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STATEMENT OF HON. SPARK M. MATSUNAGA, A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF HAWAII Mr. MATSUNAGA. Mr. Chairman, thank you for this opportunity to appear before you and to make a statement in support of S. 2317.
Like other States similarly affected, Hawaii is asking for the approval of this bill because it finds itself in an embarrassing position through no fault of its own. On June 10, 1947, the State of Hawaii and the Matson Navigation Co. entered into a license agreement for bulk sugar facilities in Hilo, Hawaii. Subsequently, Matson subleased this license agreement to Hilo Transportation Co. on January 1, 1949.
These agreements were entered into prior to the Baton Rouge case which was decided in 1961. Immediately following this historic case, the State of Hawaii, Matson, and Hilo Transportation Co. filed their agreements and schedule of tariff with the Federal Maritime Commission pursuant to that decision. Prior to the Baton Rouge decision, Federal Maritime Commission's policy did not require such filing. ! Since such filing, the State of Hawaii has been made a defendant in a Federal suit charging it with failure to file the license agreements with the Federal Maritime Commission during the period from June 10, 1947, and January 1, 1949, to the time of actual filing. Penalty under the present law calls for fines up to $1,000 a day for every day that such agreements remained unfiled. This could mean a penalty of more than $6 million in Hawaii's case. Neither the State nor the two commercial companies involved can withstand such a penalty. Their financial stability would be seriously affected. • It is to correct this inequitous situation that, as Hawaii's Representative, I am today asking for your favorable consideration of S. 2317. It is my understanding that the bill has the support of the Federal Maritime Commission, the Federal Bureau of the Budget, and the entire terminal industry. - In substantiation of the position of the State of Hawaii, I submit a letter dated January 17, 1964, addressed to me from the attorney general of the State and request that it be printed as part of the record. (The letter mentioned follows:) DEPARTMENT OF THE ATTORNEY GENERAL,
STATE OF HAWAII,
Honolulu, Hawaii, January 17, 1964. Hon. SPARK M. MATSUNAGA, U.S. Representative from Hawaii, House Office Building, Washington, D.C.
DEAR SPARK: I am informed that Senate bill 2317, which has been adopted by the U.S. Senate, will be up for consideration before the House of Representatives next week. This bill has had the unanimous backing of the Federal Maritime Commission, the entire terminal industry, and approved by the Federal Bureau of the Budget, and will in effect eliminate liability for past violations of section 15 of the Shipping Act of 1916, as amended.
The background of this bill as it affects Hawaii is as follows. The U.S. Justice Department recently filed a civil action in the U.S. District Court of Hawaii against the State of Hawaii, Matson Navigation Co., and Hilo Transportation Co., alleging violation of section 15 of the Shipping Act of 1916, as amended. This action, civil No. 2193, follows similar actions recently taken by the Federal Maritime Commission and the Justice Department following the 1961 decision in the Baton Rouge case, 287 Fed. 2d 86, to which certiorari was denied 'y the U.S. Supreme Court in 1961.
The Baton Rouge case reversed a maritime policy of more than 40 years and held that lease agreements between port bodies and their tenants must be filed with the Federal Maritime Commission for review by it, pursuant to section 15 of the Shipping Act of 1916. The Baton Rouge case is the first announcement holding that "other persons" included port authorities (private and public), States, counties, or cities who must file agreement with the Federal Maritime Commission under the Shipping Act.
The suit now filed and pending in the U.S. District Court of Hawaii charges that the State of Hawaii and Matson had failed to file their license agreement for bulk sugar facilities in Hilo, entered into on or about June 10, 1947, with the Commission. The suit further charges that a subsequent agreement between Matson and Hilo Transportation Co., entered into on January 1, 1949, subleasing the original license granted by the State of Hawaii in 1947, also had not been filed with the Federal Maritime Commission. Penalty under the act for not filing lease agreement calls for a fine up to $1,000 per day for the offense for so long as the offense existed. It is not clear at this time just how far the Federal Maritime Commission and the Justice Department intend to pursue the penalty provision of the act.
Immediately following the Baton Rouge decision, the State of Hawaii, Matson and other terminals, private and public, filed their tariffs and other agreements with the Federal Maritime Commission pursuant to the historic decision. Ironically enough, parties who have since complied with the act are now faced with the penalty provisions of the act relating back to the period when the Federal Maritime policy did not require such filing. If the Federal Maritime Commission and the Justice Department push hard enough, penalties per year, since 1947 in our case, would amount to $365,000 per year. I believe you can see the injustice of the Commission's and Justice Department's pursuit of this matter back to 1947.
Suits that have been filed to date that we know of include those involving the port authorities at Seattle, Portland, Stockton, and New York.
The bill was introduced in the U.S. Senate by Senator Warren G. Magnuson of Washington, with the approval of the Federal Bureau of the Budget. To date, we have not heard of any opposition to the bill. In fact, the Department of Justice is holding all section 15 terminal lease cases in abeyance until Congress has completed action on S. 2317 at the request of Senator Magnuson.
I would appreciate any and all help you can give on this vital matter to Hawaii. With warmest personal regards. Very truly yours,
BERT T. KOBAYASHI,
Attorney General. Mr. MATSUNAGA. I urge that the amendments made in the Senate be adopted, since the bill as originally drafted might not cover the situation in Hawaii.
Thank you very much.
The CHAIRMAN. Thank you for your statement. The subcommittee will proceed to the witness from the Department of Justice. Do you have a prepared statement at this time?
STATEMENT OF WILLIAM A. GEOGHEGAN, ASSISTANT DEPUTY
ATTORNEY GENERAL, DEPARTMENT OF JUSTICE Jr. GEOGHEGAN. No, Mr. Chairman, we do not have a prepared statement. We have submitted a report, supporting the Senate version of the bill presently before the committee.
The CHAIRMAN. And the letter from the Department of Justice and your statements will be filed in the record ?
Mr. GEOGHEGAN. That is correct. We have no prepared statement in addition to the legislative report, which we have submitted to this committee.
The CHAIRMAN. That is in your letter of January 6, 1964.
Mr. GEOGHEGAN. That is correct, sir.
The CHAIRMAN. That will be filed in the record at the appropriate place.
(See p. 121 for letter mentioned.) · Mr. DREWRY. Would you identify yourself for the record ?
Mr. GEOGHEGAN. I am William A. Geoghegan, Assistant Deputy Attorney General.
The CHAIRMAN. And the Department approves the Senate bill?
The CHAIRMAN. Thank you very much.
Are you holding up prosecution of these cases until Congress acts on this legislation?
Mr. GEOGHEGAN. We are. We have deferred pursuing these cases until such time as the Congress acts one way or another on this pending legislation. Mr. TOLLEFSON. Could I ask a question there?
I had a concern which I expressed to Admiral Harllee, and that was whether or not the bill before us would relieve that Baton Rouge situation, where the court has already rendered a decision, which has gone up to what, the circuit court?
Mr. GEOGHEGAN. The Fifth Circuit Court of Appeals.
Mr. TOLLEFSON. Now so under the court's decision, the port authority there would be liable to a penalty. Would this bill then relieve the port authority liability? · Mr. GEOGHEGAN. Yes. Let me explain. The Baton Rouge case merely decided the issue that the lease had to be filed. It was not an action to collect penalties for failing to file. It was an appeal from the Commission order. The Commission doesn't collect penalties. The Commission merely determines whether or not the lease is one that has to be filed, and then approves it or disapproves it accordingly, and the Baton Rouge case was an appeal from the decision of the Commission that the lease did have to be filed. · Thereafter, following that decision, the Commission referred the case to the Department of Justice, requesting that action be under: taken to collect the penalties provided for failing to file under section 15. That action is still pending.
Mr. TOLLEFSON. And what you are holding up now are the penalty actions ?
Mr. GEOGHEGAN. This is correct; the penalty action, only. Mr. ROGERS. Will the gentleman yield, there? Mr. TOLLEFSON. Yes, sir. Mr. ROGERS. Does this mean that every lease has to be filed ? Mr. GEOGHEGAN. Well, that is a matter of interpretation of section 15 which is primarily within the Mr. ROGERS. Well, what did the court say?
Mr. GEOGHEGAN. The court held that the lease in the Baton Rouge case had to be filed. They affirmed the decision of the Federal Maritime Commission to the effect that the lease was one which had to be filed under section 15.
Mr. ROGERS. But they set no general rule as to which had to be and which had not?
Mr. GEOGHEGAX. No; the language of the court's opinion dealt primarily with the terms of the lease in that particular case. It referred to pertinent factors in that lease agreement which indicated to the court that it came within the legislative intent of section 15, within the language and intent of section 15.
Mr. ROGERS. Do you feel that the language in section 15 is difficult to understand for people to know when they must file?
Mr. GEOGHEGAN. Well, I think it is hard to generalize. There are certainly many agreements which are obviously covered by section 15. There may be other agreements in which it is not so obvious. I think perhaps there could be some clarification. It is very broad language that is used.
Mr. ROGERS. Could you submit to the committee some suggested changes ?
Mr. GEOGHEGAX. I suppose we could, if the committee would desire that. However, this is not within our primary jurisdiction at the Department of Justice. I think it would more properly come from the Federal Maritime Commission itself.
The CHAIRMAN. Yes, the Chair will say that the Commission has said after the 30 days within which they have to review these agree ments, that then they will suggest to the committee amendment of section 15 if necessary.
Mr. GEOGHEGAN. We would be glad to confer with the Commission on any proposed legislative changes, but I don't think that the Department of Justice should initiate them.
The CHAIRMAN. I can understand that. Mr. ROGERS. Mr. Chairman, I am not suggesting they initiate. I simply wanted their views on it. I realize it would be initiated by this committee. I simply wanted some views from the Department of Justice, and I personally would like to have them.
Mr. GEOGHEGAN. The Congressman would like views ? Mr. ROGERS. Just some suggestions from your experience dealing with the case.
Mr. GEOGHEGAN. Thank you, sir. I will see that those are submitted to you. Mr. ROGERS. Thank you. The CHAIRMAN. Mr. Guerin. And Mr. Guerin, you have associates with you, do you? Mr. GUERIN. Yes, I do, sir.
The CHAIRMAN. You have heard the Chairman testify this morning. Do you want to make a general statement, and then submit your full statement? Do you have a prepared statement ?
Mr. GUERIN. Yes, sir, I have a brief general statement to make, and then I will turn to Mr. Goldstein here to make our association statement to you, if that is agreeable.
The CHAIRMAN. Well, go ahead.
STATEMENT OF THOMAS P. GUERIN, GENERAL MANAGER OF THE
COMMISSION OF PUBLIC DOCKS OF THE CITY OF PORTLAND, OREG., AND PRESIDENT OF THE AMERICAN ASSOCIATION OF PORT AUTHORITIES; ACCOMPANIED BY SIDNEY GOLDSTEIN, GENERAL COUNSEL, PORT OF NEW YORK AUTHORITY; PAUL AMUNDSEN, EXECUTIVE DIRECTOR, AMERICAN ASSOCIATION OF PORT AUTHORITIES; FRANCIS A. MULHERN, LEGAL STAFF MEMBER, PORT OF NEW YORK AUTHORITY; AND C. W. PHELPS, ASSISTANT PORT DIRECTOR, PORT OF STOCKTON, CALIF. Mr. GUERIN. Mr. Chairman, my name is Thomas P. Guerin. I am general manager of the Commission of Public Docks of the City of Portland, Oreg. I am also president of the American Association of Port Authorities which, as its name implies, represents the vast majority of the sea ports of the United States, all of which are public bodies, and which of course extend along all of our coasts from Alaska to Maine and the Great Lakes.
You have before you a list of member organizations who in turn directly represent over 100 U.S. public seaports of commercial significance. The magnitude of public investment in these public ports is huge, totaling some $3,731 million.
Here with me today are several other representatives of the American Association of Port Authorities, and whom I will, in a moment, introduce. We appear in support of H.R. 9153, and related bills.
I would emphasize here that the situations and conditions faced by the public ports of the Nation, and with which this legislation is concerned, are most serious. The highly responsible public commissioners and boards who administer the public ports find themselves now in actuality hailed before the courts or potentially in danger thereof, because of confusion surrounding the interpretation and application of the pertinent Federal law. The association, at its convention in Portland last September, viewed the problem as the gravest ever faced by its members.
The association has prepared a formal statement of its views for presentation to this committee today. That statement will be made by Mr. Sidney Goldstein, who is the general counsel of the Port of New York Authority and is also the chairman of our association's law and legislative committee.
At this point, Mr. Chairman, I wish to emphasize that in its efforts to meet the problems involved in this whole matter, the association has had the full cooperation of the Federal Maritime Commission through its Chairman and people. The association is most appreciative of the constructive and helpful attitude of Chairman Harllee and his staff.
I will not introduce those others with me today who represent the ports from other areas of the Nation, and the association. We have Mr. Paul Amundsen, who is the executive director of our association,
On my right is Mr. Francis A. Mulhern, of the legal staff of the Port of New York Authority, and we have Mr. C. W. Phelps, the assistant port director of Stockton, Calif., who represents the California groups here today.
All of us are available for any questions, sir.