[Federal Register Volume 60, Number 87 (Friday, May 5, 1995)]
[Notices]
[Pages 22390-22397]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-10993]
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FEDERAL MARITIME COMMISSION
[Docket No. 94-24]
Petition of South Carolina State Ports Authority for Declaratory
Order; Order Granting Petition in Part and Denying Petition in Part
South Carolina State Ports Authority (``SCSPA'' or ``Petitioner'')
has filed with the Federal Maritime Commission (``Commission'' or
``FMC'') a Petition For A Declaratory Order (``Petition'') pursuant to
Rule 68 of the Commission's Rules of Practice and Procedure, 46 C.F.R.
Sec. 502.68 (1993), to allow it to act without peril in issuing in its
FMC-filed tariff guidelines for the criteria it will apply to license
stevedores and marine terminal operators (``MTOs'') operating at SCSPA
facilities. SCSPA alleges that ``economic regulation'' of stevedores
and MTOs doing business or seeking to do business at public port
facilities is necessary to protect the public investment in the
facilities.
Notice of the filing of the Petition was published in the Federal
Register inviting interested parties to submit replies to the
Petition.\1\ Twelve parties filed replies to the Petition. Following
receipt of all but two of the replies, SCSPA filed a Motion For Leave
To File A Response (``Motion''). Six parties responded to the Motion.
\1\Two parties subsequently requested and were granted a 30-day
extension of time to file replies.
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The Petition
SCSPA represents that it seeks ``to remove uncertainty, to
terminate a controversy, and to allow it to act without peril upon its
view of the right to regulate the activity of persons seeking to
perform stevedore and public marine terminal functions at [SCSPA]
facilities.'' Petition at 1. SCSPA maintains that its Petition is an
appropriate subject for exercise of the Commission's authority to
entertain petitions for declaratory orders under [[Page 22391]] Rule
68.\2\ The Petition is supported by the Declaration of W. Don Welch,
Executive Director of SCSPA.
\2\Rule 68 provides, inter alia, that ``the Commission may, in
its discretion, issue a declaratory order to terminate a controversy
or to remove uncertainty.'' Subsection (b) of the Rule provides
further that:
Petitions under this section shall be limited to matters
involving conduct or activity regulated by the Commission under
statutes administered by the Commission. The procedures of this
section shall be invoked solely for the purpose of obtaining
declaratory rulings which allow persons to act without peril upon
their own view. Controversies involving an allegation of violation
by another person of statutes administered by the Commission, for
which coercive rulings such as payment of reparation or cease and
desist orders are sought, are not proper subjects of petitions under
this section. Such matters must be adjudicated either by filing of a
complaint under section 22 of the Shipping Act, 1916 or section 11
of the Shipping Act of 1984 and Sec. 502.62, or by filing a petition
for investigation under Sec. 502.69.
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SCSPA describes itself as an operating port which provides public
terminal facilities and performs terminal services, including stuffing
and stripping containers for some shippers, at its facilities. SCSPA
states that it ``has in its tariff a provision which gives it broad
authority `to control all services performed in connection with cargo
moving through or over its facilities' and has used that authority to
decide which entities may perform stevedore and related functions at
Ports Authority facilities.'' Pet. at 5.
With respect to marine terminal services, SCSPA claims the
authority to determine whether it will permit such services to be
performed by others at its facilities and to establish both the terms
under which it will allow such operations and the identity of firms
which will be authorized to operate. SCSPA advises that it performs
marine terminal services at its public facilities with about 250
employees. SCSPA states that it ``makes a profit on this operation, and
does not desire to have third parties use its facilities to compete
with it.'' Pet. at 10. Therefore, it ``has a rule that it will not
permit any third party to hold itself out to the public to perform
marine terminal container operations on Ports Authority facilities.''
Id. at 11.
SCSPA informs that the major carriers calling at Charleston have
``licensed'' facilities at which marine terminal services are performed
by third parties under contract with the carriers and that SCSPA's
public marine terminal services are utilized by the smaller lines
calling at the port and approximately 25 shippers.
SCSPA indicates that stevedoring operations at the port have
changed drastically over the past twenty years as a result of the
effects of containerization, including the International Longshoremen's
Association 50-mile Rules on Containers. Instead of just three locally-
owned and operated stevedoring firms serving numerous carriers at the
port, there are now said to be nine stevedore companies, most operating
as units of large national companies, serving only a handful of
carriers. These national concerns, says SCSPA, have little or no
interest in advancing the economic well being of the port or attracting
cargo to Charleston which they might handle at another port at which
they operate.
SCSPA advises that it already requires stevedores seeking to
operate at the port to ``register,'' but now wishes to implement
procedures involving economic and financial standards for the licensing
of stevedores. These standards would include an assessment of the
applicant's financial resources, safety record, conformity with
environmental requirements, and safety and substance abuse programs.\3\
Applicants would also be required to demonstrate ability to ``promote
and foster commerce through the ports of South Carolina.'' SCSPA
reports that twenty of twenty-five deepwater ports it surveyed in the
South Atlantic and Gulf Coast require that stevedores obtain a license
to operate from the public port agency.
\3\The guidelines, attached to the Petition at Tab B, require
each applicant for a stevedoring license to submit, inter alia: its
articles of incorporation; a list of managerial employees, including
supervisors, superintendents and foremen; resumes of its chairman,
president, vice-president, chief financial officer and local
business representative; a list of all equipment owned or leased to
be used at SCSPA facilities; financial statements or other documents
demonstrating credit-worthiness and resources, as well as credit
references; a list of business licenses; a list of business
locations and offices, describing the business done at each
location; a list of actual or potential customers to be served at
the port; and insurance certificates an copies of safety, training
and substance abuse programs.
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SCSPA believes its actions are lawful but wishes to remove doubt,
created by stevedore interests, so that it will not be in peril for
implementing new licensing procedures. The ``doubt'' to which SCSPA
refers arises from a January, 1993, informal request by ``a national
group of stevedore companies, the Independent Marine Terminal Operators
Council (``IMTOC''),'' that the FMC investigate the practices of SCSPA
and the port authorities of Georgia, North Carolina and Virginia to
determine whether these ports violated the Shipping Act of 1984 (``1984
Act''), 46 U.S.C. app. Sec. 1701, et seq., by refusing to permit
operations by third parties at their facilities. The FMC's Managing
Director declined to recommend the initiation of such an investigation,
stating that the matter would more appropriately be the subject of a
complaint.\4\ SCSPA indicates that the South Carolina Stevedores
Association, as association of local stevedores, has since continued to
seek clarification and modification of SCSPA's policy regarding
reservation of public marine terminal services work at SCSPA facilities
to itself.\5\
\4\The IMTOC letter is attached to the Petition at Tab C. The
Managing Director's response appears at Tab D to the Petition.
\5\See Tabs E and F to the Petition.
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SCSPA maintains that the Commission has jurisdiction to determine
the lawfulness of economic regulation of stevedores by public port
agencies, citing Baton Rouge Marine Contractors v. FMC, 655 F.2d 1210
(D.C. Cir. 1981); Cargill, Inc. v. FMC, 530 F.2d 1062 (D.C. Cir.),
cert. denied, 429 U.S. 868 (1976) (``Cargill''); and Greater Baton
Rouge Port Commission v. United States, 287 F.2d 138 (5th Cir.), cert.
denied, 368 U.S. 985 (1961). The guidelines SCSPA wishes to issue
should be considered a reasonable exercise of its business judgment, to
which the FMC should defer, says SCSPA. The Commission is said to have
approved similar business-based actions, or at least deferred to the
local authority to make such determinations, in Petchem, Inc. v.
Canaveral Port Authority, ______ F.M.C. ______, 23 S.R.R. 974 (1986),
aff'd sub nom. Petchem, Inc. v. FMC, 853 F.2d 958 (D.C. Cir. 1988)
(``Petchem''); and Seacon Terminals, Inc. v. Port of Seattle, ______
F.M.C. ______, 26 S.R.R 886 (1993) (``Seacon'').
Similarly, SCSPA argues that its self-preference with respect to
the performance of public marine terminal services at its facilities is
not violative of the Shipping Acts' proscriptions against
discrimination, in section 16 of the Shipping Act, 1916 (``1916 Act''),
46 U.S.C. app Sec. 815 and sections 10(b) (11) and (12) of the 1984,
Act, 46 U.S.C. app. Sec. 1709(b) (11) and (12), because there is no
triangular relationship involved in self-preference. In support of this
proposition, SCSPA refers the Commission to Puerto Rico Ports Authority
v. FMC, 642 F.2d 471 (D.C. Cir. 1980), as well as the decision of the
Commission's predecessor in Anglo Canadian Shipping Co., Ltd. v. Mitsui
Steamship Co., Ltd., 4 F.M.B. 535 (1955).
Replies to the Petition
A. Replies in Support
Replies in support of the Petition were filed by four Ports and one
association. The American Association [[Page 22392]] of Port
Authorities (``AAPA'') reports that public investment in port
facilities, including those of operating ports as well as landlord
ports, is enormous ($12.5 billion over 46 years) and must be protected
by the public entities (ports) created for that purpose. AAPA states
that:
The goals that [SCSPA] seeks to achieve are laudatory,
particularly in light of its status as a public agency and the duty
that it shares with other port agencies to protect its investment of
public funds.
* * * * *
It is the position of AAPA that public port authorities, because
of their nature as governmental enterprises be given the widest
discretion possible in controlling and regulating and marine
terminal facilities under their jurisdiction.
AAPA Reply at 2-3. AAPA declares that public port authorities * * *.
* * * charged with statutory responsibilities relating to the
planning, development, financing and operation of marine terminal
facilities * * * financed through the sale of bonds which pledge as
security the revenues of the public agencies which offer them, * * *
are motivated not simply by a profit motive but by a mandate from
the people to stimulate economic growth and to protect the public's
investment.
Id. at 3-4. AAPA maintains that port authorities are entitled to impose
reasonable conditions on those who seek to do business within the port;
to find otherwise would be to grant them less freedom to choose their
business partners than is enjoyed by all other enterprises.
The Tampa Port Authority (``Tampa''), an operating port, supports
SCSPA's right to reserve to itself the right to perform public MTO
functions at its facilities and to apply economic criteria in granting
permits or licenses for stevedores and MTOs to operate at its
facilities. Tampa declares that the port provides major employment (in
Tampa's case, 68,000 jobs), tax revenues, income and economic impact on
its region. Tampa reports that it licenses stevedores and MTOs under
its tariff. Presently, Tampa advises that it is defending a suit in
state court challenging its right to reserve general cargo terminal
operations for itself and is seeking to have the suit referred to the
FMC under its primary jurisdiction. Tampa's arguments in favor of the
port's right to regulate operations at or in connection with its
facilities, and to reserve operations to itself, are said to be
supported by the same cases cited by SCSPA.
The reply in support by the Virginia Port Authority refers to the
responsibilities of public port authorities to enhance the long-term
economic growth of their respective ports and to protect their public
investors.
The Board of Trustees of the Galveston Wharves (``Galveston'') also
supports SCSPA's proposal to license stevedores and the economic
standard to be applied by SCSPA.\6\ Galveston indicates that it
presently licenses stevedores for operation at its facilities, but does
not apply the specific economic criteria proposed by SCSPA.\7\
Galveston states that it would amend its tariff to adopt the same
proposal if SCSPA is successful. Galveston suggests, based on its own
experience, tha it is necessary for the Commission to make clear in any
ruling that port authorities may deny stevedore licenses if sufficient
economic demand does not exist to support such services. Specifically,
Galveston asserts that ports should be able to base stevedore licensing
decisions on such criteria as: existing demand for stevedore services;
an applicant's support by a vessel carrier; proof that an applicant
will bring new business to a port; and proof that grant of an
additional license will not result in duplicative services or
destructive competition which will impair the quality of port services.
In support of its arguments for the authority claimed by itself and
SCSPA to regulate stevedores, Galveston cites the Petchem, Seacon, and
Cargill cases relied on by SCSPA.
\6\Galveston's comments are supported by the Declaration of
Ernest Connor, General Manager of Galveston Wharves.
\7\It reports that, because the number of companies exceeds
demand, Galveston quit granting new licenses and, as a result, has
been challenged in court and at the Commission on its right to
withhold a license. Although these cases were ultimately dismissed
at both the District Court and the FMC, it cost the port a great
deal for attorney's fees to defend the suits.
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Lake Charles Harbor & Terminal District (``Lake Charles''), a
political subdivision of the state of Louisiana, describes itself as a
general and bulk cargo port, serving more than 800 ships and barges in
1992 and 1993. Much of the cargo is said to be P.L. 480 agricultural
aid for the Department of Agriculture, which uses a sophisticated,
computer analysis to determine the lowest landed cost to select the
exit port for shipments. By keeping its charges to cargo low, Lake
Charles states it has attracted this cargo and moved 1.1 million tons
over facilities meant to handle annual volume of 600,000 tons. It
allegedly has done so in part by having an exclusive contract with a
single firm to load and unload cargo and to move and spot railcars on a
continuous basis. Lake Charles advises that it requires stevedores to
get a permit to work and states that it is considering tariff
amendments to tie the grant of a permit to the economic interests of
the port. Lake Charles suggests that the Commission give its blessing
to these business-based decisions by granting the Petition.
B. Replies in Opposition
Carolina Marine Handling (``CMH'') suggests that the Commission
deny or return the Petition unanswered. CMH says the matter is one for
the SCSPA Board of Directors. CMH alleges that SCSPA is trying to
monopolize local stevedoring functions of stuffing and stripping
containers and flatracks, and fears that SCSPA may even attempt to
reserve to itself deep-sea stevedoring if its revenues continue to
decline. More specifically, CMH alleges that the proposed guidelines
for licensing stevedores are ``overly broad, subjective and subject to
abuse by the Executive Director.'' CMH Reply at 1. CMH objects
particularly to the guidelines' requirements that applicants provide
resumes, financial statements, customer lists and customers targets, as
part of the licensing process.
In the most comprehensive reply filed by any party, Ceres
Corporation argues that the Petition is inappropriate for declaratory
order disposition. Ceres states that it provides stevedore and marine
terminal services at Charleston through an affiliate, Ceres Marine
Terminals, Inc., which will be directly affected by the proposed tariff
rules. Its Reply is supported by two affidavits: That of Lester
Francis, former General Manager of Ceres Marine Terminal, Inc.'s
stevedoring facility at Charleston, which describes operations at
Charleston by Ceres and other stevedores; and that of James R. Bramson,
an attorney, who reports that he examined 23 Atlantic and Gulf coast
port tariffs and found no similar licensing provisions. Bramson reports
that his survey of port tariffs uncovered a few license provisions but
none requiring production of new business or a pledge of new business
to permit operations.
According to Ceres, all container terminal facilities at the port
of Charleston are owned by SCSPA; a few carriers with large volumes of
traffic lease some of the container terminal facilities at which
private stevedore companies, including Ceres, perform marine terminal
services for the containerized cargo. Receipt and delivery of
containerized cargo at the public terminal is allegedly reserved by
SCSPA. In addition, all CFS cargo (cargo stuffed or stripped at the
port) is said to [[Page 22393]] be handled at the public facilities
owned and operated by SCSPA; receipt and delivery of all such cargo is
allegedly reserved by SCSPA for its own performance. Most of the cargo
controlled by carriers (including but not limited to those with leased
container facilities) is stuffed and stripped by private stevedores,
reports Ceres; shipper-controlled cargo is stuffed and stripped by
SCSPA.
Ceres argues that the tariff is unreasonable because it would
extend the port's monopoly of cargo receiving and delivering and
stripping and stuffing of containers from shipper-controlled cargo to
all cargo except that of the few large carriers with leased facilities.
Under the proposed guidelines, SCSPA would continue to reserve to
itself the receiving and delivery of all CFS and containerized cargo at
the public terminal; in addition, Ceres points out, SCSPA would reserve
for itself the stripping and stuffing of CFS cargo under the control of
carriers other than the few who lease terminal facilities, as well as
the already-reserved shipper-controlled CFS cargo. Ceres points out
that the Commission is asked to rule on the lawfulness of these
practices without benefit of economic or financial analysis which shows
the necessity for the practice, the effect on stevedores, or the amount
of cargo served by the SCSPA or the stevedores to be affected by the
rule.
With respect to the specific elements of the licensing guidelines,
Ceres states that the past SCSPA practice of requiring annual
``registration'' of stevedores operating at the port involved only a
one-page form identifying responsible persons and credit references,
with proof of insurance coverage, which Ceres compares to the much more
extensive and intrusive requirements of the proposed licensing
guidelines. In addition to the information requirements noted at
footnote 3, above, Ceres points out that the Executive Director is
authorized to request additional information ``as he sees fit'' and is
directed to consider, in addition to the financial and other factors
specified and such other factors as he deems relevant, the ability of
the applicant to ``promote and foster commerce through the Ports of
South Carolina.''
Ceres takes issue with the lack of factual material offered in
support of the Petition. Ceres notes for example that SCSPA has neither
alleged nor shown that any stevedore at the Port of Charleston has ever
diverted to another port traffic that would otherwise have moved
through Charleston, although the likelihood of such behavior is offered
as justification for requiring that stevedores demonstrate the ability
to promote and foster commerce through South Carolina ports. Similarly
lacking are said to be alleged instances of destructive competition
among stevedoring companies, which, to the contrary, notes Ceres, have
objected only to SCSPA's solicitation of their private customers in the
past. Ceres points out that, according to SCSPA's Petition, a port
formerly served by just three local stevedores now supports the
operations of nine stevedoring companies and states that no stevedore
has left the Port of Charleston in at least the past three years. Ceres
Reply at 12.
Ceres notes that the Petition refers to various objections raised
in the past by IMTOC, Stevedoring Services of America and CMH to its
practice of reserving public marine terminal services to itself, and
offers those objections as a basis for its need to secure a declaratory
order to terminate a controversy and enable it to act on its proposed
tariff guidelines without peril. Ceres argues that the objections
raised related to the reservation of terminal services only, not the
later-drafted proposal to license stevedores. Ceres also represents
that the stevedores sought to resolve their differences with SCSPA
concerning the division of operating rights between the private and
public entities at the Port prior to SCSPA's promulgation of the
guidelines and its request for advance approval by the Commission
through the Petition. Ceres protests that SCSPA is here seeking FMC
approval in advance of its actions on the basis of a very sketchy
factual presentation.
Ceres alleges that SCSPA is seeking Commission approval for
exclusive arrangements rarely found reasonable, and then only on fact-
intensive records showing extraordinary circumstances not present at
Charleston. This case, moreover, is said to involve a major container
port, unlike the exclusive franchising cases involving individual
terminals or small or start-up ports, such as Petchem, relied on by
SCSPA.
Consideration of the Petition would require significant factual
investigation and hearings on material issues of fact, including
economic justification for the proposal and the impact on stevedores
presently operating at the port, says Ceres. The Petition is therefore
said to be unsuitable for disposition on declaratory order.
The licensing standards, Ceres charges, are vague and subjective
and therefore unreasonable. With respect to the reservation of MTO
services, Ceres argues that, even if the antidiscrimination provisions
of section 16 of the 1916 Act and sections 10(b) (11) and (12) of the
1984 Act do not apply to the proposal in the absence of a triangular
relationship, as urged by SCSPA, the reasonableness standard of section
17 of the 1916 Act, 46 U.S.C. app. section 816, and section 10(d) of
the 1984 Act, 46 U.S.C. app. section 1709(d), does apply, and that the
practice is unreasonable under that standard. And, says Ceres, the
unlawful preference sections probably do apply where, as here, the port
authority wears two hats: MTO and stevedore, and acts in one capacity
to favor the other.
The Carriers Container Council, Inc. (``CCCI''), claiming to
represent carriers of 90 per cent of the containerized cargo moved
through the Port of Charleston, states that, while SCSPA has a monopoly
of MTO functions at Charleston, carriers now have a choice of nine
stevedores to service their vessels. CCCI alleges that the proposed
tariff guidelines would deprive the carriers of this choice. In
addition, CCCI objects that the licensing standards are vague,
subjective, and unconstitutionally delegate to the FMC a state
function: review of the actions of the state port authority acting
under state law. The stated standards are said to show bias in favor of
local companies, which was found to violate the Shipping Act in
Plaquemines Port, Harbor and Terminal District v. FMC, 838 F.2d 536
(D.C. Cir. 1988). CCCI argues that an evidentiary hearing is necessary
to test the proffered economic justification for the licensing scheme,
and that a triangular relationship is not necessary to find a violation
of section 16 where the port authority wears two hats, as here, citing
Puerto Rico Ports Authority v. FMC, 642 F.2d at 489.
Stevedoring Services of America (``SSA'') opposes the Petition and
asserts that it seeks an inappropriate use of Rule 68: both an advance
ruling that its implementation of its guidelines will not violate the
Shipping Acts of 1916 and 1984 (quoting the Petition as seeking ``a
Commission declaration that its prospective stevedore license judgments
will be lawful.'' SSA Reply at 4, quoting Petition at 6) and a ruling
as to past conduct which has already been alleged, by IMTOC, to be
violative of the Acts. The latter request is said to be akin to an
attempt to use the declaratory order procedure to defend against past
or future complaint proceedings, ruled improper in Petition of Yangming
Marine Transport Corp. for Declaratory Order, ______ F.M.C. ______, 24
S.R.R. 1057, 1058 n.3 (1988), says SSA.
SSA also objects to the stevedoring guidelines requirement that
applicants [[Page 22394]] provide a customer list. SSA argues that the
guidelines are objectionable because they would deprive stevedores of
the right to operate, are vague and subjective, would impermissibly
permit monopoly practices by SCSPA, and would deprive carriers of their
right to a stevedore of their choice. With respect to the guidelines'
requirement that stevedore license applicants demonstrate ability to
promote and foster commerce through South Carolina ports, SSA points
out that no similar requirement is placed on carriers who call the
port, and that the carrier, rather than the stevedore, controls the
choice of port to be served by a vessel. Finally, SSA alleges that the
guidelines impermissibly seek to deprive stevedores of the right to
redress in state and federal courts, through a provision that exclusive
appeal of a license denial by the Executive Director and the Board of
the Ports Authority is to the Federal Maritime Commission. This, says
SSA, would deprive the applicant of rights to challenge the action
under laws other than the Shipping Acts. SSA urges that the Petition be
denied or investigated by the FMC through a fact-finding proceeding
initiated by show cause.
Maritrend, Inc., a stevedoring company operating in two ports in
the Gulf region, declares that the guidelines are too vague and
subjective: licensing should be based solely on objective criteria such
as insurance, bonding, etc., not whether the stevedore operates at
competing ports, uses non-union labor or competes with existing
licensees. The guidelines are said to reflect ``loyalty'' requirements
and local favoritism which are inappropriate considerations according
to Maritrend. Also allegedly inappropriate is the guidelines'
requirement that applicants show that they will bring ``new business''
to the port, because carriers, not stevedores, control the cargo and
selection of port calls.
IMTOC, among whose members are MTOs who perform stevedoring at
SCSPA, claims that, with respect to the reservation to SCSPA of the
right to perform all MTO operations at its facilities, the Petition is
the mirror image of the IMTOC request for investigation refused by the
FMC last year. IMTOC agrees with the FMC Managing Director's
determination in his letter to IMTOC that the matter can be concluded
only after a proceeding permitting receipt of evidence and legal
arguments from all affected parties. IMTOC submits that a full
investigatory proceeding is necessary; therefore, a declaratory order
is not appropriate. Regarding the possible violation of section 16 of
the 1916 Act by SCSPA's reservation of MTO functions at its facilities,
IMTOC maintains that because some third party MTOs are permitted to
operate the SCSPA facilities of licensed carriers, as SCSPA admits, the
triangular relationship necessary to find a violation of section 16
does exist. Moreover, IMTOC claims, no justification under Petchem
exists for the exclusionary nature of SCSPA's practices: its only
stated reason is unwillingness to forgo profits from its MTO
operations, which is not a proper public purpose.
The South Carolina Stevedoring Association (``SCSA''), an
association of privately owned stevedoring companies, some of which are
also MTOs, who do business at South Carolina Ports, notes that the
Petition asks the Commission to rule on the legality of two separate
matters: the proposal to license stevedores eligible to work at SCSPA
facilities, and SCSPA's past and present practices of excluding certain
third-party terminal operations on its facilities. Neither the
licensing issue nor the MTO exclusion issue can be determined on this
Petition, claims SCSA. The MTO exclusion issue allegedly involves past
and present conduct as to which the Petition does not begin to meet its
burden of proof that there are no violations of the Shipping Acts.
And despite SCSPA's characterization of it, SCSA claims that the
licensing issue does not concern the general authority of SCSPA to set
reasonable terms and conditions for use of its facilities, but the
reasonableness of the terms proposed. Those terms are said to include
too many vague and unspecified powers of the Executive Director to
establish requirements for applicants, revoke or suspend licenses, and
condition licenses which are unreasonable on their face. SCSA submits
therefore that the matter is unsuitable for determination on a petition
for a declaratory order.
The licensing provisions are also argued to be objectionable
because they require a ``loyalty oath'' of stevedores by requiring
promotion of the interests of the port, in addition to the
inappropriate statements about lack of local ownership. This
requirement that local interests be promoted and favored does not, in
SCSA's opinion, appear to be required of carriers that call at the
port, or the MTOs who work for licensed carriers at the port; there is,
moreover, no indication of their loyalty or lack of loyalty to the
port. SCSA charges that these attempts to favor local interests, or to
recreate the days of local stevedoring firms, are an unconstitutional
burden on interstate commerce. SCSA concludes that the FMC should deny
the Petition and order a full-scale evidentiary hearing on an order to
show cause.
SCSPA Motion for Leave To File a Response and Replies
SCSPA requests an opportunity, normally prohibited by the terms of
Rule 68,\8\ to address ``1) certain erroneous assumptions, and 2)
misapprehensions of fact, made by parties responding to the petition *
* *.'' SCSPA Motion at 1. SCSPA states that grant of its Motion will
narrow some of the issues raised by opponents of the Petition and
eliminate other issues.
\8\Rule 68(e) provides that ``No additional submissions will be
permitted unless ordered or requested by the Commission.''
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SCSPA believes that opposition to the Petition stems in part from a
misunderstanding of the purposes and goals of SCSPA's proposed
regulation of stevedores and MTOs. Referring specifically to the
concern of CCCI that the guidelines will deprive carriers of their
choice of stevedores, SCSPA offers to add appropriate language to the
guidelines to remove that issue if it is permitted to file a response;
also to be addressed would be the ``loyalty oath issue,'' as raised by
SCSA.
Stating that some opponents have misunderstood ``some of the facts
underlying the * * * Petition,'' relying on ``facts which are
demonstrably incorrect,'' SCSPA seeks the opportunity to ``sort out the
incorrect fact assertions and * * * correct them'' in a response.
Motion at 4. Nevertheless, SCSPA does not ``mean that there may not be
some facts as to which there is a dispute * * *.'' Id.
SCSPA notes that the Commission permitted a response to replies in
another declaratory order proceeding, Matson Navigation Co., Inc.--
Transportation of Cargoes Between Ports and Points Outside Hawaii and
Islands Within the State of Hawaii, ______ FMC ______, 25 S.R.R. 245
(1989), so that it could ``render a definitive verdict'' on the issue.
SCSPA Motion at 5, quoting Matson, 25 S.R.R. at 245. Similar to the
procedure used in that case, SCSPA suggests that it be permitted to
file a response limited to 20 pages and that interested parties be
permitted to make surrebuttal filings within 15 days.
Six parties filed Replies to the Motion. Maritrend claims that the
Motion demonstrates the inappropriateness of proceeding by declaratory
order in this matter. SSA reiterates its position that allegations of
[[Page 22395]] violation of the Shipping Acts are outside the scope of
Rule 68 and maintains that declaratory orders are not suited to dispose
of contested factual issues, citing Petition for Declaratory Order of
Seatrain International, S.A., 21 F.M.C. 187 (1978). IMTOC suggests that
the Motion ``be denied or held in abeyance until the Commission decides
what to do with the original Petition * * *.'' IMTOC Reply at 1. Ceres
does not object to SCSPA's request ``so long as any response is
strictly limited to a factual presentation that is directly responsive
to specific factual assertions or assumptions made by others.'' Ceres
Reply at 1 (emphases in original).
Ceres states that it does not believe that any factual
supplementation of the record by SCSPA can cure the flaws in its
Petition. For example, says Ceres, SCSPA wants to respond to questions
Ceres raised about SCSPA's survey of licensing practices at other
ports, but the real problem is not whether 20 or even all other South
Atlantic and Gulf ports license stevedores, but the particular
requirements and practices proposed by SCSPA. Ceres takes the position
that SCSPA has not requested, nor should it be permitted, to respond to
the legal arguments offered by those opposed to the Petition.
CCCI reads the Motion as indicating that ``the SCSPA confesses that
it made an error in not telling the carriers that they have a right to
appoint their own stevedore to work anywhere on the terminals.'' CCCI
Reply at 1. CCCI suggests that SCSPA end the dispute and
misunderstanding by withdrawing its Petition. Otherwise, CCCI opposes
the Motion.
SCSA argues that because Rule 68 requires that a petition be
accompanied by petitioner's complete legal and factual presentation,
and does not provide for submission of additional evidence or argument
by a petitioner, the Motion is in reality an amended petition. SCSA
notes that the Motion addresses only factual questions related to the
proposed stevedore licensing scheme, rather than past and present SCSPA
practices concerning the exclusion of certain marine terminal
operators. SCSA submits that the Motion should be denied, but that, if
it is granted, at least 30 days be permitted for the filing of
responses to SCSPA's submission.
Discussion
The replies to the Petition reflect a division of views between
stevedores and non-port MTOs, who oppose the proposals, and public
ports, who support the proposals. The level of interest and concern
generated by the proposals is arguably an indication that application
of the Commission's resources to resolution of the controversy is
appropriate.
However, as many of the opponents point out, SCSPA's petition has
two purposes: To secure the Commission's imprimatur of lawfulness of
its present and continuing practice of reserving certain terminal
functions at its public facilities for itself and to prospectively
assure the lawfulness of its proposal to license stevedores under the
criteria in its guidelines. These two areas of concern covered by the
Petition differ to some extent as to their impact and eligibility for
disposition on a petition for a declaratory order.
A distinction may be made between issues which appear to be
appropriate for disposition under Rule 68 and those which are not.
Thus, we would agree with those parties who regard the issue of SCSPA's
reservation of terminal functions for itself as inappropriate for
disposition on declaratory order because it involves past and present
conduct which may entail violations of the Shipping Acts.
We are reluctant to undertake a proceeding on a declaratory order
which, even implicitly, involves ruling on the lawfulness of
Petitioner's past activities. The new policies governing reservation of
functions are incorporated in the draft tariff rule attached at Tab B
to SCSPA's Petition, while the policies applied in the past are
reflected in the existing tariff rule attached to the Petition at Tab
A. While the policies regarding reservation of certain MTO functions
for future application are not co-extensive in coverage with the
policies SCSPA has applied to its marine terminal operations for some
time, they are, nevertheless, intertwined: they differ in scope, not
kind. Ruling on the legal issue raised--the reservation of functions
and exclusion of competing MTO's by the public owner of the facility--
with respect to the future would necessarily determine the same issues
raised with respect to SCSPA's past conduct. These practices, reflected
in SCSPA's present tariff, were the subject of IMTOC's 1993 informal
request for an FMC-initiated investigation of the practices of SCSPA
and three other public ports, rejected by the Commission's Managing
Director. We therefore find these issues procedurally inappropriate for
determination under Rule 68. The declaratory order proceeding initiated
herein will not address the merits of SCSPA's reservation of terminal
functions for itself. SCSPA's reservation practices are neither found
lawful nor prohibited by anything herein.
The proposed tariff rule for the licensing of stevedores, on the
other hand, raises issues which are uniquely within the expertise of
the Commission, do not involve possible past or present violations of
the Shipping Acts, and, insofar as they arise under the Shipping Acts,
are not issues which are or may be raised in another forum.\9\ In
United States Lines, S.A.--Petition for Declaratory Order Re: The
Brazil Agreements, order entertaining petition and referring matter to
administrative law judge, ______ F.M.C. ______, 24 S.R.R. 1034, 1040
(1988) (``Brazil Agreements''), the Commission discussed the factors to
be assessed in determining whether to entertain a petition which is
within the Commission's substantive jurisdiction. Analyzing cases in
which declaratory orders had been granted or denied on the merits, the
Commission explained that * * *
\9\SSA raises an issue regarding the guidelines provision which
allegedly would deprive stevedores of right to redress in state and
federal courts by making license denials appealable only to the FMC.
The question of whether this provision is an ``unreasonable
practice'' under the 1916 and 1984 Acts is one for the Commission's
determination in the first instance.
* * * the following weigh heavily in favor of issuance of such
orders (and their absence against it): (1) Presentation of clear-cut
legal issues and non-disputed facts; (2) ability of the Commission
to resolve all issues in a proceeding so as to terminate the
controversy; (3) presence of issues of fact or law which require the
Commission's expert knowledge or judgment; (4) non-pendency of other
proceedings or absence of need to resort to other tribunals to
resolve matters in dispute; (5) claim which is purely declaratory in
nature as opposed to an action for reparation for violation of
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statutes or regulations.
In Brazil Agreements, the Commission concluded that the issues
presented, which involved interpretation of a Commission-approved
agreement, were clear-cut and appropriate for determination by the
agency. Although some factual issues were also in dispute, the
Commission determined that disposition of those issues through an
evidentiary hearing would not be inconsistent with issuance of an
otherwise appropriate declaratory order. 24 S.R.R. at 1040. It is,
similarly, clear from the replies to the Petition, as well as from
SCSPA's Motion and the replies thereto, that there are material issues
of fact in this case which cannot be disposed of on the basis of the
existing record.
Some of the parties in this proceeding make the point that these
disputed [[Page 22396]] factual issues, involving the economic and
other justification for the proposed licensing guidelines, as well as
the need for the specific information being requested, render the
Petition inappropriate. This does not appear to be an insurmountable
problem; questions of disputed fact may be referred to an
administrative law judge (``ALJ'') for an evidentiary hearing. Brazil
Agreements; see also In the Matter of Rates Applicable to Ocean
Shipments via American President Lines, ______ F.M.C. ______, 21 S.R.R.
1168, 1169 (1982). Furthermore, the participation in this case of other
public ports with an interest in similar actions, as well as national
stevedoring companies with operations at several ports, make this a
particularly appropriate proceeding in which to determine these issues.
Some parties opposing the Petition allege that it is an
inappropriate effort by SCSPA to secure FMC approval in advance for
specific decisions SCSPA will make in granting or denying licenses.
Ceres, in particular, notes that SCSPA specifically ``seeks a
Commission declaration that its prospective stevedore license judgments
will be lawful.'' Ceres Reply at 30, quoting Petition at 6. We see no
bar to consideration of the lawfulness of the guidelines themselves on
the same basis that the Commission is frequently called upon to
determine an allegation that a tariff provision is unlawful not in its
execution but in its terms. We see nothing in SCSPA's Petition or the
guidelines themselves that would prevent the filing of a complaint
alleging unfair prejudice or disadvantage in an individual case based
on denial of a license.
Section 5(d) of the Administrative Procedure Act, 5 U.S.C. 554(e),
authorizes each agency to issue declaratory orders ``* * * in its sound
discretion * * *.'' Similarly, FMC Rule 68 provides, inter alia, that
``[t]he Commission may, in its discretion, issue a declaratory order to
terminate a controversy or to remove uncertainty'' (emphasis added). In
exercising its discretion, the Commission is entitled to assess the
advantages and disadvantages associated with declaratory relief.
Advantages include the opportunity to efficiently terminate a
controversy or remove uncertainty, while disadvantages include both the
administrative burden imposed by a policy of issuing advisory opinions
and the familiar problems surrounding the adjudication of abstract
controversies. Climax Molybdenum Co. v. Secretary of Labor, 703 F.2d
447, 452 (10th Cir. 1983). See also Yale Broadcasting Co. v. FCC, 478
F.2d 594, 602 (D.C. Cir.), cert. denied, 414 U.S. 914 (1973).
In this case, the issues with respect to the licensing guidelines
do not appear to be abstract or lacking in sufficient factual context
for determination upon a more complete record. We also note, as several
parties have pointed out, that the burden of proof in commission
proceedings falls on the proponent of a rule or order, 46 CFR 502.155,
in this case SCSPA. See, e.g., Ceres Reply at 15.
Therefore, we find that portion of the Petition which relates to
the guidelines for licensing stevedores appropriate for declaratory
relief and refer the matter to an administrative law judge for
determination of critical facts and issuance of an initial decision.
This approach will enable the Commission to fully resolve the questions
raised in the Petition which are appropriate for declaratory relief,
without addressing questions of past practices of SCSPA which the
parties were free to raise by way of a complaint at any time.
All filings made to date with respect to the Petition will be
incorporated into the record herein, for such purpose and weight as may
be appropriate. In addition, we specify in our referral particular
issues of fact and law to be resolved. SCSPA's Motion to Supplement the
Record is denied as moot, because it will have an opportunity to
supplement the record in the proceedings before the ALJ.
Therefore, it is ordered, That SCSPA's Petition for a Declaratory
Order is granted to the extent that proposed tariff Rule 34-051 relates
to the licensing of stevedores and it is referred to the Chief
Administrative Law Judge, for assignment and issuance of an initial
decision;
It is further ordered, That the administrative law judge to whom
this proceeding is assigned shall exercise his discretion to insure
that the issues are resolved in the most expeditious means consistent
with due process and a sufficient record upon which to render a
decision;
It is further ordered, That in reaching the ultimate issue of the
lawfulness of the proposed tariff Rule No. 34-051 in this proceeding,
attention shall be devoted to resolution of the following issues:
1. Whether SCSPA, a public marine terminal operator, engages in an
unreasonable practice or acts in an unfairly prejudicial manner when it
allows some stevedoring companies access to its facilities and denies
such access to other companies on the basis of the public marine
terminal operator's assessment of demand for services by carriers and
shippers using its terminals, or similar economic criteria not related
to an individual applicant for a license.
2. Whether any of the specific provisions of the proposed tariff
Rule No. 34-051 are unduly prejudicial or are likely to unfairly
discriminate against individual applicants for stevedoring licenses.
3. Whether the powers granted the Executive Director to require
additional information or to place conditions on licenses granted
constitute an unreasonable practice under the Shipping Acts.
4. Whether the provision of draft tariff Rule No. 34-051
restricting appeals of license denials or other actions to the Federal
Maritime Commission constitutes an unreasonable practice or is
otherwise unlawful under the Shipping Acts.
It is further ordered, That SCSPA's Petition for a Declaratory
Order is denied in all other respects;
It is further ordered, That SCSPA's Motion For Leave to Supplement
the Record is denied;
It is further ordered, That pursuant to Rule 61 of the Commission's
Rules of Practice and Procedure, 46 CFR 502.61, the initial decision of
the Administrative Law Judge shall be issued by May 1, 1996 and the
final decision of the Commission shall be issued by September 2, 1996;
It is further ordered, That notice of this Order be published in
the Federal Register, and a copy be served on parties of record;
It is further ordered, That each person who filed a reply to the
Petition herein is designated a party to this proceeding;
It is further ordered, That other persons having an interest in
participating in this proceeding may file petitions for leave to
intervene in accordance with Rule 72 of the Commission's Rule of
Practice and Procedure, 46 CFR 502.72;
It is further ordered, That all further notices, orders, and
decisions issued by or on behalf of the Commission in this proceeding,
including notice of the time and place of hearing or prehearing
conference, shall be served on parties of record; and
It is further ordered, That all documents submitted by any party of
record in this proceeding shall be directed to the Secretary, Federal
Maritime Commission, Washington, DC 20573, in accordance with Rule 118
of the Commission's Rules of Practice and Procedure, 46 CFR 502.118,
and shall be served on all parties of record.
[[Page 22397]] By the Commission.*
*Commissioner Scroggins did not participate in this proceeding.
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Joseph C. Polking,
Secretary.
[FR Doc. 95-10993 Filed 5-4-95; 8:45 am]
BILLING CODE 6730-01-M