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he has talked with the Office of Management and Budget, who have advised me they have been in touch with the Chairman about this request for a delay.

İ am glad to join in their request, because it seems to me we should not mark up this legislation until these policy issues have been resolved by the administration.,

Mr. Keeney, the initial record we have from the Justice Department on H.R. 9518 was given to us in a letter dated December 12, 1977, from Hon. Patricia M. Wald, Assistant Attorney General.

Do you have a copy of that letter in your possession?



Mr. McCLOSKEY. Let me quote, as a preliminary to questioning you, from two paragraphs of that letter.

The Department of Justice opposes enactment of this legislation as presently drafted. 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.

But, in addition to those two paragraphs, this appears at the bottom of page 2 of Ms. Wald's letter:

Accordingly, we would suggest that proposed new subsection (d) (1) of Section 32 of the Shipping Act be amended to read as follows:

"(d) (1) Subject to the provisions of paragraph (2), no penalty shall be imposed under section 16 for any act in foreign commerce which constitutes a rebate or refund by any unjust or unfair device or means in violation of the initial paragraph of paragraph Second of section 16, or under section 18(b) for any act which constitutes a rebate or refund in violation of subsection 18(b) (3), or for conspiracy under Title 18, United States Code, Section 371, to rebate or refund in violation of the aforesaid provisions of this Act if-(A) such act occurred before the date of enactment of this subsection; and (B) during the period beginning on the date of enactment and ending one year thereafter, the person who committed such act has made a good faith disclosure to the Commission without knowledge that it was the subject of an investigation relating to such act by any agency of the Federal Government.”

Now, would the Justice Department support that provision of the law if Congress should enact it?

Mr. KEENEY. Yes, sir.

Mr. McCLOSKEY. You do. That raises a problem in regard to the 9 U.S. carriers and 18 foreign carriers who know about the present investigation relating to rebating:

If the language you suggest is enacted by Congress, it will not affect any of the major shipping companies now under investigation, domestic or foreign.

If we remove the requirement that the company which has made a good faith disclosure without the knowledge it was the subject of an investigation, would the Justice Department oppose legislation with that language?

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Mr. KEENEY. Mr. Taylor points ont, Mr. McCloskey, that your original bill had that language in it. If you take the language outCongressman, I would like time to reflect on that a little bit.

Mr. McCLOSKEY. Please do. Any reflections you could offer would be helpful.

Mr. KEENEY. Well, I mean, I would like not to answer right here, because one of the problems we are facing is, as you know, we have certain investigations under way. And if we should act-we sponded yesterday to the chairman's letter, and the Attorney General declined to accede to the request that we defer any prosecutive action. So that if we took prosecutive action

Mr. McCloskey. Let me intrude for the purpose of our record, Mr. Keeney. Mr. Chairman, I would like to ask unanimous consent to insert in our record at this point the letter to Hon. Griffin Bell, Attorney General, Department of Justice, Washington, D.C., dated November 3, 1977, from John M. Murphy, chairman, House Merchant Marine and Fisheries Committee; Daniel K. Inouye, chairman, subcommittee on Merchant Marine and Tourism, Senate Committee on Commerce, Science and Transportation; Ted Stevens, member, Senate Committee on Commerce, Science and Transportation with respect to the matter to which Mr. Keeney has just alluded.

Mr. ANDERSON. No objection; so ordered.
[The letter referred to follows:]


Washington, D.C., November 3, 1977.
Attorney General, Department of Justice,
Washington, D.C.

DEAR MR. ATTORNEY GENERAL: Rebating as a discriminatory practice has been a major problem in the U.S. ocean liner trades for at least three quarters of a century.

The Shipping Act of 1916, based on the 1914 Alexander Committee Report, established the basic pattern of federal regulation of the ocean freight industry. Among other things, it outlawed various forms of discrimination in the U.S. liner trades, including rebating or refunding by and unjust or unfair device

Despite unequivocal prohibitions in the Shipping Act, the problem became more serious. As a consequence, in 1958, the Antitrust Subcommittee of the House Judiciary Committee began an investigation and study which not only concerned itself with pricing practices and dual rates among steamship lines, but also with the entire range of antitrust problems in the ocean freight industry operating in the foreign commerce of the United States. This investigation and study which included 23 full hearing days took over three years to complete, and resulted in what many consider to be the most comprehensive report ever on the ocean freight industry.

That report found illegal rebating “rife" in the U.S. liner trades, and recommended a series of steps to deal effectively with the problem. One of the recommendations was that:

"The Antitrust Division of the Department of Justice should also maintain close scrutiny of malpractices in the shipping industry and where these practices are predatory in nature and violate the antitrust laws, the Department should, without delay, prosecute such violations criminally or civilly when the requirements of the judicial doctrine of primary jurisdiction' permit."

The situation was no corrected, however. In fact it has become even more serious, so that today the viability of the liner segment of the U.S. merchant fleet is in jeopardy; and the objective of the Merchant Marine Act of 1936 to establish a strong merchant fleet owned by American citizens, operated by American crews, and fully capable of serving our international economic, mili.

or means.

tary, and political commitments under all foreseeable circumstances-is imperiled as a result.

There is no unanimity of opinion as to all the reasons for our inability to deal with the problem effectively.

Aside from the culpability of carriers, shippers, etc., however, there does appear to be agreement on two of the major causes for our failure.

The first is the manifest lack of coordination, and unified support among responsibility government agencies for U.S. shipping policy as enunciated in the Merchant Marine Act of 1936, the Shipping Act of 1916, and related Acts.

The Chairman of the Federal Maritime Commission recently testified that it was his “personal feeling that the Antitrust Division of the Department of Justice does not like and is unwilling to acept the Shipping Act as the law of the land."

The Federal Maritime Commission also testified that the "Department of Justice consistently opposes all conference control of ocean freight rates and practices" even though encouraged by Section 15 of the Shipping Act.

The second major factor commonly agreed upon is the inability or unwillingness on the part of responsible government agencies to enforce our laws against rebating in a non-discriminatory manner against U.S. ad foreign-flag carriers alike.

As a consequence of so called “blocking statutes" which many of our trading partners have adopted, there are obstacles to enforcing our rebating laws against foreign-flag carriers. What enforcement action that is taken therefore is usually taken against U.S.-flag carriers. Under these circumstances the purpose of the Shipping Act of 1976—to preserve fair and open competition-is illusory.

To there two major causes, we would add a third-lack of leadership and guidance from Congress. Almost fifty years elapsed between the Alexander Committee Report of 1914, and the House Antitrust Subcommittee Report of 1963.

In the past few months our respective Committee and Subcommittee have been considering legislation in an effort to correct these obvious shortcomings, and to give the Federal Maritime Commission needed additional authority to discover the other major causes of our endemic rebating problem, and recommend a permanent solution to Congress.

Because of the discriminatory enforcement of our laws against rebating, and because the vast majority of these malpractices for whatever reason appear to be beyond the pale of our enforcement authority, we have little knowledge of the contemporary practices and techniques which are being employed; and our ability to prescribe a solution is handicapped accordingly.

To encourage everyone who has been involved in rebating to come forward and disclose the nature and extent of his activities, and thereby assist the Federal Maritime Commission in acquiring greater knowledge and familiarity with contemporary malpractices, the legislation before our respective Committee and Subcommittee (H.R. 9518 and S. 2008) provides amnesty for past rebating if full disclosure is made to the Federal Maritime Commission. This provision as all provisions in the legislation would expire three years after enactment.

As a result of testimony at both of the Committee's hearings and our own deliberations, we believe the amnesty provisions in the two bills are broader than necessary to accomplish our purpose.

Accordingly we intend to recommend amendments to our respective Committees which would limit amnesty to penalties for rebating under Sections 16 and 18 of the Shipping Act, and immunity from prosecution under Section 371 of Title 18, if the conspiracy is related solely to violation of the anti-rebating provisions of Sections 16 and 18 of the Shipping Act.

Our decision in this regard has been greatly influenced by the testimony of the Department of Justice. We believe the amendments we will recommend will reflect the very constructive advice and recommendations of the Department.

During our respective hearings we became aware of several pending grand jury investigations involving rebating and Section 377 of Title 18. It occurs to us that if these proceedings actively continue over the next few months while Congress is considering H.R. 9518 and S. 2008, they will have a chilling effect on efforts to secure passage of this legislation.

We therefore respectfully request that you consider advising all local U.S. Attorneys that prosecutions for rebating or conspiracy to rebate be held in abeyance pending outcome of the legislation now under active consideration.

In making our request we are mindful that Congress recently delayed for 8 months the effect of a requirement in S. 1019 that subsidized operators of U.S. merchant vessels certify they are not rebating, in order to facilitate and expedite consideration of H.R. 9518 and S. 2008.

Finally, we wish to stress that our request is in no way intended to insulate or otherwise protect any person or corporation from investigation and prosecu. tion if warranted. Rather, it is an attempt to strike the balance in favor of the greater public good, i.e., a permanent solution to a problem which poses an imminent and serious threat to the viability of the liner segment of the American merchant fleet. Sincerely,

Chairman, House Merchant Marine

and Fisheries Committee.

Chairman, Subcommittee on
Merchant Marine and Tourism.

Member, Senate Committee on
Commerce, Science, and Transportation.

Mr. McCLOSKEY. I also ask unanimous consent to insert in the record at this point the Attorney General's response to that letter, which is dated January 25, 1978, and was directed to Hon. Daniel K. Inouye, with copies to John M. Murphy, Ted Stevens and Paul V. McCloskey, Jr.

In fact, I will just read it into the record :

Dear Mr. Chairman, this is in response to your letter of November 3rd, 1977, signed also by John M. Murphy, Chaiman, House Merchant Marine and Fisheries Committee and Ted Stevens, Member, Senate Committee on Commerce, Science and Transportation, concerning rebate practices in the United States oceanliner trades.

I apologize for the delay in responding, which was necessitated by the need to thoroughly review the prosecutive options available to us as a result of the 1972 amendments to the Shipping Act.

This Administration shares your concern for maintaining the continued riability of the liner segment of the United States Merchant Marine and the need for greater coordination among responsible government agencies in this area.

Along these lines, we have carefully considered your suggestion that ongoing investigations involving illegal rebating practices be suspended pending the outcome of proposed legislation, which would provide a form of limited amnesty for such prior conduct.

It is our considered judgment that any such suspension on ongoing prosecutive efforts on our part would be without precedent and entirely inappropriate under the circumstances. Yours sincerely,

GRIFFIN B. BELL. Mr. Keeney, I commend the Attorney General for taking that position. It sustains the principle that prosecutorial discretion should hiever be affected by political influence, either in the Congress or within the executive branch. I think the Attorney General, in taking this position, is upholding a code of conduct which started under former Attorney General Elliott Richardson during the impeachment inquiry.

Mr. Kyros. Mr. McCloskey, would you yield, sir?
Mr. MCCLOSKEY. I would be glad to vieid.

Mr. Kyros. When you stated “political influence," you did not mean to refer to the letter of Mr. Murphy and Mr. Inouye?

Mr. McCLOSKEY. Let me define what I mean by political influence. We in Congress are politicians. Those in the Justice Department enforce the law.

I do not believe any of us in the Congress, elected politicians, should affect a prosecutor's discretion. This would extend, for example, to the Garmatz case, the Heine case, the Marston case, or any other case where the Attorney General has to make a decision whether or not to prosecute.

It seems to me it is important to our system of justice that we politicians refrain from trying to influence court decisions or prosecutorial decisions. By the use of the term “political" I do not mean anything more than we in elected offices should not affect those who are in either a judicial or prosecutorial capacity.

That is a personal view, with which others may disagree.

Let me ask consent to insert at this point in the record my own letter to Attorney General Bell of November 9, 1977.

Mr. ANDERSON. No objection; so ordered.
The letters referred to follow:]



Washington, D.C., November 9, 1977. Hon. GRIFFIN B. BELL, Attorney General, Department of Justice Washington, D.C.

DEAR MR. ATTORNEY GENERAL: I have just seen a copy of the letter sent to you on November 3rd by Senators Inouye and Stevens and by Chairman Murphy of the House Merchant Marine and Fisheries Committee.

I declined to join in signing this letter last week, because in my judgment, it is inappropriate to the doctrine of separation of powers for Members of the Legislative Branch to seek to affect either the prosecutorial discretion of the Executive Branch or the independent judgment of the Judiciary.

Since the letter has been sent, however, it seems proper that you be advised that there is at least one Member of Congress whose opinion differs from the views my colleagues have transmitted to you requesting that you consider instructing C.S. Attorneys to defer prosecution for both rebating and conspiracy to rebate during the pending of our current legislative deliberations on the subject.

As Senators Inouye and Stevens and Chairman Murphy point out, they have introduced legislation to grant amnesty from prosecution to any shipping company or official who have committed criminal conduct in conjunction with rebating activity. As I had earlier mentioned to Messrs. Wilens and Taylor of your staff, Congress, rightly or wrongly, specifically reduced rebating from a criminal to a civil offense in 1972, and this would seem to support the interpretation that Congress did not intend, in amending the law, to leave open the possibility of a criminal prosecution for conspiracy to rebate. This, of course, is a matter of law, and one for your proper discretion in determining, not ours.

Whatever may be your judgment on this point, however, if prosecutions are to go forward in this area, it seems to me essential that all of the companies who have admitted rebating, or who are under investigation for rebating, be treated equally. As I said in the open Committee hearings the other day, it would seem unfair to prosecute only the one company which has thus far made full disclosure and fully cooperated with the Federal Maritime Commission.

Either all parties involved should receive prosecutorial attention or none should, if the government is to sustain the principal of equal justice for all.

I offer these opinions with no intent that they should affect your decision, and only because it is my view that they are necessarily supplemental and relevant to the letter you have received from my colleagues.

It is for the Justice Department alone to decide who is to be prosecuted and who is not to be prosecuted. I have confidence that your decision will be made without reference of any kind to the opinions of persons outside the Justice Department. Respectfully,


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