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Public ports and private terminal operators perform essentially the same general type of services in connection with the transportation of interstate and foreign commerce carried by water. Stevedoring and car loading and unloading is sometimes performed by a terminal operator or a public port and is sometimes performed by separate companies. All of these persons furnishing these types of services, when done in connection with a water carrier, are subject to the Shipping Act of 1916 and to the jurisdiction of the Federal Maritime Board thereunder. There are numerous port and terminal and car loading and unloading section 15 agreements throughout the United States. In the statement dated March 11, 1952, and signed by Ellis Arnall, Director, Office of Price Stabilization, to the Honorable Burnet R. Maybank, United States Senate, with reference to S. 2722, companion bill to H. R. 7079, it was stated: "To exempt all marine terminal facilities, as required by the present bill, would be to disturb the established congressional policy discussed above of providing Federal pricing jurisdiction in unregulated areas, and exempting from control facilities which are neither classified as public utilities nor regulated with respect to rates by any appropriate public body. Such an exemption would be inconsistent not only with a sound stabilization program, but also with the decision of the Supreme Court in the Davies Warehouse Co. case."

On March 19, 1952, Ellis G. Arnall, Director, Office of Price Stabilization, and Herbert Maletz, Deputy Chief Counsel for OPS, appeared before the Senate Committee on Banking and Currency, and the following questions and answers were given:

"Mr. MALETZ. The law now exempts public utilities from price control, irrespective of whether rates of those utilities are regulated or not.

"The CHAIRMAN. If a public utility in a community wants to regulate the rates and has a city council and legislature to regulate them and if they are negligent or the public does not want them regulated, I do not think the Federal Government ought to tell them what to do.

"Mr. ARNALL. That is exactly our position."

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"Mr. MALETZ. If a business is a conventional public utility, for example a water company, a gas company, an electric company or a power companythat business is automatically exempted from price control by the Defense Production Act, as it was by the Emergency Price Control Act of 1942.

The

There are certain enterprises which fall into sort of a twilight zone. question is, What criteria shall be used in determining whether those enterprises are public utilities?

"The CHAIRMAN. What criteria did Congress established?

"Mr. MALETZ. It is the public utility, Senator, and I am saying that the Supreme Court interpreted what the term 'public utility' meant. It said No. 1, if it is a conventional public utility it is exempted. Then for other enterprises to determine whether or not it is a public utility, we will adopt these criteria, (1) we will look to see if it is appropriately classified as a public utility, and (2) we will look to see whether its rates are regulated.

In California there are marine terminal facilities which are classified as public utilities and their rates are controlled by a local public body.

"The CHAIRMAN. And also in the State of Washington, I understand.

"Mr. MALETZ. The State of Washington is in a different category, but in California those rates are controlled and they, in our view, are exempt from price control.

"Now in the State of Washington, the ports of Seattle and Tacoma have marine terminal facilities which are highly competitive with private marine terminal facilities."

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"It was our view that the rates of those facilities are not classified as public utilities nor are their rates controlled by any regulatory body.

"Now the contention has been made before this committee that the Federal Maritime Board exercises regulatory jurisdiction over the rates of those marine terminal facilities.

"Senator BRICKER. Are they publicly owned?

"Mr. MALETZ. Yes; they are, sir."

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"Mr. MALETZ. Senator, we have issued a regulation specifically exempting services supplied directly by public bodies, except where those services are in competition with private facilities.

"Now in the State of Washington, the exemption did not apply to the port terminal facilities for the simple reason that those facilities are competitive

highly competitive with private marine terminal facilities. If we exempted the port facilities, we, in order not to discriminate, might have to exempt the privately operated facilities.

"The CHAIRMAN. What would be wrong with that?

"Senator FREAR. Yes; what would be wrong with that?

"The CHAIRMAN. I am familiar with the State of Washington and the progress they have made. I would only hope we could make the progress in the port of Charleston that they have made in Seattle.

"Mr. MALETZ. There are those facilities and others.

"Senator FREAR. Do I understand these facilities were owned by the State of Washington?

"Mr. MALETZ. That is correct.

"Senator FREAR. And if you controlled the private facilities, you had to control the public facilities?

"Mr. MALETZ. We treated them alike."

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"Senator CAPEHART. If the Congress does not want you to control these things, you are perfectly willing to forget them, are you not? "Mr. ARNALL. We are not going to do it, of course not.

"Now I understand the Office of Price Stabilization, when Mr. DiSalle was Director of this staff, took the position that you designated this agency to control prices.

"Now, then, I have no love, let me hasten to say-nor does my staff-to go out looking for trouble. If you say you do not want us to control rates charged by public port terminals, whatever you say we are going to do.

"Senator BRICKER. I do not think you can constitutionally control the prices of public authorities."

Exactly 1 week later, on March 26, 1952, the Office of Price Stabilization issued its amendment 9 to General Overriding Regulation 14, and by said amendment decontrolled by exempting from ceiling price regulation the charges for services supplied directly by Federal, State, or local government, or any agency of such government in the operation of terminal docks or warehousing facilities. In the statement of consideration in said amendment 9, the following language appears:

"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 ‘governmental' services as covered in section 3 (a) (89) referred to above."

So regardless of the statement filed by Mr. Ellis G. Arnall with the Senate Banking and Currency Committee, OPS now recognizes that there is no need for ceiling price controls of the rates of public ports and terminals, and by said amendment No. 9 to General Overriding Regulation 14, a large proportion of the "other persons subject to the act" and to the jurisdiction of the Federal Maritime Board are now exempt from ceiling price regulation.

Control by OPS of the rates of privately operated terminals is equally unnecessary. Throughout the United States privately operated terminals are in direct competition with those which are publicly operated but handle a much smaller volume of traffic. Because of the forces of competition, decontrol of the rates of privately operated terminals could not result in any inflationary tendency toward higher rates in such terminals since they are in all cases competitively controlled by those charged by the public. ports and terminals, and in many instances, are further controlled by section 15 agreements under the Shipping Act of 1916, and in all cases are subject to the jurisdiction of the Federal Maritime Board.

Due to the same forces of competition, the decontrol of the rates of public ports and terminals by amendment 9 to General Overriding Regulation 14 is in a large measure meaningless. Competitively, the public terminals can charge no higher rates than the privately operated ones; and, so long as OPS continues to assert control over the rates of the privately operated terminals, OPS is likewise exercising by indirection control over the rates of the public terminals.

The Office of Price Stabilization having found it was unnecessary to control the rates and charges of publicly owned ports and terminals, the language of Mr. Maletz in his testimony before the Senate Banking and Currency Committee, quoted supra, becomes very appropos. He said: "If we exempted the port facilities, we, in order not to discriminate, might have to exempt the privately operated facilities." Senator Frear asked: "And, if you controlled the private facilities, you had to control the public facilities?" Mr. Maletz replied: “We treated them alike."

It is thus apparent that, by decontrolling publicly owned ports and terminals while attempting to retain control of privately owned terminals, a serious discrimination between the two types of operators has resulted, to the detriment of both. The continued attempt to control a part of a competitive industry results in an indirect control of the entire industry. The attempt to control a part of an industry which is bound by agreement under the Shipping Act of 1916 to charge just and reasonable rates, and so far as practicable uniform rates, with the part of the industry which is decontrolled results in an intolerable situation from the standpoint of both the public and the private terminal operators. It is such discrepancies and discriminations that make it necessary for the Congress to enact legislation which will so clarify the meaning of the exemption of public utilities from price controls that all portions of the terminal industry which are subject to the Shipping Act of 1916 and which have entered into section 15 agreements between themselves shall be uniformly decontrolled and exempt from price ceiling regulation. H. R. 7079 will accomplish this salutary result.

On

As another instance of discrimination within an industry, we refer to the fact that OPS has decontrolled in General Overiding Regulation 14, as amended, stevedoring operations when performed for the account of a water carrier. the other hand, rates for stevedoring done for other than the account of a water carrier are not decontrolled, although both types of stevedoring services are performed under and subject to the same tariff by the operator. Car loading and unloading, except as an incident to stevedoring operations, is not decontrolled, so we have another inherently discriminatory regulation. There is no, and there can be no, reason why stevedoring done for the account of a water carrier should be free of controls and other types of stevedoring and car loading and unloading be not decontrolled.

Again, as may be recognized from the testimony of Mr. Arnall and Mr. Maletz before the Senate Banking and Currency Committee quoted above, it is apparent that private terminal operators are not uniformly throughout the United States considered to be under OPS control. For example, in California they are not controlled by OPS. In a highly competitive industry where private terminal operators and public ports and terminal operators compete, not only intrastate but interstate, for business, it is highly undesirable and unsatisfactory for such an industry to be decontrolled as to publicly owned ports and terminals and not as to privately owned terminals, or to have the operators in one State subject to claimed controls by OPS when the operators in an adjacent or neighboring State are admittedly exempt from controls. All of these inequities of control, all of these inequalities and inconsistencies of control would be cured by H. R. 7079, and the entire port and terminal industry would be placed on an equal footing throughout the United States; that is, subject to the control of the Federal Maritime Board and not subject to the control of the Office of Price Stabilization with reference to ceiling price regulation.

In order to clarify the Defense Production Act of 1950 to the end that administrative interpretation by the Office of Price Stabilization shall not be permitted to frustrate the intent of Congress by the assertion of controls inconsistent with and in conflict with the Shipping Act of 1916 and the jurisdiction of the Federal Maritime Board thereunder, and in order to treat governmental services on a permanent basis as not requiring controls, which treatment is now exemplified by General Overriding Regulation 14, as amended, and in order to prevent inequities, inequalities, and discriminations between the controls of publicly owned ports and terminals and of private docks and terminal operators, as well as the controls on the terminal industry from State to State, H. R. 7079 should receive favorable action by the Congress and by your honorable committee.

We sincerely urge that this bill or a similar bill be given full consideration to the end that the confusion now existing as to the proper interpretation of the Defense Production Act of 1950 and the uncertainties and inequalities inherent in spot

decontrol regulations and in nonuniform regulations as between States be eliminated and in the future prevented.

Respectfully submitted.

Charles P. Howard, Howard Terminals, Oakland, Calif; G. J. Acker-
man, Executive Assistant, Commission of Public Docks, Portland,
Oreg.; John F. L. Bate, Port Director, City of San Diego,
Calif.; D. L. Dullum, President, Encinal Terminal, Alameda,
Calif.; V. W. Killingsworth, President, Alaska Terminal &
Stevedoring Co., Seattle, Wash.; Robert H. Wylie, Manager,
Port of San Francisco, Calif.; J. Kerwin Rooney, Port Attorney,
Port of Oakland, Calif.; Arthur W. Nordstrom, Attorney for
Port of Los Angeles, Calif.; Special Joint Committee Representing
the California Association of Port Authorities, and Northwest
Marine Terminals Association.

Mr. GRAHAM. Gentlemen, contrary to what I suspect are a great many of the requests before this committee, H. R. 7079 does not ask that anything be decontrolled.

H. R. 7079 seeks a clarification of the present exemption of public utilities in section 402 (e) (v) of the Defense Production Act by specifying that it includes ports and terminals under the jurisdiction of the Federal Maritime Board.

It also spells out that the rates for services by the States, municipalities, and political subdivisions are not subject to the due application of control by the Office of Price Stabilization.

Now, on the Pacific, companies, public ports, and private terminals alike are joined together in conference rate-making structures which are commonly referred to as section 15 agreements under the Shipping Act of 1946.

These agreements and the rates of the terminal members, both public and private, are under the direct control and regulation of the Federal Maritime Board, which has the statutory obligation of disapproving such rates if they are "unjustly discriminatory or unfair of if they operate to the detriment of the commerce of the United States."

Now I should like to point out that the Maritime Commission, in its docket No. 639, has stated:

While the agreement is operative, the Commission has plenary power to control, among things, the fixing and regulation of rates and the practices of the agreeing parties.

This plenary control is exercised upon the consideration of all criteria employed in the conventional rate regulation of any public utility.

The Office of Price Stabilization, however, has consistently refused to recognize that Congress did not intend to subject such utilities to the conflicting regulations of the two agencies, and only upon the virtual request of the chairman of the Senate Banking and Currency Committee did the Office of Price Stabilization decontrol the terminal operations of the public ports.

It should be pointed out to the committee that the decontrol order, which the Office of Price Stabilization has only recently issued, is absolutely ineffective insofar as the public ports on the west coast are concerned for the reason that they are bound by agreements approved under the Shipping Act by the Federal Maritime Board to maintain uniform rates for the private terminals which are signatory to the section 15 agreements.

The Office of Price Stabilization, through the decontrol of stevedoring services, has administratively decontrolled the substantial bulk

of the labor services which are performed by the west coast terminals, and it should be borne in mind that direct labor cost represents approximately 85 percent of the charge for such services.

The nondecontrolled labor services, under the present regulations of the Office of Price Stabilization, represent an inconsequential factor from an inflationary standpoint.

It may be pointed out that a 10-percent increase in a typical rate, for example, would be the equivalent of three-quarters of one onehundredths of a cent per pound of freight.

Although the Office of Price Administration, under the Emergency Price Control Act of 1942, which was identical in statutory language to that here involved, took the position that these terminal operations were all exempt as being public utilities, the Office of Price Administration last May asserted jurisdiction over the ports of Tacoma and Seattle.

We were forced to file protests, and after months of expensive proceedings, that case is still in the Emergency Court of Appeals where the matter is not yet ready to be argued before the court, the Government having requested several extensions of time within which to file briefs in the matter.

This entire problem was made urgently acute last summer by substantial wage increases approved by the Wage Stabilization Board for longshore labor on the Pacific coast. The managing director and traffic manager of the port of Seattle, as well as representatives of the ports of Portland, Oakland, San Francisco, Los Angeles, Long Beach, and San Diego, and both associations, made not less than five trips back to Washington for conferences with the Office of Price Stabilization, in an attempt to work these problems out.

The Division of the Office of Price Stabilization, which is composed of experts in this field and is charged with the regulation of this field, has repeatedly recommended steps which would effectively accomplish the objectives of H. R. 7079 insofar as the port operations are concerned.

However, the attorneys in the Office of Price Stabilization apparently feel that the congressional intent has not been adequately expressed, and they have indicated that congressional clarification of the term "public utility" would be welcomed.

In view of all of these considerations and those set forth at length in our statement, we feel that the clarification embodied in H. R. 7079 is necessary to avoid the necessity of needless expense, litigation, and administrative confusion in the proper interpretation of the Defense Production Act.

It should be added that H. R. 7070 is a nonpartisan measure. Senators Maybank and Magnuson and Senator Knowland have all requested the Office of Price Stabilization to adopt a construction of the act consistent with that embodied in H. R. 7070 and the Senate counterpart of this bill, which was Senate 2722, was unanimously adopted the other day by the Senate Banking and Currency Committee, as a desirable clarification of the existing statutory exemption of public utilities.

Thank you very much.

The CHAIRMAN. The terminal facilities you represent are all privately owned?

Mr. GRAHAM. No, sir, I represent the port of Tacoma, the port of Seattle, and the Northwest Marine Terminal Association which is

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