Trans-Pacific Freight Conference of Japan/Korea v. Federal Maritime Commission
| Decision Date | 01 January 1977 |
| Docket Number | Nos. 78-2172,No.860,SEA-LAND,No.498,No. 78-2172,No.805,Docket No. 73-64,79-1062,63,No.87-346,Docket Nos. 73-5 and 73-64,Docket No. 73-5,87,No. 79-1062,No. 78-2172 and N,No.1419,TRANS-PACIFIC,s. 78-2172,78-2172,78-2172 and N,498,1419,805,87-346,860 |
| Parties | FREIGHT CONFERENCE OF JAPAN/KOREA, et al., Petitioners, v. FEDERAL MARITIME COMMISSION and United States of America, Respondents, Latin America/Pacific Coast Steamship Conference, et al., Australia/Eastern U. S. A. Shipping Conference, et al., Gulf-Mediterranean Ports Conference, Gulf European Freight Assoc., Continental-US Gulf Freight, United Kingdom/USA, Intervenors.SERVICE, INC., Petitioner, v. FEDERAL MARITIME COMMISSION and United States of America, Respondents, Gulf European Freight Association, et al., United Kingdom/USA, Intervenors. . Argued 14 Dec. 1979. Decided 11 Sept. 1980. Petition for Review of an Order of the Federal Maritime commission. Charles F. Warren, Washington, D. C., with whom George A. Quadrino, Washington, D. C., was on brief, for petitioners in Francis W. Fraser, Washington, D. C., with whom Edward M. Shea, Washington, D. C., was on brief, for petitioner in Carol J. Neustadt, Atty., Federal Maritime Commission, Washington, D. C., with whom Edward G. Gruis, Deputy Gen. Counsel, Federal Maritime Commission, John J. Powers, III and Robert J. Wiggers, Dept. of Justice, Washington, D. C., were on brief, for respondents. Also Eliot J. Halpern and F. Conger Fawcett, San Francisco, Cal., entered appearances for intervenor, Latin America/Pacific Coast Steamship Conference, et al., in Also Stanley O. Sher and Marc J. Fink, Washington, D. C., entered appearances for intervenor, Australia/Eastern U. S. A. Shipping Conference, et al., in Also Edward S. Bagley, New Orleans, La., entered an appearance for intervenor, Gulf-Mediterranean Ports Conference, in Also Patricia E. Byrne, San Francisco, Cal., and Howard A. Levy, Encino, Cal., entered appearances for intervenor, Gulf European Freight and United Kingdom/USA, et al., inand Before ROBINSON and WILKEY, Circuit Judges, and MARKEY, * Chief Judge, United States Court of Customs and Patent Appeals. Opinion for the Court filed by Circuit Judge WILKEY. Dissenting opinion filed by Chief Judge MARKEY. WILKEY |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Petition for Review of an Order of the Federal Maritime commission.
Charles F. Warren, Washington, D. C., with whom George A. Quadrino, Washington, D. C., was on brief, for petitioners in No. 78-2172.
Francis W. Fraser, Washington, D. C., with whom Edward M. Shea, Washington, D. C., was on brief, for petitioner in No. 79-1062.
Carol J. Neustadt, Atty., Federal Maritime Commission, Washington, D. C., with whom Edward G. Gruis, Deputy Gen. Counsel, Federal Maritime Commission, John J. Powers, III and Robert J. Wiggers, Dept. of Justice, Washington, D. C., were on brief, for respondents.
Also Eliot J. Halpern and F. Conger Fawcett, San Francisco, Cal., entered appearances for intervenor, Latin America/Pacific Coast Steamship Conference, et al., in No. 78-2172.
Also Stanley O. Sher and Marc J. Fink, Washington, D. C., entered appearances for intervenor, Australia/Eastern U. S. A. Shipping Conference, et al., in No. 78-2172.
Also Edward S. Bagley, New Orleans, La., entered an appearance for intervenor, Gulf-Mediterranean Ports Conference, in No. 78-2172.
Also Patricia E. Byrne, San Francisco, Cal., and Howard A. Levy, Encino, Cal., entered appearances for intervenor, Gulf European Freight and United Kingdom/USA, et al., in No. 78-2172 and No. 79-1062.
Before ROBINSON and WILKEY, Circuit Judges, and MARKEY, * Chief Judge, United States Court of Customs and Patent Appeals.
Opinion for the Court filed by Circuit Judge WILKEY.
This case is before the court on consolidated petitions to review an order issued by the Federal Maritime Commission (the Commission), Part 528 of its rules dealing with standards for self-policing systems, 1 pursuant to section 15 of the Shipping Act (the Act). 2 Petitioners are numerous ocean shipping conferences and rate agreements composed of both domestic and foreign carriers which ply the trade between various foreign and United States ports. Under section 15 of the Act, these conferences, subject to the Commission's approval, are permitted to fix transportation rates, as well as rules and regulations consistent with other substantive provisions of the Act, to which conference members must adhere. As a condition to the exemption from the antitrust laws contained in section 15, conferences are also required to ensure that members comply with the obligations contained in the conference agreements. If the Commission finds that conferences are inadequately policing compliance by the signatories, it is empowered to disapprove the conference agreement.
The rules promulgated by the Commission are intended to establish certain standards by which the Commission hereafter will judge the adequacy of the self-policing systems. These rules require the conferences to engage a self-policing body independent of the conference or rate fixing entity; grant the self-policing authorities certain investigatory powers that must be utilized; prescribe certain procedures for adjudication of breaches of the conference agreement, including the right to a hearing before an impartial arbitrator for accused members; and establish certain recordkeeping and reporting requirements. In addition, section 528.1(c) of the Commission's rules prohibits the conferences from inserting a provision in the conference agreements that would deny the Commission access to self-policing records or documents. Section 528.1(c) is also intended to aid the Commission in implementing its enforcement responsibilities under the Act. 3
Petitioners attack these rules as beyond the rulemaking authority of the Commission. 4 In addition, petitioners raise several procedural objections to the Commission's adoption of the rules, including the contention that the Commission failed to afford petitioners adequate notice and opportunity for comment on certain of these provisions. For the reasons to be discussed, we conclude that each of the objections is without merit and affirm the order of the Commission.
Full understanding of this case requires a brief historical review of the conference system and the administrative scheme under the Shipping Act of 1916 before and after the enactment of the 1961 amendments.
In response to severe rate wars caused by a chronic excess supply of world shipping tonnage, ocean carriers in the last quarter of the nineteenth century began to join together into "conferences" for the purpose of stabilizing the trade by fixing rates and eliminating competition along particular world trade routes. 5 After an extensive investigation into the cartelization of the ocean shipping industry, 6 Congress passed the Shipping Act in 1916. 7 Aware of both the practical difficulty of any single government attempting to regulate the freight rates in an international industry as well as the perceived advantage of a stable rate system, Congress granted in section 15 of the Act an exemption from the antitrust laws for concerted rate activity by the conferences.
Congress, however, also sought to eliminate the worst abuses associated with the conference system by proscribing certain particularly unfair methods designed to drive out competitors from the trades. 8 In addition, in section 15 of the Act Congress required the conferences to file their agreements with the Shipping Board and obtain approval of those agreements from the Board. 9 Although Congress contemplated that the conferences themselves would control their members' adherence to the obligations under the agreements, the Shipping Board, charged with administering and enforcing other regulatory provisions of the Act, 10 was also given responsibility for overseeing adherence by the conference signatories to their agreements. Section 15 authorized the Board to "disapprove, cancel or modify" agreements found to be "unjustly discriminatory or unfair as between carriers, shippers, exporters, importers, or ports," or between American exporters and their foreign competitors, or those found to be detrimental to United States commerce, or to violate any other provision of the Act. 11
Thus the Shipping Act of 1916 established the basic pattern of federal regulation of the ocean freight industry for the next forty-five years. The Act immunized the conferences' anticompetitive agreements from the antitrust laws for the purpose of securing more stable and uniform rates and, particularly important from the United States' viewpoint as the twentieth century progressed, protecting the economically weaker American-flag lines from destructive competition. 12 It proscribed certain especially cutthroat practices and, in addition, relied on the conferences themselves to regulate their members under the watchful supervision of the Shipping Board.
In practice, however, supervision of the conferences' self-regulatory efforts by the successive administrative bodies charged with this responsibility 13 proved woefully inadequate, as the investigations and hearings surrounding the 1961 amendments to the Shipping Act revealed. 14 The immediate impetus to amend the Act was the need to confirm the legality of so-called dual rate contracts, seriously called into question by a 1958 Supreme Court decision. 15 In the course of investigating the antitrust aspects of these dual rate contracts, however, the Antitrust Subcommittee of the House Judiciary (Celler Committee) uncovered over two hundred violations of the Shipping Act and conference agreements. 16 To a great extent, these involved various unfair means that carriers devised to undercut the agreed-upon rate schedules, ranging from cash rebates to shippers, absorption of shippers' storage and trucking costs, falsification of bills of lading to understate the applicable rate or weight of the shipment, to more sophisticated types of secret concessions designed to lure a shipper's business, including lavish gifts and entertainment. 17 These flagrant violations of the Shipping Act and conference agreements undermined whatever stability in the trade and protection for the American-flag vessels that the conferences were thought to afford. 18 Congress, while anxious to retain the conference system, thus recognized the urgent need to enact more effective regulation to curtail malpractices in the ocean shipping industry. 19
Fully aware of the international complexities involved in attempting to tighten control over conference self-policing systems, Congress nevertheless was determined to curb abuses in the trades and thus amended section 15 of the Shipping Act to provide: "The Commission shall disapprove any (conference) agreement, after notice and hearing, on a finding of inadequate policing of the obligations under it ...." 20 In section 15 Congress thus commanded the conferences to make their self-regulation effective or risk disapproval of the conference agreements and as a consequence lose their antitrust immunity. Congress also made clear that the mandatory self-policing clause was intended to "in nowise diminish the powers, duties, and responsibilities" of the Commission under the Act. 21 Indeed, Congress amended section 15 to enlarge the Commission's powers over agreements filed under that se...
To continue reading
Request your trial
-
Transmission Access Policy Study v. Fed Energy Comm'n.
...not be identical to the original proposed rule. See, e.g., AFL-CIO v. Donovan, 757 F.2d at 338; Trans-Pacific Freight Conference v. Federal Maritime Comm'n, 650 F.2d 1235, 1249 (D.C. Cir. 1980). Were the change between the proposed and final rule an important one, we would have to ask wheth......
-
Roe v. Shanahan, 1:18-cv-1565 (LMB/IDD)
...marks and citations omitted). The agency's rationale must be "both discernible and defensible," Trans-Pac. Freight Conf. of Japan/Korea v. Fed. Mar. Comm'n, 650 F.2d 1235, 1251 (D.C. Cir. 1980), and the agency "must treat similar cases in a similar manner unless it can provide a legitimate ......
-
U.S. v. Federal Maritime Com'n
...v. Seatrain Lines, Inc., 411 U.S. 726, 736-39, 93 S.Ct. 1773, 1780-81, 36 L.Ed.2d 620 (1973); Trans-Pacific Freight Conf. of Japan/Korea v. FMC, 209 U.S.App.D.C. 27, 650 F.2d 1235, 1240-41 (1980); Latin America/Pacific Coast Steamship Conf. v. FMC, 150 U.S.App.D.C. 362, 465 F.2d 542, 548-49......
-
Central & Southern Motor Freight Tariff Ass'n v. U.S., s. 83-1581
...omitted)); Independent U.S. Tanker Owners Comm. v. Lewis, 690 F.2d 908, 917 (D.C.Cir.1982); Trans-Pacific Freight Conference v. Federal Maritime Comm'n, 650 F.2d 1235, 1244 (D.C.Cir.1980), cert. denied, 451 U.S. 984, 101 S.Ct. 2316, 68 L.Ed.2d 840 (1981).70 See Exemption of Motor Contract C......