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of this year

The subject matter of S. 1905, Permission to Refund a Portion of Freight Charges, is a legal matter on which all of the Conferences and their member lines have a common position.

To avoid duplication, they have employed common counsel. I testified on behalf of the same Conferences and carriers before the Subcommittee on Merchant Marine of the House Merchant Marine and Fisheries Committee on August 16

connection with the House companion bill, H.R. 9473. At the time H.R. 9473 was introduced and considered by that Subcommittee, it was in haec verba with S. 1905. During the intervening months, H.R. 9473 was reported out of the Subcommittee in a revised form which we suggested.

Chairman Garmatz called hearings of the Subcommittee on very short notice. Since I represented Conferences and carriers on both coasts, there wasn't time for us to get together with and exchange views with the proponent of this legislation, the Federal Maritime Commission, before the hearing on August 15th. However, after the Subcommittee hearing, there was a subsequent exchange of ideas with the Commission in the form of letters to the Committee which supplemented the record. After the Subcommittee had reported out the bill in the form we suggested, we had a further opportunity to consider the matter in some depth with the senior staff at the Maritime Commission. Out of those meetings came some further suggestions which were embodied in the second substitute which was reported out by the full House Merchant Marine Committee a few weeks ago. A copy of the bill as reported is attached as Appendix B.

The bill as reported to the House meets all of our serious questions about, and objections to, H.R. 9473 and S. 1905 as originally drafted. We have always endorsed the purpose of this bill, which would permit refunds of freight when a typographical error in a tariff, or carrier inadvertence in failing to file agreed changes to a tariff, results in shippers being charged at excessive rates. However, the comments that accompanied the Commission's original bill and some of the language in the original bill troubled us.

We were particularly concerned about the suggestion, contained in the following quotation from the Commission's comments, that the Commission was seeking indirectly the power to regulate rates, a power which Congress has consistently denied it in the past. The comment that caused concern reads:

“This amendment is necessary because the Shipping Act, 1916, unlike the Interstate Commerce Act, contains no statutory authority which empowers the Commission to direct the enforcement of a reasonable rate

Since no reasonable rate fixing authority is contained in the Shipping Act applicable to ocean carriers engaged in foreign commerce, the Commission feels it necessary to obtain the statutory authority contained in this proposed legislation.”

After we voiced our concern, Chairman Harllee emphatically stated that the Commission was not seeking any rate making authority. While we welcomed the Chairman's forthright statement and recognized that the legislative history would make it difficult to interpret the proposed legislation as a grant of rate-making authority, we also were fearful that Commission personnel and others who were not particularly familiar with the legislative history would argue in the future that limited rate-making authority had, in fact, been granted. To avoid future problems of interpretation, we urged that the legislation enacted should not contain any ambiguous language that could be the basis of a future claim of rate- ? making authority.

We were particularly concerned with the third proviso which would freeze rates retroactively for 30 days and prospectively for 90 days. The power to freeze rates for a limited period because of a mistake could lead to attempts to postpone intentional rate changes of which the Commission disapproved. The Commission proposed these rate-freezing provisions to make doubly and triply certain that this bill could never be used by a carrier, intent upon wrongdoing, to discriminate among shippers by obtaining a refund for one shipper and then immediately raising the rates paid by others. However, such a provision was unnecessary because the Shipping Act, 1916, already contains provisions requiring advance notice of rate increases. In addition, every application for permission to refund freight moneys would be subject to Commission scrutiny. Carriers intent upon discriminating certainly would find some other means to discriminate that did not involve examination by the Commission.

In addition to being unnecessary, the rate-freezing proviso was objectionable because it introduced an unwarranted element of inflexibility, into rate-making. This could be particularly damaging if a carrier wished to reduce rates without advance notice, as permitted by the Shipping Act, 1916, in order to enable American shippers to compete with foreign competitors. Accordingly, we considered

a

ihe rate-freezing provision objectionable in itself, aside from any possible use hat might be made of it to support rate fixing by the Commission.

We also opposed the Commission's original requirement that the carrier notify all similarly situated shippers. As originally drafted, this provision would in each instance have imposed upon the carrier, or all the carrier members of a conference, the heavy burden of searching innumerable shipping documents to insure that every shipper entitled to even a purely nominal refund was notified. Since the close of the hearings in the House, we have engaged in a series of discussions with Commission personnel in order to find an effective means of giving notice to shippers without imposing an impossible burden on the carriers. i Today, I'd urge your Committee to concur in the changes which have been by the House of Representatives. Let me outline briefly the areas in which the House bill differs from the original draft before you: First, there is no longer any provision for a mandatory rate freeze retroactive for thirty days and prospective for ninety days. This requirement has been replaced by the last proviso which states that if permission is granted by the Commission, the carrier or conference will publish an appropriate notice in its tariff, or take such other steps as the Commission may require, to give notice of the rate change and will provide for additional refunds to other shippers who are similarly situated. ị The legislation in its present form protects the innocent shipper in those rare cases when, through a carrier's inadvertence, a shipper has paid a manifestly improper rate. The legislation empowers the Commission upon good cause shown to grant to the carrier authority to correct a clerical or administrative error and to refund the difference. The legislation also provides that relief will be afforded in those few cases where through inadvertence a carrier or conference fails to file a specific rate promised to a shipper. In the second instance, we appreciate the possibility that the question as to whether relief should be granted hinges on the question of the intent of the particular carrier and shipper applying for relief. In such a case, carrier and shipper alike must bear the heavy burden of showing "good cause”' for relief under these exceptional circumstances.

We believe that the revised third proviso adequately protects the rights of similarly situated shippers against discrimination. In our presentation to the House Committee, we pointed up the practical problems involved in giving notice to such similarly situated shippers. We emphasized that it was unfair to thrust on the carriers and the conferences the burden of searching hundreds and perhaps thousands of bills of lading for the sailings at or about the time in question and suggested that the Commission could give notice to the shipping public by publication in the Federal Register of a synopsis of the rate mistake and an invitation for any other shipper similarly situated to come forward within a reasonable period. Some of the members of the House committee were concerned with whether or not the Federal Register would be cluttered with such notices, but it was our considered judgment that these incidents happen so infrequently that this would not be an inhibiting factor. We felt that if the carrier or conference published a tariff correction notice showing the proper rate or classification that this correction notice would be sufficient for any other alert shipper to claim his rights by a timely application.

The Commission staff doesn't share our view as to the efficacy of the Federal Register as an effective method of notice to the shipping public. Perhaps we are biased in this regard because we must comb through it daily for actions by various federal agencies which may be inimical to our clients' interests. Since the Commission entertains reasonable doubts as to its efficacy, our clients are willing to go one step further. Most of the conferences employ a contract rate system under which the shipper who agrees to confine all of his shipments to conference lines receives a discount up to 15%. All contract conferences must maintain current lists of all contract shippers. In those conferences where contracts are offered, better than 99% of the shippers in the trade avail themselves of the contract. Therefore, the most effective way to publicize any rate action in such a conference is by a notice to the contract list. Our clients are prepared to circularize their contract list with an erratum notice if the Commission grants a special application. This will provide actual notice to practically everyone who might possibly be affected. It is an expensive way of correcting an error but we are confident that the number of instances where this will be necessary is so limited we can shoulder the burden.

In those few instances where our clients don't have a dual rate contract, they still maintain a complete shipper list which is comparable to the contract list. If an error happens in such a conference, the conference would undertake to circularize its shipper list, thereby giving actual notice to any shipper similarly situated.

The third possibility would arise in case an individual line not a member of a conference made an application for a refund. In this case, the steamship line would not have a contract list and may not have a shipper list. Under those circumstances, the Commission well might condition its approval of the refund on the carrier's undertaking to search its manifests and bills of lading to uncover any other shipper similarly situated.

The final proviso also requires that an application for refund or waiver must be filed with the Commission within 180 days. We approve of this proviso because it will eliminate or minimize stale claims.

We are confident after the full exchange of views which we've had that the Commission understands the various possibilities and will use the remedy best suited to the circumstances.

We believe that the revised legislation set forth in Appendix B will do the following:

(1) It will provide an effective way to cure the evil which S. 1905 seeks to cure;

(2) It will satisfactorily protect the rights of similarly situated shippers and give the Commission sufficient flexibility to condition the relief upon the

circumstances involved. Therefore, we respectfully urge you to substitute the revised language embodied in Appendix B for that which is before you in S. 1905.

APPENDIX_A.—LIST_OF CONFERENCES, AND CARRIER MEMBERS OF ONE OR

MORE THEREOF, REPRESENTED IN THE TESTIMONY OF JOHN MAHONEY ON

S. 1905
American West African Freight Conference
Atlantic & Gulf/Indonesia Conference
Atlantic & Gulf/Panama Canal Zone, Colon & Panama City Conference
Atlantic & Gulf/Singapore, Malaya and Thailand Conference
Atlantic & Gulf/ West Coast of Central America & Mexico Conference
Atlantic & Gulf/West Coast of South America Conference
East Coast Colombia Conference
Far East Conference
Havana Northbound Rate Agreement
Havana Steamship Conference
Latin America/Pacific Coast Steamship Conference
Leeward & Windward Islands & Guianas Conference
North Atlantic Mediterranean Freight Conference
North Atlantic United Kingdom Freight Conference
Pacific Coast European Conference
Pacific Coast River Plate Brazil Conference
River Plate and Brazil Conferences
Santiago de Cuba Conference
United States Atlantic & Gulf/Australia New Zealand Conference
United States Atlantic & Gulf-Haiti Conference
United States Atlantic & Gulf-Jamaica Conference
United States Atlantic & Gulf-Santo Domingo Conference
U.S. Atlantic & Gulf-Venezuela and Netherlands Antilles Confer
West Coast South America Northbound Conference

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MEMBER CARRIERS

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Alcoa Steamship Company, Inc.
American-Australian Steamship Line — Joint Service
American Export Isbrandtsen Lines, Inc.
American President Lines, Ltd.
Anchor Line, Ltd.
Anglo Canadian Line-Joint Service
A. P. Moller Maersk Line
Atlantic Container Line
Atlantic Lines, Ltd.
Atlanttrafik Express Service
Azta Shipping Co.
Bank Line Limited

Barber-West African Line-Joint Service
Belgian Line-Joint Service
Black Star Line, Ltd.
Blue Sea Line-Joint Service
Blue Star Line, Limited
Booth-Lamport-Joint Service
Booth Steamship Company, Ltd.
Bristol City Line of Steamships, Ltd.
Canadian Transport Co., Ltd.
Chilean Line (Compania Sud Americana de Vapores)
Coldemar Line (Compania Colombiana de Navegacion Maritima, Ltda.)
Columbus Line (Hamburg-Suedamerikanische Dampfschiff-fahrts-Gesellschaft
The Northern Pan-American Line, A/S (NOPAL Line)
Norton Line-Joint Service
Olsen Line, Fred (Fred Olsen & Co.)
Orient Mid-East Lines
Peruvian State Line (Corporacion Peruana de Vapores)
Port Line Limited
P.N. Djarkata Lloyd
Prudential Lines, Inc.
Royal Netherlands Steamship Company (Koninklijke Nederlandsche Stoomboot

Eggert & Amsinck.) Compagnie Maritime des Chargeurs Reunis Companhia Colonial de Navegacao Companhia de Navegacio Lloyd Brasileiro (Lloyd Brasileiro) Companhia Nacional de Navegacao Concordia Line-Joint Service Constellation Line (Van Nievelt, Goudriaan & Co. Stoomvaart Maatschappij) Cunard Steam-Ship Company, Limited, The D'Amica Societa di Navigazione per Azioni Delta Steamship Lines, Inc. Dominican Steamship Line (Flota Mercante Dominicana, C. por A.) East Asiatic Company, Ltd., The lolder Dempster Lines, Ltd. Empresa Lineas Maritimas Argentinas (ELMA) Fabre Line Farrell Lines Incorporated Fern-Ville Line-Joint Service French Line (Compagnie Generale Transatlantique) resco Line-Joint Service Furness Warren Line dynia American Line Grace Line Inc. rancolombiana (Flota Mercante Grancolombiana S.A.) julf & South American Steamship Co., Inc. lamburg-American Line (Hamburg-Amerika Linie) dansa Line danseatic-Vaasa Line Hellenic Lines, Ltd. poegh Lines-Joint Service Holland-America Line (N.V. Nederlandsche Amerikaansche Stoomvaart Maats

chappij) Holland Pan-American Line (Van Nievelt, Goudriaan & Co. Stoomvaart Maatschappij) terocean Line ish Shipping Limited hmian Lines, Inc. alian Line (Italia Societa per Azioni de Navigazione) alpacific Line, Inc. aran Lines (Aktieselskapet Ivarans Rederi) upan Line, Ltd. hnson Line ohnson-Warren Lines, Ltd. mawasaki Kisen Kaisha, Ltd. import & Holt Line, Ltd. kes Bros. Steamship Co., Inc. llamenic Line (Marina Mercante Nicaraguense, S.A.) anchester Liners, Ltd. aritime Company of the Philippines, Inc. Sitsui-O.S.K. Lines, Ltd. Contemar Line, S.A., Commercial y Maritima Loore-McCormack Lines, Inc. ational Hellenic American Line, S.A. gerian National Shipping Line, Ltd. ppon Yusen Kaisha, Ltd. Opal West Africa Line orth German Lloyd (Norddeutscher Lloyd)

Maatschappij N.V.)
Royal Mail Lines, Ltd.
Seaboard Shipping Co., Ltd.
Sea-Land Service, Inc.
Sea-Land Joint Service
States Marine Lines-Joint Service
Thai Mercantile Marine Limited
Torm Lines (Dampskibsselskabet Torm A/S)
Ulster Steamship Company, Ltd. (Head Line and Lord Line)
United Fruit Company
United Philippine Lines, Inc.
United States Lines, Inc.
United Yugoslav Lines
Venezuelan Line (Compania Anonima Venezolana de Navegacion)
West Coast Line S.A.
Westfal-Larsen Line
Westwind Africa Line
Weyerhauser Line
Wilhelmsen Lines—Joint Service
Yamashita-Shinnihon Steamship Co., Ltd.
Zim Israel Navigation Co., Ltd.

APPENDIX B

(H.R. 9473, 90th Cong., first sess.) A BILL To amend provisions of the Shipping Act, 1916, to authorize the Federal Maritime Commission to

permit a carrier to refund a portion of the freight charges Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, [That section 13(b) of the Shipping Act, 1916 (46 U.S.C. 817(b)), is amended by changing the period at the end of subsection (3) thereof to a colon and adding the following proviso: Provided, however, That the Federal Maritime Commission may in its discretion and for good cause shown permit a carrier to refund a portion of freight charges collected from a shipper or waive the collection of a portion of its charges from a shipper; where it appears. that such refund or waiver will not result in discrimination among shippers: Provided further, however, That the carrier has, prior to applying for authority to make refund, filed a new tariff with the Federal Maritime Commission which sets forth the rate on which such refund or waiver would be based: And provided further, however, That the rate resulting from such refund or waiver when approved shall be the effective and applicable rate for all other shipments of the same description of the carrier for the period commencing thirty days prior to the date of the shipment or shipments involved, until thirty days subsequent to the date of application for refund or waiver or until ninety days subsequent to the shipment or shipments involved, whichever is later, and where appropriate, additional refunds or waivers shall likewise be made.”] That section 18(6) of the Shipping Act, 1916 (46 U.S.C. 817(b)), is amended by changing the period at the end of subsection (3) thereof to a colon and adding the following proviso: "Provided, however, That the Federal Maritime Commission may in its discretion and for good cause shown permit a common carrier by water in foreign commerce or conference of such carriers to refund a portion of freight charges collected from a shipper or waive the collection of a portion of the charges from a shipper where it appears that there is an error in a tariff of a clerical or administrative nature or an error due to inadvertence in failing to file a new tariff and that such refund or waiver will not result in discrimination among shippers: Provided further, That the common carrier by water in foreign commerce or conference of such carriers has, prior to applying for authority to make refund, filed a new tariff with the Federal Maritime Commission which sets forth the rate on which such refund or ti

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