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that the authority vested in the Commission under section 902 should be enlarged and expanded, and the rights of private owners should be clarified and protected, as follows:
The authority to acquire vessels in an emergency is now limited to requisitioning those “documents under the laws of the United States.” It may be desirable to acquire vessels owned by citizens of the United States and operated under foreign registry or to acquire small watercraft which are not registered, licensed, or enrolled under the laws of the United States, or to acquire vessels which are under construction in American yards.
In some cases, perhaps, the interests of the Government would be best served if the necessary vessels and other watercraft were acquired by purchase or the use thereof were obtained through charters rather than through requisition.
Because of the foregoing considerations, it is suggested that section 902 be amended so that it shall be lawful for the Commission to requisition or purchase any vessel or other watercraft constructed or under construction, or, for any period during the emergency, to requisition or charter the use of any such property.
Cases may arise where it will be preferable to requisition merely the use of a vessel and permit the owner to operate under a requisition charter for the account of the United States. Such authority as to vessels was granted to the President in section 11 of the act of July 18, 1918 (40 Stat. L. 913), which also provided in effect that the terms of the charter proposed to the owner should constitute a determination of just compensation. If the owner was unwilling to accept the charter, he could take 75 percent of the charter hire tendered and sue for such further sum as would amount to just compensation for the use of the vessel. It is suggested that provision be also made for compensation to the owner for the loss or damage to a vessel when its use had been requisitioned, but no agreement had been reached as to its value or as to compensation for its loss or damage. It is recommended that section 902 be expanded by inclusion of similar provisions with respect to the requisition by the Commission of the use of vessels and other watercraft.
As section 902 now stands, there is no provision for a declaration that the period of the emergency has ended. Consequently the Commission might continue to exercise emergency powers for a long time after the necessity therefor had terminated. To correct this apparent oversight it is recommended that the following provision be added :
“The termination of any emergency so declared shall be announced by a further proclamation by the President."
The provisions of section 902 as to the determination and payment of just compensation seem to require some clarification and the constitutional rights of private owners whose property may be requisitioned should be protected and defined. For example, section 902 (a) provides that "the owner shall be paid the fair actual value of the vessel at the time of taking or paid the just compensation for the vessel's use based upon such fair actual value.” The Commission is advised that th Supreme Court has held that the definition and determination of what constitutes just compensation for private property taken and used for public purposes is a judicial and not a legislative question and hence, in harmony with decisions of the Supreme Court, the following language would be more appropriate:
“When any such property or the use thereof is so requisitioned, the owner thereof shall be paid just compensation for the property taken or for the use of such property."
Section 902 now contains no provision for a partial payment on account of just compensation to an owner who is unwilling to accept the amount awarded by the Commission and elects to sue the United States. The Emergency Shipping fund provisions of the act of June 15, 1917 (40 Stat. L. 182), which authorized the President to requisition vessels, provided that when the amount of just compensation awarded by the President, “is unsatisfactory to the person entitled to receive the same, such person shall be paid seventy-five per centum of the amount so determined by the President and shall be entitled to sue the United States to recover such further sum as, added to said seventy-five per centum, will make up such amount as will be just compensation, therefor.”
It is suggested that in instances it may work an undue hardship to take private property for public purposes and to require the owner to wait for all of his compensation therefor until his rights are determined by the courts, in any case where he is unwilling to accept the award made by the Commission. Accordingly, it is recommended that a provision similar to the one contained in
the earlier emergency legislation (but now repealed) be incorporated in section 902.
It is further recommended that authority be given to the Commisison to repair, recondition, reconstruct, and operate, and to charter for operation, any property acquired under authority of section 902. Also, to carry out plans being worked out with the Navy Department, authority should be granted to the Commission to transfer possession and control of any property acquired under authority of section 902, to any department or agency of the Government, under such terms and conditions as may be approved by the President, and to provide for prompt reimbursement by such department or agency for any expenditures made by the Commission on account of the vessels or watercraft so transferred.
If the suggestions and recommendations herein set forth meet with favorable consideration, their inclusion in section 902 may require a complete redrafting and rearrangement of the language now employed in that section.
The foregoing suggestions and recommendations should be considered in connection with the provisions of H. R. 131 now before your committee and as an amplification of the views and recommendations on that bill previously submitted in my letter to you dated February 27, 1939. A draft of a bill which would carry out these suggestions is enclosed.
This report, together with copy of the letter dated March 9, 1939, from the Acting Secretary of the Navy concurring in the proposed report and draft of amendment attached thereto, has been submitted to the Acting Director, Bureau of the Budget, and the Commission is advised by him that there would be no objection to the submission of the report to your committee. Very sincerely yours,
(Signed) E. S. LAND, Chairman.
Washington, March 9, 1939. The CHAIRMAN, MARITIME COMMISSION,
Washington, D. C. MY DEAR MR. CHAIRMAN : Reference is made to your letter dated March 8, 1939, to the Acting Director of the Bureau of the Budget with which was enclosed a copy of a proposed report to the chairman of the Committee on Merchant Marine and Fisheries of the House of Representatives relative to the bill H. R. 131, to amend sections 712 and 902 (a) of the Merchant Marine Act, 1936, as amended, relative to the requisitioning of vessels, and a proposed draft of an amendment to section 902 of the Merchant Marine Act, 1936, as amended, dated March 8, 1939.
You are advised that the Navy Department concurs in the proposed report and draft of an amendment enclosed with your letter of March 8, 1939, to the Acting Director of the Bureau of the Budget. Sincerely yours,
WILLIAM D. LEAHY, Acting.
March 8, 1939.
AMENDMENT TO SECTION 902, MERCHANT MARINE ACT, 1936, AS AMENDED
That section 202 is hereby amended by striking out subsections (a) and (b) thereof and inserting in lieu thereof the following subsections:
“(a) Whenever the President shall proclaim that the security of the national defense makes it advisable or during any national emergency declared by proclamation of the President, it shall be lawful for the Commission to requisition or purchase any vessel or other watercraft owned by citizens of the United States, or under construction within the United States, or for any period during such emergency, to requisition or charter the use of any such property. The termination of any emergency so declared shall be announced by a further proclamation by the President. When any such property or the use thereof is so requisitioned, the owner thereof shall be paid just compensation for the property taken or for the use of such property, but in no case shall the value of the property taken or used be deemed enhanced by the causes necessitating the taking or use. If any property is taken and used under authority of this section, but the ownership thereof is not required by the United States, such property shall be restored to the owner in a condition at least as good as when taken, less ordinary wear and tear, or the owner shall be paid an amount for reconditioning sufficient to place the property in such condition. The owner shall not be paid for any consequential damages arising from a taking or use of property under authority of this sertion.
“(b) When any vessel is taken or used under authority of this section, upon which vessel a construction-differential subsidy has been allowed and paid, the value of the vessel at the time of its taking shall be determined as provided in section 802 of this act, and in determining the value of any vessel taken or used, on which a construction-differential subsidy has not been paid, the value of any national-defense features previously paid for by the United States shall be excluded.
"(c) If any property is taken and used under authority of this section, but the ownership thereof is not required by the United States, the Commission, at the time of the taking or as soon thereafter as the exigencies of the situation may permit, shall transmit to the person entitled to the possession of such property a charter setting forth the terms which, in the Commission's judgment, should govern the relations between the United States and such person and a statement of the rate of hire which, in the Commission's judgment, will be just compensation for the use of such property and for the services required under the terms of such charter. If such person does not execute and deliver such charter and accept such rate of hire, the Commission shall pay to such person on account of just compensation a sum equal to 75 per centum of such rate of hire as the same may from time to time be due under the terms of the charter so tendered, and such person shall be entitled to sue the United States to recover such further sum as added to such 75 per centum will make up such amount as will be just compensation for the use of the property and for the services required in connection with such use. Is the event of loss or damage to such property, due to operation of a risk assumed by the United States under the terms of a charter prescribed in this subsection, but no valuation of such vessel or other property or mode of compensation has been agreed to, the United States shall pay just compensation for such loss or damage, to the extent the person entitled thereto is not reimbursed therefor through policies of insurance against such loss or damage.
"(d) In all cases, the just compensation authorized by this section, shall be determined and paid by the Commission as soon as practicable, but if the amount of just compensation determined by the Commission is unsatisfactory to the person entitled thereto, such person shall be paid 75 per centum of the amount so determined and shall be entitled to sue the United States to recover such further sum as, added to said 75 per centum will make up such amount as will be just compensation therefor, in the manner provided for by section 24, paragraph 20, and section 145 of the Judicial Code (U. S. C., title 28, secs. 41, 250).
“(e) The Commission is authorized to repair, recondition, reconstruct, and operate, or charter for operation, any property acquire under authority of this section. The Commission is further authorized to transfer the possession or control of any such property to any department or agency of the Government of the United States upon such terms and conditions as may be approved by the President. In case of any such transfer the department or agency to which the transfer is made shall promptly reimburse the Commission for its expenditures on account of just compensation, purchase price, repairs, reconditioning, reconstruction, or charter hire for the property transferred. Such reimbursements shall be deposited in the constuction fund established by section 206 of this act."
STATEMENT OF REAR ADMIRAL EMORY S. LAND, CHAIRMAN,
UNITED STATES MARITIME COMMISSION
Admiral LAND. Mr. Chairman and gentlemen of the committee: The amendments to the Merchant Marine Act, 1936, as amended, proposed in this bill, were contained in part in H. R. 131, which was cleared through the Bureau of the Budget after consideration of its provisions by the Navy Department and by the Maritime Commission.
As a result of further consideration and discussions between members of the Commission's staff and representatives of the Navy Department, it appeared desirable, in the interest of our national defense, that the amendments carried in H. R. 131 should be expanded, as now proposed in H. R. 4983, which also has been approved by the Bureau of the Budget.
In brief, the amendments as now drafted clarify and define the procedure to be followed whenever privately owned merchant vessels are requisitioned, after a national emergency has been declared or the President proclaims that the security of the national defense makes such requisitioning advisable. The procedure has been carefully worked out in the light of our experience in 1917–18 and due consideration has been given to safeguarding the rights of the private citizen whose vessels are taken over for public use.
The following comment on the amendments refers to the page and line in the committee print of March 15, 1939, where the wording of the existing law is to be changed:
Page 2, line 8: This is a clerical change, striking out two commas.
Page 2, lines 16 to 19, and lines 21 and 22: These amendments are desired by the Navy Department. They were carried in H. R. 131 and it is assumed their purpose will be explained to the committee by an officer from that Department. I should like to add that the Commission is in favor of those changes, after consultation with the Navy Department.
Page 3, and lines 1 to 10, inclusive, on page 4, contain material changes in section 902 of the 1936 act. Lines 4 to 7 contain the change recommended by the Navy Department, which is the same as the change suggested in section 712. The other changes are suggested by the Commission for the reasons following:
Page 3, lines 1 to 4, strike out the language authorizing the Commission “to requisition any vessel documented under the laws of the United States” and substitute therefor the following: it shall be lawful for the Commission to requisition or purchase any vessel or other watercraft owned by citizens of the United States, or under construction within the United States, or for any period during such emergency, to requisition or charter the use of any such property.
It is considered that the power conferred in section 902 as it now stands is too narrow and is lacking in flexibility. The effect of the language now proposed would be:
(1) To authorize the purchase as well as the requisition of the vessels or craft required. The Commission now has authority to acquire privately owned vessels under certain restrictive conditions (compare secs. 215 and 507], but in a national emergency it may be in some cases more expedient to purchase rather than requisition and the existing power to purchase is too limited to be of value.
(2) The power to requisition or purchase should not be confined to vessels documented under the laws of the United States," because many vessels owned by our citizens are now under foreign registry. Accordingly, the authority to requisition or purchase should extend to all vessels or watercraft "owned by citizens of the United States."
The CHAIRMAN. Admiral, may I ask you right there: Are the amendments which you are advocating now the ones that are set out in this committee print?
Admiral LAND. Yes, sir; that is correct.
The exercise of that power should not result in any complications with other nations. Possibly, if a national emergency so requires, it may be necessary to ask Congress to extend the Commission's authority, so that any and all vessels, including vessels owned by aliens and operated under foreign registry, shall be subject to requisition, but it is believed that the amendment as now proposed grants sufficient authority at the present time.
(3) Lest there be any uncertainty as to the scope of the word "vessel”, the amendment adds the words "or other watercraft”, which would cover all kinds of small undocumented boats as well as tugboats, lighters, tenders, scows, barges, and so forth.
(4) The words "or under construction within the United States" have been added, so that the Commission may requisition or purchase any uncompleted hulls. It was found during 1917–18 that the power to acquire vessels under construction was of very great importance.
(5) In addition to the power to purchase a vessel or other watercraft and thus acquire ownership, it is desirable the Commission should have power to charter the use of a vessel during the emergency. Accordingly, that power has been included in the proposed amendment.
Page 3, lines 2 to 4: Here provision is made for termination of the period of emergency by proclamation. Upon issuance of such proclamation, the Commission's broad emergency powers will come to an end. Section 902 now contains no specific provision for the termination of the emergency authority. This is believed to be desirable.
Page 3, lines 15 to 25: A rearrangement of the language referring to determination and payment of just compensation is proposed. Some of the wording deleted in lines 16 to 22 has been transferred to subsection (b) on page 4. The phrase "fair actual value of the vessel” has been omitted in the proposed amendments.
The reason for the omission is that the Commission's legal staff has advised that the adjectives “fair actual” when used in connection with “value” are indefinite and unnecessary and serve only to suggest that some other kind of value might be used in determining the just compensation guaranteed by the Constitution when private property is taken for public use. Our lawyers say that the determination of just compensation is a judicial function and hence the value of property taken should be determined as a matter of fact, unhampered by any formula.
However, the proposed amendments retain the legislative direction concerning the credits that shall be allowed to the United States when the just compensation is determined and paid, such as deductions for construction subsidies and for national defense features. Also, the amendments retain the injunction now carried in section 902 that the value of the property taken and used shall not be deemed enhanced by the causes necessitating the taking and use. It is understood that this provision is a limitation upon the amount of just compensation that may be determined and paid by the Commission, even though there may be some question as to whether such limitation may be binding upon the courts.
Page 4, lines 1 to 10: These lines follow the language of section 902, except the word “property” is used instead of "vessel," so that small watercraft and uncompleted hulls are covered, and except that the phrase employed is "ordinary wear and tear" instead of "reasonable wear and tear.” The phrase suggested is the one sanctioned by precedent and judicial interpretations.