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The Office of Management and Budget has advised that, from the standpoint of the Administration's program, there is no objection to the submission of this proposed legislation to the Congress. Sincerely,

HELEN DELICH BENTLEY, Chairman. Enclosures.

[H.R. 755, 920 Cong., irst sess.) A BILL To amend the Shipping Act, 1916, and the Intercoastal Shipping Act, 1933, to

convert criminal penalties to civil penalties in certain instances, and for other purposes

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the Shipping Act, 1916 (46 U.S.C. 801 et seq.), is amended as follows:

(a) By deleting that part of the first sentence in the last paragraph of section 15, immediately preceding the proviso, and substituting the following:

“Whoever violates any provision of this section or of section 14b shall be subject to a civil penalty of not more than $1,000 for each day such violation continues :"

(b) By deleting the last paragraph of section 16 and substituting the following:

"Whoever violates any provision of this section other than paragraphs First and Third hereof shall be subject to a civil penalty of not more than $5,000 for each such violation.

"Whoever violates paragraphs First and Third hereof shall be guilty of a misdemeanor punishable by a fine of not more than $5,000 for each offense.”

(c) By deleting section 18(b) (6) and substituting the following:

“(6) Whoever violates any provision of this section shall be subject to a civil penalty of not more than $1,000 for each day such violation continues."

(d) By deleting section 32 and substituting therefor the following:

"SEC. 32. (a) That whoever violates any provision of sections 14 through 21 and section 44 of this Act, except where a different penalty is provided, shall be subject to a civil penalty not to exceed $5,000 for each such violation.

"(b) Whoever violates any provision of any other section of this Act, except where a different penalty is provided, shall be guilty of a misdemeanor, punishable by fine not to exceed $5,000.”

(e) By adding the following as a new section 45 :

"SEC. 45. Civil penalties provided for violations of sections 14 through 21 and 44 of this Act may be assessed by the Federal Maritime Commission."

(f) By renumbering present section 45 to section 46.

SEC. 2. The last sentence of section 2 of the Intercoastal Shipping Act, 1933 (46 U.S.C. 844), is amended to read as follows:

“Whoever violates any provision of this section shall be subject to a civil penalty to be imposed by the Federal Maritime Commission of not more than $1,000 for each day such violation continues.”

STATEMENT OF PURPOSES AND NEED FOR THE BILL TO AMEND THE SHIPPING ACT,

1916, AND THE INTERCOASTAL SHIPPING ACT, 1933, TO CHANGE CERTAIN CRIMINAL PENALTIES TO CIVIL PENALTIES, AND AUTHORIZE THE COMMISSION TO Assess CIVIL PENALTIES

The bill would change the penalties of section 16 (except for paragraphs First and Third) of the Act from criminal penalties to civil penalties, with the money amounts of the penalties to remain unchanged. It also changes the general penalty provision of section 32 of the Act by making all violations of sections under the jurisdiction of the Federal Maritime Commission, for which no penalty is specifically provided, civil instead of criminal. Authority would be vested in the Commission to fix the amount of civil penalties for violations of sections subject to its jurisdiction. Penalties assessed by the Commission would be remitted or mitigated by it under appropriate circumstances pursuant to the Federal Claims Collection Act of 1966, 31 U.S.C. 951-953, and regulations promulgated thereunder. Since the bill would authorize the Commission to assess civil penalties, sections 15 and 18(b) (6) would be amended to eliminate the words "to be recovered by the United States in a civil action."

As the Act now stands, civil penalties are imposed for violations of section 15, which requires the filing for approval of agreements restricting competition, and of section 18(b), which requires the filing of tariffs. However, the penalties of section 14, which prohibits deferred rebates and other unfair practices, and section 16, which prohibits false billing and undue preferences, are criminal.

The Commission believes that better administration of the Act will be derived from making certain of the penalties under section 16 and penalties under section 32 civil and empowering the Commission to determine and adjudge such penalties. The Commission determinations under these sections are subject to judicial review in a United States Court of Appeals under the Review Act of 1950 (28 U.S.C. 2341 et seq.). This would eliminate the necessity of a de novo district court penalty suit as is presently required and would enable the Commission to relate the amount of the penalty directly to the nature and circumstances of the violation. Such a procedure should, in many instances, reduce the total litigation expenses to both the government and private parties while at the same time retaining the safeguards of justice through the reviewability of Commission decisions in U.S. Courts of Appeals.

Section 2 of the bill would give the Commission authority to assess the civil penalties presently provided for violations of the Intercoastal Shipping Act, 1933.

CIVIL AERONAUTICS BOARD,

Washington, D.C., June 16, 1971. Hon. EDWARD A. GARMATZ, Chairman, Committee on Merchant Marine and Fisheries, House of Representa

tives, Washington, D.C. Dear MR. CHAIRMAN : This is in reply to your request for the Board's views on H.R. 755, a bill “To amend the Shipping Act, 1916, and the Intercoastal Shipping Act, 1933, to convert criminal penalties to civil penalties in certain instances, and for other purposes." The Board assumes that your Committee is primarily interested in the consistency of the proposed procedures with those of the Board and its experience thereunder.

Under H.R. 755, which is a Federal Maritime Commission proposal, civil penalties would be substituted for criminal penalties for violations of those provisions of section 16 of the Shipping Act of 1916 prohibiting the obtaining of lower rates by means of false billing, false classification, or other unfair means. Such penalties also would be substituted for criminal penalties in specified instances of other violations where different penalties were not otherwise provided. The Commission would be empowered to assess civil penalties under both the 1916 and 1933 Acts.

The provisions of the bill are comparable to the civil penalty provisions of the Federal Aviation Act of 1958, which were made applicable to economic violations by a 1962 amendment to section 901 (a) of the Act (49 U.S.C. 1471). However, economic violations, if knowing and willful, are also subject to criminal sanctions under section 902 (a) (49 U.S.C. 1472).

As we noted in a 1970 report to your Committee with respect to a bill (H.R. 15548) containing provisions identical to those of the current bill, the Board has found that the availability of civil penalties for economic violations has resulted in a more flexible administration of the Act. However, the Board defers (as it did in the case of H.R. 15548) to the views of the Federal Maritime Commission as to the desirability or need for H.R. 755.

The Office of Management and Budget has advised that there is no objection to the submission of this report from the standpoint of the Administration's program. Sincerely,

WHITNEY GILLILLAND, Acting Chairman.

GENERAL COUNSEL OF THE DEPARTMENT OF COMMERCE,

Washington, D.C., July 22, 1971. Hon. EDWARD A. GARMATZ, Chairman, Committee on Merchant Marine and Fisheries, House of Representa

tives, Washington, D.C. DEAR MR. CHAIRMAN: This is in further reply to your request for the views of this Department with respect to H.R. 755, a bill

"To amend the Shipping Act, 1916, and the Intercoastal Shipping Act, 1933, to convert criminal penalties to civil penalties in certain instances, and for other purposes."

The Federal Maritime Commission has the responsibility to administer certain provisions of the Shipping Act, 1916, as amended (46 U.S.C. 801-842), and the Intercoastal Shipping At, 1933, as amended (46 U.S.C. 843–848). The Intercoastal Shipping Act, 1933, as amended, contains a civil penalty provision, and the Shipping Act, 1916, as amended, contains both civil and criminal penalty provisions. Violations of these penalty provisions are referred by the Federal Maritime Commission to the Department of Justice, and enforced by means of proceedings brought in a United States district wurt.

Presently, criminal penalties are provided for violations of sections 16 and 32 of the Shipping Act, 1916, as amended. Section 16 prohibits false billing, undue preference, and other unfair partictices. Section 32 is the general penalty pro vision that applies to violations for which a specific penalty is not provided by the Act. H.R. 755 would amend section 16, except for paragraphs First and Third, to change the penalty from criminal to civil. The amount of the penalty would remain the same. The bill would also amend section 32 to change from criminal to civil the penalty for violations of sections 14 through 21 and section 44. Again, the amount of the penalty would remain the same.

H.R. 755) would add a new section 45 to the Shipping Act, 1916, as amended, vesting authority in the Federal Maritime Commission to assess the amount of civil penalties for violations of sections 14 through 21, and section 44. Existing section 45 would become section 46. Finally, as the Federal Maritime Commission would be authorized to assess civil penalties, the bill would amend sections 15 and 18(b) (6) to eliminate the words "to be recovered by the United States in a civil action".

H.R. 755 would amend section 2 of the Intercoastal Shipping Act, 1933, as amended, concerning rate schedules to provide a civil penalty of $1,000, and to authorize the Federal Maritime Commission to assess this penalty.

We understand the Federal Maritime Commission believes that it could better administer its responsibilities under the Shipping Act, 1916, as amended, and the Intercoastal Shipping Act, 1933, as amended, with the amendments made by the bill. The Federal Maritime Commission could relate the amount of the civil penalty directly to the nature and circumstances of the violation. Additionally, total litigation expenses should be reduced as the need for a de novo district court civil penalty suit would be eliminated. Determinations by the Federal Maritime Commission under these Acts would continue to be subject to judicial review in a United States court of appeals.

As H.R. 755 would appear to assist the Federal Maritime Commission in the enforcement of the statutes it administers, this Department has no objection to the bill.

We have been advised by the Office of Management and Budget that there would be no objection to the submission of this report from the standpoint of the Administration's program. Sincerely,

WILLIAM N. LETSON, General Counsel.

FEDERAL MARITIME COMMISSION,

Washington, D.C., May 26, 1971. Hon. EDWARD A. GARMATZ, Chairman, Committee on Merchant Marine and Fisheries, House of Representa

tives, Washington, D.C. DEAR MR. CHAIRMAN: This is in reply to your request for the views of the Federal Maritime Commission with respect to H.R. 755, a bill

To amend the Shipping Act, 1916, and the Intercoastal Shipping Act, 1933, to convert criminal penalties to civil penalties in certain instances, and for

other purposes. The bill would change the penalties of section 16 of the Shipping Act, 1916 (except for sections First and Third) from criminal penalties to civil penalties, with the money amounts of the penalties to remain unchanged. It also changes the general penalty porvision of section 32 of the Act by making all violations of sections under the jurisdiction of the Federal Maritime Commission, for which no penalty is specifically provided, civil instead of criminal. Authority would be vested in the Commission to fix the amount of civil penalties for violations of sections subject to its jurisdiction. Penalties assessed by the Commission would be remitted or mitigated by it under appropriate circumstances pursuant to the

Federal Claims Collection Act of 1966, 31 U.S.C. 951-953, and regulations pro mulgated thereunder. Since the bill would authorize the Commission to assess civil penalties, sections 15 and 18 (b) (6) would be amended to eliminate the words "to be recovered by the United States in a civil action."

As the Act now stands, civil penalties are imposed for violations of section 15, which requires the filing for approval of agreements restricting competition, and of section 18(b), which requires the filing of tariffs. However, the penalties of section 14, which prohibits deferred rebates and other unfair practices, and section 16, which prohibits false billing and undue preferences, are criminal.

The Commission believes that better administration of the Act will be derived from making certain of the penalties under section 16 and penalties under section 32 civil, and empowering the Commission to determine and adjudge such penalties. The Commission determinations under these sections are subject to judicial review in a United States Court of Appeals under the Review Act of 1950 (28 U.S.C. 2341 et seq.). This would eliminate the necessity of a de novo district court penalty suit as is presently required and would enable the Commission to relate the amount of the penalty directly to the nature and circumstances of the violation. Such a procedure should, in many instances, reduce the total litigation expenses to both the Government and private parties while at the same time retaining the safeguards of justice through the reviewability of Commission decisions in U.S. Courts of Appeals.

Section 2 of the bill would give the Commission authority to assess the civil penalties presently provided for violations of the Intercoastal Shipping Act, 1933. In order to conform the language of this proposed amendment to the language in the proposed revision of Sec. 45 of the Shipping Act, 1916, it is suggested that the word “assessed" be substituted for the word “imposed” in line 12, page 3, of the bill.

The Commission recommends that the Congress act favorably on H.R. 755, as amended.

The Office of Management and Budget has advised that there would be no objection to the submission of this letter from the standpoint of the Administration's program. Sincerely,

HELEN DELICH BENTLEY, Chairman.

OFFICE OF THE DEPUTY ATTORNEY GENERAL,

Washington, D.C., June 29, 1971. Hon. EDWARD A. GARMATZ, Chairman, Committee on Merchant Marine and Fisheries, House of Representatives, Washington, D.C.

DEAR MR. CHAIRMAN: This is in response to your request for the views of the Department of Justice on H.R. 755, a bill "To amend the Shipping Act, 1916, and the Intercoastal Shipping Act, 1933, to convert criminal penalties to civil penalties in certain instances, and for other purposes."

The bill would change certain (but not all) of the criminal provisions of the Shipping Act of 1916 so that certain violations now punishable by criminal fines would be made punishable instead by civil penalties in the same maximum amounts, and would also authorize the Federal Maritime Commission to assess the penalties. The bill would also give the Commission power to assess the civil penalties presently provided for violations of the Intercoastal Shipping Act, 1933.

H.R. 755 is identical to H.R. 15548, 91st Congress, on which this Department reported to you on June 1, 1970. The Department as no objection to enactment of this legislation.

The Office of Management and Budget has advised that there is no objection to the submission of this report from the standpoint of the Administration's Program. Sincerely,

RICHARD G. KLEINDIENST,

Deputy Attorney General. The witness this morning is Hon. Helen Delich Bentley, Chairman of the Federal Maritime Commission.

Mrs. Bentley, please give the names of the gentlemen who are with you, for the record.

25-684 0 - 78 - 41

STATEMENT OF HON. HELEN DELICH BENTLEY, CHAIRMAN OF

THE FEDERAL MARITIME COMMISSION; ACCOMPANIED BY JAMES PIMPER, GENERAL COUNSEL; AND ROBERT S. HOPE, SPECIAL ASSISTANT TO THE CHAIRMAN Mrs. BENTLEY. Thank you, Mr. Chairman. I am accompanied this morning by James Pimper, General Counsel of the Federal Maritime Commission, and Robert S. Hope, on my left, my special assistant.

Mr. Chairman and distinguished members of this committee, I appreciate the opportunity to appear here today to offer the Commission's views on H.R. 755.

As you pointed out, the bill was introduced by you on January 22 of this year and would change the penalties for violation of section 16 of the Shipping Act, except for the first and third paragraphs, changing these from criminal to civil, leaving the amounts of the penalties unchanged.

Also it would change the general penalty provision of section 32 of the act by making all violations of sections under the jurisdiction of the Federal Maritime Commission, for which no specific penalty is provided, subject to a civil penalty instead of criminal and would authorize the Commission to assess all civil penalties provided for violation of those sections of the Shipping Act, 1916, and the Intercoastal Shipping Act, 1933, which are subject to the Commission's jurisdiction.

The Commission has been seeking this authority since its creation in 1961. In this respect the Commission's first annual report for the fiscal year ended June 30, 1962, included the following under legislative recommendations:

The Commission should be given the authority to fix and assess penalties for violation of the Shipping Act, 1916, or to remit penalties for good cause, subject to judicial review by the courts of appeals. In this connection, the criminal penalties provided by the Act, should be changed to civil penalties.

H.R. 755 would change penalty provisions from criminal to civil in three instances only:

(1) That portion of section 16 which prohibits a shipper or other person, or an officer, agent, or employee of such shipper or other person from obtaining or attempting to obtain transportation at rates which would otherwise be applicable by false billing, false classification, false weighing, false report of weight, or by any other unjust or unfair device or means.

(2) Section 16, which prohibits a common carrier or other person subject to the act from allowing a person to obtain transportation at less than effective rates by means of false billing, false classification, false weighing, false report of weight, or by any other unjust or unfair device or ineans.

(3) Section 32 which covers violations of any provisions of the act for which no specfic penalty is provided. Although section 32 covers numerous provisions, the one with which we are primarily concerned is section 44 of the act which prohibits anyone from carrying on the business of forwarding unless licensed by the FMC.

The bill would leave the dollar amount of the penalty for violation of these provisions unchanged; that is, $5,000. However, the classification of the offenses would be changed to civil instead of criminal.

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