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I know it's a very complex statement and a very complex provision, but basically what we have done is given the Commission the authority to issue an order to show cause upon the failure to comply with a subpoena or a discovery order, why a tariff should not be suspended. And if they did not show cause, then to suspend those tariffs.

Mr. McCLOSKEY. Do you run into the same objection by the State Department there?

Mr. Haslup. I am sure, in listening to Mr. Bank this morning, that we would run into the problem, if he has a problem with suspending of tariffs.

Mr. McCLOSKEY. Would you go to your section 5 on page 5?

Mr. HASLUP. Yes; section 5 is an amnesty provision-and, again, this is not to be taken as a policy statement; this is merely a drafting of the amnesty provision in accordance with our earlier suggestions.

What we have done is drafted the provisions so as to grant amnesty from Shipping Act violations and criminal conspiracies arising from such violations. We have also inserted a provision whereby, when the person comes in within the 1-year period, and makes his disclosure—at that time he would have to execute a waiver of the 5-year statute of limitations so that then when he started to enter into settlement agreements with the Federal Maritime Commission, the statute would be tolled.

We have also provided that if the settlement agreement, which contains this cease-and-desist order that was contained in the original bill, is not executed within 90 days of the date of disclosure, the Commission would have the discretion to enforce the penalties, that they wouldn't have to wait forever arguing about the terms of the settlement with the person.

We foresee this problem--that, first of all, the statute of limitations will continue to run while we are discussing settlement with the person who comes in and makes the disclosure.

Let me stop there. That's the biggest problem we see in that area.

Mr. McCLOSKEY, Could I ask you this question? As I read your section 5, it provides no penalty, either civil or criminal for a violation which occurred before the date of enactment of this subsection.

Mr. Haslup. Yes; that's from the original bill; we have not changed that.

Mr. McCLOSKEY. Now, I want to explore the possibility of changing that section. What if in your paragraph (b)(i), you said subject to the provisions of paragraph 2, no-and insert the word "criminal” there—no criminal penalties shall be imposed on any person for any act, nor for criminal conspiracies arising from such violations of the a forementioned sections and then put a period there striking out all the qualifying language.

Would that accomplish complete immunity from any criminal prosecution under the act, but leave untouched the civil liabilities?

Mr. Haslup. It would appear to.

Mr. McCLOSKEY. Would you after this hearing take a careful look at this language, because in view of the Justice Department's testimony this morning it seems to me that the Congress has an obligation to remove the ambiguity created by the 1972 act that leaves open the possibility of criminal conspiracy prosecution under section 371.

I would like to also draft language for consideration at markup next week that would give an absolute immunity from criminal prosecution, but leave untouched all liabilities for civil prosecution. In my judgment, that would not be granting anybody amnesty; it would be merely clarifying what Congress intended to do in 1972.

I think “amnesty” is an unfortunate and improper word.

What we are seeking to do is clarify an ambiguity which is left because of the legislative history of the 1972 act when the Attorney General didn't advise us that one part of his Department would consider the 371 criminal conspiracy act still applicable to rebating violations.

Mr. Haslup. We will certainly take a look at it, and

Mr. McCLOSKEY. It looks to me like the changes I suggested would accomplish that, but I would like your professional advice before next Tuesday.

The CHAIRMAN. I will ask Mr. Daschbach as Chairman of the FMC to send to the committee a section-by-section analysis of this amendment, and I will appreciate receiving it by Thursday, so that each member of our committee could study it.

Mr. DASCHBACH. Of this entire draft!
The CHAIRMAN. This entire draft, that's right.
Mr. DASCHBACH. We would be glad to do that, Mr. Chairman.

The CHAIRMAN. So that minority members and their counsel can analyze the intent of the Commission.

Mr. McCloskey. Thank you. Could you go to subparagraph (2) on page 6, your next section?

The CHAIRMAN. If the gentleman from California would yield. Mr. McCLOSKEY. Yes.

The CHAIRMAN. You have been carrying on for about half an hour, and we have a panel of witnesses that we want to conclude with today. I am wondering how much more time the gentleman intends to consume with the Commission?

Mr. McCLOSKEY. Well, Mr. Chairman, in deference to the other witnesses, and in view of the Chairman's request for Thursday, I don't think I need to go forward with the remaining parts of this. Counsel can respond in the same way he has in oral testimony, and I will desist at this point.

The CHAIRMAN. So you will have that analysis on Thursday?
Mr. DasCHBACH. Yes, sir, we will.

Mr. McCLOSKEY. Mr. Chairman, there is one problem. The next panel of witnesses is going to talk about shippers' councils. I don't know if we have ever had any comment on record from the Commission about the possibility of creating shippers' councils. It seems to me that shippers' councils would be a balance to the conference system which the Justice Department seems to oppose so vigorously.

And I wonder if the Commission Chairman, before leaving the stand, would comment briefly on the concept of shippers' councils. What would be necessary to do to obtain antitrust immunity permitting shippers' councils to meet ?

Mr. DASCHBACH. One hesitancy or reservation that I have with respect to your request is that, to be frank about it, I haven't seriously thought it through as to how it might be achieved, and I am not sure that off-the-top-of-my-head comments might not be somewhat interpreted negatively for the concept. I am not even certain at this point whether the creation of shippers' councils would come through the Shipping Act. And, frankly, simply raising that point gives me a little trouble, that I have perhaps already damaged the concept.

Mr. McCLOSKEY. Well, I won't pursue it further, except to note there is a clear dispute between the Justice Department and the Maritime Administration as to how to promote our merchant marine through the conference system.

Mr. DASCHBACH. Excuse me, if I may. I would like to clarify the point you are making in that the Maritime Commission rather than the Maritime Administration is not permitted to promote the American flag merchant marine, notwithstanding the personal feelings of its members.

Mr. McCloskey. I appreciate that. I will withdraw the question at this point, because I think it deserves very careful and very serious consideration. I am just puzzled as to what we might do absent any Administration recommendations to the Congress—to proceed toward closed conferences balanced by shipping councils with neutral bodies to assure against rebating. What position might the Federal Maritime Commission take on its new jurisdiction with respect to shippers? councils, conferences, the neutral bodies and the responsibilities of government.

It strikes me when considering a bill of this kind, where we are trying to resolve the rebating question, it is worth keeping in mindI think the Chairman has said this that the basic cause of rebating is overtonnaging. In any statute providing a solution to rebating malpractices, what we have got to address is overtonnaging which occurs because of Russian competition or because of open conferences. The rest of the world operates using closed conferences and I think this country is the only exception and still operates using open conferences.

I have no further questions, Mr. Chairman.
The CHAIRMAN. Mr. Kyros?

Mr. Kyros. Thank you, Mr. Chairman. Mr. Daschbach, there has also been discussed during the course of these hearings the possibility --in fact, it has been recommended by one witness and there has been discussion—the possibility of including in any bill that was written a general certification by the chief executive oflicer of any of the common carriers in the foreign commerce of the United States to the effect that they had not rebated or would not rebate as a policy, and that they would cooperate with the Federal Maritime Commission in the event there were any investigation. And with the request perhaps that the Chairman made of you, if you could include in your draft—your statements on it to be submitted on Thursday--if haps you could also submit a statement on that particular certification.

Mr. DASCHBACH. You mean proposed statutory language?
Mr. KyRos. Right.


Mr. DASCHBACH. Certainly.
Mr. Kyros. No further questions.

The Chairman. Thank you very much, Mr. Daschbach. We appreciate your assistance and also that of your staff.



The CHAIRMAN. Our next witness is Mr. George F. Avery, chairman of the Export/Import Maritime Committee of the National Industrial Traffic League, and he will be accompanied by Mr. Curtis Merritt, chairman, Administrative Procedures and Legal Services Committee; Mr. Joseph Angolia, member of the Export/Import Maritime Committee; and Mr. Joseph Donelan, counsel.

The Chair must apologize to the members of this panel for the committee being a little late in starting this afternoon. We had several votes on the House floor that delayed our starting time.

Mr. A very, if you will proceed. Mr. AVERY. Thank you, Mr. Chairman. The National Industrial Traffic League is pleased to have the opportunity today to respond to the subcommittee's request that we personally offer testimony to amplify our previous written support of the objectives of this legislation.

My name is George Avery. I am the chairman of the Export/ Import Maritime Committee of the league. With me today is Mr. Curt Merritt, the immediate past chairman of our committee, and Mr. Joseph Donelan, league counsel. The fourth member of our panel, Mr. Angolia, who was us the entire day to this point-his personal schedule precluded him from remaining, and I apologize for that.

Mr. Chairman, you have our testimony before you. I would like to briefly summarize the four major points in this testimony rather than read the whole thing.

The CHAIRMAN. We will put the entire testimony in the record at this point without objection.

You may proceed.
[The following was received for the record:]


My name is George F. Avery, Jr., and I am Director-International Services for Stauffer Chemical Company in Westport, Connecticut. I am accompanied today by Mr. Curtis R. Merritt, immediate past Chairman of the NIT League's Export and Maritime Committee and present Chairman of the League's Administrative Procedures and Legal Services Committee and General Traffic Manager of ASARCO in New York City; Mr. Joseph A. Angolia, a member of the Export, Import and Maritime Committee and International Distribution Manager for Corning Glass Works in Corning, New York; and Mr. John F. Donelan, General Counsel to The National Industrial Traffic League with the firm of Donelan, Cleary, Wood and Maser in Washington, D.C.

As Chairman of The National Industrial Traffic League's Export, Import and Maritime Committee, I am pleased to have the opportunity, along with several other League representatives, to participate in today's hearings on H.R. 9518, the "Shipping Act Amendments of 1977.” The bill amends the

Shipping Act of 1916 to provide for a three-year period, to reach a permanent solution of the rebating practices in the United States foreign trade.

The League is a voluntary organization of shippers, shippers' associations, boards of trade, chambers of commerce and other entities concerned with rates, traffic and transportation services of all carrier modes. It is the only shipper organization which represents all types of shippers nationwide. Its members include, large, medium and small shippers who use all modes of transportation and who ship all types of commodities. The League is not a panel or committee of a trade group, a spokesman for a particular commodity or transportation point of view, and does not permit carrier membership.

The League's primary concern is to provide for the nation and all its shippers a sound, efficient, well-managed transportation system privately owned and operated.

To arrive at positions reflective of the broad range of shipper interests within the League, the League membership at its annual and special meetings considers, debates and votes on actions to be taken. During its more than seventy years of existence, the League has frequently been the spokesman for the nation's shippers before Congress on proposed transportation and regulatory reform legislation.

On October 18, 1977, the League sent a statement, to Chairman Murphy and the entire committee supporting H.R. 9518 for inclusion in the record of hearings. In that statement, the League said: “The previous rebate hearings in the Senate have clearly indicated the lack of statutory authority to treat all carriers equally in attempting to enforce the provisions of the 1916 Shipping Act. We find the FMC investigations into rebating are becoming effective, and quite possibly it may not be necessary to make it mandatory upon the FMC to suspend the authority of a carrier to enter a U.S. port as provided under Paragraph C(2) of the proposed legislation. We would suggest that this legislation be amended to provide for discretionary authority to the Commission to invoke these actions should any carrier fail to respond to the procedures of the Commission in relation to an investigation of hearing held under an order issued by the Commission pursuant to this legislation. We support the objectives of this legislation and urge your Committee to enact an early passage of this bill” considering the specific views of the League.

Mr. Chairman, you have requested that the League amplify its written views of October 18 and address certain aspects of H.R. 9518 and other matters related to Maritime Policy.

We have several comments, and therafter we will respond to any questions which the committee may have.

First, The National Industrial Traffic League, as policy, feels that an absolute minimum of regulation in connection with ocean transportation in foreign commerce is desirable, because the complexity of international trade does not permit any one nation properly to exercise jurisdiction. Reliable, frequent, common carrier service, providing adequate space for shippers and consignees at fair and reasonable stable rates is essential. To achieve this, the League recognizes the need to support the principal of the ocean freight conference but not to the extent of the elimination from world trade of reliable non-conference carriers who also provide a valuable service to shippers. Ocean freight conferences should not be permitted to require contracts to be binding upon any party other than the actual signatory. Contracts should exempt cargo on which the signatory shipper does not have the right to select the carrier and specific commodi. ties when it can be established that circumstances justify commodity exemption, as well as all cargo on owned and chartered vessels to permit fair and legitimate use of them. No contract should place any undue administrative burden upon the shipper in connection with the shipper's relationship with a conference, nor should it place any legal burdens upon the contract signatory other than those which would ordinarily face the shipper under an ordinary commercial contract (League Policy K-1, Ocean Transportation in International Trade).

Additionally, the League's Policy K-3, Opening of Ocean Freight Rates, states, “The League favors legislation or regulations permitting the opening of rates on less than 90 days' notice provided that changes in legislation or regulation will not detract from the principle that the opening of a rate is a permanent cancellation of the contract system with regard to that commodity."

Second, the League has no knowledge of the evidence secured in the Federal Maritime Commission's rebate investigations. However, the League recommends that the FMC's experience from these investigations be carefully evaluated to ascertain the extent of the problem ; the effectiveness of the current conference

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