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been determined to be subject to section 15, the Maritime Board and now the Maritime Commission have informed the Attorney General in order that his Department might take such action as it thought warranted. Several additional suits for civil penalties have been filed.

I might interpolate, I think there are 9 or 10 pending at the present time, and those are the cases to which the Ittorney General's representative addressed himself.

Thus lessees and lessors of terminal facilities have found themselves in the position of having entered into long-term leases some years ago, which they be lieved not to be subject to section 15 of the Shipping Act, 1916, but which under the holding of the Baton Rouge case may be subject to that section. The practical choices open to such persons are to submit their leases to the Commission and seek approval, knowing that they may be subject to a suit for fairly enormous penalties, or not to file their agreements, with the hope that they would not be discovered, or that they could successfully distinguish between their lease and the Baton Rouge lease. It is the Commission's position in suggesting the instant bill that while a sound regulatory purpose is served in requiring that terminal leases which in any fashion limit or control competition be first submitted to the agency for approval, the needs of justice are not served by exacting penalties for past behavior under what amounts to a new or different construction of the law.

In short, it is the concensus of the Commission that a new construction of a statute should be given prospective effect, and should not result in penalties for past behavior innocently engaged in. Because of the variety of legal instruments which are used in granting rights to operate terminal facilities, the language of the bill is not limited to leases, but includes licenses and assignments.

And again interpolating, I ask that the first quotation from this report-page which addresses itself to the introduction of these new terms be incorporated into your report so as to avoid a confusion later on.

The bill would require prompt filing of all existing leases and would eliminate any excuse for not filing future agreements. In short, the bill forgives past violations of the Shipping Act, and puts future regulation on a sounder footing.

Now, gentlemen, I submit to you that this legislation is urgent, because many of the port operators through the Nation are confronted with these circumstances, and Congressman Rogers, if I might say so, I don't agree wholeheartedly that all the leases which the terminal operators engage in, enter into these days, are subject to section 15. Nevertheless, perhaps prudency will require the filing of these promptly, in order to get some guidelines from the Commission, either by way of recognizing that certain types of leases do not come within the purview of 15, or if that fails, by litigating the particular lease with the Department.

Mr. ROGERS. Mr. Chairman, may I? 'The CHAIRMAN. Yes, sir.

Mr. ROGERS. Along that line, actually, there is no precedent for you to determine, unless you take it to the Commission, isn't that true?

Mr. GOLDSTEIN. No, it is a very confusing picture.

Mr. ROGERS. How many leases, would you say, lease forms, I presume you have certain forms in the port of New York? Do you have a great number of them, or do you try to confine them to a certain number of forms that you use?

Mr. GOLDSTEIN. Generally speaking, sir, I think that most of the leases which we use would be a basic form. There may be tailoring in the business arrangements with each pier occupant.

Mr. Rogers. I would have thought that would be true in most major ports. Wouldn't this be true?

Mr.hey come withintutter of law, but men : Maybe the

RS. If they didumbrella' of thisthink prudence

Mr. GOLDSTEIN. I think that we will probably find that to be so. Occasionally, there may be a specially tailored one. Forgive me just 1 minute.

My associate points out that in the same port, as in the port of New York, you may in addition to the Port of New York Authority as an operator have other operators who would have different types of agreements.

Mr. ROGERS. That would have to be submitted ? Mr. GOLDSTEIN. Yes. Well, forgive me. Maybe they wouldn't have to be submitted as a matter of law, but I think prudence would dictate that they come within the umbrella of this amnesty.

Mr. ROGERS. If they didn't want to take the chånce of having a fine !
Mr. GOLDSTEIN. Yes, sir.
Mr. ROGERS. I assume they would probably submit it?

Mr. ROGERS. How many leases would have to be submitted, would you estimate, in the port of New York ? Mr. GOLDSTEIN. Oh, I would think about 250, at least-yes.

Mr. ROGERS. Do you think it would be helpful to have administrative guidelines set forth?

Mr. GOLDSTEIN. Oh, I think certainly that it would be helpful, especially if they conform with what we think the law is.

Mr. ROGERS. Yes. But perhaps your association could submit some ideas along this line?

Mr. GOLDSTEIN. We have the matter under very active consideration as an association project. As a matter of fact, Congressman Rogers, we are even authorized to prepare legislation, if we think it advisable, for submission to the Congress, along the lines that you generally describe. Mr. ROGERS. Thank you very much. Thank you, Mr. Chairman.

The CHAIRMAN. Mr. Tollefson?
Mr. TOLLEFSON. I have nothing.
The CHAIRMAN. Any further statement ?
Thank you very much.
Mr. GOLDSTEIN. Thank you, Mr. Chairman.
Mr. GUERIN. Thank you, Mr. Chairman.

The CHAIRMAN. You offer no change in the Senate bill, whatever? Mr. GOLDSTEIN. Subject to the comments I have made, the Senate bill will be satisfactory.

The CHAIRMAN. Is there any other witness?
The committee will go into executive session.

(Whereupon, at 11:55 a.m., the subcommittee adjourned, to meet in executive session.)






Washington, D.C. The subcommittee met at 11:35 a.m., pursuant to other business, in room 219, Cannon House Office Building, Hon. Herbert C. Bonner (chairman of the subcommittee) presiding.

The CHAIRMAN. The next bill is H.Ř. 2457, introduced by Mrs. Sullivan. We will hear from Mr. Gulick, Deputy Maritime Administrator. (H.R. 2457 and a report from the Department of Commerce follow :)

[H.R. 2457, 88th Cong., 1st sess.) A BILL To extend certain time limitations of section 901 (b) of the Merchant Marine Act,

1936, with respect to the vessel Spitfire Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the vessel Spitfire owned by the General Cargo Corporation, New York, New York, shall be deemed to be a privately owned, United States-flag commercial vessel for the purposes of subsection (b) of section 901 of the Merchant Marine Act, 1936, as amended (46 U.S.C. 1241 (b)), notwithstanding the time limitations in the last sentence of such subsection if such vessel is documented under United States registry on its first arrival at a United States port.


Washington, D.O., June 11, 1963. Hon. HERBERT C. BONNER, Chairman, Committee on Merchant Marine and Fisheries, House of Representatives, Washington, D.O.

DEAR MR. CHAIRMAN: This is in further reply to your request for the views of this Department with respect to H.R. 2457, H.R. 2458, and H.R. 4089, bills

To extend certain time limitations of section 901 (b) of the Merchant Marine Act, 1936, with respect to the vessel Spitfire.

To provide that the vessel Montauk may be a U.S.-flag commercial vessel for the purposes of section 901 (b) of the Merchant Marine Act, 1936.

To provide that the steamship Glenbrook may be a U.S.-flag commercial vessel for the purposes of section 901 (b) of the Merchant Marine Act, 1936. Section 901 (b) of the Merchant Marine Act, 1936, as amended by Public Law 87–266, provides that for purposes of determining eligibility for participation in cargoes reserved for privately-owned U.S.-flag commercial vessels under that section (the cargo preference law), the term "privately-owned United Statesflag commercial vessels" shall not be deemed to include any vessel which, subsequent to the date of enactment of that amendment (September 21, 1961), is documented under foreign laws, or is rebuilt outside the United States, until

such vessel has been documented under the laws of the United States for a period of 3 years.

The section, as amended, contains a proviso which makes an exception to the foregoing exclusion if prior to the enactment of the amendment (September 21, 1961), (1) the owner of a vessel, or contractor for the purchase of a vessel, originally constructed in the United States and rebuilt abroad or contracted to be rebuilt abroad, has notified the Maritime Administration in writing of its intent to document such vessel under U.S. registry, and such vessel is so documented on its first arrival at a U.S. port not later than 1 year subsequent to the date of enactment of the amendment, or (2) the owner of a vessel under U.S. registry has made a contract for the rebuilding abroad of such vessel and has notified the Maritime Administration of such contract, and such rebuilding is completed and such vessel is thereafter documented under U.S. registry on its first arrival at a U.S. port not later than 1 year subsequent to the date of enactment of the amendment.

All of the foregoing provisions of section 901 (b) are contained in the last sentence of that section. H.R. 2457 would provide that the Spitfire shall be deemed a privately owned U.S.-flag commercial vessel for purposes of section 901 (b) not withstanding the time limitations set forth in the last sentence of that section, if the vessel is documented under U.S. registry on its first arrival at a U.S. port. H.R. 2458 and H.R. 4089 would provide that the Montauk and the Glenbrook shall each be deemed a privately owned U.S.-flag commercial vessel for purposes of section 901 (b) notwithstanding “the last sentence" of such section, if the vessel is documented under U.S. registry on its first arrival at a U.S. port. Our interpretation of each of the three bills is that the vessel each bill pertains to would become a privately owned U.S.-flag commercial vessel for the purposes of section 901 (b) if the vessel if documented under U.S. laws upon its first arrival at a U.S. port.

For the reasons hereinafter stated, we recommend favorable consideration of the bills.

When the amendment (Public Law 87-266) to section 901 (b) of the Merchant Marine Act, 1936, was enacted on September 21, 1961, the Maritime Administration had on file letters of intent, or notification of contract, from the owners of 38 vessels for reconstruction of their vessels in foreign shipyards and documentation of the vessels under U.S. flag. In October 1961 the Maritime Administration sent to each owner, who filed such a letter, a letter outlining the requirements of the Maritime Administration under Public Law 87-266. These letters required the owner to furnish to us (1) a certified copy of the contract with the shipyard for reconstruction of his vessel, (2) the date rebuilding was completed, and (3) the first port of arrival of the vessel in the United States after September 21, 1961.

Owners of 11 of these vessels did not respond to our inquiries and we assume that contracts for reconstruction of the vessels were not entered into.

The owner of one of the vessels filed a certified contract for reconstruction of the vessel, but we understand that the vessel was not reconstructed.

Three of the vessels were reconstructed and came back to the United States before the effective date of the amendment-September 21, 1961.

Twenty of these vessels were reconstructed and documented under the laws of the United States after September 21, 1961, and before September 21, 1962.

The other 3 vessels of the 38 mentioned above are the Glenbrook, the Montauk, and the Spitfire. In a hearing before your committee last year, representatives of the owner of these vessels testified that reconstruction of the vessels would not be completed before the September 21, 1961, statutory deadline because of strikes in the Spanish shipyard in which the work was being performed. These are American-flag vessels, and they have not yet returned to the United States. Attached is a chronology of the notification of intent, notification of contract, and the filing of the contract, under the proviso to section 901 (b), with respect to these vessels.

We have been informed by the owner of the Glenbrook that the vessel is still in the Spanish shipyard ; that 98 percent of the steel work has been completed ; that the other work has not been done; that he has thus far paid the yard $350,000 : that the yard has billed him for an additional $661,000; that he estimates that to complete the vessel so he could take it out of the yard, and to pay import duties and meet Coast Guard requirements would increase this unpaid amount to $825,000, making the total conversion cost about $1,200,000; and that he could not afford to take the vessel out of the yard unless the vessel will be eligible to par

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