ALCOA STEAMSHIP COMPANY v. FEDERAL MARITIME COM. Nos. 17378, 17383.
321 F.2d 756 (1963)
ALCOA STEAMSHIP COMPANY, Inc., Petitioner, v. FEDERAL MARITIME COMMISSION and United States of America, Respondents, Grace Line Inc., Compania Anonima Venezolana de Navegacion, Intervenors. ROYAL NETHERLANDS STEAMSHIP COMPANY, Petitioner, v. FEDERAL MARITIME COMMISSION and United States of America, Respondents, Grace Line Inc., Compania Anonima Venezolana de Navegacion, Intervenors.
United States Court of Appeals District of Columbia Circuit.
Decided June 27, 1963.
Mr. Elkan Turk, Jr., New York City, filed a brief on behalf of Royal Netherlands Shipowners Association, as amicus curiae, urging reversal.
Before WASHINGTON, WRIGHT and McGOWAN, Circuit Judges.
McGOWAN, Circuit Judge.
There are before us two petitions to review the approval by the Federal Maritime Commission of a pooling agreement filed with it under Section 15 of the Shipping Act, 1916. (39 Stat. 733, as amended, 46 U.S.C. § 814.) The agreement relates to southbound traffic from Atlantic ports to Venezuela, and the parties to it are Grace Line Inc. (Grace), an American carrier which operates only U.S. flag vessels in this trade, and Compania Anonima Venezolana de Navegacion (CAVN), a government-owned Venezuelan line which operates only Venezuelan flag vessel. The protestants here, respectively, are Alcoa Steamship Company, Inc. (Alcoa), a United States company which operates foreign flag vessels in this trade,
The pooling agreement is concededly a by-product of the efforts by the sovereign governments of this country and of Venezuela to favor the movement of traffic in vessels flying their respective flags. As all parties recognize, the actual revenue-pooling provisions of the agreement are of little significance and play no role in the issues before us.
An understanding of the significance of this clause requires familiarity with the efforts of both Venezuela and the United States to channel cargoes into ships flying their respective flags.
The Venezuelan government has a considerable history, extending back several years, of steps designed to cause cargoes destined for that country to be carried by CAVN. The pace and sweep of these efforts increased in 1959 with the promulgation of a decree (No. 166) that required commercial companies under contract with government agencies for public works construction in Venezuela to ship by CAVN all materials used on that construction. Although this decree does not figure in the matters at issue here, it was followed the next year by another decree (No. 255) which laid the basis for an increasingly effective preference for CAVN. This decree defined several classes of cargoes, basically dependent on to end-use of the goods, which were "exonerated" from the payment of Venezuelan import duties. Although this decree did not itself discriminate as between carriers, its movement in that direction was completed with the issuance in 1961 of Decree No. 331, which provided that exoneration would be available only when the cargo was carried by CA VN "or its associated services." CAVN was empowered to grant waivers but, absent such a waiver, any shipper who was to have the benefit of relief from import duties had to use CAVN as the carrier. As a result, shippers tended to book all of their cargo which might be subject to exoneration on CAVN.
2. The United States.
Decree No. 331 had, however, some adverse consequences so far as CAVN was concerned. These were due to the circumstance that the Congress of the United States had several years earlier acted to favor U.S. flag vessels in the carriage of export cargoes financed by United States agencies, such as the Export-Import Bank. Public Resolution 17 (P.R. 17) of the 73d Congress, 48 Stat. 500 (1934), directed that such cargoes were to be carried exclusively by U.S. flag vessels, unless the Maritime Administration waived the requirement. One form of authorized waiver is that extended generally to recipient nation vessels to handle up to 50 per cent of the cargo in question where "parity of treatment is extended to U.S. vessels in the trade of the foreign nations."
Extensive hearings were held before an Examiner. The Examiner's initial decision recommended that approval of the pooling agreement be withheld, but the Commission unanimously rejected this recommendation, made findings of its own, and approved the agreement.
Although a number of reasons are pressed upon us as to why the Commission erred in approving the agreement, we believe that the central issue here, as it appears to have been in the Commission proceedings, is whether the adverse impact of the agreement upon the petitioners is so great that it must be found, as to them, "unjustly discriminatory or unfair."
It was the Commission's view that the agreement would not operate to diminish materially the traffic carried by the petitioners in competition with Grace and CAVN. In this regard it was noted that the promulgation of Decree No. 331 had fallen with the greatest weight on Grace and that, indeed, the observable impacts upon Alcoa and Netherlands were proportionately slight.
These findings by the Commission represent its best effort to measure the effects of the agreement in relation to petitioners. They are supported by substantial evidence in the record, and we have no basis for rejecting them without substituting our judgment in this specialized area for that of the body best qualified to exercise it.
We turn to a consideration seriatim of some of the other principal contentions urged upon us by one or both of the petitioners.
1. Alcoa asserts that the Commission erred in approving the agreement for the reason that the Commission conceived of its approval as discharging a promotional function in the interest of Grace as an operator of U.S. flag vessels. It is true that the President's Reorganization Plan No. 7 of 1961, which divided the functions of the Federal Maritime Board between the Department of Commerce and the Commission, was motivated to some degree by a purpose to separate promotional from regulatory functions. But Section 15 of the Shipping Act, 1916, stands on its own feet, and it is the Commission which has the responsibility of weighing pooling agreements against the standards therein contained. If the Commission, justifiably and on the basis of substantial evidence in the record before it, approves a pooling agreement as proper under Section 15, it is difficult to see how that result must fall as "promotional" because one of the parties benefited happens to be an operator of U.S. flag vessels.
There was, of course, an obvious reason why CAVN was interested in pooling with Grace, as distinct from either of the petitioners. CAVN's interest was to place itself in a position to participate in Export-Import Bank traffic. It could achieve this only by associating itself with Grace, since it was only by extending parity of treatment to U.S. flag vessels that it could obtain a general waiver incident to P.R. 17. Since neither Alcoa nor Netherlands operated U.S. flag vessels, each was powerless to enable CAVN to achieve its objective, and CAVN's interest in associating with them was presumably minimal. Any "promotional" effect flowed from this circumstance rather than from any purpose on the
2. Alcoa also argues that the Commission, instead of approving the agreement, should have acted to use its powers under Section 19(b) of the Merchant Marine Act of 1920
3. A third contention made only by Alcoa is that the pooling agreement violates two conference agreements to which both Grace and CAVN are parties. It is not clear whether this argument goes to the Commission's powers under Section 15 of the Shipping Act, 1916, or whether it asserts contractual breaches by Grace and CAVN. The latter would not seem to be relevant in this proceeding; and, in any event, we find nothing to indicate that these other agreements imposed any limits upon the Commission's powers and functions under the Shipping Act, 1916, with respect to pooling agreements.
4. A contention of a procedural character made by both petitioners is that the Commission imposed an improper burden of proof upon them to establish that the agreement would drive them out of the trade in question entirely, or seriously restrict their operations in this area. We do not find that in fact the Commission laid down any such requirement; and the point seems to us merely a restatement of the claim that the Commission should have found the agreement "unjustly discriminatory or unfair." The Commission's determination in this regard necessarily turned upon questions of degree in the light of the facts of record. With all the facts of competitive injury before it, the Commission weighed them without reference to the allocation of burden of proof,
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