Opinion ID: 510023
Heading Depth: 2
Heading Rank: 3

Heading: Analysis of the FMC's Decision on the Merits

Text: 41 After reviewing the ALJ's conclusions as well as the extensive evidentiary record, the FMC found that the Port Authority's denial of Petchem's application was justified both at the time its decision to deny was made and at the time of the Commission's review. 42 The FMC based its finding on the following factors, among others. At the time Petchem's application was denied, the company had had no prior towing experience and had not yet begun work under its military contract; the contract required Petchem to respond to military requests within thirty minutes, yet it would have only two tugs with which to service both military and commercial shipping; and Hvide, which had agreed to continue its commercial towing work even though it foresaw substantial initial losses, had demonstrated its ability to do the commercial work. 43 The Commission noted that although the CPA expected the demand for commercial towing to increase, the introduction of competition could cause Hvide to withdraw from the Port. This would jeopardize the Port's ability to assure reliable, competent towing services to its increasingly important commercial users. Under the circumstances, the FMC concluded that the Port Authority's continuance of Hvide as exclusive provider of commercial towing services was justified at the time Petchem's application was denied. FMC Op., 23 Shipping Reg. (P & F) at 990-91. 44 The Commission then considered developments since the denial of the application. It noted that although Petchem had proven itself a competent operator, there was little evidence that it could handle more than its military business. In fact, in 1984, it was required to call upon Hvide for assistance on eight occasions. By the same token, although there had been an increase in commercial work at the Port, Hvide's continuing losses demonstrated both that there was not yet enough commercial business to profitably support one tugboat operation, let alone two, and that the Port Authority was justified in crediting Hvide's statements that it would withdraw from the Port if competition were permitted. Yet if Hvide were to cease its commercial operations, there was no evidence that Petchem could fill the gap and provide the continuous, dependable commercial tugging service the Port required. Id. at 993-94. 45 Based on [t]he preponderance of the evidence of record, the Commission concluded that it should not disturb the present division of tug markets at the Port. Id. at 994. At the same time, it observed that continued growth and other changes at Port Canaveral might require a different conclusion in the future, and it recommended that the CPA consider competitive biddings at a later date. Id. at 994-95. 46 Petchem objects that the Commission's conclusions are either unsupported by the record or contrary to law. Petchem first attacks the FMC's assertion that the CPA properly questioned Petchem's ability and readiness to perform commercial services. Petchem, however, offers nothing concrete to rebut the Port Authority's reasons, recited above, for declining to grant the non-exclusive franchise in the first instance. Nor does it explain why we may ignore the Commission's determination, at the time of its review, that although Petchem had performed well in meeting the military's tug requirements, it was not then able, with just two tugs, to step into the breach and serve Port Canaveral's commercial shipping needs in the event Hvide withdrew its tugboats. 47 Although Petchem chastises the FMC for its noncritical acceptance of the large losses reflected in Hvide's financial statements, it does not assert that Hvide was operating at other than a loss. Nor does Petchem refute the ample third-party evidence describing the extent to which Hvide would be damaged by the loss of even a small percentage of its existing work at Port Canaveral. 48 We have rejected, in our discussion of the burden of proof, Petchem's argument that the Commission's past interpretations of the Shipping Acts forbid exclusive franchises of the kind granted to Hvide. Petchem advances, however, the ALJ's alternative argument that [e]ven assuming, arguendo, that only one commercial tug service was viable within the Port and that a franchise agreement was necessary--why did the Port not allow any tug service to become the franchise [sic]? Why did it select and foster [Hvide]? ALJ Op., 23 Shipping Reg. (P & F) at 496. The suggestion that the franchise should have been submitted for competitive bidding ignores the realities of this case. As the FMC noted, no other tug operator had expressed an interest in providing services for commercial vessels at Port Canaveral. FMC Op., 23 Shipping Reg. (P & F) at 992. Furthermore, if the franchise had been opened to bidding and Petchem had proven to be the only bidder in addition to Hvide, the Port Authority would still have had to consider the relative reliability of the two companies because of the Authority's overriding responsibility for the efficient operation of the Port. 49 The focus of Petchem's next attack is on the FMC's statement that 50 reduced to its essentials, [the Port Authority's denial of Petchem's application] represented a conclusion that the creation of the set aside program of a monopoly for Petchem over military work necessitated the creation of a balancing monopoly for Hvide over commercial work. 51 Id. at 991. Although Petchem would have us find a sinister significance in the FMC's use of the phrase balancing monopoly, in context it is quite benign. The Commission's next sentence reads as follows: 52 By denying Petchem's application, the Port Authority gave Petchem some time to establish itself and also gave itself some time to gain a better understanding of how the new division of military tug work from commercial work would affect Petchem, Hvide, Port Canaveral and the carriers and shippers using the Port. 53 Id. (footnote omitted). The Commission was not condoning a regime of permanent, parallel monopolies. Rather, it viewed the decision to deny the application as dictated by temporary considerations of prudence. 54 Were there any doubt as to the Commission's understanding of the basic objectives of the Shipping Acts, it has been put to rest by its observation that even if the Port Authority continues to believe that an exclusive franchise for commercial work is necessary, it should consider carefully whether periodic competitive bidding for that franchise would be beneficial. Id. at 995. As Petchem grows in experience, there is no reason to believe the company may not in time qualify to be among the bidders. Although the Commission describes these comments as advisory, they confirm that it fully recognizes that the Shipping Acts do not favor exclusive arrangements except in special circumstances.