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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
composed of both public and private terminals, sir. They are all joined together in the same conference agreement, are all subject to the same regulation by the Federal Maritime Board-all rates and charges and practices are filed with the Federal Maritime Boardand extensive rate hearings have been held before that agency both by the Northwest group and also by the California group, sir.
The CHAIRMAN. So there are uniform charges for all of those terminal facilities however they may be owned?
Mr. GRAHAM. That is correct, sir. Not only are the charges required by the terms of the agreement to be just and reasonable and with uniform rates, but that contractual obligation is the obligation which is enforced by the Maritime Board and in the rate proceedings before the Federal Maritime Board the rate structures are obviously the same for all of the ports in the respective areas.
The CHAIRMAN. If there are no questions, you may stand aside. We are glad to have your views.
Mr. Nicholson. Is the Maritime Board appointed by the Governor?
Mr. GRAHAM. The Maritime Board, sir, was formerly the United States Maritime Commission, an independent agency of the United States Government. It is now known as the Federal Maritime Board, and under, I believe, Reorganization Order No. 21, if I recall correctly; the functions of the Maritime Commission were transferred to the Department of Commerce and the Maritime Board, I believe, technically, is under the jurisdiction of the Department of Commerce at the moment.
It is a Federal board, sir, it is not a State regulatory body.
Mr. NICHOLSON. Well would this not have one Federal branch of the Government opposing the other?
Mr. GRAHAM. That is precisely the predicament we have been in since last June at this time, and a principal objection to the present interpretation of the statute by the Office of Price Stabilization is that we are placed in the impossible situation of regulation by two agencies.
As pointed out in our statement, it is entirely probable not only possible that in the conflicting regulations, if the public ports, which have been decontrolled, should advance the tariffs which they publish, and in which the private terminals concur, the private terminals, for example, would be placed in violation of the Shipping Act, as well as the Defense Production Act.
The CHAIRMAN. You make your charges conform to the charges that have been fixed by the Maritime Board?
Mr. GRAHAM. I beg your pardon, sir?
The CHAIRMAN. Are your charges comparable to the charges fixed by the Maritime Board for other terminal facilities?
Mr. GRAHAM. Well, they are fixed by the Maritime Board, sir. Public ports, as well as private ports, have been held to be subject to the jurisdiction of the Maritime Board, and all of the terminal operators, whether they be public or private, must file their tariffs with the Federal Maritime Board under these agreements to which I have referred. And, as may be indicated by reference to the Maritime Board docket proceedings, those tariffs are subject to the express approval, in the event the Board, on its own motion, or upon complaint, or upon petition of the filing parties, undertakes an investigation of the rates.
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 II. 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 oxpressed, 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
exemption. It is the position of these ports in the litigation that the Defense Production Act exempts them as it stands. But the advantages must be obvious of having the Congress clarify its intent so as to make unnecessary any further controversy between the public officials who administer our ports and the representatives of the Office of Price Stabilization.
The effect upon the public ports goes far beyond the two cases of litigation just mentioned. The mere pendency of OPS regulation claims has made for hesitancy and disruption in the closely interrelated operations of port commerce.
In general, public port operators hope merely to cover the cost of operation of their terminal facilities while tax moneys meet the debt for capital expense. If an increase in the cost of operation cannot be met with an increase in charges against the persons who use our terminal facilities, then in most of our ports the only recourse we have is to add to the taxpayer's existing burden of our capital expenditures the further burden of making up our operating deficits. In other words, the choice is not only one of increasing or not increasing port charges, but of increasing port charges as against increasing taxes in the community in which our facilities are located.
The OPS interpretation of the act appears to be that outside regulation is necessary before a facility can be classed as a public utility and exempt under the act. The OPS, nevertheless, not as a matter of statutory exemption but under its authority to issue general overriding regulations, originally exempted almost all of the services provided by public agencies whether or not subject to outside regulation. The exception was in the case of public port operators. And yet, peculiarly enough, that is almost the only field of State and local operation which already is subject to Federal regulation. I refer to the decision of the Supreme Court against the State of California under which public port operators are other persons” subject to regulation by the Federal Maritime Board under the Shipping Act.
More recently, however, apparently as the result of chiding by the Senate Banking and Currency Committee, the Director of Price Stabilization has repealed the exception so that, at the present time, his general overriding regulation exempts all public service charges including those by our public port agencies.
However, we cannot consider this action adequate. It does not recognize the statutory right of our public port agencies to an exemption granted by the Congress. In fact, by using the vehicle of a general overriding regulation, it actually asserts the right at any time to impose price control on public port charges regardless of the intent of Congress.
The present OPS position contrasts vividly with the position taken by its predecessor agency, the Office of Price Administration, under the identical congressional exempting language in the former act. In á United States Maritime Commission proceeding based upon certain price increases proposed by various of our port members in the State of California, the OPA did not take the position that it could disapprove the price increases. On the contrary, it protested to the Maritime Commission, recognizing the right of the ports to disregard OPA protests and recognizing that the only Federal control over such price increases was vested in the Maritime Commission.
An historical study of the trend of prices for port services reveals another cogent argument against superimposing OPS price control upon local control and Federal Maritime Board control. Traditionally, port operation is a depressed operation economically, with net revenues usually below the cost of providing the facilities and services. There has existed no inflationary tendency to push prices upward during times such as the present and so there is no need for price control. As a matter of fact, the price level of port operations has been responsive to depression conditions causing wholesale reduction in prices without any corresponding tendency upward during times of intense business activity. It is a truism among American public port operators that they are perpetually in a struggle to be even self-supporting
Other incongruities arise from OPS attempts at regulation of public ports. A seaport is a point of interchange between common carriers, which the act says are not subject to regulation. Both principal types of common carriers, railroads and steamship lines, are themselves operators of port facilities, in some cases in competition with public port bodies. This gives rise to a peculiar situation in which, in the view of Ops, privately owned terminals may not be subject to regulation while publicly owned terminals are under OPS control.
Let me give a recent example. The port of Beaumont performs car loading and unloading services for the various railroads entering the port as their agent for this service, billing the railroads. On the occasion of a recent port labor wage increase, the port notified the railroads of an increase in cost of the service. The
railroads in turn notified the shippers involved and as exempt common carrier, began to collect the increase from the shippers. The railroads, however, would not pass the increase along to the port without OPS approval.
This port sought relief with OPS, preserving its legal right to assert its statutory exemption. This relief was granted, but not retroactively, with the result of a net loss to the port. The net result was that the OPS interpreted the congressional intent to permit the railroads to increase their charge for the service performed by the port and refused to acknowledge that the public port operator was covered by the same congressional exemption. It is the possibility of such an interpretation and confusion resulting therefrom which we are seeking to avoid by this petition for the enactment of H. R. 7079.
Those in OPS who seek to regulate port charges apparently overlook the effect of the express exemption of rentals of real estate. Thus, certain ports traditionally employ the method of renting their piers to individual water carriers for stated periods of time. Other public pier operators, for one reason or another, employ the method of holding themselves out as public wharfingers, charging on a tariff or public utility basis. The choice of technique is with the local port authority. Yet the OPS contends that the port operator who chooses the rental technique has been exempted by Congress but that the port operator who acts as a public wharfinger has no exemption. So far as the effect of charges for public terminal facilities is concerned, there is no difference between the two methods of procedure, although the OPS purports to see a different congressional intent in the two cases.
In another respect, the position of the OPS would give to this Federal agency the final word to decide upon the survival or destruction of port operations entrusted to local officials by State governments. That situation recently occurred in the case of the port of Olympia, Wash. The publie port operater was faced with an economic inability to survive without an increase in its charges. We would contend as a matter of policy and as a matter of congressional intention under the act that the decision as to whether those charges should be increased and the port should continue to function was within the sphere of local goverrment and was not an OPS function. Yet OPS insisted that the decision could not be made without irs approval and proudly proclaimed in a press release that it had, as a matter of its grace, permitted the increases in charges which made the difference between the continuance or discontinuance of this State function.
It has seemed to us that the OPS position has not only the fault of incongruity and is not only vicious as a violation of our dual form of government, but actually it attempts to legislate hy administrative fiat what the Congress has expressly refused to Ingislate. I refer to the amendment introduced by Congressman Kennedy in 1951 which the House of Representatives actually adopted and which would have limited the public utility exemption to situations in which the public operator's charges are subject to outside control by some public regulatory body. You will see that the substance of this amendment embodied exactly the same interpretation which the OPS now gives to the term “public utility.” Without the amendment, the term was unqualified. The amendment would have introduced the qualification of outside public regulation. But the amendment was not accepted by the Senate and it failed of enactment. That would seem to us to have disposed of any possibility of imputing to Congress an intention to qualify the public utility exemption. But the OPS continues to insist that the term is qualified anyway.. In other "vords, it seeks by its administrative interpretation to substitute itself for the Congress and accon:plish the result which Congress refused to enact.
H. R. 7079 would confirm the congressional intention to exempt port operators as public utilities. While my representation is on behalf of public agencies, we also support the provisions of H. R. 7079 which would make clear that the public utility exemption in the existing legislation applies also to the private port operators who are already subject to the Federal Shipping Act of 1916. The interest of public agencies in this feature of the bill arises from the fact that in many areas public port authorities have entered into agreements with
private operators under section 15 of the Shipping Act with the approval of the Federal Maritime Board so that they may not increase their charges above the level of charges made by the private operators with whom they have agreed. The result is that so long as the private operators are prevented from effectively raising their charges when necessary because of OPS opposition, the public bodies are unable, because of section 15 of the Shipping Act, to raise their charges althouylı these latter have been decontrolled.
Of course, there is no danger from the proposal to clarify the exemption of private operations as well as public. The private operators may not increase