Dart Containerline Co., Ltd. v. Federal Maritime Commission
| Decision Date | 26 January 1981 |
| Docket Number | No. 79-1932,79-1932 |
| Citation | 639 F.2d 808 |
| Parties | DART CONTAINERLINE COMPANY LIMITED, Petitioner, v. FEDERAL MARITIME COMMISSION and United States of America, Respondents, North Carolina State Ports Authority, Delaware River Port Authority et al., Intervenors. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Allan J. Berdon, New York City, for petitioner. Edwin Longcope, Washington, D. C., was on the brief for petitioner.
Gordon M. Shaw, Atty., Federal Maritime Commission, Washington, D. C., with whom Edward G. Gruis, Deputy Gen. Counsel, Federal Maritime Commission, Washington, D. C., was on the brief, for respondent Federal Maritime Commission.
Dennis P. Myers, Asst. Atty. Gen. for the State of N. C., Raleigh, N. C., with whom Rufus L. Edmisten, Atty. Gen. for the State of N. C., Raleigh, N. C., was on the brief, for intervenor North Carolina State Ports Authority.
Martin A. Heckscher, Francis A. Scanlon and Martin J. Vigderman, Philadelphia, Pa., were on the brief for intervenors Delaware River Port Authority et al.
Warner W. Gardner and Edward M. Shea, Washington, D. C., were on the brief for amici curiae American President Lines, Ltd., et al.
Robert B. Nicholson and Robert J. Wiggers, Attys., U. S. Dept. of Justice, Washington, D. C., entered appearances for respondent U. S.
Before TAMM and MacKINNON, Circuit Judges, and JOHN H. PRATT, * U. S. District Judge for the District of Columbia.
Opinion for the court filed by Circuit Judge TAMM.
Dart Containerline Company Limited (Dart), a common carrier by water, filed a tariff with the Federal Maritime Commission (Commission) under which Dart would receive containerized unmanufactured tobacco from shippers delivering such cargo to the port of Wilmington, North Carolina. Dart would then transport the tobacco at its own expense to the port of Hampton Roads, Virginia, from which the tobacco would be carried to its European destination. After a challenge to this tariff by the North Carolina State Ports Authority (Ports Authority), the Commission found the tariff in violation of the Shipping Act of 1916. We find that substantial evidence supports the Commission's ruling and therefore affirm the action of the Commission.
Dart is a common carrier by water operating in the foreign commerce of the United States. Dart published a Freight Tariff No. 1, FMC-28, filed with the Commission on September 19, 1977, which provided for the carriage of unmanufactured tobacco in containers from the port of Wilmington, North Carolina to specified European ports at port-to-port rates. The tariff provided that the port-to-port service would take place either by direct sailing or by water or overland substitute service. The Ports Authority filed a complaint with the Commission, alleging that the tariff violated sections 16 and 17 of the Shipping Act of 1916. 46 U.S.C. §§ 815 & 816 (1976). 1 After an evidentiary hearing and submission of briefs, an Administrative Law Judge (ALJ) delivered an initial decision on January 19, 1979, upholding the validity of the tariff. North Carolina State Ports Authority v. Dart Containerline Co., Ltd. (ALJ Decision), 18 S.R.R. 1499 (FMC No. 77-50, January 19, 1979), reprinted in Joint Appendix (J.A.) 126a-47a. The Commission reversed this decision, holding that under the applicable standards the tariff unlawfully diverted cargo naturally tributary to the port of Wilmington and therefore could not be implemented. North Carolina State Ports Authority v. Dart Containerline Co., Ltd. (Commission Decision), 19 S.R.R. 521 (FMC No. 77-50, June 28, 1979), J.A. 150a. Dart then filed this appeal.
At bottom here is a dispute over the way in which unmanufactured tobacco will be transported from markets within North Carolina and Virginia to Europe. Three ports handle the vast majority of all United States exports of unmanufactured tobacco: Hampton Roads, Virginia, 2 Morehead City, and Wilmington, North Carolina. In 1977, for example, Hampton Roads handled approximately fifty-one percent of all such exports, Morehead City twenty-five percent, and Wilmington thirteen percent. ALJ Decision, 18 S.R.R. at 1506, J.A. 133a. Although the major United States tobacco producing markets are North Carolina and Kentucky, 3 the ALJ found that the greater bulk of the tobacco exported through Hampton Roads originated from supply points in North Carolina and Virginia. 4 An insignificant amount of tobacco exported through Morehead City moves to Europe; 5 furthermore, all cargo moving through that port does so in break-bulk as contrasted with the container service provided at both Hampton Roads and Wilmington. 6
Ten carriers provide container service from Hampton Roads to Europe; each competes for the carriage of tobacco. Only two lines, Seatrain and Polish Ocean Lines, provide container service from Wilmington to Europe. Wilmington did not become a container facility until 1972 subsequent to Seatrain's decision to offer container service at that port. Id. at 1503-05, J.A. 130a-32a. In 1977 Wilmington handled 31,977 tons of unmanufactured tobacco in containers destined for Europe; this figure constituted 11.4 percent of Wilmington's total export cargo. Id. at 1504, J.A. 131a. In the same year Hampton Roads handled 126,287 tons of unmanufactured tobacco exported to Europe; this figure constituted approximately 7 percent of its total export cargo. 7
Port terminal charges and ocean freight rates for containerized tobacco exports from Wilmington and Hampton Roads to Europe were equivalent at the time Dart published the tariff in question. Dart does not offer direct service between the port of Wilmington and European ports and does not intend to do so under the proposed tariff. Instead, Dart would provide overland substitute service at its own expense by using truck carriers to move loaded containers from the port of Wilmington to the port of Norfolk. Id. at 1502, J.A. 129a. This tariff has never been implemented. 8 Should this tariff divert from Wilmington all containerized unmanufactured tobacco, the Port would suffer an annual revenue loss of approximately $80,426. If Seatrain should decide to discontinue service to Wilmington as a result of a loss of tobacco carriage to Dart, the revenue loss to Wilmington would be approximately $213,455. Id. at 1507, J.A. 134a.
The Ports Authority introduced evidence of the distances and transportation rates between the major tobacco production centers in North Carolina and Virginia and the ports of Norfolk, Wilmington, and Morehead City. Exhibits 10 & 11, J.A. 104a & 157a. Of these eleven centers, 9 six are closer to Wilmington than to Norfolk. Dart's Southeastern Region sales representative identified only seven major supply markets, five of which are closer to Wilmington. Hearing Transcript, vol. III, 329 & 355 (Sept. 26, 1978). The evidence of transportation charges consisted of quoted rates from five trucking lines of their containerized tobacco charges from the supply centers to the ports. Of the rates concerning the seven markets noted above, the lowest quoted rate between two of them and Hampton Roads was higher than the highest rate quoted for carriage between those centers and Wilmington. 10 Wilmington was slightly rate-favorable in the case of three centers; an identical range of rates was reported for one center; finally, a single shipper reported identical low rates for the last major supply center but several shippers quoted higher rates for the carriage to Wilmington from that center. Exhibit 10, J.A. 104a.
The Ports Authority claimed that Dart's proposed tariff violated sections 16 and 17 of the Shipping Act of 1916. 46 U.S.C. §§ 815 & 816 (1976). 11 Section 16 forbids a common carrier by water to "make or give any undue or unreasonable preference or advantage to any particular person, locality, or description of traffic in any respect whatsoever, or to subject any particular person, locality, or description of traffic to any undue or unreasonable prejudice or disadvantage in any respect whatsoever...." Section 17 prohibits a common carrier by water in foreign commerce from demanding, charging, or collecting "any rate, fare, or charge which is unjustly discriminatory between shippers or ports...." In the context of cargo diversion from ports, the Commission has given content to these amorphous concepts of "undue or unreasonable preference" and unjust discrimination through a long line of cases. See, e. g., City of Mobile v. Baltimore Insular Line, 2 U.S.M.C. 474 (1941); Beaumont Port Commission v. Seatrain Lines, Inc., 2 U.S.M.C. 699 (1943), modifying 2 U.S.M.C. 500 (1941); Sea-Land Services, Inc. v. South Atlantic and Caribbean Line, Inc. (SACL), 9 F.M.C. 338 (1966); Intermodal Service to Portland, Oregon, 17 F.M.C. 106 (1973).
Central to a ruling that sections 16 and 17 have been violated in a case involving diversion of cargo from a port is a finding that the diverted cargo originated from an area "naturally tributary" to the complaining port. The Commission based this concept of naturally tributary cargo at least in part upon the congressional policy articulated in section 8 of the Merchant Marine Act of 1920, 46 U.S.C. § 867 (1976), which speaks in terms of "territorial regions and zones tributary to ... ports" and which demands the investigation of any "matter that may tend to promote and encourage the use by vessels of ports adequate to care for the freight which would naturally pass through such ports...." See Port of New York Authority v. FMC, 429 F.2d 663, 668-70 (5th Cir. 1970), cert. denied, 401 U.S. 909, 91 S.Ct. 867, 27 L.Ed.2d 806 (1971). Until recently the Commission had spoken only in general terms in defining this concept: "The concept of naturally tributary cargo has as its purpose the maintenance of the movement of cargo...
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