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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 Overriding 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.

Status of Car Loaders and Unloaders (2 U. S. M. C. 791)
Status of Car Loaders and Unloaders (3 U. S. M. C. 116)
Status of Car Loaders and Unloaders (3 F. M. B. 268)
Car Loading at Southern California Ports (2 U. S. M. C. 784)
Car Loading at Southern California Ports (2 U. S. M. C. 788)
Car Loading at Southern California Ports (3 U. S. M. C. 137)
Car Loading at Southern California Ports (3 F. M. B. 261)
Increased Rates Ship's Anchorage to Shore, Nome, Alaska (3 F. M. B. 229)
Terminal Rate Increases-Puget Sound Pórts (3 U. S. M. C. 21)
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.

Án 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 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 Overriding 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.

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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.

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.

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. On 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 elimi-
nated 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

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