public utilities which are subject to the Shipping Act of 1916, should receive favorable action by the Congress and by your honorable Committee. To again illustrate that under the exemption clause pertaining tɔ public utilities contained in the Emergency Price Control Act of 1942, OPA thereunder considered publicly owned ports and terminals exempt, we advert to Docket 632 before the United States Maritime Commission. In 1944 certain members of the California Association of Port Authorities filed notices of proposed increased rates for wharfage and dockage. In that instance OPA, instead of issuing a cease-anddesist order under the theory that it had jurisdiction of the rates of ports and terminals operated as public utilities, filed a protest with the United States Maritime Commission. The following quoted from that protest is very significant as illustrating the administrative interpretation in 1944 that publicly owned ports and terminals, as well as other persons subject to the Shipping Act of 1916, were exempt from OPA regulation: "In view of the foregoing considerations, this office is acting under the authority delegated from the President pursuant to section 1 of the Stabilization Act of October 2, 1942, to protest to the port authorities the proposed increases in their charges. We must, however, reckon with the possibilities that our protest, together with the protests of the agencies of the Government affected, may not suffice to dissuade the port authorities from taking the proposed action. Since the proposed increases will constitute what the protestants believe to be an unjustified addition to the cost of the war and since there is substantial hazard that the action of California authorities may prove only the prelude to like action on all seaboards, I earnestly request the Maritime Commission to exercise to the full such authority as it may possess in the premises to prevent or cause a postponement of the proposed increases. "CHESTER A. BOWLES." The United States Maritime Commission instituted an order to enter upon a hearing as to the lawfulness of the rate increases proposed, such increases were withdrawn, and the docket closed. The action of OPA, in that instance, amounted to an adinission that OPA had no jurisdiction over increases in the rates of public ports and an admission that the proper regulatory body with reference to public ports and private terminal operators was the United States Maritime Commission, under the Shipping Act of 1916. H. R. 7079 merely restates clearly this same position and would prevent OPS, now, under identical language, from arriving at an administrative determination inconsistent with and contrary to the intent of Congress. Following the decision of the United States Supreme Court in the Davies Warehouse case, referred to herein, the Administrator of the Office of Price Administration under the Emergency Price Control Act of 1942, under date of April 26, 1944, by his district price attorney of the Office of Price Administration, wrote the port of Seattle, Wash., with reference to its rates, as follows: "It is our understanding that the rates of the port of Seattle are established by the port commission, a body of public officials elected by voters residing within the port district, and that such rates are not subject to suspension or revision by the department of public service. Under these circumstances, this office is of the opinion that the exemption mentioned above is applicable. are, however, securing confirmation of this opinion." We It never has been the intent of the Defense Production Act that it should or ought to apply to publicly or privately owned ports or terminals, which are operated as public utilities or are subject to the Shipping Act, whether independently regulated as to their rates or not. This is borne out by past proposed amendments in 1951 to the Defense Production Act of 1950 which were not adopted by the Congress, by judicial decisions construing identical exemption language in the Emergency Price Control Act of 1942, and by past administrative action of OPA. H. R. 7079 is therefore justified and necessary in that it would clarify and make more certain that this correct construction of section 402 (e) (v) of that act be followed by OPS without involving other persons subject to the Shipping Act of 1916 in the extremely costly harassment of filing protests with OPS and litigating the construction of the language of that act in the courts to the cost and detriment of the ports and general industry. II H. R. 7079 would so clarify the Defense Production Act of 1950 as to prevent OPS by an administrative construction of said act from causing a conflict in jurisdiction and authority between itself and the Federal Maritime Board. H. R. 7079 proposed to clarify the Defense Production Act of 1950 so that "persons subject to the Shipping Act, 1916" will unequivocally be exempt from regulation by OPS. OPS has administratively, in the dockets affecting Seattle and Tacoma, cited supra, declared that it does have control over all public utilities which are not to be classified as conventional and which are not completely and comprehensively regulated by an independent regulatory authority. Under the Shipping Act of 1916 the Federal Maritime Board has been given and has exercised over a long period of years regulatory authority over the persons subject to that act, i. e., public and private ports and terminal operators, car loaders and unloaders, etc. OPS has refused to recognize the regulatory authority of the Federal Maritime Board under the Shipping Act of 1916 and has stated that if that authority is the only regulatory authority to which a nonconventional public utility is subject, that that public utility is not one which is exempt from the provisions of the Defense Production Act of 1950, as amended. There is now pending before the Senate Committee on Banking and Currency S. 2722, which is the companion bill to H. R. 7079. Under date of March 11, 1952, Ellis Arnall, Director, Office of Price Stabilization, addressed a communication to Hon. Burnet R. Maybank, United States Senate, with reference to S. 2722. With reference to "other persons subject to the Shipping Act of 1916" that communication contained the following language: "However, 'other persons,' marine terminal facilities, for example, are subject to the Shipping Act of 1916 only in the sense that they file copies of rates and agreements with the Federal Maritime Board which has jurisdiction only to prevent discriminatory rates and practices. The Maritime Board has no jurisdiction to regulate these rates to determine their reasonableness.” This statement by Mr. Arnall, together with the rest of the context of his communication, presents a very erroneous view of the jurisdiction of the Federal Maritime Board under the Shipping Act of 1916. With reference to persons subject to the act, the Federal Maritime Board and its predecessor, the United States Maritime Commission, has from time to time fixed maximum and minimum rates. In docket 555 instituted November 7, 1939, for example, the United States Maritime Commission investigated ports and private terminal operators in the San Francisco Bay area relating to free time allowance and wharf demurrage and storage rates. The Commission found that the respondent ports were guilty of violating the Shipping Act of 1916 and ordered the adoption of certain minimum rates for demurrage and storage (some of which were double the existing rates) and certain maximum free time allowances. The Supreme Court of the United States (California v. United States (320 U. S. 577)) upheld this decision of the United States Maritime Commission and held that the charging of noncompensatory rates by a port or terminal operator was a violation of the Shipping Act of 1916 and that minimum compensatory rates could be ordered established by the Commission. In docket 659 of the United States Maritime Commission, on October 19, 1948, with reference to an inquiry as to free time and demurrage charges at New York, it was held that the Commission had the authority under the decision in California v. United States, supra, not only to set maximum free time, but also to set minimum free time and maximum or minimum demurrage rates as well. It also held that other persons subject to the Shipping Act are bound to impose compensatory demurrage charges after the expiration of reasonable free time and "if the currently effective rates of demurrage are not compensatory, new rates should be published which are compensatory." A candid perusal of those dockets and the decision of the Supreme Court, supra, indicate that while the Federal Maritime Board may not with reference to other persons who are not signatories to a section 15 agreement under the Shipping Act of 1916, assume conventional rate regulatory power, that the Federal Maritime Board does, however, have the power as to "other persons subject to the Shipping Act of 1916" to prescribe minimum and maximum rates for all services rendered thereby. It should be remembered that under the Defense Production Act of 1950, as amended, OPS has no regulatory power as to the fixing of rates and charges for services rendered, but may merely set a maximum rate or charge with reference to other persons subject to the Shipping Act of 1916. This power is already and for a great number of years has been exercised by the Federal Maritime Board and its predecessors, so that it is ineluctable that in all instances in which the Federal Maritime Board should exercise its power to fix a maximum rate or a minimum rate that such exercise would be in conflict with the exercise of any similar power by OPS. For example, if the Federal Maritime Board should now find a violation of the Shipping Act of 1916 to exist as to any port or terminal and to correct the violation should order a minimum rate of twice or even in excess to any extent of the existing rate to be charged, then under the construction of the Defense Production Act of 1950, administratively assumed now by OPS, such an order by the Federal Maritime Board would, in effect, authorize a violation of any ceiling price that might be established for any port or terminal by OPS. H. R. 7079 would remove persons subject to the Shipping Act of 1916 definitely from the purview of OPS regulation and thus eliminate any administrative OPS construction of the act that would lead inevitably to conflict between the two acts and between the two Federal agencies administering said acts. In the case of Davies Warehouse Co. v. Bowles (321 U. S. 141), Justice Jackson, writing for the Court, stated with reference to similar language in the Emergency Price Control Act of 1942: * * * "We think Congress desired to depart from the traditional partitioning of functions between State and Federal Government only so far as required to erect emergency barriers against inflation. But as matter of policy Congress may well have desired to avoid conflict or occasions for conflict between Federal agencies and State authority which are detrimental to good administration and to public acceptance of an emergency system of price control that might founder if friction with public authorities be added to the difficulties of bringing private selfinterest under control. Where Congress has not clearly indicated a purpose to precipitate conflict, we should be reluctant to do so by decision. * ** *"" Moreover, a large number of the persons subject to the Shipping Act of 1916 have entered into section 15 agreements under that act which have been approved by the Federal Maritime Board or its predecessor. The California Association of Port Authorities and the Northwest Marine Terminal Association are instances of groups of public and private ports and terminal operators who have entered into such section 15 agreements. Those agreements provide, among other things, that all of the parties signatory thereto will charge just and reasonable and so far as practicable uniform rates and charges for the services rendered by them. In the proceeding entitled, "Status of Car Loaders and Unloaders" (2 U. S. M. C. 761), there was before the United States Maritime Commission for approval the car-loading rates of the San Francisco Bay Car-Loading Conference. The questions were whether the members of the conference were within the coverage of the Shipping Act of 1916, and if so, whether their proposed rates were fair, nondicriminatory and otherwise acceptable under the Shipping Act of 1916. The Commission said, with reference to that particular conference: "Thus, it is apparent that while the agreement is operative, the Commission has plenary power to control, among other things, the fixing and regulation of rates and practices of the agreeing parties. Therefore, approval of the agreement would constitute automatic and complete occupancy of the field of activity here involved by the Federal Government." This plenary power of the United States Maritime Commission, and now the Federal Maritime Board, has been exhibited in other cases. In Pacific CoastRiver Plate Brazil Rates (2 U. S. M. C. 28), a rate of $43 per 1,000 feet of lumber was substituted for a previous conference rate of $16 per 1,000 feet. Of this, the Commission said: "Under all the circumstances, there is no doubt that the rate of $43 was unreasonably high and that its substitution for the rate of $16 previously in effect created a definite barrier to the sale of Pacific coast lumber in the east coast of South America market and, therefore, constituted an abuse of the rate-making power which the conference members are permitted to exercise under their approved conference agreement.' In Free Time and Demurrage Charges, New York (3 F. M. B. 89), the Federal Maritime Board established a free time period of 5 days and ruled on certain questions and conditions concerning free time. Without expressly determining whether or not the demurrage rates were compensatory, the Federal Maritime Board did say, in its decision: "We held in Docket No. 555, Practices of San Francisco Bay Area Terminals (2 U. S. M. C. 588, aff'd), California v. U. S. (320 U. S. 577), that carriers are bound to impose compensatory demurrage charges after the expiration of reasonable free time. If the currently effective tariff rates of demurrage are not compensatory, new rates should be published which are compensatory. We make no finding in this as to whether existing rates are compensatory or not." It should be remembered that Docket No. 555, referred to in the quoted language above, did not involve any parties signatory to an agreement under section 15 of the Shipping Act of 1916. Further cases, where the United States Maritime Commission and the Federal Meritime Board have, with reference to other persons signatory to section 15 agreements, assumed full and complete regulation of their rates and charges are the following: 97026-52-pt. 2- -18 Status of Car Loaders and Unloaders (2 U. S. M. C. 791) Increased Rates Ship's Anchorage to Shore, Nome, Alaska (3 F. M. B. 229) Terminal Rate Structure-California Ports (3 U. S. M. C. 57) Contract Rates-Port of Redwood City (2 U. S. M. C. 727) In the Matter of Wharfage Charges and Practices at Boston, Mass. (2 U. S. M. C. 245) Interchange of Freight at Boston Terminals (2 U. S. M. C. 671) In Docket No. 418 of the United States Maritime Commission entitled, "In the Matter of Services, Charges, and Practices of Carriers Engaged in the East-Bound Transportation of Lumber and Related Articles by Way of the Panama Canal” (2 U. S. M. C. 143), it was decided that, with reference to the terminal respondents to that proceeding, they were public utilities and were required to publish and post a tariff containing their charges, rules, and regulations. It appeared in that proceeding that certain of the defendant terminals had failed to publish and post a schedule of their rates and others failed to state separately the charges for each service performed and others failed to give adequate notice of rate changes. Having decided that they were public utilities and subject to the Shipping Act of 1916 the United States Maritime Commission ordered them to comply with its tariff rules and regulations. An examination of the foregoing decisions and orders of the Federal Maritime Board and the United States Maritime Commission, its predecessor, discloses that they have assumed jurisdiction under the Shipping Act of 1916 to order increases in rates, to order maximum and minimum rates, among other things, for "other persons subject to the act" under circumstances which if those rates were subject to the ceiling-price regulations of OPS would constitute orders to violate such ceiling prices. And yet OPS still continues to assert that under the Defense Production Act of 1950 it has complete authority to fix ceiling prices of other persons subject to the Shipping Act of 1916 and does not recognize that the powers of the Federal Maritime Board are such that "other persons subject to the act" are exempt from the Defense Production Act of 1950. There will exist and continue to exist a regulatory conflict between the Federal Maritime Board and the Office of Price Administration, unless H. R. 7079 or similar clarifying legislation is adopted. It is urged that H. R. 7079 should be adopted so as clearly to exemplify the intent of Congress that OPS should not invade the province of the Federal Maritime Board with reference to its existing powers of regulation over persons subject to the Shipping Act of 1916. After all, the Federal Maritime Board and its predecessor have been long established and are thoroughly conversant with the rates, charges, and practices of public and private ports and terminals. It would not be consonant with the best interests of the terminal industry nor with the national economy that there should be any derogation of any of its powers and authority by an inconsistent construction by OPS of the Defense Production Act of 1950. H. R. 7079 is designed to express unequivocally for the guidance of OPS and the terminal industry that the Federal Maritime Board is its regulatory body to the extent of the provisions of the Shipping Act of 1916. III H. R. 7079 would clarify and amend the Defense Production Act of 1950, so as to exempt those services the rates for which are, in the interests of the national economy, not necessary to be controlled and which, if controlled, would lead to administrative difficulties and hardships far in excess of any benefits. H. R. 7079 would exempt from price control all services supplied by the United States, States, municipalities, etc., and any agency thereof. Generally speaking, governmentally supplied services should not be subject to control by OPS. The rates and charges for such services are already under direct public control, and are fixed by governmental bodies, agencies, or boards directly responsible to the people. There is no profit motive in the operation of governmental services. One of the purposes of governmental ownership or operation is to eliminate excessive profit from the operation of public utilities or services so that the public may benefit therefrom through low rates, better improvements, and adequate service. Governmental utility and service rates and charges are almost universally low as compared to comparable privately owned utilities. There is, therefore, less need to regulate governmentally owned utility or service rates or charges than privately owned ones. Privately owned utilities are, even under OPS interpretation of the exemption of the act, not generally subject to price control, because most are otherwise independently regulated. To require approval by OPS before any change in governmental utility or service rates or charges can be made, would in effect, be discriminating against governmentally owned utilities and services by requiring more rigid control thereof than for private public utilities. These principles are reflected and recognized in existing OPS regulations. General Överriding Regulation 14, as amended, as it read prior to March 26, 1952, exempted, among other services (see sec. 3 (89)), "Services supplied directly by the United States, the States, Territories, and possessions of the United States, and their political subdivisions and municipalities, the District of Columbia, and any agency of any of the foregoing." At that time this same regulation stated that these governmentally exempt services did not include "services supplied in connection with terminals, docks, or warehousing facilities by any such government or governmental agency.' On March 26, 1952, amendment 9 to General Overriding Regulation 14 became effective, which eliminated this exception from the exemption of governmental services generally, and in the preamble and justification portion of said amendment 9, it was stated: "On further consideration, the Director is of the opinion that the rationale supporting the exemption of 'governmental' services generally should be applied to terminal, dock, and warehousing services supplied directly by Government authorities or agencies thereof. The services here involved have, as their basic purpose, the stimulation of commerce to or through the particular area or locality in question, for the benefit of the general public. Hence, the charging of unreasonable or oppressive rates would defeat the very purposes for which the operations are instituted. For these reasons, the Director is of the opinion that the governmental bodies which operate such facilities will guard against any abuses in the matter of charges made for the services, and, therefore, such terminal, dock, and warehouse operations should be included in the general exemption of 'government' services as covered in section 3 (a) (89), referred to above." This conclusion and statement is directly in conflict with the statements made by the Director in his statement of objections to S. 2722 filed with the Senate Banking and Currency Committee, wherein he prophesied that if the ports and terminals were not subject to ceiling price regulations of OPS there would be a profound effect upon the economy of the Nation, to its detriment. In Docket 640 before the United States Maritime Commission, that Commission exhaustively examined and studied, through the services of the chief rate analyst for the California Public Utilities Commission, Mr. Howard Freas, the rates, charges, and rate structure of all of the major California publicity owned ports and privately owned terminals, and, in a report based upon that study, after public hearings, the Commission found that at that time and historically the rates and charges of both publicly owned and privately owned docks and terminals were, and had been for a long time, unreasonably depressed, were noncompensatory, and that the continued existence of those publicly owned ports and privately owned terminals had only continued by reason of subsidies supplied by their operators or by deferring necessary and proper maintenance. An actual study of the situation with reference to rates and charges of ports and terminals, whether publicly or privately owned, throughout the United States, would indicate that those findings, applying to California ports and terminals, can be said to be fairly representative of the entire industry in the United States. Historically, the rates and charges for ports and terminals in the United States have been chronically low and have been the entire reverse of inflationary. H. R. 7079 would give congressional recognition, on a more permanent basis, to that which OPS has already by regulation determined it is unnecessary and inexpedient to control. Said bills would also, by removing unequivocally other persons subject to the Shipping Act from ceiling price regulation, place the entire port and terminal industry, all of which industry is subject to the Shipping Act of 1916 and the Federal Maritime Board jurisdiction, on an equal regulatory basis. IV Sections 1 and 2 of said bill would so clarify and amend the Defense Production Act of 1950, as amended, as to remedy present inequities, inconsistencies, and discriminations inherent in the present regulations of OPS. |