some guidelines. I think people are entitled to know when they are going to have to come under Federal regulation or not.

Rear Admiral HARLLEE. Congressman Rogers, I believe that if the Congress does want to do something like this, that they certainly should wait until this particular legislation is passed, and until we receive these leases, so that we ourselves know the full gamut, the full spectrum of them, because if you undertook to do anything like that earlier, I think there would be quite a bit of waste and lost motion.

Mr. ROGERS. Now, do you have your counsel trying to draw up something?

Rear Admiral HARLLEE. We have made the attempt to do that, and find that at this time it is just impractical, due to the tremendous variety of these agreements and arrangements, but when we can

Mr. ROGERS. The only thing I can't follow, and understand the difficulty, is that you have got to have some criteria to determine each lease that comes before you.

Rear Admiral HARLLEE. That criteria, Congressman Rogers, stems from the wording of section 15 plus the courts which have upheld the two cases in the past.

Mr. ROGERS. I understand that.

The CHAIRMAN. Let the counsel read from a letter.

Mr. TOLLEFSON. In this letter, I think the Chairman of the Commission said earlier that perhaps what we should do today, or when we get at it, is to approve this Senate-passed legislation which deals only with this moratorium problem, and then thereafter, after you have had more experience, the committee, upon your recommendations, could consider some new legislation or amended legislation which would do just what the gentlemen is

Rear Admiral HARLLEE. Yes, sir. Could I make this suggestion? That upon some stipulated time when we would have had an opportunity to review these cases that come in, if you find that the terminal industry feels that they have to have such guidelines and that submitting these cases and expecting an answer within 30 days is not adequate

Mr. ROGERS. May I say I think that is a good idea, but don't you think it also would lessen your work if you have a guideline that all the terminal people know, so they are not going to have to send every agreement up here, where you won't even have to take jurisdiction in many cases?

Rear Admiral HARLLEE. Congressman, that is exactly why we tried to make up such guidelines, but found we could not do it.

Mr. ROGERS. I understand you would have to study it some, but I would think a guideline ought to be set.

Mr. PIMPER. Most of the agreements, Congressman, are between public port authorities and individuals, and I would gather that in essence, in areas, they probably follow a pattern, and it is certainly my hope that once you have answered in an area one pattern, that they will realize that either it is or it isn't, and in effect, will have a guideline as to what they are doing in that particular area by having the Commission tell them that it either is or is not a section 15 agreement. Mr. ROGERS. Well, do you see any reason why you couldn't set forth criteria?

Mr. PIMPER. Yes, sir. Because I think you do it in a vacuum. This

Mr. ROGERS. Well, I realize right now you may not, because you may not have had the experience to do it on, but you have got to make these determinations.

Mr. PIMPER. I think the committee will recall that the former shipping board tried to do that concerning all section 15 agreements, and they did try to set forth something, and the industry relied on it, and then came the dual rate cases, where they thought that under the Commission's the Board's criteria, that they weren't subject to section 15 and approval, and the court changed their minds, thereby subjecting those people, although I think in good faith they thought they were acting on the basis of information, to considerable penalties, and in effect, it required this committee to pass a validation law back in 1957.

Now I see that problem at least at this juncture. Now as more of these come in, I think it is perfectly possible to perhaps set forth some criteria, although I don't think it will cover all cases.

Mr. ROGERS. Well, I would hope

Rear Admiral HARLLEE. Mr. Schmeltzer would like to add, if he might, there, Congressman Rogers, to those remarks. He is the Chief of our Bureau of Domestic Regulations.

Mr. SCHMELTZER. First, sir, I would like to say we are already getting together with port authorities to get sample agreements. The port of San Francisco probably has thousands of agreements, but they use four or five basic forms. They sent one of each in to us to review. That finishes the determination problem in the port of San Francisco. This, therefore, isn't as tough a thing as you might imagine.

Secondly, it isn't only the agreement itself, it is the circumstances of the agreement that can make it subject to section 15. For example, you can have an agreement between a port and a steamship line, to lease terminal facilities at a flat rate. Now mornally, you might say that is a strict landlord-tenant agreement, which doesn't affect competition. However, when that port insists that all other steamship lines pay published rates, and this agreement with the one steamship line enables the particular steamship line not to pay published rates, then it is a section 15 agreement. So it is not even the agreement itself at all times, but the circumstances in which the agreement is made which determines whether it is subject to section 15.

We have to see the full competitive spectrum, so that we can see whether the particular agreement, in a particular port, has an effect upon competition that brings it within section 15. These are your difficulties.

Mr. ROGERS. Well, but I think you could still set forth criteria that they must meet. In other words, no discrimination in this field. Mr. SCHMELTZER. If you say "no discrimination," you are substituting for the section 15 language other rather vague language.

Mr. ROGERS. Well, there may be other ways of doing it. I was just saying

Mr. SCHMELTZER. Yes, now Admiral Harllee has promised in press releases that the Commission would attempt in litigated cases before

the Commission to set forth the law as clearly as possible. Not only say, "this is a section 15 agreement," but "this is a section 15 agreement for these reasons," and that other agreements that are somewhat different and discuss those would not be section 15. This is the way, by a case by case method, that we can best enunciate standards. Mr. ROGERS. Well, if it is so vague, it may be that the committee may-Mr. Tollefson suggested, go over the section 15.

The CHAIRMAN. Then what you are saying-that you will set forth the guidelines later?

Mr. SCHMELTZER. Yes, sir, as best we can.

Rear Admiral HARLLEE. Of course, I would like to advert momentarily to the very wording of section 15 itself. If you consider a strict interpretation, the very wording of the section itself, when you come to "in any manner providing for an exclusive, preferential, cooperative working arrangement," provides some kind of criterion right there, I think. But of course a better answer, I think, is what Mr. Schmeltzer has said.

or

The CHAIRMAN. A letter from the Department of Justice to the committee, in the third paragraph, the first two or three lines: "Until recently" the Department of Justice speaks-"leases of terminal facilities were not believed to be within the scope of section 15, consequently, were not filed with the Commission."

That is the Department of Justice speaking, itself, so I think that we will finish this matter before us this morning, and when you have experiences in this, then we will call you back here, and let's see if some guidelines can be issued by your Commission that people will be helped and aided in filing their reports to you.

Rear Admiral HARLLEE. Yes, sir.

The CHAIRMAN. Is that all right?

Mr. ROGERS. Yes, I think that's fine. I just hope it doesn't go too long.

The CHAIRMAN. Well, thank you.

Now, the gentleman from California.

STATEMENT OF HON. JOHN J. McFALL, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA

Mr. McFALL. Thank you, Mr. Chairman, for the opportunity to be present and listen to the knowledgeable questions by the members of the committee. I have a statement which I would like to have you insert in the record at some appropriate place, which I think will be sufficient for my purposes, and for the purposes of the committee. You have covered everything that is in my statement.

I would like to say that I am here because one of the ports involved in a suit already filed by the Department of Justice, the port of Stockton, in California, is in my district, and I, of course, have a very relevant interest in this legislation. I would recommend the passage to the committee, and I thank you again for the opportunity to appear. The CHAIRMAN. Thank you, and your statement will be filed at this point.

(The statement follows:)

STATEMENT OF HON. JOHN J. MOFALL, A U.S. CONGRESSMAN FROM THE STATE OF CALIFORNIA

Mr. Chairman, thank you for the opportunity to appear before your subcommittee in support of H.R. 9153 and other similar bills, including my own, H.R. 9157.

As the committee has been informed, it is proposed to amend section 15 of the Shipping Act of 1916 to exempt from the penalty provisions of that section any leases, licenses, assignments, or other agreements of similar character for the use of marine terminal property or facilities entered into prior to the date of enactment of this bill.

According to the record there are 13 known violations of section 15 on which 8 suits have been filed by the Department of Justice and possibly innumerable unknown violations. One of those suits is FMC docket No. 898, concerned with agreements between Stockton Port District and Stockton Elevators, Inc., for which the maximum fine could be $1,825,000. The Stockton Port District is a public port district, organized under laws of the State of California, within my congressional district.

It is my information that this legislation has been requested by the Federal Maritime Commission and that the Department of Justice also supports the legislation.

I most certainly agree that enforcement of the legislation and collection of these enormous penalties would be inequitable.

Until 1959 it had never been assumed that these agreements were subject to section 15. The legal advice given to the port of Stockton at the time of the making of the agreement in question was to this effect. This was changed in 1959 by the Maritime Board and upheld by the circuit court in 1962 in Baton Rouge (Port Commission v. U.S.).

Since the new ruling, the port of Stockton ceased the prohibited lease arrangements.

The Maritime Commission, in requesting this legislation, believes the needs of justice are not served by exacting penalties for past behavior under what amounts to a new and different construction of the law. I agree and recommend the legislation to your favorable consideration.

Mr. TOLLEFSON. Thank you. Mr. McFall, may I say we hadn't noted your presence until after the Chairman of the Commission had gone on. The practice here is to present members of Congress to appear first so they may go on about other business. We are sorry that we did not follow that practice.

Mr. McFALL. I appreciate that courtesy, Mr. Tollefson, but I probably would have stayed anyway, because I do have a very sincere interest in the legislation and I wanted to stay. I am delighted to have the opportunity to sit up here with you.

The CHAIRMAN. The Chair knew Mr. McFall was present, and also knew he wanted to make a statement. But I thought he would enjoy and appreciate hearing the Chairman of the Commission, and then comment on it afterwards.

Mr. McFALL. I have had this subject under consideration for about 9 months now, and the testimony and questions certainly clarified my thinking. I appreciate the opportunity to be present.

The CHAIRMAN. And the pending bill, in its passage, will relieve a situation in your home port.

Mr. McFALL. Yes, Mr. Chairman.

The CHAIRMAN. Thank you, Mr. McFall.

Next we have the gentleman from Michigan, Mr. James O'Hara.

STATEMENT OF HON. JAMES G. O'HARA, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN

Mr. O'HARA. Mr. Chairman and distinguished members of the subcommittee, it is my purpose in appearing before you to urge most vigorously the subcommittee's speedy approval of my bill, H.R. 9188, or of one of the seven similar bills now under your consideration.

These bills would overcome an inequity which had its origin in a clouded interpretation of the Shipping Act of 1916. None of us, I am sure, would speak out against clarification of the law under any circumstances. And yet we find a number of parties, including the city of Port Huron, Mich., and the Port Huron Terminal Co., facing the prospect of enormous fines as a result of an administrative and judicial determination that the Shipping Act covers now what it was not thought to cover before 1961.

We can be grateful, on the one hand, that the law has been clarified. We now know that the Shipping Act requires that terminal agreements be filed with and approved by the Federal Maritime Commission. There will be no accidental violators in the future, no lengthy proceedings and costly penalties now that the Baton Rouge case has been settled.

The parties to the Port Huron agreement were not at all sure what the law required when the agreement was concluded in 1959. By the time this agreement was filed at the request of the Federal Maritime Board in October 1960, the new construction of the Shipping Act was awaiting court determination. That determination, the Baton Rouge case, was made in February 1961, and, in effect, reaffirmed in September 1961 and February 1962. In the wake of 2 years of uncertainty the Port Huron parties found themselves the defendants in a civil proceeding by the Department of Justice for having operated the terminal facilities without prior approval of the agreement by the Maritime Commission.

Clearly there was no deliberate intent to violate this construction of the law. This appears to be the case with parties to similar agreements in other facilities. And the staggering penalty would be as high as $1,000 for each day of violation.

Mr. Chairman, the case for passage of this legislation is as clear as anything could be. This amendment to the Shipping Act is fully supported by the Maritime Commission. The Department of Justice has no objection to it and, indeed, would be spared the onerous task of prosecuting senseless cases by its passage. The Senate passed similar legislation on December 13. The elimination of this injustice awaits only the approval of this subcommittee, of the full committee, and of the House itself. In my humble judgment that approval cannot come too quickly.

Mr. Chairman, I appreciate this opportunity to submit this statement for the consideration of you and your distinguished subcommittee.

The CHAIRMAN. We are pleased to have your statement, Mr. O'Hara. If there are no questions we will hear the Honorable Spark Matsunaga.