignments to the needs of the port as a whole, the Ports Authority has initiated a program consistent with the Commission's own requirements: "As used in section 17 and as applied to terminal practices, we think that "just and reasonable practice' most appropriately means a practice . . . which is fit and appropriate to the end in view." *fn41 In light of the Ports Authority's responsibility for the development of the entire port, including the underused Puerto Nuevo area, we hold that the decision not to exact a crane-sharing agreement from PRMSA at Isla Grande is reasonable and does not violate section 17.
This controversy is, in essence, a struggle for access to high-speed shore-mounted cranes located on the docks at Isla Grande, part of San Juan harbor, Puerto Rico. Intervenor Seatrain has sought, since 1975, "secondary use" of the cranes that is, permission to use the cranes, at a fee, when such use would not interfere with the schedules of the owner of the cranes, Puerto Rico Maritime Shipping Authority . PRMSA refused such use, and the Puerto Rico Ports Authority therefore declined to assign Seatrain any berthing privileges at Isla Grande, on the ground that Seatrain's vessels, which are containerized, cannot practicably be worked at Isla Grande without aid from the cranes. After hearings before an administrative law judge, the Federal Maritime Commission found that PRMSA and PRPA, lessee and lessor respectively of the Isla Grande facilities, had effected unfiled agreements which were required to be filed, thus violating § 15 of the Shipping Act of 1916, 46 U.S.C. § 814. F.M.C. Docket No. 76-38. In a related proceeding, the Commission found that PRPA had given PRMSA an "unreasonable preference" by allowing PRMSA to exclude other carriers from Isla Grande by denying them access to the cranes, and that PRMSA in its capacity as terminal operator had shown "unreasonable preference" to PRMSA in its capacity as carrier; both PRPA and PRMSA were found to have violated § 16 of the Shipping Act of 1916, 46 U.S.C. § 815. F.M.C. Docket 76-41. Additionally, in the same proceeding, the FMC found that berthing arrangements at Isla Grande reflected a failure by PRPA and PRMSA to regulate loading and unloading operations there in a "just and reasonable" manner, thus violating § 17 of the Shipping Act, 46 U.S.C. 816. The Commission ordered that PRMSA make its cranes available to Seatrain and that PRPA assign berthing space to Seatrain at Isla Grande.1
As a threshold matter, the majority holds PRMSA not subject to this section of the Act because it is neither a "common carrier by water in foreign commerce" nor an "other person subject to this chapter." Obviously the Puerto Rico-mainland trade is not "foreign commerce." The relevant portion of the definition of "other person" reads "any person, not included in the term "common carrier by water', carrying on the business . . . furnishing . . . terminal facilities in connection with a common carrier by water." Since the definition of "other person" thus seems to apply only to those not already included in the phrase "common carrier by water," the majority concludes that PRMSA, which is obviously a common carrier by water, cannot be an "other person" as well. But the statutory language can just as well be read to mean "any person, (even though) not included in the term "common carrier by water' . . ." The majority goes on to argue that PRMSA has not in fact furnished terminal facilities; but, as I have pointed out above, PRMSA has held itself out as providing terminal facilities. Moreover, PRMSA's unreasonable refusal to allow other carriers access to its facilities should not be allowed to insulate it from the regulated status of a terminal operator, when the statute is intended to prevent such unreasonable use. It makes no sense to me to read the statute to allow jurisdiction to be avoided by the very acts which the statute interdicts if jurisdiction is present. I would, therefore, hold PRMSA subject to the strictures of section 17.