[Federal Register Volume 62, Number 124 (Friday, June 27, 1997)]
[Notices]
[Pages 34757-34758]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-16840]


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FEDERAL MARITIME COMMISSION

[Docket No. 97-12]


Pacon Express, Inc., Luis R. Hallon, and Sun Bong, Possible 
Violations of Sections 10(a)(1) and 19(d)(4) of the Shipping Act of 
1984 and 46 CFR 510.23 (g) & (h); Order of Investigation

    Pacon Express, Inc. (``Pacon'') is a non-vessel-operating common 
carrier (``NVOCC'') with a tariff and bond on file with Commission, 
ATFI Org. No. 008438. Pacon maintains an office in Carson, CA, and is 
owned jointly by Luis R. Hallon (``Hallon'') and Sun Bong (''BONG''). 
Hallon was granted a freight forwarder license as a sole proprietor, 
dba Protocol International Company (``Protocol'') (FMC 3680), on 
January 22, 1993. On February 2, 1994, Protocol's license was revoked 
for failure to maintain a freight forwarder bond.
    Information obtained by the Commission indicates that Protocol 
collected ocean freight forwarder compensation from vessel-operating 
common carriers for Pacon NVOCC shipments. In addition, it appears that 
all the compensation payments were transferred by Protocol to Pacon.
    Section 510.23(g)(1) of the Commission's Ocean Freight Forwarder 
Regulations (``Commission's Regulations''), 46 CFR 510.23(g)(1), 
provides that an ocean freight forwarder which is related to an NVOCC 
may not collect compensation unless the freight forwarder certifies to 
the VOCC that the related NVOCC did not issue a bill of lading or 
undertake common carrier responsibility for the shipment. Further, 
Sec. 510.23(g)(2) of the Commission's Regulations, 46 CFR 510.23(g)(2), 
provides that when a person acts in the capacity of an NVOCC the person 
may not collect compensation for the shipment. As Pacon and Protocol 
appear to have been related through common ownership, Sec. 510.23(g) of 
the Commission's regulations would appear to prohibit the receipt of 
compensation by Protocol for Pacon shipments.
    Section 19(d)(4) of the Shipping Act of 1984 (``1984 Act''), 46 
U.S.C. app. 1718(d)(4), provides that no ocean freight forwarder may 
receive compensation from a common carrier with respect to any shipment 
in which the forwarder has a direct or indirect beneficial interest. 
Section 510.23(h) of the Commission's regulations, 46 CFR 510.23(h), 
provides that an ocean freight forwarder may not collect compensation 
for any shipment in which the forwarder or any holding company, 
subsidiary, affiliate, officer, director, agent or executive of the 
forwarder has a beneficial interest.\1\ As Hallon appears to have an 
ownership interest in Pacon, he would appear to have had a beneficial 
interest in all Pacon shipments, and section 19(d)(4) of the 1984 Act 
and Sec. 510.23(h) of the Commission's Regulations would appear to 
prohibit the receipt of ocean freight compensation by Protocol for 
Pacon shipments.
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    \1\ Beneficial interest is defined by section 510.2(b) of the 
Commission's Regulations, 46 CFR 510.2(b), as any proprietary or 
financial right to use, enjoy, benefit, or profit or receive any 
advantage from a shipment resulting from any expressed or implied 
agreement.
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    Section 10(a)(1) of the 1984 Act, 46 U.S.C. app. 1709(a)(1), 
provides that no person may knowingly and willfully by any unjust or 
unfair device or means obtain ocean transportation at less than the 
applicable rates or charges. Compensation is a percentage of the ocean 
freight charges paid by an ocean common carrier to a licensed ocean 
freight forwarder to compensate the licensee for services performed for 
the ocean common carrier. The payment of compensation to Protocol for 
Pacon shipments would appear to result in Pacon and Hallon and Bong, 
the owners of Pacon, obtaining ocean transportation at less than the 
applicable rates through the unjust or unfair device of collecting 
compensation for the shipments. Therefore, Pacon, Hallon and Bong may 
have violated section 10(a)(1) of the 1984 Act.
    Section 11 of the 1984 Act, 46 U.S.C. app. 1710, sets for the 
Commission's authority to investigate violations of the 1984 Act. 
Section 14(a) of the 1984 Act, 46 U.S.C. app. 1713(a), empowers the 
Commission to issue orders relating to violations of the 1984 Act.
    Now therefore it is ordered, That pursuant to sections 10, 11, 14, 
and 19 of the 1984 Act and Secs. 10.23 (g) and (h) of the Commission's 
regulations, an investigation is hereby instituted to determine:
    1. Whether Hallon, dba Protocol, violated Sec. 510.23(g) of the 
Commission's regulations by collecting ocean freight forwarder 
compensation for shipments on which Pacon acted as an NVOCC,
    2. Whether Hallon, dba Protocol, violated section 19(d) of the 1984 
Act and Sec. 510.23(h) of the Commission's regulations by collecting 
ocean freight forwarder compensation for shipments in which Hallon had 
a beneficial interest;
    3. Whether Pacon and its owners, Hallon and Bong, violated section 
10(a)(1) of the 1984 Act by obtaining ocean transportation at less than 
the applicable rates or charges through the device of obtaining ocean 
freight forwarder compensation for Pacon shipments;
    4. Whether, in the event Pacon, Hallon, and/or Bong violated the 
1984 Act and/or the Commission's Regulations, civil penalties should be 
assessed against Pacon, Hallon, and/or Bong and, if so, the amount of 
such penalties;
    5. Whether, in the event violations are found, an appropriate cease 
and desist order should be issued; and
    It is further ordered, That a public hearing be held in this 
proceeding and that this matter be assigned for hearing before an 
Administrative Law Judge (``Presiding Officer'') of the Commission's 
Office of Administrative Law Judges in compliance with Rule 61 of the 
Commission's rules of practice and procedure, 46 CFR 502.61. The 
Hearing shall include oral testimony and cross-examination at the 
discretion of the Presiding Officer only after consideration has been 
given by the parties and the Presiding Officer to the use of 
alternative forms of dispute resolution, and upon proper showing that 
there are genuine issues of material fact that cannot be resolved on 
the basis of sworn statements, affidavits, depositions, or other 
documents or that the nature of the matter in issue is such that an 
oral hearing and cross-examination are necessary for the development of 
an adequate record.
    It is further ordered, That Pacon Express, Inc., Luis R. Hallon, 
and Sun Bong are designated Respondents in this proceeding;
    It is further ordered, That the Commission's Bureau of Enforcement 
is designated a party to this proceeding;
    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 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 rules of 
practice and procedure, 46 CFR 502.72;

[[Page 34758]]

    It is further ordered, That all further notices, orders, and/or 
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;
    It is further ordered, That all documents submitted for any party 
of record in this proceeding shall be directed to the Secretary, 
Federal Maritime Commission, Washington, DC 20573, and comply with 
Subpart H of the Commission's rules of practice and procedure, 46 CFR 
502.111-119, and shall be served on parties of record; and
    It is further ordered, That in accordance with 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 
June 22, 1998, and the final decision of the Commission shall be issued 
by October 20, 1998.

    By the Commission.
Joseph C. Polking,
Secretary.
[FR Doc. 97-16840 Filed 6-26-97; 8:45 am]
BILLING CODE 6730-01-M