Served April 30, 1998
Exceptions due May 22, 1998
Replies to Exceptions due June 15, 1998
FEDERAL MARITIME COMMISSION
DOCKET NO. 96-06
RIVER PARISHES COMPANY, INC.
v.
ORMET PRIMARY ALUMINUM CORPORATION
Complainant, a tug company engaged in the "assist-tug" business along a stretch of the Mississippi River, formerly doing business at a marine terminal known as the Burnside Terminal in the Baton Rouge, Louisiana port area, alleges that respondent Ormet, which operates the Burnside Terminal, signed a contract with a competing tug company which excludes complainant from serving vessels calling at the Burnside Terminal. Complainant argues that this practice violates the national philosophy favoring free and open competition, denies vessels the right to select the tug company, and unduly and unreasonably prefers another tug company and disadvantages complainant and is an unreasonable practice, in violation of sections 10(b)(11), 10(b)(12), and 10(d)(1) of the Shipping Act of 1984. Complainant seeks a cease and desist order against respondent and money damages because of its alleged loss of business at the Burnside Terminal. Respondent contends that the Commission lacks jurisdiction over the Terminal because it serves non-common-carrier, tramp vessels and that its selection of the competing tug company was a reasonable business decision made for safety, efficiency, and cost-savings reasons. It is held that:
(1) The Commission has jurisdiction over respondent's terminal because common carriers have sent vessels to the terminal that discharge cargo and, alternatively, in view of unclear or ambiguous legislative history and statutory language, under principles of statutory construction, the relevant Shipping Act provision, a remedial statute, should be read broadly and exemptions such as that for "ocean tramps" should be read narrowly.
(2) Respondent's policy of canceling its terminal tariff and requiring ships to certify that they are not common carriers before calling at the Burnside Terminal is, under the facts, not reliable and most probably, would be ineffective in screening out common-carrier vessels.
(3) Complainant has in fact actually increased its business since respondent instituted its exclusive-contract policy at Burnside, respondent's contract with the other tug company produces some benefits, and respondent in no way has a monopoly over the huge relevant market which is the lower Mississippi River where over 150 marine terminals operate. Consequently, complainant has not proven that respondent has acted unduly or unreasonably under the Shipping Act and the evidence does not justify the Commission's nullifying respondent's business decision, which was to select another tug company after soliciting bids from two competing tug companies.
Bruce D. Burglass, Jr. and Christopher K. Tankersley for complainant River Parishes Company, Inc.
Richard B. Foster and Edward J. Sheppard for respondent Ormet Primary Aluminum Corporation.
INITIAL DECISION(1) OF
NORMAN D. KLINE,
ADMINISTRATIVE LAW JUDGE
This proceeding began by complaint served March 6, 1996. Complainant is River Parishes Company (RIVCO), a tug company incorporated in the State of Louisiana engaged in the towing business along a stretch of the lower Mississippi River, covering, among others, the Baton Rouge and New Orleans areas, and furnishing tugs to assist in the docking of different types of oceangoing vessels discharging cargoes at numerous terminals on that stretch of the River. RIVCO alleges that respondent Ormet Primary Aluminum Corporation (Ormet) operates a marine terminal under lease from the Greater Baton Rouge Port Commission. This terminal is known as the Burnside Terminal and is located on the Mississippi River in the Parish of Ascension, Louisiana in the Baton Rouge area. RIVCO alleges that, effective May 1, 1995, Ormet entered into an exclusive contract with another towing company (the Bisso Towboat Company) by which all vessel docking and undocking at the Burnside Terminal must use the services of Bisso, thereby denying RIVCO and all other tug companies the right to assist bringing their customers' vessels into the Burnside Terminal, a right RIVCO had enjoyed since 1973. RIVCO further alleges that the exclusionary towing arrangement and denial of access to the terminal has caused RIVCO and other towing companies to lose customers, profits, and goodwill. RIVCO claims furthermore that it has suffered damages since May 1, 1995, approximating $157,643, plus continuing damages, and asks the Commission to issue a cease and desist order and to establish reasonable regulations and practices at the Burnside Terminal to ensure that all qualified and competent towing companies are eligible to provide their "assist-tug" services at the Burnside Terminal. RIVCO contends that the above exclusionary practice of Ormet violates sections 10(b)(11), 10(b)(12), and 10(d)(1) of the Shipping Act of 1984 (46 U.S.C. app. secs. 1709(b)(11), 1709(b)(12), and 1709(d)(1), which prohibit unreasonable preferences or disadvantages, and unreasonable practices relating to the receiving, handling, delivery, etc. of property.
Respondent Ormet denies any wrongdoing and contends that it is essentially a bulk terminal that does not serve common carriers and that the Commission consequently has no jurisdiction over it or its operations at the Burnside Terminal. Ormet also contends that it has not and does not serve common carriers, that it has canceled its terminal tariff formerly filed with the Commission, and that it requires ships calling at the Burnside Terminal to certify that they are not trading as common carriers.
Because respondent was raising a question as to the Commission's jurisdiction it was necessary to address this issue early in the proceeding so as to avoid, if possible, wasted effort in arguing the merits of Ormet's practices in relation to towing services. There is considerable case authority in the federal courts holding that jurisdictional questions ought to be determined at the outset of cases and, if necessary to allow parties such as RIVCO an opportunity to utilize discovery processes to elicit the necessary facts, such opportunity will be given. Accordingly, after discussions with the parties, I ruled that RIVCO should be allowed a reasonable opportunity to obtain various shipping records pertaining to the ships that had called at the Burnside Terminal to determine if they were common-carrier ships and that RIVCO ought to be allowed to obtain a representative sampling of shipping records and documents in this endeavor. Respondent agreed to cooperate in providing such a representative sampling from its records and RIVCO also sought relevant shipping information from outside sources as well. It was recognized that governing case law holds that parties seeking the aid of tribunals whose jurisdiction is challenged have the burden of proving that such jurisdiction exists over the particular party and practice being challenged.
Before RIVCO had completed its discovery, on May 8, 1996, respondent Ormet filed a motion entitled "Motion for Dismissal in Part." Notwithstanding the title of the motion, what Ormet was seeking was a ruling at the outset of the case delineating the scope of relief which it believed the Commission could grant by law. Specifically, Ormet asked for a ruling that RIVCO "may not recover any reparation and may not be granted a cease and desist order, with respect to any non-common carriage vessel that has called, or will call, at the Burnside Terminal." Ormet further described what type of ruling it was seeking by stating that "[w]e are merely seeking a ruling that will limit the scope of this proceeding to those activities over which the Commission will have jurisdiction in the event that [RIVCO] is able to prove that Ormet is or was a marine terminal operator." At the time RIVCO was arguing that the Commission had jurisdiction to correct unreasonable practices that dealt with any terminal activities of Ormet so long as such activities related to the handling of property at the terminal whether related to common or non-common carriers. Therefore, it was believed that a ruling clarifying the scope of the Commission's jurisdiction might assist the parties in confining their evidence and arguments to activities within the Commission's jurisdiction, thus helping to streamline the hearing, narrow issues, and perhaps even assist the parties in coming to a settlement. At least it appeared that respondent believed that a ruling on its motion at the outset might have such salutary purposes.
On July 9, 1996, I issued clarifying rulings, entitled "Respondent's Motion for Preliminary Rulings Granted," 27 S.R.R. 617, but instructed the parties to continue with discovery so that an adequate record could be developed as to the question of the Commission's jurisdiction over Ormet's terminal activities. Essentially I ruled that whatever relief the Commission could order, assuming that RIVCO proved that Ormet had violated the Act, would have to coincide with the Commission's statutory jurisdiction and could not infringe upon Ormet's non-common-carrier-connected terminal activities any more than would be necessary to relieve the adverse effects, if any, on common carriers that may call at the Burnside Terminal or on persons like RIVCO that wished to do business with common carriers. As mentioned, the rulings were only preliminary or "in limine" in nature and were designed to provide guidance to the parties before they presented their evidence at the evidentiary hearings. However, believing that the rulings would have serious adverse effects on its case, RIVCO sought leave to appeal to the Commission, which leave was granted. On November 22, 1996, the Commission vacated the rulings, finding that they were premature at a time when it was not possible to determine if any violations had in fact occurred or if any remedies were necessary at all. See Order Vacating Ruling, etc., 27 S.R.R. 823. Thereafter, after discussions with counsel for the parties, it was ruled that discovery should proceed under protective orders regarding certain confidential information and that the issue of damages should be deferred pending decision on the issues of jurisdiction and violations. It was agreed that the parties would litigate the issues of Commission jurisdiction plus reasonableness of the practices in question and the parties would submit their evidentiary cases in writing with the right to request cross-examination. Requests to cross-examine certain witnesses were made and consequently oral, trial-type hearings were conducted beginning in New Orleans, Louisiana on September 29, 1997, running through October 1, 1997. They were adjourned to allow the parties to prepare for the examination of two expert witnesses in Washington, D.C. at hearings which ran from November 19 through 20, 1997. RIVCO presented two witnesses, namely, Captain Jeffrey Beech, its Operations Manager and Secretary-Treasurer, and an outside expert, Mr. Richard H. Stagg. Both of these witnesses testified orally at the hearing and were cross-examined. Ormet presented 10 witnesses, four employees of Ormet, two employees of Bisso Towboat Company, three employees of outside organizations, and one expert.(2) Of these 10 witnesses, RIVCO elected to cross-examine four of them. Each of these 10 witnesses also prepared written testimony and there were also massive shipping documents entered into the record regarding voyages and carryings of various ships that had called at the Burnside Terminal, which documents had been obtained by RIVCO through discovery. Finally, depositions of two witnesses, RIVCO's Captain Beech, and Ormet's Mr. Thomas A. Lange, its Terminal Operations Manager, were entered into the record. After conclusion of the evidentiary hearings, the parties filed their briefs, RIVCO filing on January 23, 1998, followed by Ormet's answering brief on March 6, 1998, and finally, by RIVCO's reply brief on March 31, 1998.
FINDINGS OF FACT
The following findings of fact are taken, as is customary, from the parties' proposed findings set forth in their briefs where the record citations are shown and not repeated in this decision. The findings are divided into background descriptions of the parties and Ormet's change in the way in which it furnishes "assist-tug" services; a description of the vessels that have called at the Burnside Terminal, which descriptions are relevant to the jurisdictional issue; and, finally, a section dealing with the question of the reasonableness and lawfulness of respondent's decision to use Bisso Towboat Company exclusively at the terminal to perform the "assist-tug" services.
Description of the Parties and of Ormet's Change
in Policy Regarding "Assist-Tug" Services
1. The Burnside Terminal is located approximately 30 miles south of Baton Rouge at the 169.2 mile marker on the Mississippi River. It is one of the largest deep-water terminals on the lower Mississippi River, and serves as a transfer and storage facility for cargoes moving between ocean-going vessels, Ormet's adjacent alumina plant, barges, rail cars, and trucks.
2. The annual operating capacity of the Burnside Terminal is five to seven million tons of bulk cargo. The terminal has berths for two ships, one at the dock and one mid-stream. Each of the dock's twin gantry cranes can handle up to 750 tons of material per hour. There are also a barge loading dock and storage facilities, including a 225,000-ton capacity concrete pad, and stable ground that can hold an additional 250,000 tons. Covered storage is also provided in unique "bubble" storage facilities. All of these facilities are connected by an extensive covered conveyor system. Burnside Terminal's mid-stream transfer operation provides the second ship berth consisting of a buoy system downstream from the dock. This berth provides ship-to-barge cargo transfers utilizing floating cranes. The terminal also operates a barge fleeting area with tugs to shift the barges to and from the terminal.
3. Ormet occupies the Burnside Terminal under a lease with the Greater Baton Rouge Port Commission (the "Port"). The lease began in 1958 at the same time that the adjacent alumina plant began operations. Ormet is an aluminum producer and it operates the Burnside Terminal in order to handle bauxite and other raw materials imported for its alumina plant that is located adjacent to the terminal.
4. Pursuant to the lease, Ormet is responsible for the operation, maintenance and repair of the facility. Ormet either performs directly, or through subcontractors, all operations of the terminal, including loading and unloading cargoes to and from ships, barges, rail cars, and trucks; storage and blending of cargoes; and such incidental services as line handling, barge shifting and fleeting, rail car movements, and cargo weighing and inventory control.
5. Article 2 of the lease states that the Terminal "shall be a public marine terminal for loading, discharging, transferring, storing and handling commodities in bulk." Ormet considers Burnside Terminal to be a public terminal. Article 2 also provides that the Terminal may be used for general cargo in certain limited instances. Burnside Terminal is capable of handling and has in the past handled non-bulk or "general" cargoes susceptible to mark and count. Burnside Terminal's tariff does not prohibit the handling of general cargo and provides for rates for "cargoes which are not bulk, dry, free-flowing cargoes, or which are otherwise unsuitable for grab bucket discharge from vessels."
6. Ormet's customers are principally commodity trading companies interested in the import and export of various types of bulk materials. The main cargoes are coke, bauxite, pig iron and various metal alloys and minerals as shown in the Terminal's tonnage performance reports. These customers contact Ormet for quotations on the loading or unloading of their cargoes. If Ormet is able to make a competitive bid, the customer will direct its cargo to Burnside Terminal by arranging for shipment to that facility. Burnside Terminal is then advised of the details such as the ship, the ETA, the identity of the agent, the surveyors, etc. Burnside Terminal prepares an estimate of terminal charges such as dockage, line handling, tugs, etc. This estimate is based on the expected length of time the vessel will be at the berth and the services expected to be needed. Ormet requires these charges to be paid by the agent of the owner or charterer of the ship prior to the arrival of the ship, although it is not always able to obtain payment by that time. The charges for unloading the cargo, storage, handling, etc. are usually billed separately to the trading company that is receiving the cargo.
7. The purpose of "assist tugs" is to help vessels maneuver into position in berths along the Mississippi River. Generally speaking, vessels cannot come into a berth or a buoy system without the thrusting assistance on the port or starboard sides of the vessel, which thrusting power assist tugs provide.
8. During the maneuvering, a statutory pilot is essentially in control of the operation, giving orders to the captain of the vessel and the captains of the tugs.
9. Currently, there are four companies that provide "assist tug" services from the mouth of the Mississippi River to Baton Rouge. They are Crescent; E.N. Bisso; Bisso Towboat Company; and RIVCO. RIVCO is the smallest of the four companies and operates nine tugs.
10. All four companies have historically provided services to vessels calling at Burnside Terminal.
11. The standard procedure for ordering "assist tugs" in the Mississippi River is for the captain to advise the local agent attending the vessel during its call in the River to order the number of tugs that the captain determines are necessary to maneuver the vessel safely. The time for the maneuver is established and the tugs arrive on or before the appointed time. RIVCO tugs, as a practice, endeavor to arrive 30 minutes before the appointed time to avoid delaying the maneuver. Because the operators, charterers, and agents often have longstanding working relationships, the agents usually know when and how many tugs to order. They also know which tug company the operator or charterer prefers or with whom they have longstanding contractual commitments or prior experience.
12. The four tug companies engage in free and open competition on the River with each other for the opportunity to serve the vessels calling at the River's many terminals.
13. This competition is based upon a number of factors, one of which is price. All of the companies have price lists for the services that they provide. The price lists are called tariffs although they are not such either technically or legally. Commonly, and especially for regular customers, the companies offer discounts from the list prices. Consequently, the true cost to the vessel is not always reflected in the list prices circulated by the companies. The four companies also tend to extend credit to their customers of at least 60 days. The vessels are not required to pay the fees up front.
14. Prior to May 1, 1995, all four tug companies were serving vessels calling at Burnside Terminal.
15. In accordance with its April 19, 1995, announcement, Burnside Terminal implemented a new "assist tug" policy and practice on May 1, 1995, pursuant to a contract with Bisso Towboat dated May 1, 1995.
16. Burnside Terminal does not have its own resources and cannot provide "assist tug" services itself. Accordingly, it elected to subcontract with a third party, Bisso Towboat, to provide these services.
17. The contract rates that Burnside Terminal pays Bisso Towboat for the tug services are less than the rates that Burnside Terminal charges the vessels calling at Burnside Terminal for the tug services.
18. Burnside Terminal requires that the tug fees, as well as other fees such as dockage and line handling, be paid before the vessels call at the terminal. No credit is given.
19. Pursuant to the tug contract with Bisso Towboat, on the other hand, Burnside Terminal is not required to pay Bisso Towboat for 45 days, even though Burnside Terminal requires the vessels to pay for the tug services prior to or at the time the tug services are rendered.
20. The practice and policy of Burnside Terminal is to utilize the Bisso contract as an exclusive contract, practically and effectively barring the other three tug companies from Burnside Terminal, although under the contract Burnside has the right to use another tug company if dissatisfied with Bisso's services.
21. Burnside Terminal has asserted that no other tug companies have worked vessels calling at Burnside Terminal since May 1, 1995, and that it would not allow a vessel to berth if tugs other than Bisso Towboat tugs were being utilized.
22. Since May 1, 1995, there have been only two or maybe three instances where tugs other than Bisso Towboat tugs have assisted vessels calling at Burnside Terminal and in at least two of those instances, the tugs were working under subcontract to Bisso Towboat.
The Types of Vessels that Have Called
at the Burnside Terminal
In this section of findings it will be seen that out of the 395 vessels that called at the Burnside Terminal during the period May 1995 through May 1997 only 82 (21%) were Ormet's own aluminum-ore-carrying ships; 224 (57%) carried for only one shipper; 53 (13%) carried for two shippers; and 36 (9%) carried for three or more shippers. Therefore, as discussed later in this decision, under the presumption that a ship carrying for two or more shippers is a common carrier, which presumption the Commission has enunciated in a previous case, some 22% of the vessels that called at Burnside were presumably common-carrier vessels. If only those carrying for three or more shippers are counted, the figure is 9%. Included among these ships are those owned or operated by recognized common-carrier companies, which numbered 12, as will be seen below. Also, as seen below, many of these ships carried multiple cargoes for multiple shippers, were not fully loaded, and discharged cargoes at other ports.
Because of the voluminous record which contains detailed shipping documents describing so many vessels, for the sake of brevity and avoidance of undue cumulation, I have selected the more prominent examples of ships that carried for multiple shippers or were sent by recognized common carriers, although the record contains descriptions of many more ships.(3)
23. Based upon Tonnage Performance Reports obtained from Ormet and other shipping documents of record, a significant number of vessels which have called at Burnside Terminal and continue to call at Burnside Terminal are operated by known common carriers, carry cargo for two or more shippers, carry multiple cargoes, and have multiple ports of call on the same voyage.
24. A large number of vessels calling at Burnside Terminal were operated by or chartered to well-known common carriers in the U.S. trades: Lykes Bros. Steamship Co., Inc.; China Ocean Shipping Company (COSCO); Murmansk Shipping Co.; Black Sea Shipping Co.; Navrom; SafMarine Corporation; Cho Yang; Sinotrans; United Arab Shipping; Shipping Corporation of India; Hanjin Shipping Company; and Lineas Agromar.
25. The M/V ARABIAN EXPRESS, which called at Burnside Terminal in May of 1995, was chartered to Lykes Bros. Steamship Co., Inc., a well known ocean common carrier. Consistent with Lykes' operations, the vessel was operated as a general cargo vessel. Lykes issued its own manifest for the Burnside call of the vessel which discharged cargo for three receivers pursuant to three bills of lading for three different shippers, one of which was a freight prepaid bill of lading. Lykes' internal correspondence demonstrates that the M/V ARABIAN EXPRESS was chartered as a substitute vessel for Lykes' previously scheduled common carrier vessel the S.S. LOUISE LYKES to carry all northbound cargoes currently booked for that vessel. In addition to the cargo discharged at Burnside Terminal, and consistent with its common carrier operations, Lykes booked and carried cargo from Brazil to the United States on the M/V ARABIAN EXPRESS. This cargo was palletized baler twine. Lykes issued its own bills of lading for this cargo on a liner term basis, freight prepaid. The stowage plan for the vessel shows the discharge port as Tampa and depicts the stowage of the palletized bales of twine. The stowage plan for the M/V ARABIAN EXPRESS marked "Revision 1" from Burnside Terminal's files also indicates by shading where the baler twine would have been in the vessel. This is a common practice for Burnside Terminal discharge information. RIVCO's expert, Mr. R.H. Stagg, testified that the vessel was operated by Lykes as a common carrier.
26. The M/V LEIRA, a vessel owned by SafMarine Corporation, a well-known common carrier, called at Burnside Terminal in May of 1995. The vessel has called at Burnside Terminal several times since May of 1995 and appears to have carried similar cargoes each time. On this voyage, the vessel carried cargoes for two customers, Mid-Ship and QIT. The discharge plan from the Burnside Terminal records does not show any cargo in Holds 2 and 4, indicating that two holds were available for other cargo.
27. The COSCO vessel M/V RAINBOW called at Burnside Terminal in May as well. The deadweight of this vessel is 38,300 tons based upon Lloyds Register but the vessel only discharged 7,100 tons at Burnside for Cometals. Consequently, the vessel was available for the carriage of additional cargoes to other ports.
28. During the month of June, 1995, the COSCO vessel M/V SEA MILD carried cargo for more than three different shippers to Burnside Terminal and discharged bags for one or more of those shippers. The bills of lading for this vessel, one of which was freight collect, show that cargoes on this vessel were being shipped by six shippers to four consignees. In addition, the manifests demonstrate the vessel called not only in Louisiana but also Delaware to discharge cargo. The stowage and discharge plans for the vessel corroborate that the cargoes were destined for two different discharge ports.
29. Another COSCO vessel, the M/V TRAMCO AMITY, also called at Burnside Terminal during June, 1995. Like the M/V SEA MILD, this vessel discharged bags and carried cargo for multiple shippers and consignees. With respect to the bagged cargo, there may have been as many as 3,000 bags discharged from this vessel. The manifest from Baton Rouge Marine Corporation and the copies of the bills of lading for this vessel demonstrate that there were up to fourteen shippers and at least three consignees on this vessel.
30. During the month of July 1995, a Lykes vessel called at Burnside Terminal. The M/V FATHULKHAIR, a United Arab Shipping vessel, was chartered to Lykes. Based upon the documents for this vessel, Lykes entered into charter parties for only part loads of cargo with the two shippers of bulk cargo on the vessel. The relevant manifest and bills of lading demonstrate that there were two shippers and two consignees for the cargo that Lykes carried and that was discharged at Burnside Terminal. Lykes' communications with cargo interests soliciting cargo for the vessel show that the vessel was held out generally for the carriage of cargo. Furthermore, RIVCO's expert witness, Mr. Stagg, testified that Lykes utilized this vessel in its common carriage operation.
31. The M/V TRADE AMBASSADOR, a SafMarine vessel, called in July of 1995 at Burnside Terminal. Of the nine bills of lading for cargo discharged at Burnside Terminal, four different shippers were involved. The receivers and customers of the cargo at Burnside Terminal involved six different companies. In addition, like many vessels calling at Burnside Terminal, bags were included as part of the cargo and discharged for one of the customers or receivers who paid for Burnside Terminal's stevedoring services.
32. The M/V ZARNESTI, a Rumanian flag vessel owned by Navrom, a recognized controlled common carrier by the FMC, discharged cargo for three shippers in July of 1995. The M/V ZARNESTI is a general cargo vessel. Consistent with its configuration and operation, the documents for this vessel demonstrate that the vessel was booked after its Burnside call to carry a dismantled ammonia plant on a liner basis from Houston, Texas.
33. In the month of September, 1995, the M/V FENG SHOU, a COSCO vessel, called to discharge a load of bulk cargo as well as bags and palletized electrodes. Burnside Terminal provided stevedoring services to four different customers, one of whom received the palletized electrodes, which is a mark and count cargo. In contrast, bills of lading referred to at least six different receivers of the cargo. In addition, several of the more than 30 bills of lading issued for this vessel for nearly 20 different shippers were freight collect, such as the bill of lading for the electrodes, and the vessel had cargo on it for discharge at ports other than Burnside Terminal. In other documents for this vessel, Burnside Terminal quoted a rate for the palletized electrodes prior to the call of the vessel. As previously noted, a number of the bills of lading included bags of cargo.
34. The general cargo vessel M/V AKRAGAS called in September of 1995 as well. This vessel was operated by Kroon Shipping Corporation and cargo was discharged at Burnside Terminal for three different receivers. Bills of lading also indicate that there were three different shippers of cargo on this vessel. This movement was consistent with Kroon's normal, regular operations where Kroon solicits business through brokers and, as a result of these operations, is known as an operator that holds itself out to carry parcel lots of bulk cargo, or any cargo for that matter, for hire. The general cargo employment of the vessel is further demonstrated by the employment of the vessel after it discharged cargo at Burnside Terminal. In the documents for this vessel, it was scheduled to load cargo in Mobile, Alabama for American Cast Iron Pipe Company. This cargo consisted of ductile iron pipe. The terms of movement were full liner terms. The vessel was also scheduled to load cargo in Mobile for Yemen Exploration and Production Company, again on full liner terms. This cargo included pipe and boxes of accessories.
35. During the month of October, 1995, the M/V TAL, a Sinotrans vessel, a company which is a known common carrier in the U.S. trades, called to discharge cargo for five shippers and three consignees. The bills of lading for this vessel also indicate that cargo was discharged at Wilmington, Delaware. The stowage plan and the discharge plan for the vessel indicate that Wilmington, Delaware cargo was carried in two of the holds of the vessel.
36. During the month of November, 1995, a general cargo vessel charted to Lykes, the M/V ISTRIAN EXPRESS, called at Burnside Terminal for the discharge of cargo for three shippers and three consignees. The cargo consisted not only of bulk cargo, but bags as well. The documents for this vessel indicate that Lykes loaded and discharged a substantial amount of different types of steel products which were carried between foreign ports on the voyage of the vessel between South Africa and the Gulf, demonstrating a holding out to carry cargo of all kinds for all persons. Consistent with the usual practice, the discharge plan for the vessel indicates that there was other cargo loaded on the vessel for other ports of discharge by shading on the discharge plan. RIVCO's expert witness, Mr. R.H. Stagg, testified that this vessel was utilized by Lykes "as a common carrier" in its common carrier services.
37. The vessel M/V XUE HAI, a COSCO vessel, called at Burnside during November and discharged cargo for approximately eight shippers and three consignees. The documents for this vessel indicate that the vessel called at Mobile before it called at Burnside Terminal and that it was destined for Brownsville after Burnside. The manifest from Mobile shows that there was cargo for two shippers and one consignee at that port. This vessel also carried, in addition to the bulk cargo, bags which were discharged at Burnside Terminal.
38. During the month of December, 1995, the M/V IVAN BOGUN, a vessel owned by Murmansk Shipping, a controlled common carrier so designated by the FMC, called at Burnside to discharge cargo for three shippers and three consignees. The cargo consisted not only of bulk cargo but also of bags. This vessel calls relatively frequently at Burnside Terminal and also called earlier in August of 1995. The vessel has also called since December of 1995 at Burnside Terminal.
39. In January 1996, the M/V KOREAN PIGEON, a vessel owned by Cho Yang Shipping Company, another well-known common carrier, called at Burnside Terminal to discharge cargo from four shippers to four different receivers. Other documents for this vessel show steel in sections, plates, and bright bars in Hold No. 2 for discharge at Houston for a different shipper from those for the Burnside cargo and one freight prepaid bill of lading.
40. The M/V AKADEMIK Y PATON, a general cargo tweendecker, called at Burnside Terminal in January of 1996 to discharge for two receivers not only bulk cargo but also steel bars. The vessel is owned by Black Sea Shipping Company, which is a controlled common carrier so designated by the FMC. Burnside Terminal quoted a rate for the discharge of this nonbulk cargo to the receiver, Fecat, Inc. The stowage plan for the vessel indicates that there was also cargo loaded to the vessel for discharge in Callao, presumably in Peru. There is also an indication in the documents for this vessel that it was calling at Lake Charles after New Orleans. The call at Lake Charles was to load a part cargo of rice in bags, a common liner type of cargo.
41. During the month of February, 1996, the COSCO vessel M/V TUO HAI discharged cargo for four receivers. As indicated in the documents for this vessel, it included multiple bills of lading and discharge at two different ports, Burnside and Mobile, Alabama. Consistent with the bills of lading, the stowage plan for the vessel also indicates that there was cargo aboard the vessel for Mobile, Alabama, including bags.
42. During the month of March, 1996, the vessel M/V ALPHA called at Burnside Terminal to discharge cargo for four or five different shippers and five different consignees. Marine Commodity Lines (MCL) was the operator of this vessel. This is one of several of of the MCL vessels that have called at Burnside Terminal since May 1, 1995. These vessels have operated on a very similar basis with calls at Maputo, Durban, Richard's Bay, and the United States. MCL issued thirteen bills of lading for the cargo on this vessel and several were marked "Freight Prepaid." MCL solicits cargo on a regular basis, although it does not advertise in the usual trade publications, and is known in the South African trade as an operator that holds itself out to carry suitable bulk cargoes, as well as other cargoes that may be offered to it by shippers for hire, on a monthly basis between South Africa and the U.S. Gulf, particularly the Mississippi River.
43. during the month of April, 1996, the COSCO vessel M/V YI RONG, a general cargo vessel, called at Burnside Terminal. The vessel discharged cargo for four receivers which included not only normal bulk cargo but bags as well. Bills of lading were issued to six different shippers for delivery ultimately to the four receivers at Burnside Terminal. Approximately 1,400 bags were discharged from the vessel. Documents for this vessel indicate that it was then chartered to Intermarine Corporation, which is a known common carrier in the United States trades, for the carriage of steel and general liner cargoes. Those documents also indicate that the vessel loaded baled cotton in New Orleans and was also scheduled to load such cotton at another port. Several of the bills of lading for the inbound cargo discharged at Burnside Terminal provided that the freight was prepaid rather than paid pursuant to a charter party. The discharge and stowage plans for the vessel also indicate that portions of the vessel had cargo for other ports of discharge. In addition, the charter party with one of the shippers of cargo on the vessel destined for Burnside refers to the ability of the vessel owner to load completion cargo on the vessel and was a full or part charter, owner's option.
44. During the month of May, 1996, the COSCO vessel M/V SHI HUI called at Burnside Terminal. The vessel carried not only bulk cargo but also bagged cargo, some of which was marked. Furthermore, there are indications in the documents for this vessel that some of the large bags included smaller bags within them. COSCO issued multiple bills of lading to more than 20 shippers with at least seven different notify parties. There may have been close to 6,000 bags discharged from the vessel. Finally, there was also cargo destined for Montreal, providing another port of discharge.
45. The M/V PROIKONISSOS called in May of 1996 at Burnside Terminal. This vessel was operated by Kroon Shipping Corporation and carried cargo for five different shippers for delivery to three different receivers. In general, the itinerary was the same as Kroon's other vessels, the South African range to the U.S. Gulf/Mississippi River. In addition to the call at Burnside Terminal, the vessel also called at Point Comfort, Texas to discharge cargo. The discharge plan from Burnside Terminal indicates that there was cargo in two holds of the vessel for discharge at another port. The two holds were the same holds loaded with the Point Comfort cargo.
46. The M/V IONIA also called at Burnside Terminal in May of 1996. This vessel was operated by Marine Commodity Lines. The vessel carried not only bulk cargo but apparently carried bags as well as a cargo of steel for discharge at New Orleans. The manifest entry for the bags of silicon metal state they were "shipped breakbulk." The vessel operator issued more than 20 bills of lading for eight shippers for delivery of cargo to five or more receivers. The Burnside Terminal discharge plan indicates that cargo was on board the vessel for discharge at another port. Correspondence from Burnside Terminal to American Vermiculite Corporation addresses rates valid through February of 1997 for vermiculite in bulk on both bulk carrier vessels as well as general cargo vessels. This voyage was consistent with MCL's pattern of operation.
47. In the month of July, 1996, the vessel M/V MARE called at Burnside Terminal to discharge multiple cargoes for multiple shippers and consignees from multiple ports of loading. The vessel was operated by Marine Commodity Lines. Based upon the bills of lading for this vessel, a number of which were prepaid, there were apparently five shippers and possibly seven receivers. The cargo on the vessel included bags and cargo from South Africa to Brazil. This voyage is consistent with the type of operation of MCL which generally is loaded with South African cargo in small lots. MCL will call at one of several terminals in the River and MCL controls the discharge berth, as is clearly indicated on the bills of lading for the M/V MARE.
48. For the month of August, 1996, the vessel M/V ELIKON called at Burnside Terminal to discharge cargo for four receivers. The 15 bills of lading issued for this vessel indicate that there were at least four shippers of cargo to these four receivers. Some of the bills of lading also state that the cargo was freight prepaid. This vessel was operated by Southern Chartering, as demonstrated on the part cargo charter party with one of the shippers, Tisand. Southern Chartering is known as an operator that holds itself out to carry "parcel bulk" cargoes for multiple shippers in the South African trade to the U.S. Southern Chartering uses brokers to solicit cargo for its vessels like Kroon and MCL do. It is beginning to establish a somewhat frequent service.
49. In the month of November, 1996, the M/V CITY OF AKAKI called at Burnside Terminal. This general cargo vessel, operated by Lineas Agromar, a common carrier in the U.S. trades, discharged three small part cargoes at Burnside for three different receivers. The documents for this vessel demonstrate that it was carrying general cargo as well. It had cargo for the Port of Houston that was described as general cargo, such as a crane and steel pipe. Other documents demonstrate that the vessel was configured to and did carry containers and that some of the stowage plans clearly show that the container cells were included in some of the holds of the vessel. Two of the bills of lading for the cargo discharged at Burnside Terminal were prepaid. In one document regarding the call at New Orleans for discharge, the agent was concerned that there might be some "obstructions or containers in the way of the NOLA cargoes" and the master advised that he did have on deck cargo at Hatch No. 2. Another document shows a proposed stowage plan for the Port of Houston with information regarding drilling equipment for "HOU/RIO" as well as a number of containers to be loaded in Houston. Other bills of lading show the carriage of numerous containers and other cargo between South and Central American and Mexican ports at which the CITY OF AKAKI called on this particular Voyage No. 12. All of the bills of lading are liner bills of lading and most are prepaid or collect. In the face of such specific information regarding general cargo and multiple ports of call in the U.S. and elsewhere, Ormet concluded that the CITY OF AKAKI was not operating as a common carrier on Voyage No. 12.
50. In the month of December of 1996 the COSCO vessel M/V VITORANDIS called at Burnside Terminal to discharge cargo for multiple shippers and consignees. The cargo consisted of both bulk cargo and bags. About one half of the total cargo on the vessel was discharged at Burnside with the remaining cargo to be discharged in Montreal. The stowage and discharge plans for this vessel clearly indicate that there was cargo to be discharged in Montreal. Twelve bills of lading for the Burnside cargo were issued to 10 different shippers for at least three different consignees. One of the bills of lading was freight collect. Although a number of the bills of lading covered bulk cargo, all appear to be the standard form COSCO liner bills of lading and not charter party bills of lading.
51. The M/V COSMAR called at Burnside in December of 1996 to discharge nine different types of cargo for seven customers. The vessel was operated by Marine Commodity Lines. The documents for this vessel indicate that the ship was being booked for cargo to return to South Africa so that the vessel could be loaded for another voyage to the U.S., consistent with the operation of the other MCL vessels, particularly northbound. MCL issued bills of lading to eight shippers and seven consignees received the cargo. Most of the bills of lading stated that the port of discharge was one safe berth Mississippi River "Owners Option." Although charter parties are referred to in most of the bills of lading so marked, the owner rather than the charterer had the option of choosing the discharge berth. Several of the bills of lading were also denominated "Liner Bills of Lading."
52. The M/V LEIRA, a SafMarine vessel, called at Burnside Terminal in December of 1996 to discharge cargo for three receivers pursuant to bills of lading issued to three different shippers. This vessel also called at Burnside Terminal in May, 1995. The Burnside Terminal Tonnage Performance report for December, 1996 shows the customer for the titanium slag to be "Mid-Ship Log." The bill of lading for the titanium slag, however, shows the consignee to be E.I. DuPont De Nemours and Company. "Mid-Ship Log" is apparently an agent for DuPont.
53. In March, 1997, a COSCO vessel, the M/V HUA RONG SHAN, called at Burnside Terminal. The M/V ANDROMEDA called to discharge cargoes for three shippers. Four other vessels, the M/V MASS PROSPERITY, M/V NEA DOXA, M/V CHRISTINA C, and M/V SAMRAT RUCAKA, all called, each to discharge cargo for the two different shippers. Two other vessels, the M/V NEA TYHI and M/V SWAN had small loads discharged, 3,000 MT and 3,900 MT, respectively, indicating that each had space available for additional cargoes.
54. In May, 1997, the COSCO vessels M/V NEWAYS and M/V SHOU MING HAI called at Burnside Terminal. Three vessels, the M/V ARISBE, the M/V IONIAN WIND, and the M/V KOROS, each called at Burnside Terminal to discharge cargo for two different shippers. The M/V IONIAN WIND, an Atlantic Bulk Carrier vessel, also was carrying cargo for the two shippers that on previous voyages had loaded cargo to the vessel. The M/V HANJIN NEW ORLEANS, a vessel owned by Hanjin Shipping Company, a well-known common carrier, also called at Burnside Terminal in May.
55. MCL, in particular, has had several vessels call in the Mississippi on virtually a monthly basis. MCL vessels called at Burnside Terminal in June, July, August and September. Two of these calls were by vessels which had called at Burnside before, the M/V MARE and M/V MAROUDIO. Through November 20, 1997, MCL continued to ]operate in the same manner as it had previously, holding itself out to the public to carry multiple cargoes for multiple shippers in the South African/U.S. Gulf trade.
56. Although Mr. Stagg was proffered as an expert witness and his testimony was admitted on that basis, he testified in many instances on the basis of personal knowledge and experience, particularly with respect to MCL and the three Lykes vessels that called at Burnside Terminal in 1995, at which time Mr. Stagg was employed by Lykes and was the Lykes officer responsible for the supervision of those vessels in their operation between the U.S. Gulf and South Africa.
57. Burnside Terminal does not restrict its services to vessels with only one shipper utilizing the full reach of the vessel for one cargo but promotes itself as being the most experienced stevedore on the Mississippi River with the discharge of multiple ships of bulk cargoes and multiple stowage of such cargoes in hold with various types of separation materials. Burnside Terminal prides itself on its multi-lot bulk discharging operations and regularly concludes agreements with customers to handle cargoes carried on general cargo vessels and other non-bulk vessels.
Ormet's Purported Practice of
Barring Common-Carrier Vessels
58. Burnside Terminal does not conduct its own independent analysis of the status of vessels calling at the Terminal but relies solely on the berth applications filed by the vessel agents. Burnside's terminal manager, Mr. Lange, testified that he is not an expert on common carriers nor is there anyone else at the Terminal who is an expert and the Terminal does nothing to verify the accuracy of the information on the berth applications. Mr. Lange admitted that he is not qualified to judge whether or not a given vessel is a tramp or a common carrier. Ormet's expert witness, Mr. Jilek, testified that the vessel agents in New Orleans, at least, were not qualified to make the determination that a vessel was in common carriage, and even Mr. Jilek conceded that he was not an expert on common carriage. Indeed, Mr. Jilek opined that only the FMC or an arbitration panel or arbitrator could make such a determination.
59. Burnside Terminal states that if no berth application is received a vessel may be denied permission to berth. However, the Terminal has received only about an 80% return on berth applications and no vessels have been denied access to the Terminal for failure to file a berth application or for the filing of an incorrect application.
60. Since April 1996, the month in which Ormet began its new policy of screening out common-carrier vessels through berth-application certifications, one common-carrier company alone (COSCO) sent some 10 vessels to the Terminal through May 1997. (Ex. 2, Exhibit K, attached thereto.)
The Merits of the Complaint: Has Ormet Acted
Unreasonably
or Unlawfully by Selecting Bisso Towboat Exclusively
61. Ormet instituted its "sole provider" system on May 1, 1995, after Ormet solicited competing bids from two out of the four tug companies competing along the lower Mississippi River, namely, Bisso Towboat and E.N. Bisso. RIVCO was not asked to bid, according to Ormet's Mr. Lange, because of RIVCO's relatively small size. The other tug company, Crescent River Towing, was not invited to bid because it is owned by Cooper/T. Smith, a direct competitor of the Burnside Terminal.
62. According to Captain Beech, RIVCO's Operations Manager, RIVCO cannot provide the service needed at the Burnside Terminal under the terms offered by Bisso Towboat, i.e., by dedicating a certain number of tugs to Burnside and at Bisso Towboat's rates charged Ormet. Captain Beech would prefer to maintain the current system of allowing all four tug companies to compete along the River to allow for flexibility among the tug companies.
63. After Ormet announced its new policy restricting "assist-tug" services to Bisso Towboat exclusively, several vessel agents and one vessel operator registered their unhappiness with the new system. One of the protesting agents complained about the new system because it interfered with tug contracts which its principal, a carrier, had entered into with a tug company and interfered with the vessels' right to negotiate tug charges. One of the "complaints" was made a month before the new system went into effect and other "complaints" questioned the need for and purported benefits that Ormet claimed would result from the new system and noted that the new system would interfere with the vessels' previous rate arrangements with tug companies at favorable rates, possibly increasing the vessels' costs. Furthermore, some of the vessel owners or agents, who, according to Captain Beech, complained about the change to Ormet's new system and who are located in Greece, were concerned that RIVCO might not be able to service their vessels at Burnside under contracts with RIVCO. It was not apparent that these vessel interests in Greece were aware that Burnside's rates for "assist-tug" services would be lower than RIVCO's. (Tr. 133-135.) In any event, the "complaints" were registered several years ago shortly after Ormet instituted the new system and apparently no further "complaints" from vessel interests have been received by Ormet.
64. The issue of the exclusive contract with Bisso Towboat was considered by Ormet's lessor, the Greater Baton Rouge Port Commission (Port), at a meeting but was tabled with no formal action being taken by the Port. The Port did express concern about the legality of the contract under the Shipping Act of 1984 but apparently, after being advised that the Commission would not be concerned because of the purported absence of common-carrier vessels at the Burnside Terminal, the Port decided to take no action.
65. Under its contract with Bisso Towboat, Bisso Towboat's rates that it charges Ormet are lower than those of the other competing tug companies, and Ormet's rates for "assist-tug" services that Ormet charges its vessel customers, even after a markup over Bisso's "wholesale" rates, are still lower than RIVCO's rates charged to RIVCO's vessel customers. RIVCO's rates, like those of the other tug companies, have increased twice whereas Ormet's rates have remained constant.
66. In addition to the "wholesale" rates that Ormet has obtained from Bisso Towboat under the exclusive contract, Ormet is also given a period of 45 days before it has to pay Bisso Towboat. Ormet's rates for "assist-tug" services at the Burnside Terminal have remained at $1,450 per tug, which was the rate when the new system was instituted almost three years ago. Burnside's "assist-tug" rates are $300 - $400 less per tug than the average discounted rates charged by RIVCO and the other tug companies, and Ormet does not increase its charges with the size of the vessel, as do the other tug companies, so that savings at Burnside are even greater with larger vessels. Even Bisso Towboat's rates at other terminals where Bisso does not have an exclusive contract with the terminal operator are higher than the rates Bisso charges Ormet at the Burnside Terminal pursuant to the exclusive contract with Ormet.
The Benefits of Ormet's "Sole Provider" System
67. Ormet decided to adopt the "sole provider" system for a number of reasons, including the experience of Terminal Operations Manager Thomas A. Lange, who previously worked at the International Marine Terminals (IMT) bulk facility at Myrtle Grove, Louisiana, which successfully instituted such a system about ten years ago.
68. Vessels obtain "assist tug" services at reduced prices because of the economies of scale that Ormet creates by purchasing tug services wholesale and selling them at retail. The savings to vessels on account of the "sole provider" system at the Burnside Terminal have been sizeable.
69. The "sole provider" system reduces damages to the dock facility during docking and undocking and shifting vessels because the tug crews are dedicated to the Burnside Terminal operation and become expert in working there. There have been no reports of damage to the facility since Ormet initiated the "sole provider" system.
70. The reduction in damages to the dock and the mid-stream mooring buoys allows Ormet to lower its cost of facility repairs and maintenance.
71. The "sole provider" system eliminates vessel delay, and allows the terminal to use and benefit from demurrage and dispatch agreements which provide financial incentives for increased terminal efficiency and productivity. The tugs have never been late for an assignment since the "sole provider" system began.
72. The "sole provider" system requires the tug operator to "dedicate" tugs to the Burnside Terminal so that adequate tug service is available at all times, although the Bisso tugs serve other vessels in the area. This increases terminal efficiency by eliminating delays in waiting for tugs.
73. Bisso Towboat stations four to six "dedicated" tugs at its Burnside base, approximately three miles from the Burnside Terminal. The Bisso Towboat tugs have a vessel assignment at the Burnside Terminal every one to two days.
74. The immediate availability of the "dedicated" tugs also improves security and safety at the Burnside Terminal. The "assist tugs" have responded immediately to a number of emergencies, something which RIVCO could not match because its dock is 20 miles from the Burnside Terminal.
75. In one emergency, a ship broke loose from its moorings in the middle of the night, and Bisso Towboat "assist tugs" arrived immediately, preventing the ship from drifting into the river and becoming a hazard to navigation.
76. In a second instance, the ship went aground after breaking its mooring lines, and Bisso Towboat tugs were immediately available to move the ship before it or its cargo was damaged.
77. In total, the dedicated Bisso Towboat "assist tugs" have assisted in seven different vessel emergency situations since the "sole provider" system went into effect. These episodes, which lasted as long as six hours, are documented in detail, including the nature of the episode, and the day and time it occurred.
78. The "sole provider" system has had no adverse impact on the Port of Baton Rouge according to the testimony of Mr. Gary K. Pruitt, Executive Director of the Port Commission, who supported Ormet. He based his conclusions on the fact that although the number of vessel calls declined slightly in 1996, cargo tonnage moving through the Port increased.
79. Notwithstanding the belief and testimony of Ormet's Terminal Manager, Mr. Lange, there are not always records showing who was at fault for various accidents at the Burnside Terminal nor that RIVCO's tugs could not have performed services of comparable quality to Bisso Towboat. One source of Ormet's belief that its "sole provider" system has increased safety is a report prepared by its Insurance Administrator who did not have direct personal knowledge of the various incidents reported. Witness Slatten, of Bisso Towboat Company, conceded that various accidents could not be attributed solely to tug companies only, and Burnside Terminal has no records specifically identifying a tug as being responsible for the accidents at the terminal. At the time Ormet solicited bids for the contract to perform "assist tug" services at the Burnside Terminal, Ormet wanted to get the best price for the service that it could get and Ormet had no knowledge that RIVCO's crews were inferior to Bisso Towboat's or that RIVCO's tugs were technically inadequate, although Bisso Towboat's fleet of 16 tugs is the newest fleet of the four tug companies. While RIVCO had been operating at the Burnside Terminal, it had never been involved with an accident during the docking or undocking of vessels nor caused delay because of a late arrival of a RIVCO tug.
The Market for "Assist Tugs" on the Lower Mississippi River
80. The "assist tug" market in which RIVCO competes extends 254 miles from the sea buoy (which is in Plaquemines Parish, 20 miles south of the mouth of the Mississippi River) to the northern boundary of the Port of Baton Rouge, which is 234 miles from the mouth of the Mississippi.
81. There are over 150 marine terminals and mid-stream loading facilities on the lower Mississippi.
82. RIVCO holds itself out in its tariffs to provide "assist tug" services at 114 terminals and 33 anchorages, a total of 147 different terminal facilities on the River.
83. Louisiana ports handled 507,404,000 tons of cargo in 1995, the last year for which complete Corps of Engineers figures were available, making the State of Louisiana first among the states in the amount of cargo handled at its ports. The state handled 22.6 percent of all waterborne cargo for the nation.
84. The lower Mississippi includes four of the top ten ports in the United States, measured by cargo volume. The Port of South Louisiana is first, the Port of Baton Rouge fourth, the Port of New Orleans sixth, and the Port of Plaquemines seventh.
85. A conservative calculation of the number of vessels requiring "assist tug" services on the lower Mississippi shows that there were 7,555 such vessels in 1995, or an average of 629 vessels each month.
RIVCO's Operations and Finances
86. RIVCO had eight tugs when this case began, but has added a ninth because its business is expanding.
87. The other tug companies have the following equipment, 1) Bisso Towboat, 16 tugs, 2) E.N. Bisso, 15-17 tugs, and 3) Crescent River, 20 tugs.
88. The Bisso Towboat fleet of 16 tugs is the newest of the four tug fleets on the River, with an average age of 24 years per boat.
89. RIVCO does not advertise its services, whereas the other tug companies do.
90. RIVCO had revenue in the area of $5,700,000 in 1994, and a little more than $90,000 of that revenue was derived from activities at the Burnside Terminal; i.e., approximately 1.6 percent of RIVCO revenue was attributable to work done at Burnside in the last full year before the "sole provider" system was established.
91. RIVCO revenues grew in 1995, 1996, and for the first seven months of 1997, the last data of record.
92. Only fifty percent of RIVCO's business is within the Port of Baton Rouge.
93. RIVCO estimates that its total revenues in 1995, 1996, and 1997 were $22,000,000, and that it was unable to handle vessels which would have provided approximately $800,000 in additional revenue due to Ormet's new system at Burnside. Accepting for the sake of argument that the lost revenue figure is correct, and ignoring the fact that RIVCO has apparently replaced the Burnside Terminal business with other customers, RIVCO lost only 3.6% of its revenues because of the "sole provider" system, and the overwhelming majority of its revenues were, and are, derived elsewhere than at the Burnside Terminal. Hence, it appears that there was no actual decline in RIVCO's overall revenues on account of the "sole provider" system, as the tug company was able to obtain business elsewhere. The company even purchased a new tug during the pendency of this case because its business was expanding.
94. RIVCO handled 22 vessels at Burnside in 1993, 31 in 1994, and nine in the first four months of 1995.
95. In 1994 RIVCO handled a total of approximately 625 vessels at all locations on the lower Mississippi River, and in 1995 and 1996, the company handled approximately 750 ships each year. There has been no decline in the number of vessels handled by RIVCO on account of the "sole provider" system.
96. Captain Beech, the RIVCO Secretary/Treasurer and chief witness, admitted that RIVCO's prices for "assist tug" services are higher than those charged by Ormet at the Burnside Terminal.
97. The RIVCO charge per tug is $1,950 between Miles 130 and 224, where the Burnside Terminal is located, while the actual Burnside Terminal charge is $1,450 per tug.
98. In addition to the per-tug charge, RIVCO assesses a tonnage charge of $15 per 1,000 gross tons ("grt" as listed in Lloyd's Register of Shipping) for the vessels it assists. RIVCO also discounts its charges in the range of 20-27 percent, the rate of discount being dependent on the vessel's contract with RIVCO. RIVCO has about 300 individual exclusive contracts with vessel owners, some of them covering as many as 25 vessels.
99. RIVCO currently works at twenty or more different docks within the Port of Baton Rouge on a regular basis.
100. Based on the figures of an average of 15.8 vessels calling monthly at Burnside Terminal compared to an overall average of 629 monthly calls in the lower Mississippi River in 1995, Burnside handled only some 2.5% of the total number of vessels calling. Included in these figures are Ormet's own aluminum-ore-carrying vessels, which would not be available to RIVCO. When such proprietary vessels are factored out, that leaves only some 1.9% of the total of vessels calling in the lower River which Ormet handles at Burnside Terminal.
101. The dock for RIVCO's tugs is at the town of Lutcher at Mile 147 l/2 on the River, or approximately 20 miles from the Burnside Terminal.
DISCUSSIONS AND CONCLUSIONS
The issues to be determined at this stage of the proceeding are two: first, whether the Commission has jurisdiction over Ormet as a marine terminal operator within the meaning of section 3(15) of the 1984 Act, specifically, does or did Ormet furnish terminal facilities in connection with a common carrier as that law requires for Commission jurisdiction to vest; and second, if the Commission has such jurisdiction, does Ormet's practice in selecting Bisso Towboat Company as the exclusive provider of "assist-tug" services at the Burnside Terminal constitute conduct violative of sections 10(b)(11) and 10(b)(12) of the 1984 Act because such practice gives an undue or unreasonable preference or advantage to Bisso or subjects other towing companies to undue or unreasonable prejudice or disadvantage? Moreover, does the subject practice constitute an unjust or unreasonable regulation or practice relating to or connected with receiving, handling, storing, or delivering property, in violation of section 10(d)(1) of the 1984 Act?
The Arguments of the Parties
RIVCO contends that Ormet has furnished and continues to furnish terminal facilities in connection with common carriers and thus remains subject to Commission jurisdiction. RIVCO states that the parties have stipulated that at least one common-carrier ship called at Burnside since Ormet began offering its exclusive tug service at Burnside, which fact, it is contended, is enough to confer jurisdiction on the Commission under case law,(4) but that many more common-carrier ships, i.e., ships operating as common carriers or operated by common carriers have called at Burnside since Ormet adopted its exclusive contract with Bisso Towboat Company. RIVCO contends that the fact that many or most of the cargoes carried to the Burnside Terminal are bulk cargoes and thus exempt from the requirement that their rates be filed in tariffs in no way means that the carriers of such bulk cargoes are exempt from the 1984 Act otherwise. RIVCO cites a Commission case in which it argues that the Commission asserted jurisdiction over two liquid bulk parcel chemical carriers. RIVCO notes, however, that carriers of such cargoes were later exempted from Commission regulation totally by Congress, which amended the 1984 Act to achieve such result.(5) However, it is argued, by exempting a "chemical parcel-taker" from the definition of "common carrier" in section 3(6)(B) of the 1984 Act, which Congress did in 1986, Congress did not intend to exempt any other type of bulk carriers totally from the Act. The Act, as amended, exempts totally only a "ferry boat, ocean tramp, or chemical parcel-tanker."
Next RIVCO discusses the state of the law under which carriers are determined to be operating as common carriers, citing the leading case of Tariff Filing Practices of Containerships, Inc., 9 F.M.C. 56 (1965), and numerous related or analogous cases. RIVCO argues that the determination is made by consideration of numerous factors, none of which is sufficient by itself to determine a carrier's status, whether it is the number of shippers per voyage, advertising, filing of tariffs, issuance of bills of lading, regularity of service, etc. Moreover, even the carrier's description of itself is not controlling. RIVCO argues that many of the vessels and operators calling at Burnside demonstrate that they are engaged in common carriage by their holding out, solicitation of shippers, service to multiple shippers, general use of bills of lading, and frequency of voyages to Burnside. Furthermore, it is argued, many of the carriers sending ships to Burnside are well-known common carriers who are willing and able to carry part lots of bulk or non-bulk cargoes in their ships, although some of these carriers may have separate tramp divisions, and these carriers either solicit cargo through brokers or are approached by cargo interests knowing that the carriers are available to carry for anyone who inquires. Also, it is argued that a carrier can be a common carrier presumptively if serving as few as two shippers per voyage or even if it charters a portion of the ship to one shipper and solicits other cargoes for the rest of the ship. RIVCO cites three ships operated by Lykes Bros. Steamship Co. and one in particular as being "indisputably common carriers" because of Lykes' solicitation for additional cargo for the ships in addition to the cargo carried under charters on these ships. RIVCO calls these operations "part cargo charters" and cites the fact that many of the charter arrangements refer to the right of the carrier to load "completion" cargo which necessarily contemplates another shipper.
RIVCO addresses Ormet's argument that non-common carriage is shown by the existence of FIO ("free in and out") or FIOS ("free in and out stowed") terms of carriage and by use of special contracts. RIVCO argues that these facts do not necessarily mean that the carrier was operating as a non-common carrier. Nor, it is argued, does the fact that the charterer can designate the berth so mean. RIVCO argues that these terms only concern the question of who is responsible for certain costs of loading and discharging cargoes and reflect the fact that the charterers may be more familiar with the needs and requirements of certain terminals and that such special arrangements may be made even by shippers on liners. RIVCO cites a court case and testimony of its expert witness, Mr. Stagg, regarding the peculiar custom as regards handling of bulk cargoes especially out of South Africa. RIVCO also cites a Commission decision in which a carrier was held to be a common carrier although the shippers were responsible for loading expenses.(6)
RIVCO contends that individual factors, such as advertising, solicitation, regularity of service, or fixed termini do not necessarily determine whether a carrier is common or non-common. RIVCO cites Commission decisions that held that regularity of service did not determine common carriage in foreign as opposed to domestic commerce of the United States(7) and that even without fixed termini a carrier might operate as a common carrier.(8)
Finally, RIVCO turns to what it believes to be the heart of Ormet's argument that the ships calling at Burnside cannot be common carriers because they are tramps who are not common carriers because they are not "liners." In other words, according to RIVCO, Ormet is trying to confuse and expand the definition of "ocean tramp" in such a way as to prevent such a tramp from being considered to be a common carrier. RIVCO cites a Commission decision which seemed to recognize that a common carrier could operate a tramp ship under charter to one shipper without losing its status as a common carrier.(9) RIVCO discusses at some length various writers and authorities on shipping who describe tramp ships, which are nowhere defined in the 1916 or 1984 Shipping Acts. RIVCO points out that the original language of the 1916 Act expressly excluded "a cargo boat commonly called an ocean tramp" from the definition of the term "common carrier by water in foreign commerce" without defining the term "ocean tramp," then used the term again in section 3(18) of the 1984 Act as originally enacted, again without defining the term, and later, in 1986, moved the words to section 3(6) of the Act, again without defining the term. RIVCO then concludes that "[t]here was no definition of 'ocean tramp,' and the term has been the subject of some speculation and dispute since 1916." (RIVCO's Opening Brief at 57.) However, citing various texts, authorities, and language in Commission decisions, RIVCO attempts to clear up the confusion and demonstrate that an "ocean tramp" is really a ship operating under charter to basically one shipper usually for the full reach of the ship. Since many or most of the ships calling at the Burnside Terminal in its non-proprietary, non-aluminum related business, do not operate under charter to one shipper, RIVCO contends that such ships are common carriers and therefore the Burnside Terminal falls within the definition of a regulated marine terminal operator set forth in section 3(15) of the 1984 Act. In other words, a carrier can either be a common carrier or a tramp operator and many ships calling at the Burnside Terminal are not tramps but common carriers. According to RIVCO, precedent under the 1916 Act "unmistakably points to the . . . conclusion that an ocean tramp is a vessel that has been chartered by a single shipper for a full cargo for one consignee. All other permutations would be common carriage." (RIVCO's Opening Brief at 64-65.)
In its answering brief Ormet argues that the Commission has no jurisdiction over Ormet's operations at the Burnside Terminal because Ormet serves tramp vessels only and has taken steps to preclude common-carrier vessels from calling at the terminal. Ormet disagrees with RIVCO's characterizations of various ships that have called at the terminal and contends that RIVCO's suggested definition of a tramp vessel is too narrow and unrealistic. Instead of the narrower definition of a tramp vessel advocated by RIVCO, i.e., the single-shipper, single-charter of a full shipload, Ormet argues that a tramp vessel is a much broader concept based on numerous criteria besides the number of shippers, and Ormet argues that the vessels calling at Burnside meet those criteria. Ormet argues particularly that ships serving the so-called "parcel bulk" trades in which they load for several shippers usually under charter dominated by one shipper with no fixed schedule or itinerary are tramp vessels. Therefore, according to Ormet, it does not and has not served vessels subject to regulation under the 1984 Act as common carriers that are also not tramps. Ormet also argues that the question as to the precise definition of an exempted tramp vessel is difficult and the record is confusing and inadequate so that the question should be decided, if at all, in a rulemaking proceeding in which all potentially affected parties could submit their views, especially ocean carriers whose status is being determined in this proceeding without their being heard. Ormet argues moreover that it does not knowingly serve common-carrier vessels that it has taken steps to exclude, that the dry bulk trades do not need Commission regulation because the main beneficiaries of Commission regulation, namely, the shippers of dry-bulk cargoes, unlike common-carrier shippers, control the ships and are not in weak bargaining positions. Ormet criticizes the quality of RIVCO's evidence and the validity of Ormet's expert witness's testimony. As to the merits of RIVCO's complaint, Ormet argues that RIVCO has actually increased its revenues in the relevant market which extends to over 200 miles of the Mississippi River and to 150 or so terminals. Moreover, Ormet contends that its exclusive contract with Bisso Towboat Company, a RIVCO competitor, offers benefits as regards safety, efficiency, improved emergency services, and lower prices to carrier customers, that its exclusive towing arrangement has not and will probably not spread up and down the River, that its arrangement is not a tying device unlawful under irrelevant antitrust law, and that, in any event, the Commission is limited in any relief that it could afford to its jurisdiction over common-carrier-related activities only.
RIVCO presents rebuttal arguments in its reply brief. RIVCO disagrees with Ormet's legal discussion as to what constitutes tramp shipping, arguing that Ormet has cited cases incorrectly or without understanding them, or has disregarded critical precedent in certain cases and that the cases actually support the view that a tramp is essentially a charter operation for a single shipper, although the tramp can itself become a common carrier if it begins to serve multiple shippers as RIVCO argues has happened in the "parcel bulk" trades. RIVCO argues that the question of defining tramps is not new or novel and has been decided in previous cases before the Commission and its predecessors and that a decision in this adjudicatory proceeding would be proper because it would bind only the parties thereto. RIVCO argues that a decision concerning the Commission's jurisdiction over Ormet at the Burnside Terminal should be rendered in this proceeding notwithstanding Ormet's argument that Ormet has taken steps to preclude common-carrier vessels from calling at the terminal because Ormet's implementing procedures are not reliable and are subject to error through self-interest and other defects in Ormet's self-policing system. RIVCO again argues that Ormet has not provided valid reasons justifying its decision to use one towing company exclusively at the Burnside Terminal and to exclude at least two other competing towing companies that had formerly been allowed to serve vessels calling at the terminal. Such conduct, it is argued, is contrary to the national philosophy favoring free and open competition and constitutes a departure from the prevailing custom along the River. Moreover, RIVCO contends that a complainant may file a complaint with the Commission without proving actual injury if a respondent has violated the 1984 Act but that Ormet's exclusionary practice has, in fact, caused such injury to RIVCO and other towing companies that used to be able to serve vessels at the Burnside Terminal. RIVCO argues that the exclusionary practice would constitute an unlawful tying device under antitrust law but regardless of antitrust law the practice is unfair and unreasonable under the 1984 Act. RIVCO asks the Commission to require Ormet's exclusive contract with the Bisso Towboat Company, a RIVCO competitor, to be terminated and to direct that further proceedings be held to determine the amount of reparations (money damages) due RIVCO.
Issue No. 1: The Commission's Jurisdiction
Of the two issues to be determined the first regarding the Commission's jurisdiction over Ormet is mainly one of law and statutory interpretation while the second, the reasonableness and lawfulness of Ormet's conduct under the 1984 Act, is, in my opinion, more fact-driven. There is some authority for the proposition that a court or agency need not decide a jurisdictional issue if there is no merit to a complaint and the jurisdictional issue is difficult or close.(10) However, such a doctrine is unusual. The standard rule is that a court or agency should decide whether it has jurisdiction before proceeding to decide the merits of a case. See Osborn v. United States, 918 F.2d 724, 729 (8th Cir. 1990); Crawford v. United States, 796 F.2d 924, 928 (7th Cir. 1986); 2 Moore's Federal Practice (3d ed.) sec. 12.30[1] at 12-34 ("The district court should determine subject matter jurisdiction issues first, because they concern the court's 'very power to hear the case.'")
Having invoked the jurisdiction of the Commission, the normal rule is that the complainant RIVCO has the burden of proving such jurisdiction, i.e., the risk of non-persuasion falls on RIVCO. This is elementary law and is stated in many cases. See, e.g., California Shipping Line, Inc. v. Yangming Marine Transport Corp., 25 S.R.R. 1213, 1222 (1990); New Orleans Steamship Association v. Plaquemines Port, Harbor, and Terminal District, 23 S.R.R. 1363, 1376 (1986); James J. Flanagan Shipping Corp. v. Lake Charles Harbor & Terminal Dist., cited above, 27 S.R.R. at 1133; 46 C.F.R. 502.155; 5 U.S.C. sec. 556(d); 2 Moore's Federal Practice (3d ed.) sec. 12.30[5]; 5 Wright and Miller, Federal Practice and Procedure, sec. 1350 at 555; 4 Stein, Mitchell, & Mezines, Administrative Law, sec. 24.02. Moreover, because jurisdictional issues often involve questions of law they are reserved for the courts, not juries, to determine. Osborn v. United States, cited above, 918 F.2d at 729. Nevertheless there is some authority for the proposition that the concept of burden of proof is less relevant when the issue involves a question of law and there is no dispute of material facts.(11)
The basic question as regards the Commission's jurisdiction is one of statutory interpretation, i.e., of determining the intent of Congress. The cardinal rule of statutory interpretation or construction, of course, is to determine congressional intent and in a situation like the instant one, in which the legislative history and statutory language are less than clear or conclusive, resort to principles of statutory construction is warranted. See discussion in International Association of NVOCCs v. Atlantic Container Line, et al., 25 S.R.R. 167, 174-175 (ALJ), affirmed, 25 S.R.R. 734 (FMC 1990). 73 Am Jur 2d, Statutes, secs. 145, 146. The Commission, of course, not being a court of general jurisdiction, is limited by its enabling statute. As the Commission has stated in this regard in American Union Transport v. River Plate & Brazil Conferences, 5 F.M.B. 216, 224 (1957):
. . . we wish to point out that this agency's jurisdiction is as set out in statute, and we cannot, by our own act or omission, enlarge or divest ourselves of that statutory jurisdiction.
See also Definition of Package Under the COGSA, 23 S.R.R. 111, 116 (1985) ("The Commission cannot regulate activities beyond its jurisdiction whatever the equities or policy considerations present.").
The instant case involves interpreting the language of section 3(15) of the 1984 Act which confers Commission jurisdiction on a marine terminal operator if the operator is "a person engaged in the United States in the business of furnishing . . . terminal facilities in connection with a common carrier." Furthermore, to determine its jurisdiction, the Commission must find that the person with whom Ormet is engaged is a "common carrier," which is defined in the 1984 Act as a "person holding itself out to the general public to provide transportation . . ." and who "utilizes . . . a vessel operating on the high seas . . . except that the term does not include a common carrier engaged in ocean transportation by . . . ocean tramp . . . ." (Section 3(6)(B), 1984 Act.)
Among the problems faced by the Commission when trying to determine whether the various ships calling at the Burnside Terminal were common carrier ships intended to be regulated under the 1984 Act or were tramp ships sent by common carriers or by non-common carriers is the fact that the statute does not define "ocean tramp." Yet if any carrier utilizes an "ocean tramp," such carrier would be totally exempt from the 1984 Act. On this question the parties offer two different definitions. Thus, RIVCO offers the definition that "an ocean tramp is a vessel that has been chartered by a single shipper for a full cargo for one consignee. All other permutations would be common carriage." (RIVCO's Opening Brief at 64-65.) RIVCO supports this suggested definition by citing its expert witness, Mr. Stagg, and other sources. Ormet, on the other hand, contends that Ormet's proffered definition is too narrow and imprecise. Ormet argues that to determine whether a ship is an "ocean tramp" one must consider many criteria, of which the number of shippers is only one. Thus, Ormet argues that "[t]he following criteria can be used to identify tramp vessels: voyage dominated by the shipper, freight payable per charter party, ship will go where it can find the most attractive cargo, no fixed routing, no fixed schedule, cargo booked free in and out (FIO or FIOS), cargo interest responsible for loss or damage to cargo while it is at the terminal, not a great variety of cargo on the ship, cargoes generally shipped in large quantities, small number of shippers, and the vessel sailing is not advertised in advance." (Ormet's Answering Brief at 17.) Ormet cites to its own expert witness's testimony, to certain responses of RIVCO's expert witness on cross-examination, and to various maritime texts.
Obviously, RIVCO is advocating a narrow definition of "ocean tramp," which, if adopted, would confer only limited exemptions from the reach of the 1984 Act whereas Ormet suggests a broader definition, which, if adopted, would insulate its operations from the reach of the Act.(12) As the following discussion will show, there are differing views among the writers as to how broad or narrow the definition of "ocean tramp" should be, there was uncertainty among the members of the 1916 Congress that enacted the first Shipping Act using the term "ocean tramp," and the various reports and cases dealing with "ocean tramps" are not entirely clear or consistent. However, as RIVCO has argued in its reply brief, the question of defining an "ocean tramp" has been addressed by the Commission and its predecessors and there is no need to defer deciding the question in this case in favor of a rulemaking proceeding. As the following discussion will show, it is possible to reach a reasonable decision based on previous case law and principles of statutory construction even if the statute and legislative history are not entirely clear. There are two means to reach such a decision, the first by relying on the precedent established in the case of Prudential Lines, Inc. v. Continental Grain Co., 21 S.R.R. 133 (I.D.), adopted, 21 S.R.R. 1172 (1982), cited by RIVCO. The second is by means of principles of statutory construction and deference to an agency's interpretation of and policy regarding administering its statute. I discuss the Prudential case first.
The Test Laid Down in the Prudential Decision
In Prudential complainant, a common carrier, alleged that respondent, a grain company operating a marine terminal in Norfolk, Virginia, had excluded Prudential from calling at the Norfolk terminal to load grain to be exported to Egypt in favor of another carrier, thereby acting unduly, unjustly, and unreasonably under provisions of the 1916 Act that preceded sections 10(b)(11), 10(b)(12), and 10(d)(1) of the 1984 Act. The Commission found that the exclusion of Prudential Lines implicated the grain business, not the Shipping Act, and consequently that respondent had not violated the 1916 Act. However, the Commission rejected respondent's jurisdictional arguments, namely, that the terminal served only "contract" or non-common carriers and was therefore outside the scope of the Commission's jurisdiction. The Commission based its jurisdictional finding on the fact that four acknowledged common carriers (Farrell Lines, Prudential Lines, Central Gulf Lines, and Icelandic Steamship Co.) had sent ships to the grain terminal, which carriers remained common carriers notwithstanding lack of advertising, regularity of sailings, absence of filed tariff rates, or holding out as regards the particular ships that the carrier had offered to carry grain in bulk at rates available to all. RIVCO points out similarities between the Prudential case and the instant one. For example, the cargoes loaded at the grain terminal consisted of bulk grain but the ships had space available for other cargoes, the common-carrier ships sent to the Norfolk terminal constituted some 12 percent of the 175 vessels studied, the common-carrier ships made only about an average of two calls per year, i.e., not regular calls, and at least one common carrier, Prudential, customarily carried parcels of grain to fill in its ships when cargo was in short supply. Significantly, the Commission held that a common-carrier-owned ship did not have to be operating as a common-carrier ship when it called at the Norfolk terminal because "the Shipping Act regulates carriers, not types of carriage." (21 S.R.R. at 1174.) Moreover, the Commission expressly stated that jurisdiction attaches to a marine terminal operator "as soon as the terminal services one common carrier." (Id. at 1175 n. 10.) RIVCO points out that in the instant case at least 12 known common carriers(13) have sent or continue to send ships to the Burnside Terminal and that many of these ships carry part loads of cargo with remaining space available for other cargoes and carry multiple lots for multiple shippers.
The test laid down in Prudential, namely, that it is the type of carrier calling at a terminal, not the type of carriage on a particular ship, that determines whether a marine terminal operator fits the definition in the statute, has been cited with approval by the Commission in subsequent cases. See Pate Stevedoring Co. of Alabama v. Alabama State Docks Dept., 24 S.R.R. 1221, 1229 n. 14 (1988), adopting 24 S.R.R. at 670 (the test for determining jurisdiction, namely, whether common carriers have been served at a terminal, not whether the terminal holds out to serve common carriers, is a "long established test"); Petchem, Inc. v. Canaveral Port Authority, 23 S.R.R. 974, 982-983, affirmed as Petchem, Inc. v. Federal Maritime Commission, 853 F.2d 958 (D.C. Cir. 1988). Therefore, whether one agrees with the wisdom of the Prudential test or with the holding that jurisdiction attaches if only one common carrier sends a ship to a terminal, I am bound by Commission precedent.(14) In any event, far more than one common carrier have sent ships to the Burnside Terminal but even if jurisdiction attaches when only one ship called at the terminal, that does not mean that the Commission must decide the question of the merits of the complaint in RIVCO's favor. In other words complainant must still prove a violation of law and that it needs the Commission to issue remedial orders. Because I conclude that RIVCO has not proven that Ormet violated the 1984 Act, the question as to what kind of remedy the Commission could fashion under law when the large majority of Ormet's business is with proprietary aluminum-ore-carrying ships and unregulated single-shipper, tramp ships becomes academic.
The Alternative Basis-Statutory Construction
I believe that the Commission's decision in Prudential supports a conclusion that because common carriers have sent ships to the Burnside Terminal the Commission consequently has jurisdiction over the terminal. However, in the event that the Commission believes the Prudential precedent to be an inadequate basis, there is another basis for the Commission to find jurisdiction over Ormet's terminal. That basis involves principles of statutory construction and matters of agency policy in the administration of the law that Congress has given the agency to administer.
It is recognized that an agency will be given some deference by reviewing courts if the agency has to interpret and administer a statute whose legislative history and language are either unclear, inconclusive, or ambiguous. In such cases the agency can apply principles of statutory construction in an effort to ascertain congressional intent and if the agency presents a reasonable basis for its interpretation of the statute and for its policy, the reviewing court will not disturb the agency's decision. This doctrine was laid down in the famous case of Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984).
The problem, of course, is that Congress never defined the term "ocean tramp," yet gave common carriers utilizing "ocean tramps" complete exemption from both the 1916 and 1984 Acts and, consequently, exemption to marine terminal operators serving "ocean tramps." The resulting uncertainty enables RIVCO to offer one definition of "ocean tramp" while Ormet offers a broader definition, and, consequently, the expert witnesses presented by these two parties looking at records of the same ships and voyages, disagree as to whether they were tramps or common carriers. Nevertheless, there is apparent agreement that a ship operating under a charter to one shipper for a full shipload of cargo is most assuredly a tramp vessel exempt from Commission regulation. Furthermore, the criteria advocated by Ormet as characterizing ocean tramps, such as irregular itineraries, same types of cargoes, ships seeking out cargoes, can also apply to the definition advocated by RIVCO. What separates the two definitions is the question as to whether a ship leaves its tramp status and becomes a common-carrier ship when more than one shipper is served per voyage. When this transformation occurs is not entirely clear but, as one court observed, it can happen. The following discussion illustrates the point that although there is some uncertainty regarding how broadly or narrowly the tramp exemption should be read, it is possible for the Commission to limit the exemption for purposes of the instant case based on some legislative history, case decisions, and maritime authorities and resort to principles of statutory construction.
A brief discussion of the legislative history of the 1916 Act and case law thereafter illustrates the point that there has been some uncertainty regarding congressional intent as regards the meaning of the words "ocean tramp." That term first entered the regulatory law in section 1 of the 1916 Act, which did not define "common carrier" except in geographic terms but provided "That a cargo boat commonly called an ocean tramp shall not be deemed such 'common carrier by water in foreign commerce.'"(15) The legislative history shows that the manager and sponsor of the bill that became the Shipping Act, 1916, Congressman Alexander, believed an "ocean tramp" to be a ship operating as RIVCO suggests, namely, under charter to a single shipper, although the shipper could be a broker who chartered the ship for a number of small shippers. However, other members of the 1916 Congress that enacted the Shipping Act believed that "ocean tramps" could be common carriers and despite Congressman Alexander's belief that ocean tramps and common carriers were different, and that there was no need to mention "ocean tramps" in the legislation, the Congress enacted the above-quoted proviso.(16) During the life of the 1916 Act the problem of defining "ocean tramp" occurred from time to time and arose in cases in which parties were arguing that particular ships were either "ocean tramps" or common carriers. Case law attempting to define the term "ocean tramp" developed a definition which accords with RIVCO's contention that an ocean tramp is a ship under charter to one shipper and seemed to agree that tramps could not be common carriers. Thus in Section 19 Investigation 1935, 1 U.S.S.B.B. 473, 475 (1935), the U.S. Shipping Board Bureau, a Commission predecessor, characterized tramps as distinct from common carriers, describing the former class of carriers as "carriers transporting on any one voyage supplied by a single shipper only under a single charter party or contract of affreightment." The Bureau recognized that ocean tramps were not subject to the 1916 Act but were subject to section 19 of the Merchant Marine Act, 1920. However, the Bureau confined its new regulations requiring rate filing in the export trades to common carriers and repeated its definition of "tramp" that was exempted from regulations under the 1916 Act as follows: (1 U.S.S.B.B. at 498):
. . . a tramp is a carrier transporting on any one voyage cargo supplied by a single shipper only under a single charter party or contract of affreightment. The best example of such a carrier is the tanker.
The Bureau also noted the fact that much of the cargo carried by tramps moved in bulk. Id. at 499.
A Commission predecessor further defined an ocean tramp in somewhat more colorful terms in 1938 in a report filed by the U.S. Maritime Commission with Congress concerning tramp shipping service. (Report of the United States Maritime Commission on Tramp Shipping Service, House Doc. No. 520, 75th Cong., 3d Session (February 17, 1938) (Tramp Shipping Report).
In the Report the Commission expanded the definition of tramp as follows:
. . . a tramp, or general trader, as it is sometimes called, is any vessel which has no fixed route and no regular time of sailing and which is ever seeking those ports where profitable cargo is most likely to be found. Indeed the tramp is a free lance that has earned its name from its gypsy-like existence, for it will carry cargo to almost any destination, and in the course of its wanderings the tramp may travel every sea and circumnavigate the globe. Report at 1, quoted in Agreement No. 203-010633 (Ligracol), 23 S.R.R. 581, 588 (I.D.), proceeding discontinued, 23 S.R.R. 1408 (1986).
As RIVCO argues, the Tramp Shipping Report is somewhat consistent with the definition of tramps contained in Section 19 Investigation 1935, cited above, namely, that "[a]s a general rule, the tramp loads or discharges at one port, and it carries a full cargo of but a single commodity belonging to a single shipper." Report at 2. The Report also refers to tramp arrangements as involving full cargoes of bulk commodities (Id.) and mentions "numerous American sailing tramps engaged in carrying full cargoes of such cheap and bulk commodities as grain, timber, and cotton." (Id. at 4.) As RIVCO notes further, however, the Report becomes somewhat confusing when stating that a tramp can transform itself into a "liner" when it is placed on berth and advertises for fill-in cargoes sailing to given destinations and at given times. (RIVCO's Opening Brief at 61, citing references to the Report.) There is more confusion because the Report states that the tramp operating on berth, as described above, "renders a service analogous to that of a common carrier," although the Report states that the tramp on berth is not a common carrier because it does not hold itself out to take any cargo offered. (Id.) RIVCO argues that the Report is confusing because it was written by the promotional part of the previous Commission under a different statute (the Merchant Marine Act, 1936). RIVCO also argues that the Report is mistaken because a tramp becomes a common carrier when it is placed on berth and advertises for cargoes and operates on a fixed itinerary and schedule, thereby fulfilling the common law "holding out" definition of a common carrier. (RIVCO's Opening Brief at 62.)
Whatever the deficiencies or confusions may be with respect to the Tramp Shipping Report, it has been quoted and cited in subsequent cases both in court and before the Commission. See Brown & Williamson Tobacco Corp. v. The S.S. Anghyra, 157 F. Supp. 737, 752 (E.D. Va. 1957), in which the court found that a one-shot voyage of tobacco by a carrier under emergency conditions constituted a tramp operation not subject to the 1916 Act, although the operation in question may not have involved only one shipper under a charter like a tanker. The court believed that the single shipper-single charter definition had been "modified" by the Tramp Shipping Report to allow for tramps to provide a service "analogous to that of a common carrier" when the ship was placed on berth, advertised for fill-in cargoes, etc. (157 F. Supp. at 752.) The court also noted that this modification was "confirmed" by the Commission in 1943. (Id.) The case referred to by the court was Rates of General Atlantic S.S. Corp., 2 U.S.M.C. 681 (1943), in which the Commission cited the "free lance" and "gypsy-like existence" description of a tramp quoted above from the Tramp Shipping Report and concluded that the respondent carrier, which had made four sailings under wartime conditions, was not a tramp but a common carrier. In a later case, Transportation--U.S. Pacific Coast and Hawaii, cited above, 3 U.S.M.C. at 197, the Commission again cited the Tramp Shipping Report but focused on the single cargo/single shipper definition as well as irregularity of sailings. In this regard the Commission stated (3 U.S.M.C. at 198):
In traditional terms, a tramp vessel is one that operates on irregular or unscheduled sailings from one port of loading to one port of discharge, lifting one dry cargo commodity usually of low value without mark or count and from one shipper to one consignee . . . .
The Commission also drew a distinction between tramps and common carriers but noted that in some instances the person chartering the ship might be carrying shipments of a number of small shippers. In such cases, this person could be considered to be a common carrier, as RIVCO states. However, the Commission opined that when a charter party gives the charterer the full capacity of a ship, the charterer becomes a bailee for hire to transport as a private carrier for hire. (Id. at 199, referring to a brief of Congressman Alexander, the sponsor and manager of the 1916 Act.(17)
Transportation--U.S. Pacific Coast and Hawaii is significant for several reasons. In the case four carriers had attempted to avoid regulation under the domestic portions of the 1916 Act and the Intercoastal Shipping Act, 1933, by claiming that they operated tramp-like ships without regular routes, did not publish sailing schedules, did not solicit cargo, and operated one-way voyages under charters. In other words they claimed that the ships resembled the wandering "gypsy" operators under the traditional definition of tramp shipping. However, one of the carriers conceded that it carried cargo for more than one shipper, and that the cargo was subject to mark and count. The Commission held that the language in the domestic-commerce statutes that referred to carriers operating "on regular routes from port to port" had the same purpose as the foreign-commerce statute, namely, to exclude ocean tramps, and that the four respondent carriers had been operating between points fixed by the charter parties. Accordingly, the four carriers were found to be operating as common carriers, not tramps, as the Commission similarly held in Rates of General Atlantic S.S. Corp., cited above, 2 U.S.M.C. 681.
A later Commission decision which mentioned the classic single-shipper, single-charter operation as a tramp operation was Investigation of Tariff Filing Practices, 7 F.M.C. 305, 321 (1962). The Commission found that several carriers were operating as common carriers and had to file their tariffs but also recognized that such carriers could on occasion offer a tramp service "under charter to one shipper." (7 F.M.C. at 321.)
Although it appeared that an "ocean tramp" was generally to be considered as a ship under charter to one shipper for the full reach of the ship and could remain so even when other shippers joined in to fill the ship, the line between "ocean tramp" and common carrier or liner was not crystal clear, as seen by the court's opinion in United States v. Stephen Brothers Line, 384 F.2d 118, 123-124 (5th Cir. 1967). In Stephen Brothers, the court found that the carrier had carried a wide variety of cargoes for which it had actively solicited and was not a tramp carrier. The court seemed impressed by Commission decisions holding that ships carrying a variety of commodities for numerous shippers were not "ocean tramps." (Id., citing among other cases, Transportation--U.S. Pacific Coast and Hawaii, 3 F.M.B. 190, 199; and Brown & Williamson Tobacco Corp. v. S.S. Anghyra, 157 F. Supp. 737, 570-752.) The court seemed to agree with the view that a tramp carrier was distinct from a common carrier, the latter being subject to regulation while the former was not. (Id. at 124 n. 15.) However, the court recognized the fact that a tramp vessel could become a common carrier. Thus, the court expressly declined to decide "just what is an ocean tramp" (Id. at 124 n. 16), but opined that "the most perverse nautical tramp by going on berth to accept cargo from all alike could become a common carrier." (Id.)
Outside of court and Commission cases, outside writers on shipping and admiralty matters seem to support RIVCO's view that an "ocean tramp" is essentially a ship operating under charter to one shipper for the full reach of the ship, although they do not rule out the possibility that an "ocean tramp" may carry for other shippers on the same voyage. Thus, Professors Gilmore and Black in their book, The Law of Admiralty (2d ed. 1975) at 197, describe the irregular nature of a tramp's schedule and itinerary and state that in contrast to a liner operation, "the tramp seeks and usually gets a full cargo loaded by a single shipper." Professor Schoenbaum, in his work Admiralty and Maritime Law (2d ed. 1994), contrasts common carriage and private carriage (meaning "tramp" shipping) as follows:
Maritime transport is divided into two general categories, common carriage and private carriage (also known as "tramp shipping"). The essence of private (tramp) carriage is the charter party, an arrangement where the shipowner leases the vessel to one person or agrees to take a shipment that takes up the whole reach of the vessel. Volume II at 14.
Another writer in the field, Gerald Ullman, a longtime attorney practicing before the Commission, in his book entitled U.S. Regulation of Ocean Transportation under the Shipping Act of 1984 (Cornell Maritime Press 1995 at 10) supports RIVCO's suggested definition of an "ocean tramp." Mr. Ullman defines a "tramp" as follows: "A tramp transports on any one voyage cargo supplied by a single shipper only under a single charter party or contract of affreightment."
If all the authorities and cases agreed on a single, simple definition of an "ocean tramp," the task of selecting RIVCO's narrow definition of an "ocean tramp" rather than Ormet's broader definition would have been much easier. However, other writers and authorities commenting on "tramps," while not disagreeing with RIVCO's definition, allow some flexibility in cases when tramp ships carry fill-in cargoes for other shippers. Also, these writers mention other factors that distinguish "ocean tramps" from liner or common-carrier vessels relating to types of cargoes carried, schedules, itineraries, advertising, and other indicia. Thus, consider the work done by Rene de Kerchove, whose International Maritime Dictionary (2d ed. 1961) seems to follow the traditional single-shipper, single-charter definition advocated by RIVCO but also recognizes that some tramps may carry for more than one shipper on a voyage and may even go on berth to carry for general cargo. At page 853 of his work, de Kerchove defines "tramp" as follows:
TRAMP. A freight vessel that does not run in any regular line but takes cargo wherever the shippers desire. Also called ocean tramp. Tramp vessels are hired to carry cargo of any kind not requiring vessels of special design. They are operated singly over any ocean route and to any destination not prohibited by physical conditions, such as insufficient harbor depth, or legal requirements. Tramp vessels are chartered either for a particular trip or for a stipulated period. They usually carry full cargoes of bulky commodities, such as coal, ore, grain, sugar, also manufactured products such as iron or steel, which are moved in vessel load lots. They are occasionally placed "on the berth" by the owners or shipbrokers for smaller shipments of general cargo. They are built for maximum economy and freight capacity without sacrifice for ability to enter harbors and channels of every water depth.
Then consider the description of tramp shipping contained in Bross, Steward R., Ocean Shipping (Cornell Maritime Press 1956). At pages 86-89 of his work, Mr. Bross describes a tramp as a "ship not engaged in a regular run or trade, but taking on cargo as offered. Such vessels engage in any trade wherein profit can be expected." (Id. at 86.) The author describes tramp shipping in broader terms than simply a single-shipper, single-charter operation. The description is certainly more favorable to Ormet's position than to RIVCO's because Ormet contends that the ships in question are serving a "parcel bulk" trade and some of the ships calling at Burnside carried more than one type of cargo. Thus, Bross stated that "[t]ramp shipping comprises the greater part of world's total merchant tonnage, and contrary to the popular conception of a tramp as a 'streak of rust' wallowing aimlessly along her half-exposed wheel thrashing the sea, many tramp vessels are modern, fast, and maintained in the peak of efficiency." (Id. at 87.) He mentions that tramp vessels are built generally to carry any kind of cargo but "some tramp operators habitually engage in certain trades; seasonally carry certain cargoes, or consistently charter their vessels to certain 'liner' companies." (Id.) The author describes the differences between liner and tramp operations, the latter being irregular, but states that tramp operators sometimes provide tonnage to liner companies when the latter need more ships to meet business demands. (Id. at 88.)
Perhaps the most detailed description of ocean tramp operations is that contained in Lane C. Kendall, The Business of Shipping (Cornell Maritime Press, 5th ed. 1986). This authority also describes ocean tramp shipping as something more involved than merely a single-shipper, single-charter operation. He devotes the first four chapters of his work to describing the differences between liner service and tramp shipping and to the nature of tramp shipping throughout the world's sea lanes. The discussion is too long and detailed to repeat in this decision. However, a few highlights warrant mentioning. For example, at pages 5-11, the author lists 10 factors distinguishing tramps from liner service, which latter service is described as "common (public) carriers, required by law to accept without discrimination . . . any legal cargo which the ship is able to transport. . . ." (Id. at 6.) The factors distinguishing liners or common carriers from tramps, according to the author, are the liners' regular, repeated sailings from and to designated ports, the liners' public commitment to accept all legal cargo, the liners' higher value, packaged cargoes, the liners' use of standardized contracts of carriage or bills of lading, the liners' more or less stable freight rates, the liners' regular schedules of service, the liners' ships not designed primarily to carry bulk cargoes, the liners' larger and more complex home office staffs, their use of solicitors rather than ship brokers, and their carriage of passengers.
A particular factor distinguishing liners or common carriers from tramp operators is the type of cargo carried. The author describes liner cargoes as usually "of higher value than the cargo hauled in tramps" so that liner cargoes "are charged higher freight rates." Also there is the fact that liners "accept less than shipload lots, nearly always in packages (including containers) requiring special care in stowage. . . . Handling ('stevedoring') charges always are included in the freight rate." Liners also carry a "variety of commodities loaded in every port of call." (Id. at 7.) In contrast to the liners, "[c]argoes carried in tramps generally are those which can be transported in bulk ('homogenous cargoes') and have low intrinsic value. Typical cargoes are coal, ores, grain, lumber, sugar, and phosphate rock. The cost of loading and unloading the ship in most cases is paid by the charterer. Freight rates for tramps reflect the fact that movements frequently are from a single port of loading to a single port of discharge, with minimum expense involved in the care of the cargo while in transit." (Id.)
Another factor that warrants discussion is the number of shippers per voyage. While liners generally carry for a sizeable number of shippers, tramps in most cases carry for one shipper. As regards tramp operators, they "normally carry full shiploads of a single commodity, usually in bulk. In most cases, there is only one shipper, but two or more shippers of the same kind of cargo occasionally may use a single ship." (Id. at 6.) Elsewhere the author describes "the modern general-purpose tramp" as a ship "intended to serve . . . a number of different trades. In one year, a fleet of four of these tramps lifted cargoes of pig iron, black iron, wheat middling pellets, scrap iron, logs, timber, tapioca, wood chips, poonac (coconut oil cake), ilmenite sand, iron ore, grain, coal, bauxite, and cement." (Id. at 23-24.)
Still another authority describing the differences between liner and tramp carriers is the so-called "Celler Report," officially, the Report of the Antitrust Subcommittee of the Committee on the Judiciary, House of Representatives, 87th Cong., 2d Sess. (March 12, 1962). At pages 42-46 of the Celler Report, the Report describes the two types of vessels, namely, liners and tramps, in terms similar to those discussed by the authorities cited above. Thus the Report defines a "liner" as "any vessel that operates over a fixed route on a regular schedule of sailing." The Report states that "regularity of service on a particular trade route and performance as a common carrier are the liner's principal characteristics." (Report at 43.) In contrast to the liner, the Report quotes the following definition of a tramp vessel: "[i]n traditional terms, a tramp vessel is one that operates on irregular or unscheduled sailings from one port of loading to one port of discharge, lifting one dry cargo commodity usually of low value without mark or count and from one shipper to one consignee. The tramp does not usually hold itself out as a common carrier and is free to travel anywhere on any terms not infrequently being chartered out on time terms. . . ." (Report at 44.) The Report further describes the nature of the tramp operator as distinct from the liner by stating (Id.):
Since it does not provide the regularity of service on a fixed route offered by the liner, and since it is designed for the hauling of low-value, nonperishable bulk cargoes, usually without mark or count, the tramp is normally not in a position to offer serious competition for the liner in the carriage of general merchandise.
The preceding discussion illustrates the point that defining an "ocean tramp" is not a simple matter and that some confusion has developed in the case law, which confusion originated in the Congress that enacted the 1916 Act. Thus, sometimes the Commission has interpreted the "ocean tramp" exemption broadly and other times narrowly.(18) This uncertainty persisted into 1985 when Judge John Cograve issued an Initial Decision in Agreement No. 203-010633 (Ligracol), 23 S.R.R. 581, proceeding discontinued, 23 S.R.R. 1408 (1986). In Ligracol Judge Cograve found two carriers planning to operate a third carrier called Ligracol not to be eligible to file their agreement under the 1984 Act because one of the carriers was a "tramp" and the carrier to be operated was also a "tramp." However, he also found that these carriers, who would be carrying for multiple shippers in a recognized trade area on a more or less monthly schedule, would be common carriers for that segment of the public which is composed of bulk chemical shippers. (Id. at 558.) This view by Judge Cograve that an "ocean tramp" serving multiple shippers in a trade area had become a common carrier but remained a tramp defined "ocean tramp" very broadly and was unprecedented. The decision also meant that such carriers were regulated under some sections of the 1984 Act but not under other sections because of the peculiar wording of the statute when first enacted. Recognizing the anomalous situation, Congress amended the 1984 Act so as to make clear that tramp operations were to be totally exempted from the 1984 Act. See the legislative history to P.L. 99-307, S. Rep. No. 99-284, 99th Cong., 2d Sess., reprinted in 1986 U.S. Code and Admin. News 1317-1319. By the amendment to the 1984 Act, Congress returned to the situation that had existed under the 1916 Act, namely, total exemption of tramp ships from Commission regulation. However, in rewriting section 3(6) of the 1984 Act, which now contains the words "ocean tramp" as well as a detailed definition of "chemical parcel-taker," Congress also left the words "ocean tramp" again undefined.(19) As for the Ligracol Initial Decision, it has limited precedential value because the Commission never reviewed it.
Statutory Construction - Interpreting Exemptions
from Remedial Statutes Narrowly
As the preceding discussion shows, the legislative history, statutory language, and case law are somewhat ambiguous, although they do indicate that a single-shipper charter of an entire ship can be treated as an "ocean tramp." If the Prudential precedent is deemed insufficient, under the circumstances it would be necessary to interpret the relevant statutory language using principles of statutory construction and to provide a reasonable basis for the Commission to follow a policy of interpreting the "ocean tramp" exemption narrowly. See International Association of NVOCCs v. Atlantic Container Line, et al., cited above, 25 S.R.R. at 174-175; 73 Am Jur 2d, Statutes, secs. 145, 146; Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., cited above, 467 U.S. 837.
In the 1984 Act Congress gave the Commission jurisdiction over a "marine terminal operator" who was defined as a "person engaged in the United States in the business of furnishing wharfage, dock, warehouse, or other terminal facilities in connection with a common carrier." (Section 3(15) of the 1984 Act.) This was essentially the same definition as that contained in section 1 of the 1916 Act. Elsewhere in the 1984 Act Congress defined "common carrier" more in keeping with the common-law definition of such a carrier as one "holding itself out to the general public to provide transportation by water . . . except that the term does not include a common carrier engaged in ocean transportation by . . . ocean tramp . . . ." (Section 3(6).) The term "common carrier" as used in the 1916 Act and as better defined in the 1984 Act has been interpreted in many cases to mean the common carrier as that term was understood in the common law. See Tariff Filing Practices, etc. of Containerships, Inc., 9 F.M.C. 56, 62 (1965), and cases cited therein.
One of the principles of statutory construction is that a remedial statute should be broadly construed in order to enable an agency to give effect to the statute's salutary purposes. The Commission has held that the Shipping Act is remedial and accordingly should be liberally construed when persons seek to avoid Commission jurisdiction. Thus, in Containerships, the Commission stated:
This conclusion [that respondent is a regulated common carrier] is more easily reached in light of the purposes of the shipping acts and the Commission's responsibility for regulation in this area. In general, those purposes are to regulate carriers by water in foreign or domestic offshore commerce. One of the purposes of the Shipping and Intercoastal Acts was to remedy various discriminatory practices prevalent in the shipping industry concerning establishment and maintenance of rates and fares. The acts, however, limit the Commission's regulatory jurisdiction in this matter to "common carriers." In order to effectuate the remedies intended by the enactment of a regulatory statute such as these, it is necessary to allow flexible and liberal interpretation of the statute.
Citing a court case interpreting another remedial statute, the Interstate Commerce Act, the Commission stated (Id.):
[I]n determining the true nature of the transportation, it is necessary to have in mind the purpose of the Act . . . . In addition, the court should have in mind the fact that this legislation is remedial and should be liberally construed to effect its evident purpose and that exemption from the operation of the act should be limited to effect the remedy intended. (Emphasis added.)
The Commission proceeded to state that the case "contains an important practical question of Commission responsibility" because if the respondent carrier "is exempt from regulation by the Commission, the remedial purposes of the Shipping and Intercoastal Acts will not be fulfilled." (Id.) See also International Association of NVOCCs v. Atlantic Container Line, cited above, 25 S.R.R. at 744 ("liberal, purpose-driven readings of the Shipping Acts are justified and desirable where a particular provision is broadly written, thus signifying an intention by Congress that Commission jurisdiction should not be narrowly construed." (Case citations omitted.)
The principle that when not completely clear, remedial statutes should be broadly construed to effectuate their purposes is well recognized in law and is followed in many cases. See, e.g., RNS Services, Inc. v. Secretary of Labor, Mine Safety and Health Admin. (MSHA), 115 F.3d 182 (3d Cir. 1997); Almero v. I.N.S., 18 F.3d 757 (9th Cir. 1994); Hogar Aguar y Vida en el Desierto, Inc. v. Suarez-Medina, 36 F.3d 177 (1st Cir. 1994); Hull Co. v. Hauser's Foods, Inc., 924 F.2d 777 (8th Cir. 1991); 82 C.J.S., Statutes, sec. 388 ("A remedial statute is designed to correct an existing law, redress an existing grievance, or introduce regulations conducive to the public good, and generally is to be liberally construed."
The fact that the Shipping Acts are remedial and are to be broadly construed to effectuate their salutary purposes was recognized by the Supreme Court in connection with the interpretation of the Commission's jurisdiction under the same statutory provision in the 1916 Act in which the Commission's jurisdiction over terminal operators was first conferred. In the case of United States v. American Union Transport, Inc., 327 U.S. 427, 437 (1946), the Court had to interpret the language of section 1 of the 1916 Act which defined "other person subject to this Act" as persons carrying on the business of forwarding or furnishing terminal facilities "in connection with a common carrier by water." The Court concentrated on the question whether the Commission had jurisdiction over so-called independent freight forwarders because these forwarders had argued that unless they were financially affiliated with carriers they were not operating "in connection with" common carriers. For almost 30 years the Commission had been interpreting the statutory language narrowly so as to exclude the independent, non-affiliated forwarders from regulation under the 1916 Act. However, the Commission belatedly began efforts to regulate the independent forwarders and the Court agreed that the statute gave the Commission jurisdiction over such forwarders, stating in this regard (327 U.S. at 443):
We think the [forwarders] are within the coverage of section 1. This conclusion is required not only by the broad and literal wording of the definition but also to make effective the scheme of regulation the statute established and by considerations of policy implicit in that scheme, as well as by the legislative history . . . . In order to place the discussion of our reasons in statutory as well as factual setting, we sketch below some of the more pertinent statutory provisions. In doing so, we shall emphasize the consequences of including or excluding the so-called independent forwarders . . . for effective administration of the Act and achievement of its policy. (Emphasis added.)
The Court went on to mention that the statutory language was "broad and general" (Id.) and later that the statutory language was possibly not sufficiently ambiguous to require the use of "construction" but if doubt remained, the Court discussed the history and policy of the 1916 Act. (Id. at 445.) The Court discussed other provisions of the 1916 Act regarding anticompetitive agreements and discriminatory and unreasonable practices which were all regulated or prohibited and found that some of the practices appeared to be "peculiarly if not exclusively susceptible of commission or inducement by forwarders" (Id. at 449). As regards the prohibition against unreasonable practices by forwarders and terminal operators prohibited by section 17 of the 1916 Act (now section 10(d)(1) of the 1984 Act), the Court held that the forwarders "by the nature of their business . . . are intimately connected with these various activities." (Id.) Thus, the Court stated that "unless the Commission has jurisdiction over them, it may not be able effectively to carry out the policy of the Act." (Id.) To emphasize the point that the Commission must have jurisdiction over "other persons subject to the Act," such as forwarders, the Court cited the manager of the 1916 Act, Congressman Alexander, who indicated that the Act should be broadly construed to effectuate its purposes. Thus the Court cited Congressman Alexander who stated that "if this Board effectually regulates water carriers, it must also have supervision of all those incidental facilities connected with the main carriers . . . ." (Id. at 451, citing the legislative history of the 1916 Act). The Court elaborated on this point by stating that the original congressional intention was broad, not restrictive, and was designed to cover forwarders "or other furnishers of terminal or 'link' service[s] with the common carriers." (Id. at 453.)
The Commission and later court decisions have consistently followed the Supreme Court's views of the importance of "links" with common carriers, such as marine terminal operators, to the effective regulation of the ocean shipping industry. In a number of cases the Commission has found terminal operators to be equivalent to public utilities that are vitally important to the flow of commerce. See, e.g., Investigation of Free Time Practices--Port of San Diego, 9 F.M.C. 525, 547-548 (1966) (terminals are public utilities supplying the public with a service which is of public consequence; ocean carriers and the commerce of the United States depend upon the terminal operators and upon the economy, efficiency, and soundness of their operations); Marine Terminal Practices of the Port of Seattle, 21 F.M.C. 397, 416 (1978), and cases cited therein ("[t]he vital role of such [terminal] operations as a link in the stream of transportation has been recognized by the Commission and the courts. . ."); Perry's Crane Service v. Port of Houston Authority, 16 S.R.R. 1459, 1484 (I.D.), affirmed in relevant part, 19 F.M.C. 548 (1977); A.P. St. Philip Inc. v. Atlantic Land & Improvement Co., etc., 13 F.M.C. 166, 174 (1969); American Export Isbrandtsen Lines, Inc. v. F.M.C., 444 F.2d 824, 828 (D.C. Cir. 1970) (public marine terminals are affected with a public interest; public interest in their efficient operation is unquestioned).
The statute involved in this proceeding is therefore remedial and to be broadly construed to effectuate its salutary purposes and the congressional intention to regulate marine terminals as necessary "links" in commerce with common carriers is clear, thus militating against exemptions from the scope of the statute. Because respondent in the instant case is arguing for an exemption from the reach of the statute, reference to another principle of statutory construction is now warranted. That principle is that provisos or exceptions to remedial statutes are to be narrowly construed and persons claiming such exemptions have to make appropriate showings that they qualify for the exemptions. See, e.g., Canadian Pac. Ry. Co. v. United States, 73 F.2d 831, 834 (9th Cir. 1934) ("A proviso or exception which restricts the general scope of the act must be strictly construed . . . and the burden of proof is on one claiming the benefit of the proviso."); Shilkret v. Musicraft Records, Inc., 131 F.2d 929, 931 (2d Cir. 1942) (a proviso stating an exception from the general policy which a law embodies should be strictly construed so as not to destroy the remedial purposes intended to be accomplished by the enactment); Markowitz v. Northeast Land Co., 906 F.2d 100, 105 (3d Cir. 1990) (exemptions from remedial statutes are to be narrowly construed); Olsen v. Lake Country, Inc., 955 F.2d 203, 206 (4th Cir. 1992) (exemptions from remedial statutes are to be construed narrowly); United States v. Luna, 768 F. Supp. 705, 708 (N.D. Cal. 1991), affirmed, 15 F.3d 1093 (9th Cir. 1993) (statutory exceptions are to be strictly construed so as to prevent the exception from swallowing the rule); 2A Sutherland Statutory Construction (5th ed.) sec. 47.08 ("where there is doubt concerning the extent of the application of the provision on the scope of another provision's operation, the proviso is strictly construed."); 3 Sutherland Statutory Construction (5th ed.) sec. 60.01 at 148 (". . . exceptions to remedial legislation are strictly construed. But one court has stated that courts should construe exceptions to remedial statutes narrowly, but they should also construe the exceptions sensibly, giving effect to the statutory purpose."); A. H. Phillips, Inc. v. Walling, 324 U.S. 490, 493 (1945) (any exemption from remedial legislation must be narrowly construed giving due regard to the plain meaning of statutory language and the intent of Congress. "To extend an exemption to other than those plainly and unmistakably within its terms and spirit is to abuse the interpretative process and to frustrate the will of the people.").
Finally, there is another doctrine that applies in cases such as the instant one in which legislative history and statutory language are unclear or inconclusive. That doctrine confers on agencies flexibility in determining their policies in administering the statutes with which they are entrusted and requires reviewing courts to defer to the agencies' interpretations of the statutes provided such interpretations are reasonable. This doctrine, of course, was enunciated in the leading case of Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., cited above, 467 U.S. 837. In Chevron, the Environmental Protection Agency (EPA) issued regulations under the Clean Air Act in which it had to interpret the statutory words "stationary sources" of air pollution and deal with pollution-emitting devices within the same industrial grouping under a so-called "bubble concept." Congress had never dealt with the particular problem faced by the EPA and consequently neither the statute's legislative history nor its language addressed the particular problem faced by the EPA, and Congress did not adequately define the critical words "stationary sources." Under such circumstances the Court stated that "if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency's answer is based on a permissible construction of the statute." (467 U.S. at 843.) In a later case, Justice Scalia explained the Chevron decision to mean that "courts must give effect to a reasonable agency interpretation of a statute unless that interpretation is inconsistent with a clearly expressed congressional intent." INS v.Cardoza-Fonseca, 480 U.S. 421, 454 (1987). In a later case, the Court confirmed that the Chevron rationale applied to "a pure question of statutory construction" and that in such cases an agency must be "accorded . . . deference . . . as long as its interpretation is rational and consistent with the statute." NLRB v. United Food & Commercial Workers Union, 484 U.S. 112, 123 (1987). The Chevron doctrine of deference to an agency's interpretation of its enabling statute and of its jurisdiction was confirmed in another case, Mississippi Power Co. v. Mississippi, 487 U.S. 354, 381-382 (1988), in which Justice Scalia opined that "Congress would naturally expect that the agency would be responsible, within broad limits, for resolving ambiguities in its statutory authority or jurisdiction." Perhaps the best way to illustrate the point that under the Chevron doctrine courts will defer to an agency's interpretation of its statute and to agency policy as regards administration of the statute when the statute and its legislative history are unclear is language from Chevron itself where the Court stated (467 U.S. at 866):
When a challenge to an agency construction of a statutory provision, fairly conceptualized, really centers on the wisdom of the agency's policy, rather than whether it is a reasonable choice within a gap left open by Congress, the challenge must fail. In such a case, federal judges--who have no constituency--have a duty to respect legitimate policy choices made by those who do. The responsibilities for assessing the wisdom of such policy choices and resolving the struggle between competing views of the public interest are not judicial ones: "Our Constitution vests such responsibilities in the political branches." (Case citation omitted.)
See also Rust v. Sullivan, 500 U.S. 173, 186 (1991) (when legislative history is ambiguous and unenlightening, the Court will defer to the expertise of the agency).
In the instant case, as I explain later in this decision, I find that RIVCO has not sustained its burden of proving the merits of its case against Ormet, i.e., that Ormet has unduly or unreasonably prejudiced or disadvantaged RIVCO, unduly preferred anyone, or has acted unreasonably, in violation of sections 10(b)(11), 10(b)(12), or 10(d)(1) of the 1984 Act. Therefore, as has happened in some previous cases, I could have declined to rule on the difficult jurisdictional issue and simply dismissed the complaint on its merits. This approach has been followed by the Commission and even the courts in difficult cases.(20) However, in the event that the Commission disagrees with my conclusions as to the merits of RIVCO's case and wishes to take remedial action, it would be necessary for the Commission to address the jurisdictional question. Also, even if the Commission were to agree that RIVCO has not proven that Ormet violated the Act, in some future marine terminal case where the merits were proven, the Commission would benefit by having some discussion of the question. Furthermore, the fact that persons believe that they have been harmed by marine terminal operators and wish to obtain suitable relief from the Commission in cases like the instant one provides another reason why the Commission might wish to announce to the world and the shipping public that its policy is to interpret its statutory jurisdiction broadly in order to effectuate the salutary purposes of the 1984 Act when there is no clear showing of congressional intent in the relevant statutory language and legislative history. In other words, the Commission might wish to advise the public that it will not shut the door to persons claiming harm from marine terminal practices that may be remediable under the 1984 Act at the very outset of a complaint proceeding but will at least consider their evidence and the merits of their claims because the Commission does not interpret the "ocean tramp" exemption to Commission jurisdiction broadly in the context of a remedial statute such as the 1984 Act. Therefore, later in this Initial Decision I will evaluate RIVCO's evidence as to the merits of its claims that Ormet has acted unlawfully under sections 10(b)(11), 10(b)(12), and 10(d)(1) of the 1984 Act.
The Relevant Facts Showing Commission Jurisdiction
Under the Tests Previously Discussed
Under the test laid down in Prudential Lines, Inc. v. Continental Grain Company, cited above, 21 S.R.R. 133 (I.D.), adopted, 21 S.R.R. 1172, namely, that jurisdiction attaches if only one common carrier sends a ship to a marine terminal, the record shows that not only one but at least 12 recognized common carriers have sent ships to the Burnside Terminal. See findings of fact, no. 24, and footnote 13 above, citing evidence naming the 12 common carriers beginning with Lykes Bros. Steamship Co., Inc. and ending with Lineas Agromar. The Commission can officially notice that these carriers file tariffs, offer regular services for the general shipping public, have been involved as respondent parties in Commission proceedings, and the like. See 46 C.F.R. 502.226(a).(21) In Prudential, furthermore, the four common carrier ships comprised some 12 percent of the total number of ships served at Continental's Norfolk terminal, they did not make regular calls and at least one common carrier customarily carried parcels of grain to fill in its ships when cargo was in short supply. In the instant case, not four but at least 12 common carriers sent ships to Burnside and some of these ships carried part loads of cargo and multiple lots for multiple shippers. However, under the Prudential test, all that matters is that a common carrier sent one of its ships to the terminal whether or not the particular ship was in common carriage herself at the time because the Commission held that "the Shipping Act regulates carriers, not type of carriage." (Prudential, 21 S.R.R. at 1174.) Furthermore, the record shows that at least one common carrier (COSCO) sent ships to the Burnside Terminal after Ormet canceled its terminal tariff and initiated its purported policy of precluding common-carrier ships from calling at the terminal.(22)
Under the alternative test, namely, that a vessel carrying multiple lots for more than one shipper, i.e., for two shippers or more or for three shippers or more, is no longer to be considered an "ocean tramp," the record offers several examples. Thus, the record shows that 53 ships out of the 395 examined (13%) carried for two shippers while 36 ships (9%) carried for three shippers or more. The Commission has held that if a ship carries for two shippers it is presumed that it is in common carriage, although the presumption can be rebutted. See Transportation by Mendez & Co. Between U.S. and Puerto Rico., cited above, 2 U.S.M.C. at 720. However, the presumption of common carriage becomes stronger when three or more shippers are served per voyage. There are several examples of such ships. Thus, in June 1995 the COSCO ship M/V SEA MILD carried cargoes for six shippers and discharged not only at Burnside but at a Delaware port as well. Also, in June 1995, another COSCO vessel, the M/V TRAMCO AMITY, discharged cargoes, some of which was bagged, for 14 shippers. In July 1995, another common carrier, Safmarine, sent a vessel named the M/V TRADE AMBASSADOR and discharged cargoes, including bagged cargoes, for four different shippers. Another ship sent by a common carrier (Navrom), the M/V ZARNESTI, discharged cargoes for three shippers at the Burnside Terminal in July of 1995. In September 1995, COSCO sent its vessel, the M/V FENG SHOU, to discharge a load of bulk cargo plus bags and palletized electrodes, for nearly 20 shippers under more than 30 separate bills of lading. Some other ships calling at Burnside for three or more shippers were the M/V TAL, sent by Sinotrans, a common-carrier company, carrying for five shippers in October 1995; the M/V XUE HAI, a COSCO vessel that discharged cargo, including bagged cargo, for eight shippers in November 1995; the M/V MARE, sent by Marine Container Lines, that discharged cargoes, including bags, for five shippers in July 1996; the M/V CITY OF AKAKI, operated by Lineas Agromar, a known common carrier, a vessel that carried general cargo and discharged for three different receivers in November 1996; all the bills of lading for this vessel were liner bills, and the vessel carried cargoes in numerous containers and other cargoes to other ports in South and Central America and Mexico; the M/V VITORANDIS, another COSCO vessel that in December 1996 discharged cargoes for 10 different shippers, carried under standard form COSCO liner bills of lading and not charter-party bills of lading. Still more examples of vessels sent by recognized common carriers to Burnside are the three ships sent by Lykes Bros. Steamship Co., Inc. These three ships are the M/V ARABIAN EXPRESS, FATHULKHAIR, AND ISTRIAN EXPRESS that called at Burnside in May, July, and November 1995, respectively. Although common carriers have bulk, non-common carrier divisions, as Ormet argues, according to Mr. Stagg, RIVCO's expert witness, who was the Lykes officer in charge of the relevant service at the time, these ships were employed by Lykes in its common-carrier division, Lykes was forced to charter the M/V ARABIAN EXPRESS due to a temporary lay up of one of its ships, and had been operating the ships in connection with a longtime contract using its common-carrier, liner vessels. Furthermore, the ships carried cargoes for two or three shippers per voyage that was not entirely bulk in nature and called at other ports in Lykes's common-carrier service. Under the Prudential test, as mentioned, if a common-carrier company sends one ship to a terminal, whether or not the ship is in common carriage, that fact suffices for Commission jurisdiction to attach. Under the test, apparently, even if the common-carrier company sent a ship in its non-common carrier bulk division, jurisdiction would attach to the marine terminal operator.
The above list of ships calling at Burnside Terminal is not exhaustive but is presented to show that such ships have passed the line from "ocean tramp" to common carriage or have been operated by common-carrier companies, either of which situation confers on the Commission jurisdiction over a marine terminal operator that furnishes facilities to the ships, under the Prudential test or even under the classic, narrow definition of an "ocean tramp" as essentially a single-shipper, single-charter of a full shipload with some fill-in cargoes.
The Matter of the Two Expert Witnesses
As the earlier discussion illustrates, the question of how to define at "ocean tramp" with precision is a matter of some debate among the cases and authorities. The debate has continued into this record in the person of two expert witnesses presented by the parties. These expert witnesses are Mr. Richard Stagg, who testified for RIVCO, and Mr. Tim E. Jilek, who testified for Ormet. Unlike the other witnesses who testified for RIVCO and Ormet who are essentially operating people and admittedly were not offered as experts on what constitutes common carriage or "ocean tramps" under the 1984 Act, both Mr. Stagg and Mr. Jilek were so offered.
The parties attack the credibility of each other's expert witness, although both Mr. Stagg and Mr. Jilek have extensive experience in various aspects of shipping. Mr. Stagg presently works for a company engaged in the ship brokerage business located in England. Previously he was employed for 15 years by Lykes Bros. Steamship Co., 12 years of which were spent in South African, Kenyan, and London offices. For over two years, until October 1996, Mr. Stagg worked for Lykes in the United States responsible for all movements of cargo both inbound and outbound on Lykes's vessels. (See Exhibit 22, Mr. Stagg's Declaration.) Mr. Stagg testified as to the activities of various carriers in the "parcel bulk" trade from South Africa to the United States in regard to solicitation of cargoes for multiple shippers and the fact that some are common carriers with non-common carrier divisions. He testified that "[t]o the best of my knowledge, all of these carriers solicit cargo for their vessels in one manner or another and frequently carry multiple types of cargo for multiple shippers often to multiple ports of discharge. Given the nature of the bulk cargo trade particularly in the South Africa/U.S. trade lane, a number of these operators provide relatively frequent service in that trade. Based upon my experience and understanding, these operators are engaged as common carriers." (Id. at 7.) Ormet criticizes Mr. Stagg and downplays his credibility in regard to Mr. Stagg's longtime absence from the United States and a contrary view of the Lykes ships by a subordinate Lykes employee, Mr. Stagg's alleged belief that the number of shippers per voyage is the sole determining factor in defining common carriage, his knowledge of common carriage based on his experience rather on scholarship and study of case law, and other matters. RIVCO rehabilitates Mr. Stagg in some detail in its reply brief (at 14-19).
On the other hand, Ormet promotes the qualifications and credibility of its own expert witness, Mr. Tim E. Jilek. Mr. Jilek is currently president of a chartering company located in Colorado and is a "pure ship broker." His company usually represents bulk shippers and assists them in chartering appropriate vessels. He is an arbitrator in maritime cases who has appeared as a witness in an FMC proceeding and as an expert witness in a Customs matter. (Ex. 27, Mr. Jilek's Statement.) Mr. Jilek has worked in the shipping business since 1972 and testified that he has become familiar with the meaning of the word "tramp" through his experience of 20 years plus reading maritime literature and his understanding of certain legal decisions, including the Commission's Containerships decision, cited above. He provides several criteria by which to define a "tramp" ship, which are more detailed than the single-shipper, single-charter definition advocated by RIVCO (e.g., cargo shipper interests control the ship, freight payable under charter party, no fixed routing or schedule, all bulk cargo, small number of shippers, cargoes not shipped in small quantities). (Ex. 27 at 4-5.) RIVCO attacks Mr. Jilek's credibility by pointing out that Mr. Jilek, like Mr. Stagg, did not profess to be a legal scholar or expert on common carriage either and that Mr. Jilek's knowledge of common carriage appeared on cross-examination to be based merely on a reading of Containerships and two other cases. (Ormet's Reply Brief at 16.) Moreover, as RIVCO states, Mr. Jilek reviewed only a few documents in the case and addressed very few vessels specifically in his written statement. (Id. at 17.) Moreover, RIVCO rehabilitates Mr. Stagg as regards his testimony concerning the Lykes vessels mentioned earlier as being common-carrier ships by pointing out that the opposing view was presented by another Lykes employee in a letter who, unlike Mr. Stagg, was not in charge of the particular Lykes operation at the relevant time. (Id. at 18-19.)
If this were a case in which the above expert testimony was critical and the entire case hinged on which opinion the Commission should select, it would be necessary to examine the qualifications and cross-examination of both Mr. Stagg and Mr. Jilek more closely. In such case, in which the expert testimony is diametrically opposed and absolutely critical to a decision, courts will examine closely not only the qualifications of the expert witnesses but their reasoning, methodology, and data, as well as possible interest or bias that also affects lay witnesses. See, e.g., United States v. R.J. Reynolds Tobacco Co., 416 F. Supp. 316, 323-325 (D. N.J. 1976) (expert opinion based on defective data and unreliable methodology is valueless); see also the discussion in 1 McCormick on Evidence (4th ed.) secs. 13 and 17, concerning the use of cross-examination of expert witnesses and the problems of resolving disputes among expert witnesses. I do not find the definitions of "tramp" shipping proffered by Mr. Stagg and Mr. Jilek to be irreconcilably opposed in contrast to their opinions as to particular types of ships operating in "parcel bulk" trades. However, I find Mr. Stagg's opinions regarding the Lykes operation in the South African "parcel bulk" trade, namely, that the ships operated as common carriers, to be probative considering Mr. Stagg's personal experience with Lykes during the relevant period of time. However, I find that the Commission, as an expert agency presumed to be familiar with the shipping industry that it regulates and with the statute that it administers, has less need to depend upon expert witnesses, especially when called upon to interpret the language of a statute that the Commission administers. It is a basic principle of administrative law that a regulatory agency is presumed to be familiar with the industry it is charged with regulating, and the agency is not necessarily bound by opinions of expert witnesses but is free to reach its own conclusions. This principle was announced by the Supreme Court in Market St. Ry. Co. v. Railroad Commission of the State of California, 324 U.S. 548, 560-561 (1945); see also Noell v. Bensinger, 586 F.2d 554, 557 (5th Cir. 1978); Central Illinois Public Service Commission v. FPC, 338 F.2d 682, 685 (7th Cir. 1964); Cullers v. Comm'r of Internal Revenue, 237 F.2d 611, 616 (8th Cir. 1956) (agency can reject expert testimony based upon its own knowledge, judgment, and experience but cannot arbitrarily disregard the expert's testimony); Walker v. Mathews, 546 F.2d 814, 820 (9th Cir. 1976) (ALJ not bound to accept expert's opinion but cannot simply reject it without reasons); see the detailed discussion of these principles in 4 Stein, Mitchell, & Mezines, Administrative Law (Matthew Bender 1998), sec. 28-03; see also Davis & Randall, Inc. v. United States, 219 F. Supp. 673, 678 (W.D. N.Y. 1963) (agency is not bound to accept expert's opinion when other experts disagree, are interested, and the subject is inherently uncertain).
I base my conclusions on the interpretation of the relevant statutory language in sections 3(6)(B) and 3(15) of the 1984 Act concerning "common carriers" and "ocean tramps" far more on the legislative history and case law or on principles of statutory construction, as I have discussed, than on the expert opinions of Mr. Stagg or Mr. Jilek.
The Effect of Ormet's Announced New Policy of
Not Serving Common-Carrier Vessels
I have concluded that Ormet has been engaged in the business of furnishing terminal facilities in connection with common carriers and therefore meets the statutory definition set forth in section 3(15) of the 1984 Act. However, Ormet also contends that it has canceled its terminal tariff and has taken steps to advise carriers that it will not serve common-carrier vessels that attempt to call at the Burnside Terminal. Ormet contends that under previous case law, it has therefore removed itself from Commission jurisdiction. Ordinarily I would find merit to Ormet's argument but the facts in this case distinguish the situation from those in the previous cases cited by Ormet.
Ormet contends that "Ormet does not want to service common carrier vessels, and is making a serious, good faith effort to avoid doing so." (Ormet's Answering Brief at 35.) Ormet cites three Commission cases (and two court cases) for the proposition that if a marine terminal does not serve common carriers the Commission does not have jurisdiction. The three Commission cases cited by Ormet are New Orleans Steamship Association v. Bunge Corp., 8 F.M.C. 687 (1965); In the Matter of Agreement No. 2719, 16 F.M.C. 318 (1973); and McAllister Bros. v. N. & W. Ry. Co., 20 F.M.C. 62 (1977). Ormet argues, furthermore, that as a terminal where cargo is discharged and not loaded, it cannot as a practical matter know what is loaded on ships at foreign origin points nor perhaps even how many foreign shippers were involved. (Id. at 36.) Consequently, Ormet contends that it is doing all that the law requires by canceling its terminal tariff and instituting a certification system to keep out common-carrier vessels.
RIVCO criticizes Ormet's plan by which Ormet claims that it can screen out common-carrier vessels and thereby remove itself from the Commission's jurisdiction. RIVCO contends that Ormet has been in the business of serving ships carrying multiple lots for multiple shippers as well as full shipload charter operations and only if Ormet truly gave up serving ships carrying for multiple lots for multiple shippers could Ormet begin to reliably represent that it does not serve common-carrier vessels. Moreover, no one working for Ormet's terminal is qualified to make the legal decision as to whether a particular ship wishing to call at the Burnside Terminal is truly in common carriage or not and, indeed, the conflicting expert opinions in the record illustrate that this question is not a matter which terminal-operating people are qualified to decide. Moreover, in the cases cited by Ormet, the terminals were dealing with full-shipload charters so that it was relatively easy for the terminals to represent that they did not serve common carriers. In the instant case, however, it is probable that a common-carrier vessel will call at the Burnside Terminal and be served especially since the vessel agent, who is not an expert on the legal question of common carriage, is not likely to certify that the vessel is in common carriage and thus must be turned away from the Burnside Terminal. (RIVCO's Opening Brief at 67-69.) RIVCO adds to these arguments in its reply brief (at 5-8) and emphasizes that a "great deal of Ormet's business at Burnside is part lot and multi-lot shipments" so that "[t]he likelihood of serving common carriers under those circumstances is very great. . . ." (Id. at 7.)
I agree with RIVCO in this matter. First, the cases cited by Ormet for the proposition that all that Ormet has to do is cancel its terminal tariff and make vessels or their agents certify that they are not "common carrier vessels" suffices to remove the terminal from Commission jurisdiction involve significantly different facts. Thus, in Bunge Corp. the terminal handled full shiploads of grain and was a loading terminal, not a discharge terminal like Burnside, and Bunge in fact would only serve vessels under charter for the carriage of full cargoes of grain. Such ships would in all likelihood qualify as "ocean tramps" or private carriers. Moreover, as the Commission's decision indicates, Bunge had followed the Commission's staff's suggestion that Bunge should amend its tariff (as it did) barring common carriers at its terminal if Bunge intended not to load part cargoes. There was no indication in Bunge Corp. that Bunge would continue to serve ships carrying multiple loads for multiple shippers nor that Bunge would serve vessels sent by known common carriers.
In In the Matter of Agreement No. 2719, cited by Ormet, a grain company operating a terminal succeeded in avoiding Commission jurisdiction over an agreement to which the grain company, Dreyfus, was a party, by following the Bunge Corp. example, namely, by publishing a terminal tariff provision that would notify common carriers that they would not be accepted at the terminal. The Commission permitted Dreyfus to remove itself from Commission jurisdiction but made clear that it did so on the assumption that Dreyfus would not serve common carriers "directly or indirectly at the lease facilities in question . . . ." (16 F.M.C. at 325.) Again, there was no indication in the case of any likelihood or probability that Dreyfus would serve common carriers contrary to its representation. As discussed above, the record in the instant case is to the contrary.
The other Commission decision cited by Ormet, namely, McAllister Bros. v. N & W Ry. Co., 20 F.M.C. 62, similarly is so distinguishable in its facts as to lend no support to Ormet. In McAllister, a railroad operated a terminal at Norfolk, Virginia that handled coal exclusively and served vessels carrying coal for single shippers under contract or charter with no indication that any common carrier ever sent a ship to the terminal. I also find no support for Ormet in the two court cases Ormet cited.(23)
I agree therefore with RIVCO that Ormet has an ineffective policy of insuring that common-carrier vessels will not call at the Burnside Terminal for the reasons stated by RIVCO, for example, the difficulty of ascertaining whether a particular vessel was in common carriage, the lack of qualified personnel at the terminal to make such a decision, which is difficult to make even for experts, and the fact that self-interest will motivate vessel agents and the Burnside Terminal not to turn away vessels but instead merely to certify that a particular ship is not in common carriage, and that at least one common carrier (COSCO) sent ships to Burnside even after Ormet instituted its new policy. Moreover, some 89 out of the 395 vessels examined that called at the Burnside Terminal in a two-year period (some 22% of the sampling taken), which carried for two or more shippers, were presumably in common carriage. It would be contrary to human nature for any business to turn away that large a percentage of its business. Rather than surrender a sizeable portion of its business, Burnside could simply accept the fact that it does business with common carriers and common carriers' ships, as this record shows, that it must refile its terminal tariff with the Commission, and that it is subject to possible complaints and other regulatory intrusions as are all other marine terminal operators subject to the 1984 Act.
Issue No. 2: The Merits of RIVCO's Complaint;
Has Ormet Acted Unlawfully under the Shipping Act?
Having concluded that the Commission has jurisdiction over Ormet's activities at the Burnside Terminal, I now turn to the second issue, namely, whether RIVCO has proven that Ormet has unduly or unreasonably preferred or advantaged or unduly or unreasonably prejudiced or disadvantaged anyone or has failed to observe reasonable practices, in violation of sections 10(b)(11), 10(b)(12), and 10(d)(1) of the 1984 Act, respectively. Citing two cases, A.P. St. Philip, Inc. v. Atlantic Land & Improvement Co., et al., 13 F.M.C. 166 (1969), and California Stevedore and Ballast Co. v. Stockton Port Dist., 7 F.M.C. 75 (1962), RIVCO argues that Ormet's exclusive contract with the Bisso Towboat Company constitutes a prima facie unjust and unreasonable practice which violates the three laws cited above and that Ormet must consequently furnish justification, which RIVCO claims is a heavy burden that Ormet has failed to sustain. (RIVCO's Opening Brief at 72.) RIVCO argues that the fact that the practice concerns a towing operation, not a practice actually conducted on the piers, does not matter as far as Commission jurisdiction is concerned because the Commission has held that a tugboat service becomes a regulated terminal service when the terminal operator makes access to the terminal dependent upon the use of a favored towing company, citing A.P. St. Philip, as confirmed by the Commission in Petchem Inc. v. Canaveral Port Authority, 23 S.R.R. 974 (1986), affirmed as Petchem, Inc. v. Federal Maritime Commission, 853 F.2d 958 (D.C. Cir. 1988).
RIVCO argues that Ormet's reasons for entering into the exclusive contract with the Bisso Towboat Company, namely, efficiency, safety, and profit, are not supported either by evidence or by the applicable law, and are post hoc rationalizations. In any event, RIVCO argues that the real reason why Ormet selected Bisso as the exclusive towing company was to make a profit by marking up Bisso's charges to Ormet and making the vessels pay Ormet at marked-up rates. However, it is argued, under previous case law, in which exclusive or monopolistic practices at marine terminals have been struck down by the Commission, Ormet's purported justifications have not been found to be valid so as to offset the invasion of the national philosophy favoring free and open competition or the fact that third persons such as vessel operators have been deprived of their right to select the towing company of their choice through open competition. RIVCO also contends that itself and other tug companies have been excluded from the Burnside Terminal, the purportedly relevant market, and that the other two excluded tug companies besides RIVCO had once enjoyed some 60-75% of the Burnside market. RIVCO also claims that even if its previous percentage of the business at Burnside was less than 5%, based upon RIVCO's net revenues, this amounts to some more than $170,000 per year in lost revenues, and two other excluded towing companies have also been harmed and have been suing in state court. (Id. at 79.) Also, RIVCO argues that if Ormet's exclusive-contract practice is found to be reasonable and lawful by the Commission, it could spread to other terminals on the Mississippi River, as a state court judge observed, with deleterious effects. (Id. at 79.)(24) Finally, RIVCO argues that Ormet's practice is an unreasonable "tying" device and that if Ormet had been truly concerned about safety and efficiency, it could have instituted practices that were less anticompetitive.
Ormet disagrees with RIVCO. Ormet contends that it is employing a "sole provider" service that is like that found reasonable in All Marine Moorings, Inc. v. ITO Corp. of Baltimore, 27 S.R.R. 539 (1996), and Petchem, Inc. v. F.M.C., cited above, plus several other Commission cases.(25) Also, Ormet argues that it was fully authorized to institute its "sole provider" system under its lease from the Greater Baton Rouge Port Commission, as was the terminal operator in All Marine Moorings, which lease only requires it to serve vessels in addition to its own aluminum-ore-carrying vessels at the Burnside Terminal, and, as Ormet argues, the Port Commission has observed no adverse effects on the Port of Greater Baton Rouge because of Ormet's "sole provider" system, citing the testimony of the Port Commission's Executive Director. (Ormet's Answering Brief at 51.) Moreover, Ormet argues, the Port Commission even supports Ormet's position as shown by the fact that the Port Commission took no action against Ormet even after RIVCO submitted a complaint to that Commission. (Id.)
Ormet cites evidence in the record supporting its contention that its "sole provider" system using the Bisso Towboat Company has benefited its terminal operations in terms of safety and efficiency for a number of reasons, e.g., prompt availability of Bisso's tugs, which are "dedicated" to the Burnside Terminal and are located nearby, the decline or absence of accidents at the terminal, and the elimination of delays in servicing vessels. According to the testimony of Ormet's witness, Mr. Lange, Ormet's Terminal Operations Manager, the exclusive employment of Bisso, by eliminating delays in servicing vessels, has improved Ormet's financial situation at the terminal by enabling Ormet to benefit by receiving "incentive" payments if the terminal can finish the job promptly. This increased efficiency, according to Mr. Lange, benefits other vessels calling at the Burnside Terminal who no longer become stacked up waiting for ships that called earlier to be discharged. Ormet cites other benefits to vessels because of Bisso's ability to respond promptly in emergency situations because of Bisso's nearby location and cites the well-known accident that occurred in New Orleans in December 1996 when a vessel crashed into a waterfront shopping complex in New Orleans causing great damage while not under the control of "assist tugs."
In addition to its claims of improving efficiency and safety at the Burnside Terminal by using Bisso Towboat exclusively, Ormet argues that its vessel customers benefit by paying lower rates than those RIVCO or the other towing companies charge even allowing for the fact that Ormet marks up what Bisso charges Ormet when Ormet bills the vessels. Ormet estimates that it has saved vessels about $40,000(26) each month in "assist-tug" charges while its "sole provider" system has been in effect, that its rates to vessels have not increased in almost three years in contrast to RIVCO's rates that vessels have to pay RIVCO, and that this stable lower rate situation is attributable to Ormet's position of strength which enabled Ormet to obtain favorable rates from Bisso Towboat under its exclusive contract with Bisso Towboat. Also, despite RIVCO's claims that vessels have lost the benefits of competition among tug companies at the Burnside Terminal, which competition presumably helps keep rates down, Ormet cites evidence that it faces competition from other terminals at the River, naming three larger competing terminals among 12 or 16 smaller operators along the River. (Ormet's Answering Brief at 58.) Ormet furthermore cites evidence that the only other terminal on the River using an exclusive tug system like Ormet's, the IMT terminal, charges rates that are still lower than RIVCO's, proving, according to Ormet, that the pressures of competition among terminal operators still exist to help keep terminal rates down even if the terminal selects one exclusive provider of the "assist-tug" service.
Ormet does not deny that it makes a profit under its "sole provider" system paying Bisso Towboat "wholesale" rates while charging its vessel customers "retail" rates at a "modest" profit. (Ormet's Answering Brief at 60.) However, Ormet argues that it "need not be ashamed that it is able to make a modest profit . . . while reducing assist tug costs to vessel, and increasing safety and efficiency at the Burnside Terminal." (Id. at 60.) Ormet argues that RIVCO is urging a "nanny" form of government intrusion into a beneficial business decision that would benefit RIVCO and its allies "but at the expense of everyone else, the vessels, Ormet, the cargo, and the shipping public in general." (Id.) Citing All Marine Moorings, Ormet argues that the better result would be a finding that Ormet "needs no permission under the Shipping Acts to make such a business decision." (Id.)
Ormet addresses the question as to the impact upon RIVCO's business caused by Ormet's introduction of the "sole provider" system at its Burnside Terminal and contends that the impact is "minimal." Ormet cites evidence that RIVCO is only one of four tug companies competing along the lower Mississippi River, a huge area including four Louisiana ports (Plaquemines, New Orleans, South Louisiana, and Baton Rouge) that handles hundreds of millions of tons of cargo every year. (Id. at 61.) Out of this "relevant market," it is estimated that Burnside controls only 2.5 percent in terms of the number of vessels calling at the many terminals (more than 150) along the lower Mississippi River. (Id.) Ormet points out that RIVCO holds out its services at 114 of these terminals and at 33 mid-stream facilities. (Id.) In terms of RIVCO's revenues and operations, Ormet, citing record evidence, contends that in the last full year before Ormet introduced its "single provider" system at the Burnside Terminal (1994), only 1.6 percent of RIVCO's revenues came from serving vessels calling at the Burnside Terminal, and RIVCO handled only 31 vessels at Burnside out of a total of 625 vessels that RIVCO handled, or under 5 percent. (Id.) Moreover, notwithstanding Ormet's new system at Burnside, RIVCO's business actually grew to approximately 750 vessels handled per year in 1996 and 1997, a growth of some 20 percent over 1994. Moreover, the record shows that RIVCO actually bought a new tug in response to this growth. (Id.) Citing confidential figures in the record, Ormet also points out that RIVCO's annual revenues actually rose in 1997 over the levels reached in 1995 and 1996. (Id.) Consequently, Ormet argues that "RIVCO business has been expanding since the sole provider system was put in place at Burnside, and has added to its tug fleet." (Id.)
The above discussion summarizes Ormet's main arguments in defense of its "sole provider" system. However, Ormet furnishes additional arguments to rebut RIVCO's claims, such as RIVCO's claims that the "sole provider" system will spread up and down the River, that Commission precedent requires that Ormet provide strong justification for its practice, that the practice is akin to a "tying" device outlawed under antitrust law, that Ormet makes a tidy profit out of its system by marking up Bisso Towing's charges to Ormet, and that Ormet's practice is unfair because it burdens vessel owners and operators. (Ormet's Reply Brief at 64-67.) Suffice to say that, as I explain below, for the most part I agree with Ormet's arguments and citations to the record and find that RIVCO's rebuttals to Ormet as presented in RIVCO's reply brief do not change my conclusion that RIVCO has not sustained its burden of proof.
Legal Conclusions
Reduced to its essence, I conclude that what Ormet has done is to institute a system of providing a terminal service using one provider exclusively at its terminal instead of buying its own tugs and hiring its own employees to perform the service. I find that this system, called the "sole provider" system by Ormet, was instituted as a business decision by Ormet which, while selecting a tug company other than RIVCO as the provider and thus disappointing RIVCO, benefits other affected interests. Moreover, I find no compensable injury to RIVCO that was caused by the new system and, indeed, the record shows that RIVCO's business actually expanded after the new system was introduced. Consequently I conclude that this record will not support a decision by the Commission to interfere with Ormet's business decision or to upset the contract which Ormet negotiated with the Bisso Towboat Company, which company Ormet selected after soliciting competing bids from two tug companies. Under this contract Ormet gave Bisso exclusive rights to perform "assist-tug" services and Bisso in turn gave Ormet the lowest rates among the tug companies competing along the lower Mississippi River. I base this conclusion not only on the policy statement in the Shipping Act of 1984 "to establish a nondiscriminatory regulatory process . . . with a minimum of government intervention and regulatory costs" (section 2(1) of the 1984 Act) but on the evidence showing minimal impact on RIVCO in the huge relevant market and offsetting benefits to the terminal and to Ormet's vessel customers. Moreover, several beneficiaries of Shipping Act protections, namely, the customers of the terminal operator as well as the Port itself, have either not appeared or have not produced evidence of actual specific harm to their interests. While this fact does not mean that RIVCO has no standing to file a complaint alleging violations of the Act, it does mean that RIVCO has not proven that Ormet's practice constitutes "undue and unreasonable" conduct prohibited by sections 10(b)(11), 10(b)(12), or 10(d)(1) of the 1984 Act. See Petchem, Inc. v. Canaveral Port Authority, cited above, 23 S.R.R. at 987 n. 39, and case cited therein (any person may file complaint alleging violation of the Act); Trane Co. v. South African Marine, 19 F.M.C. 374, 378 (1976), and many cases cited therein (same and complaining person may file complaint even if not suffering injury itself). Furthermore, while sections 10(b)(11) and 10(b)(12) of the Act prohibit preferences, advantages, or prejudice or disadvantages affecting persons, these prohibitions are qualified. They must be "undue or unreasonable." See Consumer Electronics Shippers Ass'n, Inc. v. ANERA, 26 S.R.R. 766, 773 (1993) (respondents may have disadvantaged complainant association by refusing to give complainant the type of service contract desired but the disadvantage was not undue or unreasonable); Perry's Crane Service v. Port of Houston Authority, 19 F.M.C. 548, 551-2 (1977) (Shipping Act does not prohibit all preferential or prejudicial treatment, only that which is undue or unreasonable); A.P. St. Philip, Inc. v. The Atlantic Land Improvement Company, et al., cited above, 13 F.M.C. at 174 (same). Consequently, even if RIVCO has been disadvantaged and the Bisso Towboat Company has been preferred, such a situation resulted because Bisso was able to submit the most attractive bid to Ormet which had solicited bids from two eligible tug companies, and in return for exclusive rights to perform services for vessels calling at the Burnside Terminal, Bisso Towboat charged Ormet low rates acceptable to Ormet. This contract therefore was the product of some competition.(27) I also find that RIVCO has not sustained its burden of proof under section 10(d)(1) of the 1984 Act, i.e., I find that RIVCO has failed to prove that Ormet has failed to observe reasonable practices by entering into the contract with the Bisso Towboat Company.
In arguing that Ormet's restrictive practice is unreasonable, RIVCO relies on a series of cases involving terminal operators or ports that have instituted various types of restrictive or even monopolistic practices. Thus RIVCO cites A.P. St. Philip, Inc. v. Atlantic Land & Improvement Co., et al., cited above, 13 F.M.C. 166; and California Stevedore and Ballast Co., cited above, 7 F.M.C. 75, decided in 1969 and 1962, respectively. RIVCO contends that whenever a marine terminal operator institutes restrictive practices that offend the national philosophy favoring free and open competition, the terminal operator must justify the practice and that the burden of justification is a heavy one. The two cases cited above do indeed stand for the proposition that restrictive anticompetitive practices at marine terminals contravene the national philosophy and require justification and there are other cases so holding.(28) However, because the cases depend so heavily on the particular facts at the particular ports, there are also cases finding the various restrictive practices to be reasonable and lawful under the circumstances at other ports. A list of such cases going both ways, some finding the practices to be unlawful and others finding them to be lawful, are discussed in some detail in All Marine Moorings, Inc. v. ITO Corp. of Baltimore, cited above, 27 S.R.R. at 352-355. In All Marine Moorings, furthermore, it was recognized by the presiding judge and approved by the Commission, that "although monopolistic practices have been deemed to be prima facie unreasonable and violative of Shipping Act standards, they pass muster if respondents justify them." (Id. at 353.) However, it was recognized that if the practice under challenge did not constitute a monopoly or something akin to a monopoly and there was no showing that competition was inadequate in the relevant market, a respondent might not have to justify the practice or, if it did, the burden of justification was light. In this regard the Initial Decision stated (27 S.R.R. at 353):
However, if there is no showing in the first place of a monopoly or something akin to a monopoly or an inadequate level of competition, there is no automatic requirement of justification, and a less restrictive practice that does not constitute a monopoly but only a lesser degree of invasion of the national philosophy favoring free and open competition requires less justification.
In adopting the Initial Decision, the Commission specifically approved the above quoted language. (27 S.R.R. at 545.) Moreover, as did the Initial Decision, the Commission recognized that each of the terminal cases depended on the particular factual situations at the particular ports and marine terminals. (Id.) Indeed, in All Marine Moorings, the Commission went so far as to hold that the complaining line-handling company excluded at one terminal had not even made out a prima facie showing of unreasonableness, considering the fact that complainant occupied some 70 percent of the business at the Port of Baltimore and that respondent's restrictive practice only affected one relatively small location at the Port, i.e., that the impact of respondent's decision to perform its own line handling services at its terminal to the exclusion of the complainant company that had previously worked at the particular terminal in Baltimore was small.
When complaining parties have made a showing of monopolies at particular ports and respondent ports or terminal operators have presented defenses, the Commission has often found the particular terminal practice to be lawful and reasonable under the Shipping Act. Thus, as the Initial Decision in All Marine Moorings and Commission adoption of it show, respondent terminal operators and ports have justified restrictive or preferential practices at ports on various grounds. Six Commission cases, in which the terminal or port justified its restrictive practices, were discussed in which respondents successfully cited the smallness of the port which could not support two tug and towing companies, the existence of adequate competition at the port and the superior services and financial situation of the preferred lessee, insufficient business at a small port to support two terminal operators, the need for the port to make use of its cranes in which it had heavily invested, in competition with private crane operators, and the need for the stevedore to sub-contact with a particular grain trimmer who could provide the proper type of service. (I.D., cited above, at 353-354.) In each of these cases, the Commission declined to interfere with the business judgments of the particular ports or terminal operators. In All Marine Moorings itself, as mentioned, the Commission did not even believe that the respondent terminal operator, who had made a business decision at its one location in the entire Port in the belief that it could thereby offer more efficient service to its customers, among other reasons, was even required to justify its business decision in view of the relatively tiny portion of the relevant market occupied by the respondent terminal operator and the minimal impact on the complaining line-handling company resulting from its exclusion from the one terminal in the entire Port of Baltimore.
In All Marine Moorings, Inc., cited above, 27 S.R.R. at 355, 546, the Commission observed that it is not the Department of Justice nor the Federal Trade Commission and does not administer the antitrust laws. However, the Commission, in adopting the Initial Decision, also observed that certain concepts drawn from antitrust law are useful in applying Shipping Act standards. (Id. at 546.) Among the concepts are those of the "relevant market" in which the respondent and complainant compete. In All Marine Moorings, the "relevant market" was the entire Port of Baltimore, and it was found that complainant line-handling company, which had been excluded from one terminal location in the Port, actually was the dominant company in the relevant market whereas the respondent terminal operator had only a "monopoly" at one terminal location. Complainant was thus free to continue competing in the entire Port and had only lost the ability to continue working at respondent's one terminal location. The Commission found no violation of the Shipping Act by the respondent terminal operator under the same sections of the 1984 Act as those that RIVCO alleges to have been violated by Ormet, namely, sections 10(b)(11), 10(b)(12), and 10(d)(1). In the instant case, the record shows that Ormet controls one terminal out of some 150 along the 200-plus mile stretch of the River and serves only some 2.5% of the number of vessels calling at the many terminals along this stretch of the River. Thus, Ormet has even less control over the "relevant market" than did ITO Corporation in Baltimore. Moreover, in terms of impact upon RIVCO's business the record shows that in the last full year before Ormet selected Bisso Towboat as the sole provider of "assist-tug" services, only 1.6% of RIVCO's revenues were earned at the Burnside Terminal. Moreover, since Ormet's new system began, RIVCO has been able to compensate for any loss of business at the Burnside terminal, has actually increased its revenues and business by turning to other terminals along the River, and has even acquired another tug presumably to meet the demands of its expanded business. There is thus no evidence of a monopoly or something akin to a monopoly in the relevant market, competition among four tug companies appears to be operating along the "relevant market" stretch of the River, and RIVCO appears to have recovered nicely from having lost its ability to work at Burnside. As the Commission noted in All Marine Moorings, under such facts there is no automatic requirement that Ormet justify its business decision to contract with Bisso Towboat. However, even if there were, less justification would be required, and Ormet has provided some justification, namely, increased efficiency, safety, cost savings, and ability to improve its profits, not to mention RIVCO's inability to match Bisso's offer.
If the facts in this case had shown a monopoly or something akin to a monopoly or the absence of adequate competition along the relevant 250-mile stretch of the River, Ormet's evidence in justification of its practice would require greater persuasiveness. However, under the facts described above, I find that Ormet's evidence suffices to justify its decision, assuming that Ormet was required to furnish such evidence in the first place. As mentioned above, according to Ormet's witness, Mr. Lange, its Terminal Operations Manager, the exclusive use of Bisso Towboat, which has "dedicated" tugs at relatively nearby locations to the Burnside terminal, accidents have declined or delays in servicing vessels have been eliminated to the benefit of other vessels waiting their turns, and Ormet benefits by receiving "incentive" payments if it can service the vessels promptly. RIVCO disputes these claims by Ormet, arguing that RIVCO also provides safe and efficient service, that there is no difference technically between RIVCO's tugs and Bisso Towboat's tugs, that there are no records supporting Ormet's claims that delays had been a problem before Ormet selected Bisso Towboat as the exclusive provider of "assist-tug" services at Burnside, that in a previous case both the Commission and the court held that efficiency alone is not a sufficient justification for an exclusive terminal arrangement, that Ormet has furnished no credible evidence that accidents at the Burnside Terminal are caused exclusively by tugboat errors, and that even under the contract with Bisso Towboat, Bisso Towboat may have to subcontract with other tug companies who will work at Burnside as the need arises. (Ormet's Opening Brief at 73-77.)
It is RIVCO's position that the above reasons submitted by Ormet to justify its exclusive contract with Bisso Towboat are self-serving, post hoc rationalizations and that the real reason for the Bisso contract is to enhance Ormet's profits. RIVCO argues that Ormet is marking up what Bisso Towboat charges Ormet and then charging the vessels calling at Burnside marked-up rates, making a profit. RIVCO argues that terminals are not allowed to justify depriving vessels of the right to select their own tug companies and then making a profit at the vessels' expense, citing previous cases. RIVCO cites evidence submitted by one vessel agent regarding the purported harmful effects when vessels lose this right to choose. Finally, RIVCO argues that the practice of selecting one tug company exclusively at a terminal could spread up and down the River to the detriment of vessel operators and of competition and that the practice is an unlawful "tying" arrangement. (Id. at 77-84.)
In the previous discussion of case law holding that the Shipping Act is remedial and should therefore be broadly construed, reference was made to cases holding that Congress considered marine terminals to be extremely important because they served as "links" in the chain of commerce. Moreover, as the cases show, the Commission has been concerned with the soundness of terminal finances and efficiencies of terminals' operations. Numerous court and Commission cases emphasize the importance of maintaining efficiencies and sound financial situations at terminals. See Marine Terminal Practices of the Port of Seattle, 21 F.M.C. 397, 416-417 (1978); and the many cases cited therein, especially American Export Isbrandtsen Lines, Inc. v. F.M.C., 444 F.2d 824, 828 (D.C. Cir. 1970) ("The public interest in their efficient operation is unquestioned."); American Export Isbrandtsen Lines, Inc. v. F.M.C., 389 F.2d 962, 968 (D.C. Cir. 1968) ("Savings from efficiencies will presumably be passed on to shippers and receivers and, ultimately, will accrue to consumers."); see also Investigation of Free Time Practices--Port of San Diego, 9 F.M.C. 525, 548-549 (1966) (the commercial well being of ocean carriers and the shipping public is directly related to the economy, efficiency and soundness of terminal operations). Therefore, whether RIVCO could also provide safe and efficient services for vessels calling at Burnside Terminal, as far as the record shows, Bisso Towboat certainly can and does and even if one were to discount Ormet's evidence and its witness Mr. Lange's testimony as self-serving, the evidence is relevant as justification for selecting any tug company. Moreover, the evidence of safety, efficiency, and cost savings to vessels was furnished not only by Mr. Lange but by four other witnesses (Messrs. Solar and Myers of Ormet, and Captains Slatten and Rowbotham of Bisso Towboat Company).(29) It may be self-serving and not always supported by actual records, as RIVCO argues, but it is relevant and, coming from experienced operating and management people on the scene, it is entitled to some weight. See Unapproved Section 15 Agreement--Coal to Japan/Korea, 7 F.M.C. 295, 302 (1962) ("Testimony does not become sacrosanct when uncontradicted nor is self-serving testimony automatically to be discredited. These are but factors to be considered in determining the validity and probative value of the testimony and the inferences that may properly be drawn therefrom in light of all the evidence."). Moreover, the evidence is that since the introduction of the Bisso Towboat contract, there have been no instances of accidents to vessels at the terminal and there is also evidence that since the new system began, delays have ceased and the terminal benefits financially from incentive payments by vessels when the terminal can move the vessel through the terminal promptly. Also, the evidence shows that Bisso Towboat's proximity to the Burnside Terminal has proven beneficial in responding to emergency situations at the terminal, an advantage Bisso enjoys over RIVCO. Ormet argues persuasively in my opinion that "[i]t is difficult to foresee any circumstances which would justify depriving the shipping public of this protection. Certainly, nothing that RIVCO has said or offered in this case would support such a result." (Ormet's Answering Brief at 56.)
I come next to what RIVCO argues is the real reason why Ormet signed a contract with Bisso Towboat, namely, to increase Ormet's profits. However, the record shows that Bisso Towboat won the contract from Ormet at such low prices that even when Ormet marks them up when charging its vessel customers, Ormet's rates for "assist-tug" services are lower than RIVCO's. Moreover, Ormet's rates ($1,450 per tug) have not increased in almost three years while RIVCO's rates ($1,950 per tug plus $14 per 1,000 gross tons of the assisted vessel) have increased every two years. Evidently, Ormet was able to obtain such favorable low rates from Bisso Towboat in return for giving Bisso Towboat exclusive rights at Burnside. Indeed, at other terminals where Bisso Towboat does not have an exclusive contract, its rates are higher than what it charges Ormet at Burnside. The situation therefore is that even when Ormet makes a profit on the low rates it is charged by Bisso Towboat, Ormet saves its vessel customers money by under-pricing RIVCO, saving vessels considerable money each month in "assist-tug" charges. Again, I find Ormet correct when it argues that "RIVCO offers no reason why the vessels should have to pay more at Burnside Terminal for the privilege of using RIVCO tugs." (Id. at 58.)
In short, I find that Ormet's business decision to select Bisso Towboat after soliciting bids from two eligible competing tug companies has produced efficiencies, enhanced safety, and enabled Ormet to charge its vessel customers lower rates than those charged by RIVCO. I adhere to this conclusion notwithstanding RIVCO's contention that Ormet's practice constitutes a "tying" device unlawful under antitrust laws or that in certain previous cases the Commission has struck down monopolistic or restrictive practices at some terminals. First, as mentioned above, in All Marine Moorings, the Commission noted that it does not administer the antitrust laws, although some antitrust concepts are useful in deciding shipping Act issues, such as the "relevant market." However, in Gulf Container Line v. Port of Houston Authority, 25 S.R.R. 1454 (1991), cited in All Marine Moorings, 27 S.R.R. at 355, the Commission made clear that it was striking down what appeared to be a "tying" device unlawful under antitrust law by applying Shipping Act, not antitrust-law standards. In any event in Gulf Container Line, the respondent Port was attempting to force upon the complaining carrier services that the carrier did not want or need in order for the carrier to obtain desired services at the terminal. The Commission found the practice to be unreasonable and unlawful under the Shipping Act. In the instant case Ormet is not forcing vessels calling at the Burnside Terminal to use a service that they neither desire nor want. "Assist-tug" services are admittedly critically needed services, and, as the record shows, the service is provided by Bisso Towboat safely, efficiently, and at lower cost to vessels than under RIVCO's rates.(30)
Second, as mentioned earlier, there have been Commission decisions striking down monopolistic or restrictive practices at marine terminals, which cases RIVCO has cited. Four of these cases in particular were discussed in All Marine Moorings, cited above, 27 S.R.R. at 352-353. In certain earlier cases the Commission announced the doctrine that the restrictive practices ran counter to the national philosophy favoring free and open competition. However, as discussed in All Marine Moorings, the Commission modified the original doctrine to allow such practices when justified by respondent terminal operators. Thus, in Petchem, Inc. v. Canaveral Port Authority, 23 S.R.R. 974, 990 (1986), discussed in All Marine Moorings (27 S.R.R. at 353), the Commission modified the earlier doctrine prohibiting restrictive terminal practices, stating:
Such arrangements are generally undesirable and, in the absence of justification by their proponents, may be unlawful under the Shipping Acts. However, in certain circumstances, such arrangements may be necessary to provide adequate and consistent service to a port's carriers or shippers, to ensure attractive prices for such services and generally to advance the port's economic well-being. (Emphasis added.)
The Commission, by adopting the Initial Decision, stated that the burden of justifying the restrictive practices fell on the respondent ports or other parties to the arrangements under attack but that "nevertheless, the ultimate burden of proof in any Shipping Act challenge to an exclusive terminal arrangement or franchise rests with the party wishing to overturn the franchise." (Id.) Then the Commission discussed six cases finding restrictive terminal practices to be reasonable and lawful under the Shipping Act. (Id. at 353-354.) In the instant case, as I mentioned above, although RIVCO disputes Ormet's justifications, Ormet has furnished evidence showing that its exclusive contract with Bisso Towboat has to some extent maintained efficiencies and enhanced safety. Moreover, even if RIVCO could also match Bisso Towboat in safety and efficiency, RIVCO did not match Bisso Towboat's low prices and "dedication" of tugs which persuaded Ormet to enter into its contract with Bisso Towboat. As I have indicated above, I see no basis to overturn Ormet's business decision, arrived at after Ormet solicited bids from two tug companies trying to get the Burnside contract and thereby give RIVCO or the other tug companies that were not selected a second chance to provide "assist-tug" services at the Burnside Terminal when Burnside is already charging vessels the lowest rates for "assist-tug" services even after marking up Bisso Towboat's winning bid. This conclusion is fortified by evidence that the amount of business that RIVCO had done at Burnside was tiny compared to RIVCO's overall operations in the huge River market in which RIVCO competes, that RIVCO's business has actually expanded in this huge market since Ormet began operating under the contract with Bisso Towboat, and that Ormet actually occupies a tiny portion of the huge relevant market which encompasses about 150 terminals along a 250-or-so mile stretch of the Mississippi River. I also consider the fact that the parties who supposedly have suffered because they cannot choose a tug company before calling at the Burnside Terminal, the vessels, have not intervened nor furnished evidence of specific non-theoretical harm to their interests resulting from Ormet's decision to employ Bisso Towboat exclusively at the Burnside Terminal that would offset the benefits shown to have resulted from the "sole provider" system.
Finally, I address the fact that RIVCO has expressed concern that Ormet has deprived vessels of the benefits of competition at the Burnside Terminal as regards the selection of a tug company and that the Ormet "sole provider" system might spread along the River. In fact, only one other terminal along the relevant stretch of the River, IMT, ten years ago instituted a similar system, which has not been shown to have caused particular harm. The concern is that absence of competition might lead to poor service and higher prices, the traditional fears of monopolies. Such have not resulted at Burnside where the "assist-tug" rates are still lower than RIVCO's and no evidence of inferior service has been furnished for the record. Moreover, the record shows that Ormet itself faces competition from other terminals along the River. Its witness, Mr. Lange, testified that there is strong competition among bulk-handling terminals on the lower Mississippi River, namely, with Electro-Coal, IMT, and Cooper/T. Smith, plus 12 to 16 smaller operators. (Ormet's Answering Brief at 58, citing record reference.) As the previous discussion indicates, in Commission cases the fact that competition existed at a particular port was one factor justifying a particular restrictive practice. See Seacon Terminals, Inc. v. Port of Seattle, 26 S.R.R. 886, 898 n. 28 (1993), cited in All Marine Moorings, 27 S.R.R. at 353. The "single provider" system instituted by Ormet at the Burnside Terminal, like the system initiated by ITO Corporation of Baltimore in All Marine Moorings, marked a departure from custom. Nevertheless, the new system in Baltimore was found to be reasonable under the facts in that case. Whether the "single provider" system at the Burnside Terminal will spread along the River, as RIVCO and other tug companies fear, and whether such spread could have a "very deleterious" effect as a state court judge opined, are entirely speculative questions. At present only two terminals out of 150 or so along the relevant 250-mile stretch of the River have instituted such a system. If it does in fact spread and if there is evidence presented to the Commission of actual injury to affected interests because of widespread elimination of competition not offset by compensating benefits, the Commission will be sitting and can address such new facts. The present record, however, is insufficient to warrant the Commission's interfering with Ormet's business decision.
ULTIMATE CONCLUSIONS
The Commission has jurisdiction over respondent Ormet's Burnside Terminal because respondent has served vessels owned or operated by recognized common carriers and under Commission precedent such fact suffices to confer jurisdiction under the statutory definition of marine terminal operator set forth in section 3(15) of the Shipping Act of 1984. Alternatively, because of unclear statutory language and legislative history, under principles of statutory construction, the statutory exemption for "ocean tramps," a term which has caused some debate and dispute over the years, should be read narrowly so as not to frustrate the purposes of the remedial Shipping Act.
Respondent's proposal to screen out common-carrier vessels seeking to call at the Burnside Terminal and thereby remove itself from Commission jurisdiction, under the peculiar facts of this case, is not practical and hence not reliable because of the complicated legal issue regarding whether a particular vessel is a common-carrier ship, a question which operating people at the terminal are not adequately equipped to answer. Moreover, vessels owned or operated by common carriers have continued to call at respondent's terminal even after respondent instituted its screening system.
Complainant has not sustained its burden of proving that respondent's selection of the Bisso Towboat Company to perform "assist-tug" services at the Burnside Terminal, rather than to allow four tug companies to compete to serve arriving vessels, is undue or unreasonable under the Shipping Act of 1984. Respondent occupies only a tiny portion of the huge relevant lower Mississippi River market, complainant's business has actually expanded in this huge market since respondent selected Bisso Towboat, and the evidence shows that respondent made a sound business decision which produces efficiencies, enhances safety, and enables respondent to charge relatively low "assist-tug" rates to vessels calling at the Burnside Terminal.
Norman D. Kline
Administrative Law Judge
Washington, D.C.
April 30, 1998
ENDNOTES
1. This decision will become the decision of the Commission in the absence of review thereof by the Commission (Rule 227, Rules of Practice and Procedure, 46 CFR 502.227).
2. RIVCO's two witnesses were: Captain Jeffrey Beech, its Operations Manager and Secretary-Treasurer; and Mr. Richard H. Stagg, an officer of Bluship, Ltd., a British company engaged in the brokerage business on behalf of vessel operators and cargo owners, who had been formerly employed by Lykes Bros. Steamship Co. for fifteen years. Mr. Stagg was presented as an expert witness on the question whether various ships calling at the Burnside Terminal were common-carrier ships or otherwise. Ormet's ten witnesses were: Messrs. Lange, Spano, Meyers, and Solar, all employed by Ormet in various capacities; Captain David S. Rowbotham and Mr. Scott T. Slatten, both with the Bisso Towboat Company; Messrs. Gary T. Pruitt, Dr. Rexford Sherman, Mr. John Knapp, and Mr. Tim E. Jilek, none employed by Ormet or the Bisso Company, but employed by independent organizations, such as the Greater Baton Rouge Port Commission, the American Association of Port Authorities, a vessel-operating carriers' agent, and a ship broker. Ormet also presented one witness, Mr. S. Scott Bluestein, an attorney with the firm representing Ormet, who merely sponsored a letter from a carrier describing the status of three ships that had called at Burnside.
3. For a description of the other vessels examined by RIVCO, the reader is referred to pages 10-36 of RIVCO's opening brief.
4. RIVCO cites Prudential Lines, Inc. v. Continental Grain Co., 21 S.R.R. 1172, 1175 n. 10 (1982), for the proposition that "jurisdiction attaches as soon as the terminal services one common carrier." (Emphasis added.)
5. This case was Agreement No. 203-010633 (Flota Mercante Grancolombiana, Andino, Ligracol, etc.), 23 S.R.R. 581 (I.D.), discontinued, 23 S.R.R. 1408 (1986). As explained later, the ALJ found that the parties to the agreement, a vessel-operating common carrier and a tramp carrier, were not eligible to file their agreement to operate another tramp carrier under the language of section 5 of the 1984 Act, although suggesting that tramp carriers could be subject to other regulatory provisions of the 1984 Act if they operated as common carriers. With the passage of P.L. 99-307 in 1986, amending the original language of the 1984 Act, however, the agreement was withdrawn because tramp carriers operating the subject liquid chemical parcel ships were explicitly exempted from the 1984 Act.
6. The case is Investigation of Tariff Filing Practices of Carriers Between Contiguous States of the U.S. and Alaska, 7 F.M.C. 305 (1962).
7. Rivco cites Rates of General Atlantic S.S. Corp., 2 U.S.M.C. 681, 684 (1942).
8. RIVCO cites Tariff Filing Practices of Containerships, Inc., cited earlier, 9 F.M.C. 56.
9. RIVCO cites Investigation of Tariff Filing Practices of Carriers Between Contiguous States of the U.S. and Alaska, 7 F.M.C. 305 (1962).
10. See Boston Shipping Association, Inc. v. Federal Maritime Commission, 706 F.2d 1231, 1235-1236 (1st Cir. 1983), affirming Boston Shipping Association, Inc. v. NYSA, 21 S.R.R. 955 (1982) (Commission and court decline to decide complicated labor-related jurisdictional issue but find no violations of shipping law on the merits); Petchem, Inc. v. Federal Maritime Commission, 853 F.2d 958, 961-962 (D.C. Cir. 1988); James J. Flanagan Shipping Corp. v. Lake Charles Harbor and Terminal District, 27 S.R.R. 1123, 1133 (1997) (Commission declined to decide if Flanagan was a regulated marine terminal operator when the counter-complainant had failed to prove the merits of its claim against Flanagan).
11. See the discussion and cases cited in United States Line (S.A.) Inc.--Petition for Declaratory Order re: The Brazil Agreements, 25 S.R.R. 1, 24 (I.D.) adopted with clarifications, 25 S.R.R. 755 (1990). As discussed in the case cited, there is authority for the proposition that the burden-of-proof concept may not be applicable to pure questions of law and that it is more important to develop an adequate record than to decide cases on burden-of-proof concepts.
12. Under RIVCO's suggested definition of an "ocean tramp," namely, a single shipper, single charter of a full ship, some 89 out of a sample of 395 ships that called at Burnside Terminal between May 1995 and May 1997 were common-carrier ships, not tramps, because they carried cargoes for two shippers or more per voyage. RIVCO excludes all of Ormet's own aluminum-ore-carrying ships and single-shipper voyages from regulation, as being ocean tramps or proprietary ships. Thus, according to RIVCO, some 22 percent of Ormet's business was in connection with regulated, non-tramp common carriers as shown by the sampling of ships studied. See Ormet's Opening Brief at 9, and trial exhibit 1, "Exhibit 18," attached thereto.
13. Trial Exhibit 1, "Exhibit 19" attached, lists 12 known common carriers that have called or continue to call at the Burnside Terminal, namely, Lykes Bros. Steamship Co., Inc., China Ocean Shipping Company (COSCO), Murmansk Shipping Co., Black Sea Shipping Co., Navrom, SafMarine Corporation, Cho Yang, Sinotrans, United Arab Shipping, Shipping Corporation of India, Hanjin Shipping Company, and Lineas Agromar. On brief, RIVCO adds two other such carriers (Egyptian National Lines, and Pan Ocean Trading) but these names are not on the exhibit. (RIVCO's Opening Brief, proposed finding of fact 33.)
14. The Commission, as an administrative agency, has some flexibility in determining whether to alter, modify, or abandon precedent because an agency is supposed to be adaptable to new conditions and can change its mind or policy if past policies and tests are shown to be imprudent or unwise. See discussion in Harrington & Co., Inc. v. Georgia Ports Authority, 23 S.R.R. 753, 766 (ALJ), affirmed, 23 S.R.R. 1276 (FMC 1986), and the cases and authorities cited therein. However, to depart from precedent the courts expect the agencies to provide valid reasons and to explain why the agencies choose not to follow previous decisions. See Pate Stevedoring Co. of Alabama v. Alabama State Docks Dept., cited above, 24 S.R.R. at 1229 n. 11 (Commission finds insufficient reason to depart from the Prudential test); see also Hatch v. Federal Energy Regulatory Commission, 654 F.2d 825, 834 (D.C. Cir. 1981).
15. Section 1 of the Shipping Act, 1916, formerly 46 U.S.C. sec. 801, stated:
The term "common carrier by water in foreign commerce" means a common carrier, except ferryboats running on regular routes, engaged in the transportation by water of passengers or property between the United States . . . and a foreign country, whether in the import or export trade: Provided, That a cargo boat commonly called an ocean tramp shall not be deemed such "common carrier by water in foreign commerce."
16. See the brief discussion in Transportation--U.S. Pacific Coast and Hawaii, 3 U.S.M.C. 190, 199-200 (1950, describing how despite Chairman Alexander's belief that a tramp was not a common carrier, other members of Congress were not so sure and accordingly inserted explicit language into the 1916 Act to exclude ocean tramps from regulation. For a more complete understanding of the uncertainty in the 1916 Congress as to whether ocean tramps could be common carriers, see the extended debates between Congressman Alexander and other members of the Congress reported in the legislative history to the 1916 Act (H.R. 15455, 64th Cong., 1st Session as follows: Congressional Record, Vol. 53, Part 8 at 8078, 8267-8268; Id., Part 12 at 12448; Id., Part 13 at 12799. Indeed, when other members of the 64th Congress added language to the original bill so as to exempt ocean tramps from regulation as common carriers because of the confusion as to their status, Congressman Alexander remarked that such amendments were unnecessary because, in his opinion, ocean tramps could seldom or never be considered as common carriers. See 53 Cong. Rec. 13,366 (Aug. 29, 1916); 53 Cong. Rec. 13,426 (Aug. 30, 1916); 53 Cong. Rec. 12,798 (Aug. 18, 1916).
17. In his brief, Congressman Alexander had concluded that "as an almost general proposition . . . such vessels [i.e. ocean tramps] seldom or never can be considered as common carriers. Tramp vessels are almost universally chartered by a single shipper, even though in some instances that shipper may be a charter broker who has accumulated the shipments of a number of small shippers. It has become well established by a long line of decisions in the Federal courts that when a charter party gives the charterer the full capacity of a ship the owner is not a common carrier but a bailee to transport as a private carrier for hire." (3 U.S.M.C. at 199.)
18. For example in the following cases the Commission has interpreted the "ocean tramp" exemption narrowly either explicitly or implicitly, as RIVCO urges, and found jurisdiction: D.L. Piazza Company v. West Coast Line, 3 F.M.B. 608, 612 (1951) (multiple shippers; charterer filled in ships); Alaskan Rates, 2 U.S.M.C. 558, 580, 581 (1941) (carrier served small settlements); Transportation--U.S. Pacific Coast and Hawaii, 3 U.S.M.C. 190 (1950) (several shippers served); Rates of General Atlantic S.S. Corp., 2 U.S.M.C. 681, 683 (1943) (four sailings carrying general cargo under many bills of lading); Transportation by Mendez & Co. Between U.S. and Puerto Rico, 2 U.S.M.C. 717, 720 (1944) (17 consignors, many bills of lading; presumption of common carriage if more than one shipper per voyage); Investigation of Tariff Filing Practices, 7 F.M.C. 305, 321 (1962) (several shippers but carrier could be tramp operator if operated ship for one shipper under charter). On the other hand, in the following cases the Commission has interpreted the "ocean tramp" exemption broadly either explicitly or implicitly and accordingly found no jurisdiction: New York Marine Co. v. Buffalo Barge Towing Corp., 2 U.S.M.C. 216, 219 (1939) (considerable number of shippers per voyage and variety of cargoes carried on barges; use of private wharves for loading and unloading); Pacific Coast Carrier Investigation, 2 U.S.M.C. 191 (1939) (several shippers of lumber in chartered ships); cf. Brown & Williamson Tobacco Corp. v. The S.S. Anghyra, 157 F. Supp. 737, 752 (E.D. Va. 1957) (several shippers per voyage on one-shot voyage); Ligracol, 23 S.R.R. 581 (I.D. 1985) (periodic voyages for several shippers of liquid chemical parcel bulk cargoes).
19. Congress enacted the corrective legislation, P.L. 99-307, in 1986. After enactment of this law, the parties to Ligracol withdrew their agreement and the proceeding before the Commission was discontinued. Ligracol, 23 S.R.R. 1408 (1986).
20. See footnote 10 above.
21. Of course as the rule and the Administrative Procedure Act (APA) provide (5 U.S.C. sec. 556(e)) Ormet has the right to ask the Commission for an opportunity to show that these carriers are not common carriers.
22. Ormet canceled its terminal tariff effective May 15, 1996, and on or about April 26, 1996, began to require that vessels calling at the Burnside Terminal submit a written berth application specifying that they were not common-carrier vessels. (Tr. Exh. 1, "Exhibit 10," attached thereto.) However, COSCO sent ships to the terminal after April 1996 and into 1997. See Exhibit 2, "Exhibit K," attached thereto, listing 10 COSCO ships that called at the terminal after April 1996.
23. The two court cases cited by Ormet are Fall River Line Pier, Inc. v. International Trading Corp. of Virginia, 399 F.2d 413 (1st Cir. 1968); and Giacona v. Marubeni Oceano (Panama) Corp., 623 F. Supp. 1560 (E.D. Tex. 1985). The Commission was not a party in either of them. In Fall River Line Pier, the court refused to enforce a Commission order of reparations against a terminal operator which handled bulk cargoes almost exclusively and had minimal contact with common carriers. The court held that the Commission lacked jurisdiction over the terminal because of the minimal contact with common carriers using a type of counting-the-carriers theory. The Commission does not follow the court's rationale, specifically rejecting it in the Prudential case (Prudential, cited above, 21 S.R.R. at 156-159). Giacona involved a suit by a longshoreman against a vessel owner and a grain terminal in which the vessel owner contended that an indemnity provision in the terminal's tariff violated the Shipping Act, 1916. The court, however, found that the grain terminal was a private, not a public terminal because its tariff specifically stated that the terminal would not handle or service vessels defined as common carriers by the 1916 Act and there was apparently no evidence submitted to the court that any common carriers or common-carrier vessels had ever called at the terminal. Therefore, the court did not feel any need to follow Commission case law.
24. Two other tug companies, Crescent Towing and E.N. Bisso, filed suit in state court against Ormet and the Baton Rouge Port Commission, attacking Ormet's "sole provider" system under state law and the commerce clause of the federal Constitution. RIVCO intervened in the court suit. So far both the trial judge and the appellate court have found against the tug companies and the matter is pending before the Louisiana Supreme Court. The lower court judge opined that the arrangement could "very likely" spread along the River and, if so, "could have a very deleterious effect." However, the Louisiana Court of Appeal, affirming the lower court, found no violation of the federal commerce clause, stating that the sole provider system at Burnside "does not regulate or impede the free flow of commerce passing through the terminal, but rather, seeks to facilitate and improve the overall efficiency and profitability of terminal operations. This is achieved by avoiding the potential for costly delays in tug assistance, and reducing the risk of damage to vessels and the terminal itself through the use of regular tug crews who are intimately familiar with the particular river currents and eddies which may be encountered by vessels entering or leaving the dock." (Court's opinion at 12, exhibit 9D; exhibit 1, ex. 8 attached; RIVCO's opening brief at 79-80; Reply Brief at 32.)
25. The other cases cited by Ormet are: Seacon Terminals, Inc. v. Port of Seattle, 26 S.R.R. 886 (1993) (marine terminal operator given a terminal lease to the exclusion of another terminal operator); Agreements T-3310 and T-3311, 20 S.R.R. 712 (I.D. 1980), administratively final, Jan. 28, 1981) (exclusive contract between small port and marine terminal operator justified by economic reasons); Agreement--Port Canaveral and Luckenbach S.S., 17 F.M.C. 286 (1974) (terminal operator given monopoly over port facilities); Perry's Crane Service v. Port of Houston Auth., 16 S.R.R. 1459 (I.D.), adopted in relevant part, 19 F.M.C. 548 (1977) (port authority given limited preference in assignment of cranes); and D. J. Roach, Inc. v. Albany Port District, 5 F.M.B. 333 (1957) (grain stevedore allowed to enter into exclusive sub-contract with grain trimmer).
26. This figure may be overstated as RIVCO contends. (RIVCO's Reply Brief at 32.) RIVCO contends that Ormet served about 16 vessels per month so that at alleged savings of $1200 to $1600 per vessel, the total monthly savings would be only $19,200 to $25,600, not $40,000. The lower figures are based on 395 vessels that called at Burnside between May 1995 and May 1997.
27. Interestingly, although RIVCO is complaining about the fact that Ormet has entered into an exclusive contract with Bisso Towboat at the Burnside Terminal, Captain Jeffrey Beech, RIVCO's Operations Manager, testified that RIVCO itself uses the exclusive-contract system with its own customers, the vessels. Captain Beech testified that RIVCO has about 300 exclusive contracts with vessels. (Exhibit 20, Deposition of Captain Beech, at 75-76.)
28. In addition to California Stevedore & Ballast Co. v. Stockton Port District, cited above, 7 F.M.C. 75, and A.P. St. Philip, Inc. v. Atlantic Land and Improvement Co., cited above, 13 F.M.C. 166, in two other cases the Commission struck down exclusive or monopolistic practices at marine terminals and required that respondents justify such practices with convincing evidence. See Agreements Nos. 8225 and 8225-1, 5 F.M.B. 648 (1959), affirmed as Greater Baton Rouge Port Commission v. United States, 287 F.2d 86 (5th Cir. 1961); and Perry's Crane Service v. Port of Houston Authority, 16 S.R.R. 1459 (I.D.), adopted with modifications, 19 F.M.C. 548 (1977). All of these cases were discussed in All Marine Moorings, Inc. v. ITO Corp. of Baltimore, cited above, 27 S.R.R. at 352-353.
29. See the statement of Mr. Scott T. Slatten, vice president of operations for Bisso Towboat Company, Exhibit 14. Mr. Slatten explained how beneficial the arrangement with Bisso Towboat is for Ormet and for Ormet's terminal operations because of the proximity of Bisso's tugs to the Burnside Terminal and the skills and experience acquired by tug operators who are stationed near or at Burnside and continually work there. According to Mr. Slatten, furthermore, the previous system of having four tug companies compete at the terminal was flawed because tug operators worked at Burnside only sporadically. In addition to enhanced safety and efficiency, Mr. Slatten explained how it was that under the Bisso contract, Ormet is able to charge low rates to vessels among the tug companies (often the lowest according to witness Lange). He also gave several specific examples of emergency situations at the terminal when Bisso Towboat was able to respond promptly. Mr. Slatten's statement regarding safety and efficiency is corroborated by Captain Rowbotham of Bisso Towboat Company, Mr. Richard P. Solar, Shift Supervisor for Ormet, and Mr. Marvin Joel Myers, Transportation and Storage Coordinator for the Burnside Terminal. See Exhibits 12, 13, and 15.
30. RIVCO's argument that Ormet's practices constitute a "tying" device unlawful under the antitrust laws is of limited relevance when attempting to determine lawfulness under Shipping-Act standards. Thus, RIVCO argues that Ormet has tied "assist-tug" services (the tied product) to the sale and use of the terminal services (the tying product) and contends that Ormet has exerted its market power at the Burnside Terminal to remove competition in the "assist-tug" services market. (RIVCO's Reply Brief at 26.) However, under antitrust law there must be two different markets or products. (Id. at 26-27.) This requires an analysis of the "assist-tug" and terminal-services markets, which RIVCO claims to be separate. If Ormet is really selling an integrated single terminal service because the "assist-tug" services are intimately related to the terminal services, it could be argued that there is no "tying" device at all under antitrust laws. See 54 Am Jur 2d, Monopolies and Restraints of Trade, sec. 94. Even if the two services are distinct under antitrust laws, "tying" devices are not always considered to be per se violative of antitrust laws, and consequently "there must be a thorough investigation of the industry at issue and a balancing of the particular arrangement's positive and negative effects upon competition within the relevant market." (54 Am Jur 2d, Monopolies, etc., sec. 49; see also sec. 91.) In the instant case, RIVCO has not been removed from the enormous relevant market, the lower Mississippi River, in the first place, and the record shows benefits from the "single provider" system so there is a legitimate question whether the "single provider" system would even be violative under antitrust laws. In any event, as Gulf Container Line, cited above, shows, the Commission applies Shipping Act, not antitrust-law standards, and even RIVCO seems to acknowledge that "[r]egardless of the applicability of the antitrust laws or the authority of the FMC to enforce them, this exclusive arrangement is unfair and unreasonable under the 1984 Shipping Act." (RIVCO's Reply Brief at 27.)