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And now, Mr. Chairman, with my thanks for your courtesy and the courtesy of the committee to me, I will present Mr. Sidney Goldstein, who will in turn present the association's statement.

Thank you.
The CHAIRMAN. You have heard the testimony of Admiral Harllee.
Mr. GUERIN. Yes, sir.
The CHAIRMAN. Do you concur in what he says?
Mr. GUERIN. Yes, sir. Generally speaking, I do.

The CHAIRMAN. And the Senate bill which is different from the House bill is the bill you desire?

Mr. GUERIN. We would agree with that bill, sir; yes, sir.

The CHAIRMAN. Is there nothing further, then, that you would like to point out what is necessary in any bill that this committee will report out?

Mr. GOLDSTEIX. No; but if I may be permitted to address myself, sir, to the bill, I will not read the entire statement, I shall ask the liberty to file it with you.

The CHAIRMAN. All right, sir, go ahead.
(Mr. Goldstein's prepared statement follows:)



Mr. Chairman, on behalf of the American Association of Port Authorities, I wish to thank you and the members of the committee for this opportunity to appear before you in support of H.R. 9153. As you know, this bill is identical with H.R. 9146, H.R. 9157, H.R. 9183, H.R. 9188, and H.R. 9438. Bills similar in intent although different in language are H.R. 8915, H.R. 8918, H.R. 8921, and H.R. 8926. It is also identical with S. 2317, as introduced. As you know, S. 2317 was reported by the Commerce Committee (Rept. No. 770) in an amended form (text annexed marked "A") and was passed, as amended, in the Senate on December 13, 1963.

The problem to which the bill which you have before you today and all the others mentioned are addressed is one of the most pressing problems facing the marine terminal industry of the United States. It was the subject of extensive discussion at the October 1963 convention of our association in Portland, Oreg. Since that convention, we have been privileged to have the cooperation of the Federal Maritime Commission in discussions looking toward a solution to the immediate problem; viz, tbe liability of terminal operators for potentially enormous civil penalties for what the FMC has described as “past behavior innocently engaged in." What we sought was a solution which would be mutually beneficial to the industry in its operations and to the Commission in its regulatory function.

Each of the several bills I have mentioned proposed such a solution. Each was intended to forgive past violations of section 15 of the Shipping Act, 1916, arising out of certain leases or other agreements relating to marine terminals. Section 15 provides that certain types of agreements between marine terminal owners and operators and others subject to the act may not lawfully be carried into effect unless and until they have been approved by the Federal Maritime Commission. The statute further provides that violators of the section are liable to a civil penalty of not more than $1,000 for each day that the violation continues. These bills would amend section 15 to provide for the exemption of certain marine terminal agreements from the penalty provisions of the section, provided the conditions as to filing set up in the bills are satisfied.

As I have previously indicated, H.R. 9153 and S. 2317, as introduced, were identical in text. In commenting on S. 2317 at the hearing before the Commerce Committee, we referred to three problems with regard to the text of the bill. As I will point out in discussing them, two of these problems were met in the amended version of S. 2317 (see exhibit A) which was passed in the


The first problem arises out of the fact that the bill uses particular words to describe the type of agreements covered; namely, "* * * leases, licenses, or assignments of terminal facilities * * *." These words are words of art, legal art, which might cause serious interpretative problems at a later date. We believe that it was the intent of all concerned that the amnesty to be granted should extend to all agreements for the use of terminal properties or facilities or for the rendering of services in connection therewith. Hence we think the particular words now in the bill should be eliminated and the word "agreement," limited thereafter to the types of agreements mentioned above, should be used in place of them. The final Senate version of the legislation chose the method of adding additional words, viz "or other agreements of similar character". This language is an improvement, but since it does not eliminate the interpretation problems, we believe that our proposal is more desirable.

The second problem arose from what we believe was a simple oversight. As we see it, those concerned with drafting this legislation focused their primary attention on agreements heretofore made and currently in effect. The language of the bill (H.R. 9153) on page 2, line 2, referring to "continued in operation" makes this quite clear. What we think was simply overlooked was the fact that the civil penalty provisions of section 15 of the 1916 act could be argued to be applicable to agreements which have already expired, some of which go back 30 or 40 years. While the language of the bill demonstrates that by filing such agreements the possibility of penalties could be avoided, requiring the filing of such expired agreements would impose a real burden on the terminal operators and on the Commission. The terminal operator would be required to go through all his dead files and collect all such documents for filing or run the risk that later interpretations of the act could lead to suits for penalties on them. The Commission would have to process them even if it deemed it unnecessary to thoroughly review them. When this problem was pointed out in the Senate, an appropriate change in text was made. Thus, in the final Senate version of S. 2317 this problem has been eliminated.

The final problem arises out of the use of the date October 1, 1963. It is our understanding that there is no particular significance attached to this date that it was selected when the legislation was first under consideration. The intent of all concerned seemed to be to make, with the enactment of this amnesty legislation, a "fresh start." That, we suggested at the Senate hearing, can best be done by making the amnesty applicable to all agreements entered into prior to the enactment of the legislation. The Senate adopted the suggestion and amended the text of S. 2317 accordingly. These changes, as we proposed them, required other minor adjustments in text. We, therefore, prepared for the consideration of the Senate Committee, a complete copy of a proposed revised text of the bill with these changes. For your convenience, a copy is annexed hereto as exhibit B.

We urgently request that you favorably report this legislation. As the Federal Maritime Commission's memorandum of justification indicates, the problem to which this legislation is directed arises from the fact that until very recently, there has been little or no judicial or administrative interpretation of the provisions of section 15 as they relate to leases and other agreements for the use of marine terminal facilities or services. As a result, members of our industry and their counsel have had very little guidance in attempting to interpret this section of the act and reach decisions as to whether or not particular agreements had to be filed with the Commission. Many of us who had occasion to discuss these problems with members of the staff of the Federal Maritime Commission can truthfully state that by reason of the dearth of judicial and Commission interpretations, they were as confused as we were as to the proper application of the section to particular types of agreements. It was not until the now famous Baton Rouge case was finally decided in 1962 that the real extent of the problem was made clear. There the Federal Maritime Board was sustained by the courts in its reversal of the decision of its Chief Examiner and in that reversal, they stated what to the industry was a new interpretation of the law. In the light of that decision, all of us who had not theretofore been required to decide whether or not section 15 applied to each of the numerous agreements entered into in the conduct of terminal business were forced to recognize that it was possible that particular agreements, as to which we had concluded that section 15 was not applicable, were, in fact, section 15 agreements. In other words, we were forced to conclude that we might have been wrong. Of course, there was a tremendous liability on the part of the public marine terminal industry involved.

The Congress when it thereafter amended section 15, in connection with dualrate agreements, provided some assistance. As you may recall, prior to that amendment to section 15, the penalty prescribed appeared to be an absolute penalty of $1,000 per day. When you amended the statute, you made it clear that the penalty figure was a maximum figure. But, despite that change, the potential liability remains enormous, and, despite the Baton Rouge decision, the area of doubt is still very broad.

I can assure you that port attorneys throughout the country have spent many hours endeavoring to determine the correct application of the Baton Rouge decision to other agreements, but the plain fact is that there are a vast number of agreements to which the Baton Rouge case does not apply because the agreements differ in substantial respects from the agreement there under consideration. As to all of the latter types of agreements, there is still no guidance available in the form of decisions of either the courts or the Commission. The scope and gravity of the problem has been recognized throughout the industry. The bill before you today is a recognition of the gravity of the situation and, perhaps more important, of the deterrent effect of these penalty provisions on the Maritime Commission's efforts to properly regulate the terminal industry for the benefit of the Nation's commerce.

The purpose of this legislation, jointly concurred in by the industry and by the Maritime Commission and other agencies of the Government (and approved by the Senate when it passed s. 2317), is to provide a basis upon which a "fresh start" can be made. When it is enacted, some very difficult problems of legal interpretation can be resolved free of the very real threat of enormous penalties. When the agreements which give rise to the problems in interpretation are filed, the Commission will be given an opportunity to advise the industry as to its views as to the application of section 15. Such filings, we hope, will produce in the very near future a wide body of precedent. By enacting this amnesty legislation, the expense and delay of long investigative procedures will be avoided. No marine terminal operator could, in our opinion, fail to avail himself of the opportunity to insure, without penalty, complete compliance on his part with the requirements of section 15. In short, gentlemen, I sincerely believe that the enactment of this legislation will redound to the benefit not only of our industry but of the waterborne commerce of the United States. I urge you to report this legislation favorably as promptly as possible.

Again, may I express my sincere thanks for this opportunity to appear before you on behalf of the American Association of Port Authorities. I will do my best to answer any questions you may have.

ЕхнвІт А

TEXT OF $. 2317, As AMENDED "That section 15 of the Shipping Act, 1906 (46 U.S.C. 814), be amended by inserting at the end thereof the following: 'Provided, however, that the penalty provisions of this section shall not apply to leases, licenses, assignments, or other agreements of similar character for the use of terminal property or facilities which were entered into before the date of enactment of this Act, and, if continued in effect beyond said date, submitted to the Federal Maritime Commission for approval prior to or within ninety days after the enactment of this Aet, unless such leases, licenses, assignments or other agreements for the use of terminal facilities are disapproved, modified, or canceled by the Commission and are continued in operation without regard to the Commission's action thereon. The Commission shall promptly approve, disapprove, cancel, or modify each such agreement in accordance with the provisions of this section.'"

EXHIBIT B Provided, houeter, that the penalty provisions of this section shall not apply to any agreement subject to this section for the use of marine terminal properties or facilities or the performance of services in connection therewith, which was entered into before the enactment of this Act; provided further, horrever, that any such agreement, which is to continue in effect after the enactment of this Act which has not, prior to the enactment of this Act, been bled with the Commission, shall be submitted to the Commission for approval within ninety (90) days after the enactment of this Act. Any such agreement which is hereafter disapproved, modified or canceled by the Commission which is continued in effect without regard to the Commission's action thereon sball


be subject to the penalty provisions of this section. The Commission shall promptly approve, disapprove, cancel or modify each such agreement in accordance with the provisions of this section.

Mr. GOLDSTEIN. I appreciate the opportunity to appear before you in support of H.R. 9153. As the members of the committee know, this bill is identical with a number of others pending in the House, and it is also identical with S. 2317 as introduced. As you know, S. 2317 was reported by the Commerce Committee Report No. 770 in an amended form, the text of which is annexed to my statement. It was passed as amended in the Senate on December 13, 1963.

The problem to which the bill which you have before you today-
The CHAIRMAN. Well, the Senate bill suits you, then?
Mr. GOLDSTEIN. Yes, sir; it does. But I-

The CHAIRMAN. You have no suggested amendments to the Senate bill?

Mr. GOLDSTEIN. I have some comments addressed to the House bill which by the adoption by this committee of the Senate version will cure any of the problems that I present.

The CHAIRMAN. Suppose we just file your statement, then.
Mr. GOLDSTEIN. But I would like, sir, if I may be permitted-

The CHAIRMAN. And the committee will then have under consideration the Senate bill 2317.

Mr. GOLDSTEIN. Yes, but if I may be permitted, with respect to the first comment that I make in my statement, which suggests an amendment to even the Senate version of the bill, I would like to get on the record, because I think the record from the Senate report will help us as lawyers to clarify the problem which confronted us with the Senate version of the bill. And namely, sir, that provision which I would like to call to your attention is this: I am quoting now from page 4 of Calendar No. 751, Report No. 770, 88th Congress, 1st session, Senate:

Those agreements that would receive the benefit of the amnesty S. 2317 would provide, described as leases, licenses, assignments, or other agreements of similar characterwould of course include only agreements that are within the terms of section 15 by reason of the present wording of that section. The words used to describe the type of arrangements included within the amnesty are not intended to enlarge the scope of section 15, nor to bring within its language agreements not already subject to its terms. Neither does use of the words “leases or assignments” mean to imply that every lease, license, assignment, or similar agreement for the use of terminal facilities is required by section 15 to be filed and approved prior to its being put into effect. Rather, only those lease-type agreements that would be subject to the terms of section 15 in the absence of the wording to be added by this bill would be within the terms of S. 2317. The amnesty provided by enactment of S. 2317 would not apply to those agreements subject to the terms of section 15 that do not involve a landlord-tenant relationship.

Well, I think I can forget reading that for the minute. My object in asking that that be incorporated for the record, Congressman Tollefson, relates to some of the questions propounded before. The act speaks, specifically using a term, "agreement." The amnesty legislation describes other types of agreements.

We as lawyers grow concerned that the introduction of new words in the amnesty provision might enlarge the effect of section 15. I think the explanation and the record was made in the Senate hearing and in the Senate report, and if that be incorporated within your record, we could lay that to rest. The other two suggestions which are incorporated in my statement will have been taken care of if you adopt the Senate version of the bill.

I might add one more thing in the light of the discussion that transpired

Mr. TOLLEFSON. May I ask a question ?
The CHAIRMAN. Yes, sir.

Mr. TOLLEFSON. What you are saying is in effect you are recommending that in our report we have similar language?

Mr. GOLDSTEIN. Yes, sir.

Mr. TOLLEFSON. And that would take care of some of the questions that you have in mind ?

Mr. GOLDSTEIN. Yes, sir, that would take care of the ports' problems. I might suggest, sir, that in the light of the discussion which transpired before, for your consideration, that the material appearing on page 7 of the Senate report which describes the justification for the bill be incorporated as well in your record, and if I may be permitted to read it, I think it will summarize very clearly what this legislation intends to effect.

And I quote from page 7 of the Senate report:

The bill would amend section 15 of the Shipping Act, 1916, so as to exempt from the penalty provisions of that section currently existing leases of terminals, provided they are filed with the Federal Maritime Commission within 90 days from the date the bill is enacted into law. The need for the bill stems from the fact that until the former Federal Maritime Board's decision in agreements Nos. 8225 and 8225–1, 5 F.M.B. 648 (1959), and the subsequent affirmation of the Board's decision by the U.S. Court of Appeals for the Fifth Circuit in Baton Rouge Port Commission v. United States, 287 Fed. 2d 86, certiorari denied 368 U.S. 985, neither the agency nor the industry were clear as to the full circumstances under which leases of terminal facilities fall within the coverage of section 15 of the Shipping Act. Section 15 provides that all agreements between two persons subject to the Shipping Act which provides for the fixing or regulating transportation rates or fares, giving or receiving special rates, accommodations, or other special privileges or advantages, controling, regulating, preventing, or destroying competition * * * or in any manner providing for an exclusive preferential or cooperative working arrangementmust be filed with and approved by the Commission in order to be lawful.

The penalty for carrying out such an agreement prior to Commission approval is up to $1,000 per day. Leases of terminal facilities quite customarily contain in addition to the usual grants of estates in lands, covenants requiring that the lessee operate the terminal facility according to specified standards, and in some instances, grant future rights to the lessee.

For example, the lease in the Baton Rouge case, above, required that the lessee charge rates “competitive with and not greater than rates for similar services and privileges charged at other gulf ports,” and gave to the lessee the right of first refusal to lease any similar additional facility which the lessor might construct. The Maritime Board found that these and other covenants brought the lease within the purview of section 15, and the fifth circuit affirmed.

In due course, the Maritime Board informed the Department of Justice of its findings in the Baton Rouge case, and the Department brought suit against the lessee for civil penalties, due under section 15. As other unapproved leases have

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