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Would you, Mrs. Bentley, or one of your associates, explain the main difference beween the judicial review called for under the Review Act of 1950 and the de novo proceedings in the courts? It is on page 7 of your statement.

Mr. PIMPER. Briefly the difference is that the Commission's determinations in the Judicial Review Act are entitled to considerable weight unless clearly wrong, arbitrary or capricious, and must be followed by the court.

Now, in the district court, you go there and you start all over again. In a proceeding against an individual, in my opinion, the fact that the Commission has decided he was wrong, would be there, but the jury and judge would not have to pay any attention to it. It would depend entirely on what you presented to that court specifically, not what was presented to the Commission, and then appeared before the court in the Commission's report or in the Commission's brief, as it would in the case of an appeal to the circuit court of appeals under the Judicial Review Act.

Mr. MOSHER. Does that satisfy counsel?

All right.

Again you argue this change makes more effective your job of policing?

Mrs. BENTLEY. Yes, sir.

Mr. PIMPER. It does that, and in my opinion, also removes a burden that is on the district courts and the jury systems, with them being as busy as they are now, and they would not have to go through that under this procedure if this is the way this is to work.

Normally you would cut the district court out all together and the circuit court would have to just hear it on the basis of the record that is already developed, not on a new record.

Mr. MOSHER. It speeds up the whole procedure?

Mr. PIMPER. Absolutely.

Mr. MOSHER. Thank you.

The CHAIRMAN. Mr. Lennon.

Mr. LENNON. Madam Chairman, in 1962 the Federal Maritime Commission in its report recommended that the 1960 act which provided for criminal penalties should be changed to civil penalties. That is 9 years ago this recommendation was made, is that right?

Mrs. BENTLEY. Yes, sir.

Mr. LENNON. Now, on page 2 of your statement, you indicate that H.R. 755 would change penalty provisions from criminal to civil in three instances only. What concerns me here is that you are suggesting, and I think I understand the reason for it, that a shipper or person or an officer, agent or employee who attempts to obtain transportation at rates which would otherwise be applicable, by false billing, false classification, false weighing, false report of weight, would no longer be a criminal offense, but would simply be a civil offense.

The falsification of billing, false classification, false weighing, false report of weight-you are going to remove that entirely from the criminal concept.

Are these made under oath?

Mrs. BENTLEY. The bill of lading?

Mr. LENNON. Is affidavit required of the person as to the truthfulness of the statement that they file?

Mrs. BENTLEY. You mean when they fill out a bill for the shipment. that they have to take an oath, no, sir. There is none.

Mr. LENNON. But you are saying now that a person, even a company, not just to mean an agent or employee, but if an officer of a company falsely bills, or falsely classifies or falsely indicates weight or report of weight, that that individual would be no longer subjec to a criminal penalty, but simply to a civil penalty?

Mrs. BENTLEY. Yes.

Mr. LENNON. Let me ask this question.

Are there any permits issued to carriers or shippers? Do they not have to get a permit or license?

Mrs. BENTLEY. Freight forwarders of course have to be licensed, and they usually do the paperwork.

Mr. LENNON. There is no authority then under the Federal Maritime Commission to control except through the provisions of the 1916 act. In other words, if a company persistently and consistently falsified, and even though you imposed a civil penalty, they could continue this, and there is nothing you could do about it. You could not revoke the permit, because they do not have a permit. You could not revoke the license because they do not have a license.

Mrs. BENTLEY. That is right, except for the freight forwarder. Mr. LENNON. Except the freight forwarders?

Mrs. BENTLEY. That is right.

Mr. LENNON. Now, that puts the Federal Maritime Commission in a position that it is difficult to enforce the law because these other quasijudicial bodies, such as you mentioned here, some of them operate on the permit and licensing system, and when a company or particularly its officers or principal agents consistently violate the law, they can revoke that permit and stop that through an injunction at least.

Here you are sort of tied down, it seems to me. I wonder then whether or not you should be.

You raised these questions.

In your judgment you think even with the abolition of criminal penalties in the three areas that you mentioned that this would help you because of the wide variance in the application of the statutes of the law and the circumstances in so many district courts across the country, and the trials in de novo process, in which you would not be able to appeal on the record.

I think the question will arise on the floor on the part of some individuals for us to cite an illustration or several instances where you have a practical application of the violation.

So, would you furnish for the record without any identification of companies, of course, some instances in which we could, if we are called on, particularly whoever handles the bill on the floor, the chairman, I guess, that he could respond to a practical illustration.

Mrs. BENTLEY. We will.

(The information referred to follows:)

ACTUAL CASES TO SUPPORT PASSAGE OF H.R. 755

There follow several examples of actual cases in which we are satisfied that, if the Commission had possessed the authority sought in H.R. 755. sanctions would have more timely and in adequate amounts to act as deterrents from future violations.

A case involved section 16 violations of considerable manitude. The shipper regularly undermeasured its shipments to obtain lower freight rates. A guilty plea was entered and accepted on 17 counts and the court assessed a fine of $25.00 on each count for a total of $425.00. The maximum penalty would have been $5,000 for each count. The fine did not begin to offset the savings gained by the shipper from underpaid freight rates.

A case involved 19 counts of misdescription under section 16 to obtain lower freight rates. The maximum fine on each count was $5,000. The shipper pleaded guilty to two counts 17 counts were dismissed. The fine assessed was $100 on each count for a total of $200, whereas the savings in underpaid freight amounted to $1,154.94.

In another instance involving section 16 violations of under-measurements found in 3 containers resulted in approximately $600.00 of underpaid freight. Intra-agency delays in preparing and presenting the case for referral to the Department of Justice resulted in the matter not being submitted to that Department until approximately two years after the violations were detected. Prosecution was declined with statement in pertinent part "In view of the fact that the attempted savings, if any, were relatively small, and [the shipper] is presently shipping its dry goods on a per trailer basis, no useful purpose will be served by the institution of criminal proceedings."

In 1970 the Commission documented a case showing that a shipper was obtaining lower rates by classifying and shipping a certain item as scrap when it, in fact, was selling this item, not as scrap and not by weight, but as its original and proper description and by the piece. Photos were obtained showing some of the cargo in its original packing boxes. Prosecution was declined with advice in pertinent part-"There appears to be sufficient uncertainty as to whether the [items] shipped. . . . come within the classification of scrap. . to preclude the Government from establising that the [shipper] knowingly and willfully tendered a shipment under a false classification."

In another case prosecution was declined with the following comment.. "the case lacks jury appeal; the freight savings. were relatively small, under $2,000.00. . . ." and "In addition, as we have pointed out in other instances. the age of the violations militates against the likelihood of a successful prosecution. We suggest that you review your procedures for investigating, evaluating and referring these matters in order to substantially reduce the lapse of time between violations and referral to the Department."

Although this case took an unusual length of time to investigate, the documentation was necessarily slow, requiring time consuming efforts on the part of several of the Commission's district offices and resulting in an eventual 28 page report from New York and a 48 page report from New Orleans. The investigation, documentation and referrel for prosecution took two years and it was not until 7 months later that prosecution was declined for the reasons as stated.

Mr. LENNON. I believe the Maritime Commission has really recommended abolition of all criminal penalties in the 1916 act.

Mrs. BENTLEY. Originally, yes.

Mr. LENNON. But you say that the Department of Justice raised some objection to that?

Mrs. BENTLEY. Yes.

Mr. LENNON. What was their basis to their objection? Was it indicative of what I referred to here from my own, just quick, hurried perusual of your statement? I wonder if the counsel could respond to that?

Mr. PIMPER. Yes. What you have referred to here, they consider that the violations in the section 16 first and third, and the one in section 14 are more heinous than the other types of violations. You will notice they are violations by carriers rather than by anyone other than carriers. I think Justice feels that in order to deter the carrier from doing what is prohibited by these sections which probably affects their competitive situation, the penalty should be criminal.

They think there ought to be a criminal sanction as well as a civil sanction.

The 1916 act has been on the books since 1916, that is 54 years or 55 years. I, frankly, know of no one who has paid anything other than a fine. I know of nobody that has ever-where anybody has suggested that he be imprisoned.

Mr. LENNON. Does the criminal provision provide for anything but fines? It declares a misdemeanor or shall be punishable by fine not in excess of $5,000. But does the Commission have the inherent authority, statutory authority, to impose a penalty of imprisonment?

Mr. PIMPER. No, sir. It does not have. As a matter of fact, the problem with the misdemeanor is that the Commission itself may not impose any kind of a fine today. Once they determine that there is a basis of the imposition of the penalty, they must send it to the Department of Justice.

Mr. LENNON. Where there is a criminal penalty.

Mr. PIMPER. And Justice at that time takes over. It normally involves filing of papers in courts, and settlement is reached thereafter with the judge in effect agreeing with the settlement. But you can see the time and additional effort that is required to get it to that juncture. Mr. LENNON. In the interest of time, I do not want to take too much time, but what we are doing now is we are wiping out the trials in de novo in every instance. The appeal will be directly from the Commission's decision to the court of appeals on the record and avoid the necessity of trials de novo in the district court. They have to go to the court of appeals in every instance on an appeal from the decision of the Commission, and it will be on the record, and not a trial de novo. That will certainly expedite it.

I wish I had more time.

Thank you.

The CHAIRMAN. I have a letter here from Herbert Lord, chairman of the Committee on Maritime Legislation of the Maritime Law Association. It was addressed to me and dated June 26, 1971, and received June 30, 1971.

I will read one paragraph from his letter:

H.R. 755. While we have no strong consensus for a position within our Committee on this proposal to substitute civil for criminal penalties under the Shipping Act of 1916, the Committee, by simple majority of those reporting, is in opposition. While it is recognized that there has been a general tendency, perhaps in response to notions of uniformity, to substitute civil for criminal penalties in other Subtitles of Title 46 of the United States Code, objection to this policy as applied to the Shipping Act of 1916 stems from the consideration that an administrator, strongly pressing policy directives, is apt to react unfavorably to opposition, even reasoned opposition, and attempt to smooth the administrative path by imposition of civil penalties.

In the case of a real contest the parties in such matters probably would prefer to submit themselves to the dispassionate justice of the courts. This is not, of course, to say or imply that the administrative agencies generally or any in particular do not usually perform their functions fairly and with restraint. But it has been suggested that enforcement of the provisions of the Shipping Act of 1916, involving concepts closely related to competition, and keen competition at that, often require a form of juridicial determination better left to the courts. If our Committee can supply any assistance in your most commendable efforts, please do not hesitate to call upon us.

With best wishes,

HERBERT LORD.

Mr. LENNON. Mr. Chairman, may I ask one more question?

The CHAIRMAN. Mr. Lennon.

Mr. LENNON. You are convinced, and I am too, that this would provide for a more uniform application of civil penalties by reason of avoiding the various thinkings of so many district courts throughout the country and the indeterminate delay in the final adjudication of it? Mr. PIMPER. That is right.

Mrs. BENTLEY. That is the guts of it.

The CHAIRMAN. I think the counsel, Mr. Casey, has a question or two.

Mr. CASEY. I am not sure whether this question was adequately covered in response to Mr. Lennon's questions or not, but it occurred to me when I first read the statement, that while you are proposing changing the criminal penalties to civil, you are proposing to retain the $5,000 maximum.

At the same time you say that you want to take all the profits out of any illegal transaction, plus take a little bit more so that it would provide a deterrent for future violations. With a $5,000 limitation, I find it somewhat inconsistent with the idea of taking the profits out. In other words, there might be a situation where the profits would greatly exceed $5,000.

Mr. LENNON. I think there ought to be an amendment offered, where there is evidence of falsification of the record, I think the maximum penalty should be at least $10,000 to $25,000. That is my thinking.

Mr. CASEY. These cases are only where there has been some falsification. I think in having discussed this informally, that there may be an answer to this that might be satisfactory, rather than changing the $5,000. Would you care to respond to that?

Mrs. BENTLEY. Yes. The $5,000 would be for each offense, and our experience has shown that in those cases involving a single shipper, let us say, there usually are quite a number of consignees requiring separate bills of lading for each. If there are, say, 20 consignees, we are not talking about $5,000, but we are talking about 20 times $5,000, or a total of $100,000. And as to section 32, which covers violations for which no specific penalty is provided, we are mostly concerned with such violations of the freight forwarder operating without a license and in these cases $5,000 would be a severe penalty depending upon the financial status of the parties involved.

However, even in these instances, each individual transaction would be a separate violation subject to the $5,000 maximum penalty.

Mr. CASEY. In other words, when you import some cargo in a shipload, it is not going to go to one person generally, but to a number of individuals in the United States, and each portion or each part of that statement that goes to individuals is subject in itself to $5,000 penalty?

Mrs. BENTLEY. Yes.

Mr. LENNON. Does counsel accept that? The penalty on the shipper would be related to the individual designees or consignee?

Mr. CASEY. That is the way it is now, so far as the criminal penalty application is, as I understand it. I accept the experience of the FMC in going back over their record, and that this would adequately cover them so far as taking the profits out of this.

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