Puerto Rico Maritime Shipping Authority v. Federal Maritime Commission
| Decision Date | 14 May 1982 |
| Docket Number | 81-2128,Nos. 81-2088,s. 81-2088 |
| Citation | 678 F.2d 327 |
| Parties | PUERTO RICO MARITIME SHIPPING AUTHORITY, Petitioner, v. FEDERAL MARITIME COMMISSION and United States of America, Respondents, Trailer Marine Transport Corporation, Government of the United States Virgin Islands, et al., Drug and Toilet Preparation Traffic Association, Inc., Intervenors. GOVERNMENT OF the VIRGIN ISLANDS and Puerto Rico Manufacturers Association, Petitioners, v. FEDERAL MARITIME COMMISSION and United States of America, Respondents, Sea-Land Services, Inc., Puerto Rico Maritime Shipping Authority, Trailer Marine Transport Corporation, Intervenors. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Petitions for Review of an Order of the Federal Maritime commission.
Amy Loeserman Klein, Washington, D. C., with whom Kathleen Mahon, Washington, D. C., was on brief, for Puerto Rico Maritime Shipping Authority, petitioner in No. 81-2088 and intervenor in No. 81-2128.
John C. Cunningham, Atty., Federal Maritime Com'n, Washington, D. C., with whom C. Jonathan Benner, Gen. Counsel, Federal Maritime Com'n, Washington, D. C., was on brief, for respondents. Edward G. Gruis, Atty., Federal Maritime Com'n, Washington, D. C., also entered an appearance for respondent, Federal Maritime Com'n. Barry Grossman and Robert J. Wiggers, Attys., Dept. of Justice, Washington, D. C., also entered appearances for respondent, the U. S.
George J. Weiner, Washington, D. C., with whom Edward J. Sheppard and Edward Aptaker, Washington, D. C., were on brief, for Government of the Virgin Islands and Puerto Rico Mfrs. Ass'n intervenors in No. 81-2088 and cross-petitioners in No. 81-2128.
Michael Joseph, Washington, D. C., for intervenor, Trailer Marine Transport Corp., in Nos. 81-2088 and 81-2128.
Daniel J. Sweeney and Steven J. Kalish, Chicago, Ill., were on brief for intervenor, Drug and Toilet Preparation Traffic Conference, Inc. Donald J. Brunner, Washington, D. C., was on brief for intervenor, Sea-Land Service, Inc., in No. 81-2128.
Before WALD, MIKVA and GINSBURG, Circuit Judges.
Opinion for the Court filed by Circuit Judge WALD.
In September 1981 general rate increases were filed with the Federal Maritime Commission (FMC) by four common carriers in the Puerto Rico and Virgin Islands domestic offshore trade. Operating for the first time under new, expeditious procedures enacted by Congress in 1978, the Commission approved the rate increases of three of the carriers and reduced the proposed increase of the fourth and most dominant carrier, the Puerto Rico Maritime Shipping Authority. We now consider petitions for review of the agency's order filed by the dominant carrier and by representatives of involved shippers, challenging various elements of the Commission's decision. We affirm the Commission's order in all respects.
Under the Intercoastal Shipping Act of 1933, 46 U.S.C. §§ 843-848, the FMC was authorized to review the rates of intercoastal carriers in order to ensure that they were reasonable and just. In 1978, Congress amended the Act to streamline consideration of rate increases, while still protecting the interests of both carriers and shippers. 1 Under section 845 of title 46, as amended, the Federal Maritime Commission may set hearings to consider the lawfulness of any proposed rate increases, but only upon publication in the Federal Register of the specific issues to be resolved. 46 U.S.C. § 845(a) (Supp. III 1979). The Commission must adhere to strict time limits within which to complete its hearing and render a decision: the hearing must be completed within sixty days; an initial decision must be rendered within 120 days and the Commission must render a final decision within 180 days after the new rate is scheduled to go into effect. The Commission may once extend the 180-day limit for sixty days.
The 1978 Amendments also provided for special procedures for the conduct of the hearing: "Notwithstanding any other provision of law, in providing a hearing for the purposes of this chapter, it shall be adequate to provide an opportunity for the submission of all evidence in written form, followed by an opportunity for briefs, written statements, or conferences of the parties." Id. § 845(b). It is clear from the legislative history of the amendments that this provision was designed to allow expeditious completion of these hearings without running afoul of the Administrative Procedure Act. 2
The carrier has the burden of proof that its rates are just and reasonable. Id. § 845(b). If the Commission finds that the new rates are unjust or unreasonable it may determine and prescribe a maximum or minimum rate. See id. § 845a. Any amount charged to shippers over that which is ultimately determined to be just and reasonable must be refunded to the shipper by the carrier, with interest computed on the basis of the prime lending rate. See id. § 845(c)(2).
This case presents for review the premier use by the Commission of these new powers and procedures to evaluate tradewide, general rate increases. The Commission evaluated rate increases filed by the four major carriers in the Atlantic Gulf Coast trade. Chief among these carriers is Puerto Rico Maritime Shipping Authority (PRMSA), a nonstock corporation owned by the Commonwealth of Puerto Rico. 3 The primary offshore areas served in this trade are Puerto Rico and the Virgin Islands.
On December 5, 1980, PRMSA filed general rate increases in the Puerto Rico and Virgin Islands trades averaging 17.2 percent, scheduled to become effective February 3, 1981. PRMSA's competitors Sea-Land Service, Inc. (Sea-Land), Trailer Marine Transport Corporation (TMT), and Gulf Caribbean Marine Lines (GCML) had filed similar general rate increases to become effective in January 1981. The increases filed by all of the carriers were protested by the Drug and Toilet Preparation Traffic Conference, a trade organization of shippers, the Puerto Rico Manufacturers Association, the Government of the Virgin Islands, and the Chamber of Commerce of Puerto Rico.
Prior to the effective date of the PRMSA general rate increases, the Commission ordered an investigation, without suspension, of the rate increases of Sea-Land, TMT and GCML, 6 as well as PRMSA. 7 The investigation, Docket No. 81-10, was the first tradewide investigation held under the 1978 Amendments to the Intercoastal Shipping Act.
As required by the new law, the Commission published in the Federal Register the specific issues to be investigated:
(1) What is an appropriate rate of return for the carriers named as Respondents? In addressing this question consideration should be given to the average rate of return earned by other U.S. corporations and the inherent risks, if any, in operating in the affected trades.
(2) Is the methodology used by Respondents in making revenue and cargo volume projections appropriate?
(3) Are Respondents' revenue and cargo volume projections sufficiently accurate, and if not, what are the appropriate projections?
(4) Have Respondents properly calculated their cost projections covering labor, fuel, vessel maintenance and administrative and general expenses, and, if not, what are the proper calculations?
(5) Do the proposed rate increases impose an economic hardship on the affected interests represented by Protestants and Intervenors, and, if so, to what extent should this factor be considered in determining a reasonable rate of return for the carriers?
Joint Appendix (J.A.) at 178-79. 8
The hearing was conducted almost entirely in written form in three rounds of simultaneous submissions labeled Direct, Rebuttal and Surrebuttal. The hearing was concluded on May 6, 1981, and the final briefs were submitted by June 15 to the Presiding Officer, an Administrative Law Judge (ALJ). On June 5, the Commission granted an extension of time for the final decision. Pursuant to that extension, the ALJ issued his decision on July 20, 1981, recommending approval of the increases of PRMSA, Sea-Land, and GCML. For TMT, the initial decision recommended neither approval nor disapproval of the increase, but stated that the ALJ was unable to find, from TMT's submissions, that TMT had presented sufficient evidence to carry its burden of proof that its increase was just and reasonable. 9 The ALJ suggested that TMT have another opportunity to show the Commission that its rate increase was justified by supplying more evidence or by referring to submitted evidence not discussed in its brief to the ALJ.
On September 25, 1981, the FMC issued the Order here under review, Docket No. 81-10, Sea-Land Service, Inc., Trailer Marine Transport Corporation, Gulf Caribbean Marine Lines, Inc., and Puerto Rico Maritime Shipping Authority, Proposed General Rate Increases in the Puerto Rico and Virgin Islands Trades (September 25, 1981). The Commission approved the increases of Sea-Land, GCML, and TMT, but disapproved PRMSA's increases to the extent they exceeded an average of 14.5 percent. The Commission ordered PRMSA to roll back its rates within thirty days and to refund to shippers that portion of the rate increase that had been found to be unreasonable and unjust.
PRMSA has petitioned for review of the decision. It challenges the Commission's rejection of its forecasted fuel expense, the Commission's calculation of the cost of debt for the group of companies used as a reference point for the proper rate of return for the carriers, and the composition of that reference group's asset base on which its rate of return was calculated. In a related case, consolidated with PRMSA's challenge, two protestant shippers also petitioned for review. The Government of the Virgin Islands and the Puerto Rico Manufacturers Association (together GVI/PRMA) challenge the allowed rate increases as unjust and unreasonable. First, they urge that TMT failed to carry its burden of proof as to...
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