Pacific Coast European Conference v. United States
| Citation | 350 F.2d 197 |
| Decision Date | 30 April 1965 |
| Docket Number | No. 19237-19239.,19237-19239. |
| Parties | PACIFIC COAST EUROPEAN CONFERENCE and Members Thereof, Petitioners, v. UNITED STATES of America and Federal Maritime Commission, Respondents. LATIN AMERICA/PACIFIC COAST STEAMSHIP CONFERENCE, Petitioners, v. FEDERAL MARITIME COMMISSION and United States of America, Respondents. PACIFIC COAST RIVER PLATE BRAZIL CONFERENCE and Its Member Lines, Petitioners, v. UNITED STATES of America and Federal Maritime Commission, Respondents. |
| Court | U.S. Court of Appeals — Ninth Circuit |
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Leonard G. James, Robert L. Harmon, F. Conger Fawcett, Graham, James & Rolph, San Francisco, Cal., for petitioners.
James L. Pimper, Gen. Counsel, Robert B. Hood, Jr., Federal Maritime Commission, Wm. H. Orrick, Jr., Asst. Atty. Gen., Irwin A. Seibel, Atty., Dept. of Justice, Washington, D. C., for respondents.
Jerome H. Heckman, Robt. R. Tiernan, Keller & Heckman, Washington, D. C., for Dow Chem. Co. and Dow Chem. Intl., SA, intervenors.
Before HAMLEY, MERRILL and BROWNING, Circuit Judges.
The orders here under review1 are two2 of twenty-two substantially similar orders issued by the Federal Maritime Commission pursuant to its report entitled The Dual Rate Cases.
The orders are here attacked as in excess of the Commission's authority as bestowed by § 14b of the Shipping Act of 1916, as amended 46 U.S.C. § 813a (Supp. V, 1964)3 (later discussed), and contrary to the intent of that section; and, through lack of notice and hearing, as in violation of the Administrative Procedure Act, 60 Stat. 237 (1946), 5 U.S.C. §§ 1001-1011 (1958).
Petitioners are three of some sixty steamship conferences affected by The Dual Rate Cases and orders entered pursuant to that report. These conferences are rate-fixing associations of carriers, all of whom are engaged in the waterborne commerce of the United States and whose association is permitted by § 15 of the Shipping Act of 1916, as amended 46 U.S.C. § 814 (Supp. V, 1964), subject to approval of their agreements of association by the Federal Maritime Commission.
These proceedings involve those provisions of the several agreements of association which permit the fixing of "dual rates": the granting by a conference of preferential rates to shippers who have agreed with the conference to patronize it exclusively.
Prior to the enactment of the legislation with which we are here concerned the lawfulness of dual rate contracts had long been questioned as contrary to established antitrust policy. In 1958 the Supreme Court in Federal Maritime Board v. Isbrandtsen Co., 356 U.S. 481, 78 S.Ct. 851, 2 L.Ed.2d 926 (1958), had held such a contract to be in violation of § 14 Third of the Shipping Act of 1916, 39 Stat. 733 (1916), and had thus cast doubt on the validity of such arrangements. Congress sought to clarify and remedy the situation. After three years of study Public Law 87-346, 75 Stat. 762 (1961), was enacted October 3, 1961. Its declared purpose was "* * * to authorize ocean common carriers and conferences thereof serving the foreign commerce of the United States to enter into effective and fair dual rate contracts with shippers and consignees * * *." By § 3, interim validity of existing dual rate agreements was provided.
The authority of the Commission to permit such contracts was limited by requiring that the contracts in eight specified respects meet the congressional judgment as to what they should include. Listed as specification Nine was the requirement that a contract shall contain "* * * such other provisions not inconsistent herewith as the Commission shall require or permit." Thus was imposed upon the Commission the task of reviewing and revising all agreements under which the conferences were operating with respect to dual rates.
The provisions for interim validity of existing dual rates contracts set forth a schedule for bringing those contracts into line with § 14b's requirements. The conferences, within six months, were to file with the Commission their proposals as to how their existing contracts should be amended to meet the new requirements. Thereafter the existing contracts as so amended should be valid for a further period of one year, during which period "the Commission shall approve, disapprove, cancel or modify all such agreements and amendments in accordance with the provisions of this Act." By subsequent enactment the time allowed the Commission (and the period of interim validity) was extended to April 3, 1964, 77 Stat. 5 (1963).
These petitioners duly submitted their proposed amendments to the Commission before expiration of the six-month period specified.
On March 21, 1962, the Commission gave notice by publication in the Federal Register, 27 Fed.Reg. 2647 (1962), that pursuant to the provisions of the Shipping Act it was considering the promulgation of certain rules and regulations governing the use of contract rate systems as authorized by § 14b.
On January 3, 1963, the Commission published in the Federal Register its "Notice of Proposed Final Rules and Uniform Agreement." Reciting its earlier notice the Commission stated:
"Having given due consideration to the comments of interested persons filed in response to said notice the Federal Maritime Commission hereby gives notice that it is considering the promulgation of final rules in this matter. These proposed final rules are as follows:" 28 Fed.Reg. 74 (1963).
There followed a proposed uniform contract for all conferences.
A storm of protest arose from the conferences over this proposed resort to a uniform contract. The conferences contended that the Commission's function under § 14b was to conduct individual hearings on the amendments as proposed by the individual conferences to determine whether those amendments conformed to the requirements of that section.
The Commission acceded to conference demands. On April 9, 1963, it entered its "Order of Investigation and Hearing" respecting Pacific Coast European Conference (typical of the orders respecting the individual conferences) for hearing before an examiner upon the amended contract as proposed by that conference.4
Subsequently, on the petition of various shippers and shipper associations, certain so-called "major issues" were severed from most of the proceedings on the individual contracts and were heard before a panel of five examiners in a proceeding assigned Commission Docket No. 1111. The Commission's order of investigation and hearing in this docket stated that the proceeding was instituted in order to lessen the burden of shippers (who might be signatories to dual rate contracts with a number of conferences, and who might otherwise have to participate in substantially every proceeding before the Commission), and for the purpose of achieving "optimum uniformity" in contract provisions.
On December 3, 1963, petitioners' examiner rendered his initial decision. Subject to certain specified modifications, and subject to the rulings in Docket 1111, he concluded that the proposed contract met the requirements of § 14b and was not detrimental to the commerce of the United States, contrary to the public interest or unjustly discriminatory or unfair and should be permitted in use in foreign commerce by the conference.
On March 27, 1964, the Commission handed down its report entitled The Dual Rate Cases, together with orders in petitioners' proceedings to the effect "that the agreement submitted to the Commission by the respondents in the above proceedings are hereby approved in the form attached to this order" and providing that the attached form of order should become effective April 4, 1964, "to the exclusion of any other terms and provisions." The report and order were served on petitioners on March 30, 1964.
The form of contract attached to the order was initiated by the Commission pursuant to the findings and conclusions of The Dual Rate Cases and was not the contract considered by the examiner in petitioners' proceedings. It contained provisions not specifically required by § 14b and not discussed in the hearings had upon petitioners' proposed contracts.
Petitioners assert that they were thus required, on four days' notice, to commit themselves by agreement to grant concessions to contract shippers above and beyond those called for by the Shipping Act, as to which there has been no hearing in their proceedings, and which in fact were, as to them, unnecessary and prejudicial to the point of unfairness.
Petitioners did not seek rehearing before the Commission pursuant to its Rule 16, 18 Fed.Reg. 3726 (1953), 46 C.F.R. § 201.261,5 upon these protested contractual provisions. Instead they promptly brought this proceeding for judicial review, not primarily attacking the substance of the contracts approved by the Commission but rather the procedures by which they were formulated.
1. Petitioners contend that their rights under their outstanding contracts constituted property rights protected by the Fifth Amendment; that Congress through enactment of § 14b and the Commission by imposing a mandatory agreement upon the conference without their consent have deprived them of their right freely to contract about their business affairs. Specifically, petitioners contend that their contracts constitute property which the Commission is "taking" without due process.
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