# Appendix — Campbell v. United States Court of Appeals for the Sixth Circuit > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385603_0382%3A2 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 1967 - **Citation:** 386 U.S. 905 ## Text 2 a ‘ : we . ; 23s 8 7 - Appendix 300. This is sinidiiited less than the weight ‘of the evidence, ‘and the possibility of drawing two inconsistent conclusions from. the evidence does not prevent ‘an administrative _-agency’s finding from being ‘supported by substantial evi- | _ . denice. Labor Board y. Nevada Consolidated Copper Corp.,. 316 U.S. 105, 106; Keele Hair & Scalp Specialists, Ine, v., : ‘FIC, 275 F. 2d 18, 21. : wet? es \,Congress was very deliberate in adopting this iia a Yeview. It frees the reviewing courts of the time-consum- ing and difficult task of weighing the evidence, it gives proper respect to the expertise of the administrative tri- - bunal and ‘it helps, promote the uniform application of the = statute. These policies are particularly important when a -- court is asked’ ‘to review an agency’s fashioning of dis- cretionary relief. Tr this area agency determinations fre-_ '. quently rest upon a “eomplex and’ hard-to-review mix of ..© > eonsiderations. By giving the agency discretionary power. to fashion remedies, Congress, places a premium upon agency expertise, and, for the sake_ of uniformity, it is usually better to minimize the opportimity for reviewing ‘courts to substitute their discretion for that ofthe agency.” This court had occasion to make notation of the~same limitations in Trans-Pacific Frgt. Conf. of Japan v. Fed- eral Maritime Com’n,, 314 F. 2d 928, 935, where, citing — decisions of the Supreme Court, “we said: “The Commission 7 -. was an administrative body set up for, the purpose ‘of deal- * ing administratively with the problems presented from time —— ‘to time under the Shipping Act. Its function in this respect Er was not unlike similar functions . performed ° by the Na- - ‘tional Labor Relations Board, the Federal Communications es Commission, and otKer commissions created by act of Con- gress. It has long been recognized that such an administra- . tive vse has a broad diseretion i in. effectuating the ence ‘ ° ' ‘ os . : Appondic = ig of the Act creating the Commission to determine whether . certain statutory requirements apply to certain individuals _ or groups. In making those decisions such administrative bodies are not limited by common law concepts. The ques- . tion always is whether the determination of the board or - commission has ‘ “warrant in the record” and a reasonable basis in law.’ National Labor Relations Board v. Hearst Publications, 322 U.S. 111,....” - | aes ae In our. view the very complete and elaborate decision of «. -the Maritime Commission discloses that its conclusions do have warrant in the record, a reasonable basis in law, and - are supported by substantial evidence. i The petition. for review is denied | 1 and the order of the. _ Commission is affirmed. vie ae ‘& ‘10 tora _Appondis Uitenie _ : Appendix Cc 3 pene and Order of Federal Maritime Commission § oe v- ‘gg oD ‘September. 24, 1965 | Fepénat MakITIME Commission ; “Federal Maritime Commission ; yok * > NO. 1086 ~ .” -. Stockton Port District | V Pactric WestsouND ConFERENCE Er AL. Respondents’ equalization rules, and practices in accord- — .ance therewith, found to’ be. unjustly discriminatory and unfair to termirial ports of the San Francisco * - Bay area (which include Stockton), within the mean- ° . ing of section 15 of the Shipping Act, 1916, to the extent that they provide for equalization of inland - transportation against such ports on cargo laaded at Los Angeles and Long Beach, California. © » Filed equalization rules of respondents operating under’ | approved conference agreéments, and practices in . ” accordance therewith, to the extent that they provide for equalization of inland transportation charges be- tween San Francisco Bay area: ports (which include Stockton), found not to be in violation of sections 15, 16 First, 17 or 18(b) of the Shipping Act, 1916, or | - to be unjustly ‘discriminatory or unfair, detrimental . to the commerce of the United States, or contrary to the. public interest, within the meaning of section as ‘ ” . ™ : ‘ e . ad . ‘ . , Z e f é * LSPA A LS SAREE EOE TE LIL ALE I PERE GET IEEL TEER RIGS EI op e ee... ere 15 of said -Act, if clarified as required; found not to _-Violate the principles and policies of section 8 of the _ Merchant Marine: Act,1920; and not shown to be in violation of section 205 of the Merchant Marine Act, 1936. - ieee: | 5 Respondent Pacific Westbound ‘Conference and its mem- bers found not to be in compliance with section 18(b) ,of the Shipping Act, 1916, by. reason of so-called “equalization” on citrus fruit originating in Southern _ California and shipped from San Francisco, which is" not in accordance with or pursuant to filed equaliza- tion rule. “3 het teed J. Richard Townsend and Walter H. Meryman for Stock-. | ton Port District, complainant. *s Edward D, Ransom and Gordon L. Poole for Pacific Westbound Conference and members, respondents. §—-—« Leonard G. James, Robert L..Harmon and. F. Conger “ Fawcett for Pacific Straits Conference, Pacific/Indonesian _. Conference, and their members, respondents. ) Stanley Mosk and Miriam E. Wolff for San: Francisco Port Authority, intervener. Pee Wm. Jarrel Smith, Jr, and Robert-J. Blackwell for Hear- ing Counsel, intervener. : : REPORT . Tr By ‘the Commission: (John Harllee, ° Chairman ; ‘Ashton - C. Barrett and James V. Day, Commissioners) This proceeding arose upon the: complaint of Stockton Port District against the Pacific Westbound Conference, the Pacific Straits Conference, and the Pacific/Indonesian Conference. ‘The complaint alleges, in general, that the . , ‘agreements of these conferences and the conference tar- 12 Appendix iffs, which. permit port equalization, are prejudicial to _ the. Port of Stockton and contrary to various statutory provisions. Stockton urges the Commission to order the respondent conferences to delete the port equalization rules from the conference tariffs and to cease and desist from the practice of port equalization. a Port equalization, under the. respondent conferences . ” tariffs, permits conference carriers to equalize inland trans- ‘ portation costs between terminal ports. Thus, under the tariff rules, a carrier may reimburse a shipper for the - difference between the shipper’s inland transportation costs to the nearest terminal port. and the shipper’s _ inland transportation costs to. the terminal port of load- - ing. For example, if from the point of origin of the cargo it will cost the shipper 34 cents per hundred pounds to ship overland: by common carrier to the Port. of Stockton and 42 cents per hundred pounds. to ship-overland by common carrier to the Port of San Francisco, the ocean carrier may take the shipment at San Francisco and “equal-' ize” the added inland cost by reimbursing the shipper fér _the excess of 8 cents per hundred pounds which it. has cost him to ship via San Francisco instead of Stockton. . Stockton alleges that the-port equalization rule results — in diversion of volumes of cargo normally tributary to - Stockton. This is allegedly eontrary tothe purposes and — policies of section 8, Mefchant Marine Act, 1920, and section 205, Merchant Marine Act, 1936. Furthermore, ’ Stockton asserts that the rule and its ithplementation are agreements unapprovable under section 15, Shipping Act, 1916; that’ the rule is discriminatory and unreasonable in - violation of. sections 16 and 17 of the Shipping Act; and Stockton urges that the conferences have violated section 18(b) of the. Shipping Act by departing: from their con- ference tariffs. ~ | 3 _ FACTS Vaal Aaa The Conference and the. Port Equalization Rule _ The’ Pacifie Westbound Conference (PWC), organized: - in 1923, has at present a membership of 28 common car- _ Tiers. PWC serves the trade outbound froth the Pacific _- Coast of the United States to destinations in the Orient, principally Japan, the Philippines, and Hong Kong. In 1962, PWC: members made 1240 sailings, each represent- ing a vessel calling at. one or more Pacific Coast ports and clearing for a destination in the Orient. : The Pacific Straits’ Conference operates from Pacific _ Coast ports to Singapore, Malaya, Sarawak, North Borneo, and Brunei. The Pacific/Indonesian Conference ‘operates. from Pacific Coast Ports to Indonesia. a ies PWC sets ocean rates which apply without reservation fronr terminal ports. Terminal ports are those at which PWC members accept cargo for loading at the base rates ‘named in the PWC tariff. Terminal ports in California are Stockton, Richmond, Oakland, Alameda, San Fran- cisco, Los Angeles, Long Beach, San Diego, and Sacra- mento. So URE) eee ies: ‘The port equalization rules apply to terminal ports only - ~ and the rules presently in effect for respondents are set _ forth in the attached. appendix. _ e es Whenever cargo is equalized, the shipper must submit to the member booking the cargo the transportation bil] | covering the movement from point of orgin. In turn, the carrier. must submit the information to the conference for certification of the basis for the equalization. Although the 1. Sacramento is‘ not’ a terminal port in the Pacific Straits or Pacific/Indonesian Conferences. Service at Sacramento in these conferences is subject to a tonnage restriction of a minimum of 500 tons from one shipper. cst Ne . = ‘ CF 7 Bee Appendix ’ tariff requires use of. an approved form, only ane of the PWC members uses the form:at present; the others pro- - vide the actual source documents. ‘The documents include information sufficient to disclose the point of origin, date of shipment, commodity, nearest terminal port, port of loading, information regarding the inland freight rates, — and the.inland freight bill. The conference office endeavors. to check the rates contained in the source documents. This check is ‘particularly necessary on the constructive leg of the equalization; i.e, the rate from the point of origin to the nearest terminal port. For the actual leg of. the equalization, the conference uses the inland transportation bill for the actual routing of the cargo. The conference is familiar with the rates involved in the equalization of the more important cargoes and it checks to see if the rates and equalization are reason- able. Upon encountering a questionable item, the confer- - ence refers to an inland freight tariff or telephones a trucking company or railrogd. The conference is aware of the trncking company that actually carried the cargo, and ~ they use the actual transportation costs. . For the constructive leg of the equalization, the confer- » ence uses the lowest common cafrier rates to the nearest loading port. In this coritext, nearest means cheapest. - The claims for equalization ‘and the supporting docu- ments are generally submitted t6 the conference fairly soon after the vessel has sailed, but certain of the conference "members may accumulate equalization claims for a week to two weeks. There is‘ no conference rule regarding the - time within which claims must be presented. Equalization cannot: be paid until approved by the conference. ‘In addition to the privilege to equalize, the PWC tariff . permits transshipment. Under transshipment, the shipper delivers the cargo to Stockton, the carrier accepts the * eo oo eee aa Cn Appendix Wak ihs me oe cargo and issues a negotiable document, and thereafter fo 2 re _ its convenience and at its own expense the carrier may move the cargo to San Francisco for loading on the vessel. ie, cargo may be handled by: truck, rail, or barge; how- ever, it is predominantly moved via truck. Generally, only é commercial general cargo is transshipped from Stockton. ‘In the case of transshipment the steamship carrier is obliged to-pay the inland freight as well as the terminal charges at both Stockton and San Francisco. Usually trans- shipment is limited to smaller tonnages, particularly where there is insufficient cargo at Stockton to justify a eall, or some operational reasons make it impossible to make an ‘intended call. There is no cost to: the shipper for trans- shipment. _ te The Port of Stockton : og -The Stockton Port District is a public corporation formed — pursuant to the Harbors and Navigation Code of California. The Port District operates terminal facilities owned by the ‘Port District or the City of Stockton. The port consists of 10 general cargo berths, one of which is open with two 30-ton gantry cranes, two bulk docks, and one bulk grain dock. The general cargo berths are marginal-type wharves on concrete pilings with corrugated steel transit sheds. Adjoining the transit shed area, are warehouse facilities, a cotton compress, cotton warehouse, a bulk wine terminal, and a grain elevator. Stockton also leases from the Navy two berths and one transit shed on Rough and Ready Island. In the immediate area is a basin in which vessels calling at Stockton turn around, after discharging or load- ing cargo, to proceed. downstream. At the beginning of 1964, a total of $23,000,000 had been invested in the Stock- ton facilities. The Port of Stockton is reached via the — Stockton Ship Channel, a journey of some 75 nautical miles . i ° - * - . . . q Ee ee aa EN ‘a Pt he eee 3 Appendix ; (or 84 statute miles) from the Golden Gate. The channel, a Congressional project, was approved August 26, 1937. The average transit time from San Francisco Bay to Stock-. ton via the channel is 714 to 8 hours not taking into account delays due to fog or bridge liftings. The channel is at least 30 feet deep at mean low water. Although there are occa- sional groundings and delays due to fog, the conditions of the channel are satisfactory and not a serious factor in preventing a vessel from calling at Stockton. The largest . cargo vessels Su PWC can call at Stockton without, unusual difficulty. H On August. 1, 1957, PWC made Stockton a full faicakail port, and since this time Stockton has had a phenomenal ' | . growth. Equalization did not affect Stockton until it hécame — a full terminal aa Impact of Equalization on Stockton . Stockton claims a loss of revenue to the port by virtue of equalization during 1962 of $232,000. The port lost reve- - nue from its terminal charges—service and facilities charge, _ wharfage, truck: unloading, dockage, and pre-palletization. Very little additional labor’ would be needed to accom. | _ modate this cargo insofar as wharfage and dockage are con- cerned, but the service and facilities charge has a con- siderable amount of labor. Most of the charge for truck . unloading, line handling, and pre penitionion | is labor costs. Service at Stockton e Q During: 1962, 85 vessels of respondent conferences made: actual ealls at Stockton and many of these lifted general cargo. In contrast, vessels of members: of the Pacific Coast : x European Conference made 227 calls at Stockton in 1962: es . . * “Appendie WW and lifted 260,000 tons of cargo. Of the lines calling at Stockton only. OSK makes Stockton its last port of loading outbound. “K” Line made its first call at Stockton in. June _ 1962 and made fairly regular calls thereafter. Pacific Far’ . Kast Line (PFEL) operates 9 vessels in the PWC trade and practically all sailings have Stockton. calls, PFEL dis- |. ant charges cargo at.Stockton on all voyages, but export cargo ee is ordinarily not available at the time of the. inbound call. About one-half of PFEL’s outbopnd vessels call at Stockton, principally for bulk bottom cargoes in parcel lots. These. bulk cargoes are at least 75 percent safflower seed, but from time to time include. wheat and barley. They are loaded at Stockton - Elevators. When the ‘vessel calls ‘for bulk, if. there is sufficient, general “cargo available, the vessel will shift to a general cargo berth to load. PFEL made 30 calls at Stockton in 1962; however, Stockton is not the final ‘port - of loading in the PWC trade for PFEL. PFEL does con- sider itself to have a regular outward service at Stockton. American President Lines (APL) had 24 calls at Stock- ~ ton in 1962, five discharged cargo only and 12‘loaded bulk only. In the first half of 1963, APL guaranteed shippers that vessels would call at Stockton regardless of the amount 3 of cargo offered, but the plan proved to be uneconomical . - and was dropped. APL’s service at Stockton definitely de- . pends upon the availability of bottom cargoes, and Stockton is not the last loading port for APL vessels. © _N.Y-K. Line provides no regilar service at Stockton. Diado Line had 4 calls at Stéckton in 1962 and United Philippine Lines had none. States Steamship Company had 4 calls in 1963 which loaded bulk rice and some general cargo. Sree eON ee a3 i Of the PWC mémbers, 15 made at least one call at Stock- ton during 1962; 13 made no calls. PWC made a total of : . . r , . . _ ak ihe | 22 . sae | Appendiz. -if in stating those reasons we fail to treat any “specific ; exception,” it has nevertheless been considered and. found not justified. - ie The equalization here in.question is said to (1) dis- ‘courage the use of the Port of Stockton in violation of the arte principles and policies of section 8 of the Merchant Marine Act, 1920, with resultant. violations. of sections 15 and 17 of the Shipping “Act,® (2) result in unjust discrimination. . and undue prejudice against Stockton, and grant undue preference to the ports where cargo is loaded: (particularly San Francisco, Wilmington, and Long Beach) in violation - of sections 15, 16 and 17 of the Shipping: Act. In addition, Stockton urges so-called “other grounds of unlawfulness.” 7 These “other grounds” will be treated after disposal of © - what we consider to be the principal issues, The examiner concluded (1) that the ports. of San Fran- cisco and Stockton were of the same harbor complex or geographical area and that equalization’ between ports in the same geographical area was not contrary to the prin- © 4. Section 8 of the 1920 Act directs the Secretary of Commerce . in er ager with the Secretary of the Army— .. . with the object of promoting, encouraging and develop- ing ports and transportation ‘facilities in connection with water commerce . . . to investigate territories, regions and -—., zones tributary to stich ports, taking into consideration - the economies of transportation by rail, water and highway and the natural flow of commerce, and, to investigate any other matter that may tend to promote and encourage the use by Pe “vessels of ports adequate to care for the freight which would naturally flow through such.ports.’’ . +. Stockton has apparently abandoned its contention. that: re- " spondents’ equalization constituted an‘ unjust and unreasonable regulation and practice related to or connected with the receiving, handling, storing or delivery of property within the meaning’ of 4 -section 17. In any event, as the Examiner correctly pointed out, — ‘ respondents’ equalization rules and practices had nothing to do with the receiving, handling,.storing or delivering of property. Beaumont Port Commission v. mre Innes, 3 F.M.B. te (1951). ! “a | Appendix 23 ciples and policies of section 8 of the 1920 Act, thus no violation of sections 15 and 17 of the Shipping Act resulted . therefrom and (2) that the territory which was naturally tributary to Stockton was also naturally tributary to San Francisco, and thdt under the applicable precedents the absorption of inland freight differentials is unlawful only if it destroys the rights of ports to traffic originating in the areas naturally tributary to them, and (3) that respondents’ , equalization as practiced against Stockton was lawful under . the applicable precedents, Stockton argues that the ex- aminer was wrong on all three counts. — ss Port equalization is not unlawful in principle. Beaumont - Port Commission v. Seatrain Lames, Inc., 2 U.S.M.C. 500, 504 (1941). Equalization may be unlawful, however, if it draws from ports traffic which originates in areas naturally tributary. to those ports, City of Mobile v. Baltimore Insular. ~ . Line, Inc, 2 U.S.M.C. 474, 486-87 (1941); Proportional Commodity Rates on Cigarettes and Tobacco, 6 FMB. 48, 55, 56 (1960), and if the port losing the. diverted traffic can . Offer adequate service to shippers diverting to the°favored port, City of Portland v. Pacific Westbound Conference, _ 4¥F.M.B. 664, 679 (1955). Equalization may also be unlawful . if it is practiced between ports located in different or separ- “ate harbors or geographic areas. Beaumont Port Commis- sion v. Seatrain Lines, Inc., 2 U.S.M.C, 699, 703 (1943). .. With these principles in mind, we can now examine more closely the examiner’s findings and conclusions, = «_sC | The examiner treated Stockton as an integral part of the San Francisco Bay “harbor. complex” and thus as being within the same “geographical area” which has access to the open sea through the Golden Gate. Stockton contends . that the examirier erred because Stockton is not on the San Francisco Bay and it is 84 miles and 5 waterways removed - 2 ° y . : : e 24 rok | | Appendix from San Francisco Bay. Secondly, the examiner:concluded | that the areas naturally tributary to Stockton were equally _ so to San Francisco. Stockton argues that here again the examiner fell into error because inland rates from the rele- — vant area are lower to Stockton than. they are to San Fran- cisco. It is in this latter contention that we find the essential] ingredient in Stockton’s attack on respondents’ equalization. In Stockton’s view naturally tributary territory theans simply “the area from which the inland transportation rates | and mileages are less to a particular portthan to any other 2 port. ” oo We agree with the examiner’s conclusion that the ports of Stockton and San Francisco do not represent separste and distinct geographical areas. They are both “bay area” ' ports and have been uniformly treated as such for a variety of purposes. Thus, the California Legislature in a compre- hensive report on the San Francisco ports issued ‘in -1951 consistently referréd to Stockton as a Bay area port. In setting up the Bay Area Protection and Promotion Pro- gram, now contained in Harbors and Navigation Céde, sec- tion 1980, et seq., the San Francisco Bay Area i is defined by the California Legislature as— . . that region served by commercial shipping and transportation passing through the. Golden Gate, in- . eluding es ant areas of wae and northern Cali- ox fornia . : Ae . . Pe In. seeking ‘to being itself within the diabetes of section. © — .8 of the 1920 Act, Stocktom relies on its physical separation 3 - from San Francisco Bay proper. But other factors must, be considered in making determinations under section 8. Thus, ” sto his research on the PWC figures, out of 1,116 shipments _ involving a total of $107,272 in equalization payments, there - were 314 instances of overpayment for a total .of $8,254, and 322 instances of underpayment for a total of $2,810. A substantial part of the $8,254 in alleged overpayments arose out of.a practice, discontinued during 1962, of allow- _ ing the principal shipper of raisins to equalize on the basis _ of the rate for his less-than-truck-load shipments to San Francisco ‘against the rate. for truckload shipment tor Stockton. This was done. on, the theory that if the shipper z had shipped via Stockton, the LTL shipments would have : ‘been consolidated with shipments destined for Europe, to’ ‘8 ” x ° . . ye, tale , Pee bd feces Appendix | i's $3 forin truckload shiprhents at a substantially lower rate. The shipper complained of the cessation of this palpably | improper practice and testified on behalf of ar Bee. as the sole malcontent shipper. The Examiner concluded that, _ ‘The inland rate situation was: indeed. shown to be com- plicated. The inland transportation industry manages _to operate under it, however; and the conferences ap-" ' pear-to have mastered its mysteries so as to operate - __ their equa! zation rule fairly as a matter of practieal —which was fonenesiee with a well-defined dispute, with ~ . . the conference ultimately taking the proper course—no ° shipper testified to any dissatisfaction with the theory or practice. of calculating equalization under respond- _ ents’ rule. There is no other evidence of any differ- ences or possible preferences in the treatment of ship- pers similarly situated. Had there been any such pat- tern it may safely be assumed that complaimant’s ‘ex- pert, in the course of his meticulous examination, would have found it. - Stockton’ s exceptions to this donclusion amount to noth- . ing more than a reargument of the contentions urged be- fore the Examiner and we find his conclusion well founded and ‘proper. _ ~ Stockton further argues that respondents’ equalization practices result in unjust discrimination hetween shippers, in violation of sections 15 and 16 First of the 1916 Act, because varying equalization payments under the rules result in different charges for the same ocean ‘trans- portation, because respondents ultimately collect varying amounts for transportirig the same commodity between the - same ports, depending on the inland transportation charges, which determine the amount of the. equalization payment. . Varying charges for identical services are prima facie dis- criminatory and thus unreasonable unless justified. Pro- _ portional Commodity Rates on Cigarettes and Tobacco, 6 : FMB. -48, 55 (1960). ier : - Discrimination against a shipper is necseentily meas- ured: by what the. shipper pays, not by what the carrier. -ultimately collects. Shippers. who receive equalization allow- — ances pay the same amount for through transportation, whether they ship via Stockton or San Francisco.. No ship- _ per has complained of discrimination, and there is no evi- dence of any differentiation among shippers similarly situ- ated. Under sithilar circumstances, no evidence of discrimi- nation against shippers was found in Beawmont Port Com-. mission v. Seatrain Lines, 2 U.S.M.C. 693, 703, where, as - - we have already noted, Houston, Galveston and Texas City _ ‘may be considered the respective equivalents of Stockton, San Francisto and Oakland-Alameda, and Havana the equivalent of conference | destinations in the Far East: “ Complainants’ contention that Seatrain’s. practice un- | justly discriminates against Galveston and Houston ’. will not bear analysis. The port-to-port' rates to Havana . .’ from these .ports and Texas City are the same. The shippers served by Seatrain pay the same through ‘transportation charges, whether they ship from Gal- veston, Houston or Texas City. There is no complaint af of, or evidence to show, discrimination — ship- 3 - pers by Seatrain. & » Moreover, any prima facie discrimination based “upon - ocean carriage alone—as between, ‘say, a shipper’ located ‘af San Francisco who receives no equalization allowance © and one located at Fresno who receives equalization against . Stockton when he ships via San Francisco—is justified by: © the facts of record. The record is clear that the fewer load- . . _ ing ports in the normal itinerary, the better operating re-* -sylts the carrier will have. To eliminate equalization, there- S i> We _ Appendive ee . s. by requiring carriers either to call at Stockton or abandon ‘some of the cargo in that area, would be beneficial to the Port of. Stockton and perhaps some of the shippers in that - area. But the public interest is much larger than the needs or desires in the Stockton area. The équalization under con- — sideration here reflects an overall. economic good, tangible benefit to the public at large, and ™ important —— “tion justification. We conclude that no unjust Gicndindbuatiag biiweit ship- pers, or undue or unreasonable preference or advantage to any particular person, within the meaning of sections ' 15 and 16 First of the 1916 Act, may be found in respond- _ ents’ equalization rules or their ‘practices pursuant thereto. — goo, or Stockton also argues that the respondents unnecessarily . " dissipate their revenues ‘through their equalization allow- ances, sinee ( 1) the most economical way. to move cargo. isto load it aboard a vessel which is at Stockton, and (2) in some cases cargo which is equalized against Stock- ~-ton_would be shipped via San t'rancisco anyway. Such ' dissipation is alleged tobe contrary to the public interest and detrimental to the commerce of the United sient violation of section 15 of the 1916 Act. The record does:not support. Stockton’s contentions. The — most: economical way to move cargo was. shown‘not always | to be to load equalized cargo aboard a vessel at Stockton. which ‘was there to load other cargo. PFEL frequently transships cargo by truck-(at its own expense) to San Francisco for loading aboard a vessel which has called at Stockton, be@ause it is cheaper to do that than to move | the vessel, at a cost of, some $300, from a bulk cargo berth to another berth at Stockton. Transshipment costs the car- _ . Tier a great deal more than equalization, since it not only pays the full cost of truck 2 saihdacieamice from Stockton * we Appendix | _ to San ‘Prencibea, but also pays ‘handling and loading |» : charges to both ports. '. Even Pit it is more economical. for a carrier : sellin vessel is already at Stockton to lofd there rather than equalize, it does not follow: that it will be cheaper for a com- _ |. petitor that does not have a ship at Stockton and does -~ ~ not have: bulls cargo contracts which make it economical r to send a ship there.® For the carrier that actually equalizes, - there is no dissipation of revenue*through equalizing as against sending a ship to Stockton. Ig this respect, equal- j - ization is self-correcting. If there is sufficient | cargo avail- able to a carrier to make it more economical to call at | ‘Stockton, the carrier will normally do. 80 rather than equalize. : There is no evidence. that oqidhlization is not profit- ‘able, overall, to any carrier that equalizes, nor is there any evidence that, the public interest or commerce of the : United States has beetr adversely affected by any dissipa-, - tion of carriers’ revenues. The evidence indicates, rather, _ that equalization ig financially beneficial to the eq soeiaine | carrier. Wsesines. it ‘should be noted that even with cin ~ tion, Stockton’s growth since 1957 has put it ahead of the ports of San Francisco, Oakland and Alameda combined, — . in export tonnage. General cargo (via.conference and non- ‘conference vessels). to conference destinations increased — 1962-over- 1961, aeeene: total enran to ‘Goes 9. “Respondent PFEL, the cole: carrier that was eritinad of _ equalization against Stockton, frankly considers its position to be ‘‘more advantageous than others insofar as ealling at the Port of © . Stockton .. . we have contracts for bulk cargoes for justification to put us up to the Port of Stockton which other lines do not have.”’ Thus PFEL feels it could get ‘‘the lion’s share’’ of any additional _ fon going through Stockton. Still, PFEL now transships cargo a and cleo equalins againet Stockton. - : - Appendio | | ee conference destinations declined from *1 308 558. tons. to. _ 1,108,726 tons. Thus; equalization has not seriously affected Stockton’s competitive position. Stockton .also | argues that there is a violation of section 205 of the Merchant Marine Act, 1936, which provides: - SEC. 205. Without limiting the power and authority i * hea vested in the [United States Maritime] ‘rier by water, either directly or indirectly, through the medium of. an agreement, conference, association, its Y understanding, or otherwise to prevent or attempt to Pe prevent any other such carrier from. Serving any port - designed for the accommodation of ocean-going vessels ' located on any improvement project authorized by the Congress or through it by any other agency of the Fed- eral Government, lying within the continental limits — of the United States, at the same rates which it charges at the nearest _ anrenay er served by it. No functions with respect to ‘this ‘gestion of the 1936 Act ———“were were transferred to the Federal Maritime Commission by Reorganization Plan No. 7 of 1961, which established .the - Commission. However, complainant suggests that section 205 remains the ‘law of the land, and must be considered by the Commission. in exercising its delegated functions. Stockton is a port designed for the accommodation of ocean-going vessels, tocated on a an improvement author- = ——————— ized by ‘the Congress, and is. therefore entitled to ‘the protection of section 205, as our predecessor: said of the - Port of Stockton and other bay area ports in Encinal Tey mindls -v. Pacific. Westbound Conference, 5 FMB. 316, 320 (1957). But gection 205 i is not violated by respondents equalization rules-@8 observed in practice; ie., with the’ _ elimination from: “the rules of the phrase purporting to - restrict its operation to cargo “which would normally - ‘Commission, it shall be unlawful for any cgfmon car- | - move” from a given point. This apparent restriction has. . . no pinctiiak relation the theory or aigeesiien of the - rule, Perhaps it was originally intended to make it clear. - - that cargo may be equalized even though it might “nor- mally” Andye from another port, thus: anticipating any objection « on. tKat ground. The rule should be drafted to . exclude what - is clearly not intended as a restriction. '_. The rules, as‘ applied, permit equalization in favor of - Stockton to exactly the same extent as against it. Respond- : ents comply literally with the statute by serving Stockton at the same rates which ‘they charge at the nearest port — regularly served by them, since rates: e same for all bay area terminal ports. ‘f-equalisation is considered to change the base rates from any such port, respondents “are in compliance with the statute because they offer the .same equalization to shippers who wish to load at Stockton. - -Finally, Stockton argues that equalization. aoa as a~ eloak for malpractice.” In support of this proposition PFEL’s representative referred to one case of unidenti- fied “malpractice” which he said had resulted in a Com- - mission investigation. The répresentative further testified that upon. two occasions PFEL had been offered a ship- ment if it would equalize on the basis of a ‘trucker’s bill of lading showing a point of origin more remote from the loading port than the actual point of origin. As respond- ‘ents suggest, it. would appear that if a shipper and carrier conspire to engage in crime, they can find simpler: and safer methods than getting a third party to produce a false bill of lading. Giving full credence to PFEL’s testi- oY mony, however, it cannot be concludéd that respondents’ equalization rules and practices offer such a peculiar temp- tation or facility for malpractice as to make it desirable — oto eradicate equalization. completely. There was no evi- dence in the record of any malpractice affecting Stockton, Oe eee ee ee . Stockton also points to a practice of the PWC r ents with respect to citrus fruit, allegedly affecting Stock- “ton. For a number of years it has been‘ the practice of ‘respondent PWC and its members. to: allow an “equaliza- ~ tion” payment of 15- cents per. ‘carton on citrus fruit shipped fr an Francisco if it originated in “South- - *_ern- California.” Southern - California is defined as the. _-—~ territory south of a line drawn east from Santa Barbara, : south of the area in: -whith constructive mileage, and car- rier rates, are. lower to. Stockton than to San Francisco. : This 15-cent allowance is not based ‘upon any excess over- ~ land transportation cost as such, but rather on the fact _ that citrus shippers located south of the Santa Barbara ; line quote exporters a price delivered to-a dock in “North- | ern California”—particularly San Francisco—which is 15. -eents per carton 1 higher, than their price delivered to dock in Los ie ‘Harbor. For feasons not apparent from - the record the ocean carrier allows the exporter (the ship- _ per from tha standpoint of ocean carriage) an amount a! - . equal to this difference in the. price of fruit delivered : 3 i. a.s. San Francisco. as against f.a.s. Los Angeles. There - ae practice no other equaliztion with respect to citrus ‘ fruits. The conference is not asked to equalize against . ‘ Stockton or otherwise on ‘fruit originating north of the ‘i Santa Barbara line, and in practice citrus fruit is never eee ‘shipped from Stockton. G tae ea Thus, ‘there .is an allowance against ocean freight on - citrus fruit; shipped from’ “Northern Calfornia” ports’ as against. shipments from “Southern California” ports at ' the rate of 15 cents per carton, : ‘based upon an‘arbitrary price differential of 15: cents, with respect to fruit: ay nating south of the Santa Barbara line. - - The PWC chairman necessarily conceded that this “equalization” is not found i in the PWC —— rule, bis e Bt er OS ” spline’ ; : f: - but PWC argues ‘that it ‘accords’ with the -prinéiple of : -equalization, which it contends is -the absorption by the . _ carrier of the difference between the’shipper’s cost at the. . Nearest terminal port and the loading port. But this is. ' too loose and inaccurate a definition. As the rule itself. states, equalization is the absorption by the carrier of the shipper’s excess cost of delivery to the loading port: That _is quite different from absorbing a differential in the ship- _ per’s exporter’ s”) purchase price, resulting from a sort of: basing-point system by the growér-seller. The . _ exporter, who is the shipper as far as the ocean carrier is concerned and: the one who bills the conference for -. equalization, in. fact has no cost of delivery to ship’ mit tackle’; he buys at a flat price. f.a.8. . The conference has reported. to the Commission data . with respect to citrus fruit equalization, purportedly. as « - equalization under its tariff rule, showing point of origin ° as “Southern California” and rate. of equalization at 15- ~ cents pér carton. This does not validate the practice, but - ‘neither does it invalidate respondents’ published rule, nor - eontaminate the rule so as to require its disapproval. However, this so-called equalization on citrus fruit is not in accordance with or pursuant to. Tespondents’ filed’ - tariff. Thus, respondents PWC and its members have failed © to:comply with» paragraphs (1) and (3) of section 18(b) -of the 1916 Act, i in that they have not filed a rule or regu- — lation which affects a part or the aggregate of their. filed . rates, and have-charged a diffefent compensation for trans- - - portation from their rates and charges on file. ‘Moreover, _in our View, the absorption of an arbitrary amount based -— upon a differential in delivered “price” of a commod- ity is unjustly discriminatory between ports’ within the st ere - section | 15, since the. ‘amount absorbed has. no i "EK : = \, dppendis. pete, ‘Al : : transportation basis or justification. It is further found, - however, that such practices have not diverted — — aos 7 and do not affect, the Port\ of Stockton. : _. While the ctnaieds concluded that the rules and prac- tices with respect to- equalization between terminal ‘ports within the San Francisco Bey area, were not +t unlawfal, Ee . he sonst that: : . to the extent that they permit general equaliza- “Aion upon. cargo loaded at the ports of Los “Angeles and Long Beach, California, based upon the excess . cost of inland transportation from point of origin to - such ports over such cost to San Francisco, Stockton or.any other port.within the San Francisco Bay har- . bor complex, are unjustly discriminatory and unfair | between ports, within the meaning of section 115 of the 1916 Act; and to such extertt the said rulee,, and prac; ‘tices parent thereto, are disapproved. ° PWC excepts to this holding on the grounds that the on which this finding could be premised. '- examiner made no findings to support this conclusion con-. . trary to the requirements of section 8( a) of the Adminis-: - trative Procedure Act: (5 U.S.C. 1007) and that there is : no evidence j in the record, ‘not to say substantial ait : Wefiold . that the examiner decided this issue outeectly : and on the basis of adequate proof. The initial’ decision ee correctly set forth the legal test, to be used: If the absorp- -. tion of inland. rate differentials destroys the right of ports to traffic originating ‘in, the areas naturally: tributary to. _ them, the absorption is “unduly prejudicial to such ports ~ where service. from the port equalized against is adéguate. The examiner noted that the number of shipments equalized O-. against Stockton i in favor of Southern California ports in 1962 was small, but of substantial tonnage. The. examiner _ found that the Golden Gate i is 423 statute miles north of can “42 ace is eels pe ‘ ‘hina and ‘that. the territory tributary, to the Southern _~ . California area is not tributary to San Francisco Bay area. _ "ports. He further found that service from. Bay area porta 4+ ‘was adequate. : PS _, The record shows details of shipments eeualiatl against Stockton where the cargo actually moved from Los An- geles and Long Beach. The record also shows details of . inland. transportation costs between interior points and , terminal ports, including Los Angeles . and Long Beach, » and the adequacy of service at Stockton and. ‘other Bay _ area ports. °° Therefore, we agres with the’ examiner that siquatizdtion ; of-cargoe via: Southern: California ports destroys the right © “of Bay area. ports to traffic originating in the area natu- rally tributary to them. It is obvious that this type of : _ equalization diverts traffic away from the natural direc- tion of the flow of traffic. This situation is, as found by ee the examiner, contrary to our decisions in Proportional . Commodity Rates on Cigarettes and Tobacco, 6 F.M.B. 48 . (1960), and City of Portland v. Pacific Westbound Con- _, ference, 4 F.M.B. 664 and 5 F.M.B. 118 (1956). The examiner made those findings, supported by evi- _ dence, which are prerequisite to the application of the legal _ 5 a. test of équalization. We, spend reject this exception . of PWC., PWC efntends further that” the equalization against - Bay’ area ports where cargo moved through a. Southern California, port is not pertinent to ‘the’ issues in this pro- ceeding. We reject this argument. We will. not ignore — | » unjust: discrimination even though it was not raised with _' respect to Bay area ports other than Stockton in the com- cae We ee of a similar argument i in eg of Port- Kee ets { sn he \ land v. Pacific Westbound Conference, 5 F.M.B. 118, 129° (1956), where we stated: Eres, | ohana PFEL’s view appears to require a conclusion that. that we are rigidly limited in our findings and con- ~ ‘clusions bythe precise language of a complaint or» order of remand, régardless of the facts which may . be developed and argued by the parties to the pro- ome | ee We do not share this view of our duties under the ‘Shipping Act, 1916 (“the Act”). In our view, we would - be remiss in our’ duties if, assuming ‘détual direct service by Java Pacific, we did not, acting on this record, prevent continued unlimited ‘equalization on dynamite by PFEL. As stated in Chesapeake.d O. Ry. Co. v. United States, 11 F..Supp. 588, 592. (1935), in. - discussing an Interstate Commerce Act provision sim- ilar to our section 22: : SL epee eet ** * after a complaint is filed before the Commis- sion, it bécomes the duty of the Commission, to in- -" vestigate the complaint and take proper action upon _ its own motion * * * its power is not restricted by - .« the issues raised on the complaint, provided * * * that the (respondent) * * * had full opportunity to. _ make (its) defense. — eta . It is the duty of the Commission to look to the substance of the complaint rather than its form and it is not limited in its action by. the strict rules of _ pleading and practice which govern courts of law. This Board, uke other administrative agencies, has an affirmative duty to investigaté as well as to decide, in consonance with its position as trustee of the public interest in matters within its jurisdiction. : ‘The conference further argues that the examiner's . finding sin’ this respect should’ be qualified to take into. '. consideration which of the San Francisco Bay area ports have adequate service. In fact, PWC contends that equal- — ization should. be proper where: service at’ San Francisco. ~ 44 a ‘Appendiz ~ | Bay area ports is unsatisfactory i in any respect. We reject this test of equalization in favor of that previously ex- pounded—-that equalization is unlawul if it destroys the — “ right of ports to. traffic originating in the area naturally : tributary to them where service from the San Francisco .-—— Bay area ts adequate. And the likelihood of inadequacy = 4 - sat San Francisco Bay aréa ports is remote indeed. We, - | _.therefore, will not qualify the examiner’s holding. We reaffirm that: respondents’ equalization rules to the extent that they permit equalization upon cargo loaded _ ‘at the ports of Los Angeles and Long Beach, California, _ _ based upon the excess costs of inland transportation from : point of origin to such ports over the cost of inland trans- _ portation to Bay area ports, are unjustly discriminatory : and unfair between ports within the meaning of section 15. We will disapprove the equalization rules to this extent. An appropriate order will be entered. ~ Commissioner Vearn Dissenting: I agree with the majority opinion in that the shapletnen-4 tation of respondents’ equalization rules in favor of Los Angeles and Long Beach are unjustly discriminatory and - utifair. I find the discrimination so ‘far as it relates to _ cargo which is naturally tributary to Stockton to be a discrimination against. Stockton. only, which for reasons . given below can in no way be considered a San Francisco Bay area port. . | 3 I disagree, however, with the results reached by the ma- jority and am convinced that the subject equalization rules against Stockton’ are violative of Section 16 First of the 1. The stateinent at page 23 of the majority opinion that ‘‘The =f _Tules, as applied, permit equalization in favor of Stockton io exactly - the same extent as against i ’? betrays a certain naivete in coming to grips with the issue. While the word ‘‘permit’’ lends authenticity to the statement, in the nature of things, the equalization must always work against Stockton vis-a-vis. San Francisco _— area : Appendix. _— sees Me 45 ‘Shipping Act, ‘contrary to the public interest standard of - Section 15, and in contravention of the principles and — policies of Section 8-of the Merchant Marine Act, 1920, and Section 205 of the Merchant Marine Act, 1936. I read the majority’s action today as (1) frustrating : the will of. Congress in developing new and modern ports _and (2) turning over to conference carriers, the right to determine.which of our ports shall prosper and which shall suffer. Further, the establishment of Stockton as a “ter- | minal port” by all of the Conferenees, i in 1957 by the Pacific » Westbound Conference, becomes insofar ‘as the port of _ Stockton is concerned, a meanjngless gesture.” The ma-. ; . jority has recognized that the port of Stockton “has had . phenomenal growth” since fhe Port of Stockton attained “terminal port” status. I. fear that the majority decision here’ will seriously impair that. growth. Millions of dol- lars, both pee: and private, have - been Invested in the port.® ) At least one conference ¢ carrier ihe iodide substantial scheduled service at the port of Stockton. The majority’s action today will bless the efforts of those carriers who have no intention of giving direct service to thé port, and ‘those carriers who have traditionally bypassed the port, with the opportunity to drain its general cargo. As the’ Commission stated recently “In The Matter of Agreement. Nos. 6200-7 etc., Docket 1166 (served June 24, 1965), “Tt seems elemental that. the carriers best able to establish fair and — rates for a given trade 2. . This status was pesabelay as a side of Encinal Terminals v. / “Pacific Westbound Conference, 5 F.M.B. 316-(1957). 3.. At the beginning of 1964 the capital outlay in the Port ‘of Stockton was 23 million dollars, This investment included $9,800,000 - . by the port district ; $3,200,000-by the city of Stockton ; $3,800,000 by. the Federal Government; $500, 000 by the. State 5 California _ and $5,700, 000 ond private investors.. 46 Appendix are those carriers. which are adinally > serving the o trade . . . we. believe the. vesting of rate-making _ decisions in carriers who do not serve the area’ in whose rates they have a voice to be far more dan- se gerous to the commerce of the United States than. - the existence of rate competition between two com- peting areas.” , The. majority notes at page 8, reasons why shippers favor equalization: regularity of service and.shorter in- transit time. It goes without saying, I think, that shippers _ Bniversally favor superior service and shorter transit time where these benefits can be secured without additional cost to. them.‘ eh Air : In my view, the majority’s reference that: |. “For almost a hundred years before Stockton’ was made accessible ‘to oceangoing vessels, San Francisco was the principal port through which freight from the San Joaquin Valley would and did pass. It did not cease to be such‘a port merely upon the creation of an ie | Ie additional port at Stockton.” belieg‘an unconscious adherence to the “fundamentally en- f ; titled” theory which has ceased to have any value since Pa- cific Far East Lines, Inc. v. Federal. Maritime Board, 275 . F ad 184 (1960). > @ 4. A curious statement appears on page 8:: “rf there were no equalization many perisable cummodition would -» gstill- mov San Francisco rather than Stockton.’’ The ma- ‘jority, of , do not state why any of the overland costs to San _ Francisco on commodities shipped through San Francisco for the convenience of the cargo should be absorbed by the carriers. This particular instance reveals the chink in the majority’s decision: equalization is permitted against Stockton, os se euanuniy. 30 the 3 carrier where the cargo would be shipped ex-Stockton, and ha — | er | this, a rebate measured by the difference by the ov eost to Stockton and overland. cost to San Francisco on cargoes ordi- _ - marily and traditionally shipped ex-San Francisco follows because . “the cargoes intended for the different terminal ati ean not - — re, 8 ; Appendia SE Ea My dissent, however, a not be re Upon: vis broad - generalities. P The central point here is rr EA tariff rules which “permit” carriers to equalize against Stockton. The ma- " jority. has correctly assessed the thrust of the. “permissive- ness” of these rules: “. . . carriers find that competition compels them to equalize”. Thus a conference carrier is not free to serve or not serve Stockton as its sound managerial . judgment dictates, consequently the effect of the equaliza- tion rules is to restrict. competition. between the ports. _In reaching its ultimate conclusion, the majority found that (1) the port of Stockton is a port in the San Francisco .. Bay area, and (2) cafgoes naturally tributary to Stockton are also naturally tributary to San Francisco. While I think neither of these, findings i is correct, I believe they skirt and. confuse the central issue, which is: Do these tariff rules ee result in- an unjust discrimination | to the port-of Stockton? The findings, moreover, are not supported ni the sae and have no valid basis in law. eree | _ First, the port of Stockton. is not a San Francisco Bay port within the meaning of any statute administered by this Commission, and the cited: “comprehensive report” of the California Legislature in. 1951 referring to Stockton as a -Bay Area port certainly ‘is not controlling here, if: indeed it has any relevance at all. The incontrovertible facts are that Stockton is «some 107. constructive miles and’ several distinct waterways removed from San Fr ancisco Bay. It | is unthinkable that the Port of Stockton. should be -con- sidered as juxtapdsed to San Francisco, Oakland, Alameda and Richmond. The finding that Stockton should be treated - as a Francisco Bay port must hang as an ‘unwarranted fiction upon which no legal conclusion’ can be based. _ Secondly, to say, as does the majority, that the “natural direction of the flow of traffic from the San ‘ oaquin Val- ae, cae i -Appendiz ss . ley...is eee the Golden Gate to the Pacific Ocean” iis g. ‘the question: The point at issue is whether the “natural direction of the flow. of traffic — be San J oaquin Val- . ley ... through the Golden Gate .. .” is through San Fran- cisco or through Stockton. I hola. to the belief that this " natural flow i is ,through Stockton, and succinctly stated, but for the equalization, an admittedly artificial- device, San .. Joaquin exports ‘would normally flow through the Golden ‘Gate via Stockton, except where, for the convenience of the cargo, shippers are not only willing: ‘to but should pay -their fair share of costs of the ere service offered at San. Francisco. : : _. The majority places some slice upon 1951 Port Series® — reports to show that the San Joaquin cargoes are as “natur- ally” tributary to San Francisco as they are “naturally” tributary to Stockton. A perusal of the cited works fails to © uncover the adverb “naturally”. Hence the “obviousness” ‘ that “these studies dictate a rejection of any ‘constructive mileage’ theory for determining ‘naturally winery ter- -Titory’ ie is indeed wanting. The only valid test, in this case, for deterinining whether - or not the effectuation of the equalization rule, and conse- quently for determining whether respondents are giving . “any undue or unreasonable preference or advantage to any Si ticular person, locality, or description of traffic” or sub- Jecting “any. particular person, locality, or description of . . traffic to any undue or unreasonable prejudice or disad- vantage” in. violation of Section 16 First, is whether the traffic would move via San Francisco but for the equaliza- - tion, Here, certainly, most of it would not and to the-extent: - §, “The Ports of Han Praieleno and Redwood City, California.” . Port ais spt fa, Rev. ed by th a mcg foe covering Stock- ton, in — e Corps o — and the Maritime Administration. . oo 8 omendia aaee 49. that the artificial device draws traffic from Stockton it is unlawful.* eee coke : at AC In this véin; I am convinced that the precedents support © my view, There can .be no doubt here that the equalized. ~- “cargoes originate in areas “naturally and geographi eee tributary [to Stockton] because of inland transportation — * rates favorable to [Stockton]-as well as through closer « proximity”. City-of Portland v.- Pacific Westbound Confer- ene, 4 F.M.B. 664 (1955). Similarly, what was said in City .. Of Mobile v. Baltimore Insular Line, Inc., 2 U.S8.M.O: 474 (1941), is appropriate here: : e FOS ees y “To permit continuation of unrestricted solicitation by fi carriers for business through condonation of a prac- ‘ tice whereby unfavorable inland rates are overcome — would wholly ignore the right of a port to-traffic which it.may be entitled by reason of its geographical loca- tion. Such right appears fundamental. under statutes designed to establish and maintain porar S Again, in the Portland case, swpra, our predecessors inter- preted section 8 of the Merchant Marine Act, 1920, as re-- . quirlag::- . @ : Otherwise the‘rules of the. three conferences are substantially the : same, insofar as they relate to the Port of Stockton. e a ‘ . : on . : Ad & Peery : / GS | oO oe : : 7 eats (ce) Whén the inland cost. of transportation ious point ate of origin is lower to terminal ports in Oregon, Washington; or: British Columbia than via California terminal ports, equalization may be applied via California terminal ports _ only on shipments of deciduous fruits and dairy products - (See Note below covering Explosives) and such equalization . ‘shall be permitted only so long as there is not:adequate serv- ice from the terminal port in Oregon, Washington, or British Columbia, to which the cargo is tributary, to mieet the noone of shippers of these: commodities. NOTE: ‘ Naualination on explosives is not permitted except that in the event a shipper-is unable to obtain space for a - specific shipment of explosives by a direct sailing from a terminal through which explosives would normally move at a date which reasonably will meet the needs - of such shipper or his consignee, equalization shall be - permitted on such shipment, Provided, that the shipper. ‘certifies to the Conference the need for space on such . date and allows 48 hours after receipt of such certifi- * jeation: for the Conferefice to indicate the conference - carriers who can provide space on a direct sailing which ‘reasonably will meet the shipper’ . needs. (d) Equalization is permitted on shipments of trea, fruits, which would. normally be shipped via California ter- minal ports’ when shipped via terminal -ports. in Oregon, ees Washington, or British Columbia, whengthere is not ade- quate service from the California port, to which the cargo is tributary, to meet the needs of shippers of these ¢ com- ee ¥ sf é ¢ ; Fe, - oe ‘fe P | Appendix | : 65° (e). Cargo which would normally move from one terminal port in Oregon, Washington, or British Columbia, may be shipped under equalization*through another terminal port in Oregon, Washington, or British Columbia, and cargo which would normally move from one- ‘California terminal | port, may. be shipped under equalization via another Cali- fornia, terminal port. . a *(f) Equalization. Shall only be paid on the basis of the lowest applicable common carrier @. contract carrier rates. ’ (g) In support of each claim for equalization the shipper | must furnish the carrier a copy of transportation bill cover- ing movement from point of origin. (h) Prior to payment of equalization bills, a es must "submit to the Conference on prescribed form a certified statement for confirmation and approval of applicable inte- rior rates and/or the basis for equalization. by £3 ? a” ; SERVED : FeperaL Maritime CoMMIssION _ Federal Maritime Commission | ~ NO. 1086 -Srocxtron Port District we ’ PaciFic Westaouxn’ CONFERENCE ET AL. » _ AMENDED ORDER » . P This amended order is to be attached to the report in this proceeding in lieu of the order served September - 24, 1965, in this proceeding. Full investigation of the nities and things involved in this proceeding has been had, and the Commission on Sep- ° . tember 24, 1965, has made and entered of record a report .. ‘stating its conclusions and. decisions thereon, which report _ is hereby referred to and made a ‘part hereof. The Commis- — _ sion. found in- said report, inter alia: | . an - * 1. That. the equalization rules of the respondents (Pacific Westbound Conference, Pacific Straits Con- ference and Pacific/Indonesian Conference, and the | members: of these conferences), to the extent that they provide for or permit equalization of inland transpor- tation from shipper’s point of origin to any terminal: port located on the harbor of San Francisco Bay and ’ _ its connecting waters (the existing ports so designated -and deseriped being the ports of San Francisco, Oak- land, Alameda, Richmond, Stockton, Sacramento), on . cargo loaded at Los Angeles or Long Beach, Califor- - nia, are violative of section 15 of the Shipping Act, | 1816; — : . i ee ae ‘September 28, 1965-. / ; at ‘ . > ‘ . ° Tea " ; oa) . . ‘ ° Pt 4 “ . ie % > oq rd ‘aie: Roe oT 3 £ “That the equalization rulés of the above confer- ease ences and their members ‘providing for or permitting ee oe equalization of inland transportation from shipper’ 8 point of origin to any of the said terminal ports located in the harbor of San Francisco Bay and its connecting _. waters on cargo loaded at any other of said terminal ports are.: unclear in their references to cargo “which would normally move” ; Yara, ee Poe ‘:-«3. That Pacific Westbound Conference and its mem- ’ ber -lines haye engaged in eer with respect to payment of “purported “equalization” in: connection with citrus fruit not provided for in their tariff. in violation of section 18(b) ai the Shipping Act, 1916. - Tuererorr, It Is Onprrep, 3 1. That the respondents cease and desist from ap- plying their equalization rules to cargo loaded-at Los Angeles or Long Beach, and that modifications of their - equalization ruleg;to exclude their application to cargo loaded at such ports be filed within 30 days of service of this order’; 2: That the waitin: in so sneditvigg their rules, omit the characterization of cargo as that “which would . normally move” from certain ports; and = ie 3. That respondent, Pacific Westbound Conference . - and its member lines cease and desist from their pres- ent practices with respect to payment of ‘purported “equalization” i in connection with citrus fruit in viola- tion of their tariff. | a By the Commission. . (SEAL) » aah ./8/ Tomas List’ i } Thomas Lisi Rg ae ee age as vey Secretary 58 . Appendix, Report of Commissioner J ohn S. Pattersqn: The reasons for'a separate report of my decision are that ~ the ‘majority, in my opinion : ns (1): has gone beyond the Commission’s functions as- ' signed under section 103 of Reorganization Plan No. 7 of 1961 by interpreting section 8 of the Merchant Marine Act, 1920, and section, 205 of the Merchant Marine Act, 1936, and (2) did not make the record show. the ruling on ‘th 3 i exception presented. : Fanetions relative to the authorizations in sections 8 and 205 were not transferred to-us by the President with the approval ‘of Congress pursuant to the Reorganization Act - of 1949 but were vested in the Secretary of Commerce. The _ Secretary of Commerce is the federal official responsible for . | deciding what these sections mean under various circum-— stances, and we sjiould not, in.my opinion, prejudice his — decisions nor create the possibility of unwarranted con- flicting decisions among government. agencies. , Section 8(b) of the Administrative Procedure Act ‘ainesta ‘agencies to make their records show the ruling upon each exception presented prior to decisions upon agency review. The subsequent decisions. must also include a statement of the reasons or basis for all conclusions upon all the mate- rial issues of fact, law, or discretion presented on the record. This report of my decision is: believed -to comply with these . mandates. My colleagues’ report states: “if i in-stating those reasons we fail to treat any ‘specific exception’, it has never- theless been considered and found not justified.” It seems - to me an adjudicator should not relieve himself of a re- . sponsibility to pass on compjainant’s well-thought-out ex- — o Appendizn 59 ceptions with such general statements. The statements are. ee unsupported assertions without basis or reason. ‘The facts stated in the majority report are een ¢ for cs dee purposes of this report. if Complainant Stockton made eight requésted findings and conclusions with respect to sections: 15, 16, 17, and 18(b) of - the Act. The findings are summarized in the next paragraph as items 1 through 8, and the conclusions of Stockton are Stated with respect to each section as noted. Section 15. The equalization rules — disapproval : as agreements because : : 1. The amount of the payment cannot be ditebininas by examination of the tariff in detriment to the commerce and — contrary, to the public interest. 2. The determination of the correct payment i is impos- sible, also involving unjust ceentemtnnan between ee. and exporters. ~ 3. Use of the Port of Stockton for freight “which re naturally pass through that port” is discouraged and de- creased in detriment to the commerce and in conflict with | ‘public interest. . 4 The rules result in discrimination. po prejudice to the Port of Stockton and preference to other California yom | ' 5. Différent sliippeis are treated differently i in making equalization ‘payments, causing detriment ‘to the commerce ~ and contrariety with public interest. \ 6. Carriers’ revenues are unnecessarily dissipated in. detriment to the commerce and pests to the public in- . _, terest. ; ; af Carriers serving Stockton are déprived of cargo against the public interest and in detriment to the com- _meree. eee . a J _ ees re ‘deeedia: - Ee Section 16.. The equalization rales are,unlawful because the e acts enumerated with respect to section 15 in items 2, 5, and 8 above also permit undue preference and Saeteadioe or unjust “discrimination” (section 16 does not - use the word) between | shippers; and in item 4 result in ; undue prejudice to Stockton and undue preference to other California ports in violation of section 16, second ° para- : ~ graph, subparagraph “First”. , Section 17. The equalization. rules are prohibited be- - _ cause the same actions enumerated with respect to section 15 in items 1, 2, 3, 5, 6, 7, and 8 above constitute unjust _and ynreasonable regulations conntcted with the receiving, handling, and storing or.delivering of property. _ Section 18. The equalization rules violate subsection (b)(1) because the same actions with respect to section 15-in item 1 fail to meet the:tariff filing requirements, ‘and in item 2 above constitute an improper tariff publication. For the reason that the Commission has no authority to administer sections 8 and 205, these laws are not discussed. The Examiner made a: decision on each request, found none of the claims proven, and rejected all of the requested findings and conclusions. Exceptions followed. The exceptions of A. Stockton Port District and B. Pacific Westbound to which we must adress. ourselves are as follows: A. Stockton Port District. Complainant excepts: ‘1. To all of the Examiner’s ultimate findings and con- clusiogs contained in the second: paragraph on page 31 of the Initial Decision. The Examiner’s ultimate conclusions . and findings require subdivision for the purpose of rational : 8. Improper equalization practices’ are coricealed, con- vase trary. te.the public. interest and-in. detriment to the com- ‘ meree. : WV ams Meg Hen: Appendiz +» — Pe 61 discussion about the distinct provisions of law which he finds not to. be violated, so the exception becomes one to-the ‘conelusion that the equatinetion 4 rules and panetians — . ant thereto: “a. are not in violation of section 15, ” b. are not in violation of section. 16, second pare- " graph, subparagraph First, 7 ¢. are notin violation of section 17, and _d.. are not i in violation of section 18(b). For the reasons noted above, references to section 8 of the Merchant Marine Act, 1920, and section 205 of the Merchant Marine Act, 1936, also referred to by the Examiner, are disregarded as not within our functions. 2. To statements regarding the geographical location of the ports of Stockton and San Francisto. 3. To statements~ regarding the geographical relation- ship of Texas City, Houston, and Galveston, ‘Texas, in ¢om- _ parison with San Francisco, Stockton, and other Bay ports, and to the position of Beaumont, Texas, in relation to'that . of Los Angeles, California. | 4. To a statement regarding the territory Sanreny tributary to Stockton. « 5. Toa statement that under existing decisions the con- | : clusions regarding naturally tributary territory are deter- .@ minative of the question as to whether equalization as be- tween Stockton and other. San A renciaon Bay ports should . be disapproved. 6) ‘6. To the conclusion that the filed equalization rules. comply with section 18(b)(1) without filing any inland car- rier rates. Sed - 7, To the conclusion | that the Palit does not support a "finding and conclusion that as a practical matter the deter- mination of payments i is impossible. sae i . . “ = . 62. Appendix : ' | 8. To the statement that the rules as ; applied. do not - discourage or decrease the aggregate use of Stockton and other Bay area ports or divert arenas from its patural direc- - tion of flow. _ 9... To the statement that Stockton does not ada ade- _ quate service for general cargo shipments to which equali- ~ aa ion is applicable. a 0. To the statement that the ryles and practices. are not . , found to be unjustly discriminatory or unfair between ports. y - 1. To the statement that there is no unjust discrimina- - tion between shippers or undue or unreasonable preference or advantage to any particular 7 under sections 15 and 16 (First) of the Act. . 12. To the statement that there is ‘no evidence veiainin: - tion is \not profitable to any equalizing carrier, nor any : evidence that the public interest or commerce of the United States has been adversely affected hy any en of carriers’ revenues. 18. To the’ statement it can not ‘be concluded that the ° rules are a facility for malpractice. . - 3 Biri 14. © To the findings and conclusions with vuoi to citrus: fruit insofar as they approve equalization practices with respect to such commodity if'a rule is put in the tariff. An exception as to the violation of section 205 Has been disregarded. ° - B. Pacific Westbound Dultenaiée: Respondent iiieinte to the conclusion that the rules, to the extent that they per- mit general equalization upon cargo. loaded at the ports of Los Angeles and Long Beach based upon the excess cost of inland transportation from point of origin to such ports ; over such cost to San Francisco, Stockton, “or any other port within the San Francisco Bay harbor complex”, are unjustly diseriminatory and unfair between ports under Appendix > oP ee 63 section 15 and ‘to such extent, the rules and Practices are disapproved. -The Examiner’ s ultimate findings and concltnions. “con- tained in paragraph 2 on page 31 of the Initial Decision” are that no provision of the Act has been violated by re- spondents ‘as a result of the facts summarized in the eight requested findings and conclusions i in Complainant’s open- ing brief. The generalized nature of Stockton’s first excep- - tion requires going back over complainant’s éight requested. findings, particulatly in response to Stockton’s further re- quest that “our Opening Brief and our Reply be considered ‘in connection: with si argument in support of our excep- " tions.” "My rulings would as follows: , . The rules and practices are authorized by agreements filed pursuant to section 15. These agreements have here- tofore been approved as a result of the approval: of Agree- ments Nos. .57, 5680, and 6060. The authorized rules and - practices are those in. Rule. No. 2 in Tariff No. 1-X. of — Pacific Westbound; Rule No. _1(b) in. Tariff No. 6 of Pacific Straits; and Rule No. lin Tariff ‘No. 7 of Pacific Indonesia. There is no issue. that the: agreements relate to the subjeets. listed i in the first paragraph of section 15. We have held that an equalization: rule is one‘of such sub- ‘jects and must be filéd unless the practice set forth in the rule is authorized by the basic Conference Agreements. Pacific: Coast Port Equalization Rule, 7 FMC 623 (1963) _ (see pages 630, 631). Our order was affirmed and found valid in American Export & Isbrandtsen Lines, et al vs. - . Federal Maritime. Commission et al, 336 F. 2d, 650°(C.A. 9th 1964)’ The tariff Tules are an implementation of the filed, agreements Nos. 57, 5680, and 6060 provisions for- bidding payment in respect of freight and absorption at : loading ports of rail freights or other . ra ‘except as - 64 oe: Agpentie: ask to by two-thirds ‘of the beirtlea” and thereafter - shown in tariffs. Two-thirds of the members have bound all the members to perform the equalization absorption rules. ; 7 TH eee nd ak The issues are ‘whether (i) past approval should be withdrawn and disapproval substituted as authorized by Section 15 because of the eight reasons presented, (ii): misdemeanors should be found for violation of section 16, or (iii) ‘unlawful ac halted for violation of sec- tion 17, or (iv) ri vie awean for violation of section | -18(b):. . ‘A. Stockton’s exceptions: 1, The ultimate conclusions ‘and findings. (a) Exceptions related to ore of agreements un- der section 15. : (1) The amount to be absorbed ‘~ a carrier - through ‘payments . equalizing inland shipping costs to Stockton. - and San Francisco is as determinable as any general | fale can-make it in view of the various situations to ‘be ‘eovered. The amount is measured “on the basis of the ~ lowest applicable” rates, must-be substantiated by “a copy of transportation. bill covering movement from point of origin”, and by a statement of “applicable interior rates . 9 and/or:the basis of equalization”. These requirements are preceded by a definition of what equalization is, such as . the definition i in Rule 2 appended to-the Examiner’s Deci- : sion’ In other respects, pages 7 and 8 of the Examiner’ 8 Decision explain adequately how the absorption is .a& sep- | arate transaction after the established ocean freight is paid, and is computed on the basis of tariff-established _ inland transportation costs. This agency’ ’s precedents cited in opposition all concerned cases where ‘the ocean freight -- . rate was subject to adjustment depending on inland costs. + Here aie’ is a separate payment in vesponied to shipper application after objectively establishing inland costs and a public. record is kept of all payments. The rule and computation of all amounts are known to everyone. No. detriment to. commerce nor contrariety with public inter- est has been proven. | (2) For’ the reasons given above sible the amount is ascertainable and known, the payments pursuant, to the rule are equally easy to establish “on the basis | ’ of the lowest applicable common carrier or contract car- _. rier rates” (or “lowest applicable rates” under the Pacific/ Indonesia rule) and: may not exceed “35 .percent, of the ocean freight”. An established trade practice was shown .. involving inspection of the shipper’s freight, bill ‘showing the amount actually paid to the inland carrier. From such amount the calculated cost of shipment to Stockton “is subtracted and the difference is paid. Variations are reflected in appropriate revisions, as described by the _.Examiner. The determination of the “lowest” amount was ne" shown in some cases to be difficult, or complicated, but not. impossible. Complainant . illustrated these circum- stances, but never “showed -exactly how ‘discrimination. between shippers and exporters resulted from the diffi- culties or complexities, and no discriminatien is discerned ‘from «inspecting the record, Detriment to commer¢e or contrariety with. public interest are -pot proven by. the fact of difficulty or complexity alone. (3) The freight that would “naturally” pass through’ _- Stockton mostly would be freight that exporters could send to Stockton, cheaper than to ahy other port since ocean freight rates are the same as from San Francisco; _ consequently, “naturally” is taken to be a euphemism for more cheaply or at less cost. Use of Stockton is - unquestionably discouraged or decreased if any economic . s 66 - ‘merce or contrariety with public interest is shown by these facts. ee or ” .% Lg ea neat : . Appendix . so 5; 69 : | (7) Caytiers serving Stockton are deprived of -Stockton } oe cargo as a result of the absorption of the excess inland : ee freight to San Franeiseo over Stockton, but, equally,. car- ) riers serving San Francisco would be deprived of cargo - under any other arrangement, and Stockton has not estab- lished any superior right to offset the.conveniences of the shipping public and carriers. No detriment to commerce or | contrariety with public interest is shown by these facts. | (8). Concealment of improper practices by the rule pre- supposes the existence of improper practices being eon- cealed, but none was proven. All that was produced were 3 speculative possibilities and testimony of what one witness called “improper practices”. Opinions are not proof, There ‘has been no adjudication of the illegality asserted by the opinions, even assuming the rule itself were proven inevit- _ ably to cause illegal conduct. If conduct is shown to be illegal, it will have to’be punished by some other means than - invalidation of the rule which will harm all carriers follow- ing the rule, but leave the guilty party unpunished. The exceptions related to section 15 should be overruled. (b) Exceptions related to violations of section 16. (1) The determination of the correct amount of the equal- - ization payment under the rules was found as a practical . _ matter to be possible and no individual carrier’s guilt in _cheating. on computations was proven. Complainant, by in- ° ferencé and argument, has only sought to ‘prove ‘that “it - leaves the door open to undue - preference and prejudice between shippers” and has argued that the possibility is inevitable. Complainant treats the rules. themselves as the matefactor. (See par. XIII, subparagraphs 3 and 4,-Com- ' nea plaint.) Section 16 applies to common carriers either alone or in conjunction with any other person directly or in- directly, and the -prohibited acts in specific instances by named persons must be proven to establish-a misdemeanor. ‘ 5 ies ei es : ® TEENS ARN NIT ENE CTSNET SR A st aR aS iti Lomas id nisi one Sedan bee 70 Appendiz : -,No such acts have been linked up with any respondent on - this record. If the instances: involving the raisin growers, or truckers using their own trucks,’ or citrus fruit shippers are thought to prove misdemeanors, the testimony without - documentary proof in this record is inadequate. We should have: exhibits showing similar transactions and disparate ; treatment deviating from what the rule purports to do. (2) For the same reasons the testimony regarding differ- : ent treatment of shippers was inadequate because not con- a nected with«any instances of specific wrongdoing. (3) The charges that i improper equalization practices are “concealed” or that the rule serves as a “cloak” for im- ‘> _ proper practices are innuendoes and equally faulty as sub- ’ stitutes for proof of misdemeanors. 3 - No violation of any provision of section 16 has been , een. and the exceptions related thereto should be over- (e) Exceptions related to vidistuna of section 17. Under the first paragraph of section 17, complainant, after stating it is “in competition as a port and a terminal with San Francisco . . .”‘(Complaint, par. XII), alleges the rule causes “charging and collecting . . . rates and charges that. are unjustly discriminatory between shippers and ; port .” (Complaint, par. XII (5)). The eneending repart answers, first, on precedent such — payments were authprized in Beaumont Port Commission’ v. Seatrain Lines, 2 USMC 699 ( 1943) and, second, on . definition the “natural” flow. of everseas traffic from the San Joaquin Valley has always been through -the Golden Gate. Neither precedent nor definition, however, explains why the standards of the statute are not disregarded by charging the same ocean transportation rates from both ports, ‘and ‘then by paying those shippérs who might other- . wise choose — a part of their inland semgeenine Appendix | 71 cost as an- inducement to choose San Francisco instead. There is no doubt Stockton is going to be ‘discriminated - against by this practice and is entitled to a reasonable ex- planation of why any discrimination is or is not unjust other than that the’ act has been done before in Texas. or that, before Stockton Spent its money for a port, traffic went _ ’ through the Golden Gate anyway, and that traffic is just as - “naturally tributary” to San Francisco as to Stockton. Stockton makes the very reasonable and compelling argu- ment that if a port invests millions of dollars in develop- ment largely with public money, it is entitled to all the cargo that may be sent.to the port cheaper than to any other port. Certain formulas using constructive mileages to delineate areas are used to establish inland transportation costs. The cargo that may be sent to the port easier than. to, any other | port is- then called local tributary traffic, as I understand - the argument. Stockton says other ports may not. take away this local tributary traffic, nor take away the advantages of getting cargo to Stockton by equalization paynients to ship- pers. My answer is Stockton has no such rights by virtue of - expenditures or the existence of a “natural” flow or local tributary traffic and, absent such rights, the discrimination induced by the carriers’ refunds eas exercised by shippers is not unjust: The justification for public investment in port construc- tion comes before, not after, the investment. The investment depends on commercial potentialities, not on future rights. -. Once made; the investment does not thereafter create legal ‘Tights to.a flow of business or entitle anyone to anything, but only creates opportunities to exploit. The only creator of opportunity or business values now claimed by Stockton as a matter of right or entitlement is the peculiarity of the same ocean freight rates from Stockton as from San Fran- A Vs — He ages —— Appendiz - _eiseo in spite of ‘longer travel time and distances. The peculiarity of such rates from Stockton: ‘was created by the carriers, not by Stockton. It is not unjust.that the rate | equality is eliminated by the absorption of partial inland mane transporting costs because the carriers have only eliminated what they created in the first place. Nothing.is taken away that Stockton was entitled to, such as values it created. The consequences to public investment im ports are the conse- ba quences of past decisions to locate a port where ‘business potentialities may never be fully realized rather than by denial of rights resulting in unjust discrimination. - — Natural flow of traffic and local tributary traffic argu- _. ments are equally unfounded, being based on a supposition — of vested: rights to traffic*based on mileages to ports regard- less of economic considerations. Such rights have no‘rela- | tion to commerce which, ‘as I see it, may not exclude mone- tary factors. Shipper choices and port and carrier benefits depend on savings. to shippers. There is no such thing as a local tributary measure based on. mileage formulas alone translated into rights to certain business regardless . of cost. A local tributary measure must be related to trans- portation costs and there is no unjustness i in offering ship- pers a saving in ghoosing one port over another, the _ geography of this case being what ad is, as long as all: are treated equally. © ; There is no unjust discrimination between shippers and ports, and the exception as to.a violation: of the first para- graph of section 17 should be overruled. No consequence of the rule on the absorption of part of inland freight costs relates to a regulation or practice con- nected with the receiving, handling, storing, ‘or delivering of property within the meaning of the second paragraph of section 17. Beaumont Port Com’n v. Seatrain Lines, 3 FMB = * a devedle aes 73 556 (1951). Neither the payment to the digete sacelasia by inland freight nor a reduction in rates-involves receiv-_ ing, handling, or storing of property, but involves trans-. portation. The exception as to a violation of the. second _ paragraph of section 17 should be- ‘overruled. — | (d). Exceptions related. to’ violations of section. 18(b) ( 1). (1) The amount of the payment was found above to be determinable from a reading of the rule and this is all that ‘section. 18(b)(1) requires. Section 18(b)(1) requires filing only of “rates and charges .. . for transportation to and from United States ports and foreign ports and hpricot all points on its own route . (2) Determination of ounces: while difficult, is pos- . sible. The objective of the rule and the guiding measurés are stated’ and testimony disclosed précisely how payments were calculated in ‘given instances. The unworkability of - . the rule was not proven. Three situations were alleged where payments may not have followed the rule, but there was*no specific evidence. As noted earlier, if specific in- stances of. discriminatory treatment or dishonesty in the — application of the rule are shown, adjudication and punish-— ment, if guilt is found, may be undertaken in separate Pro- ceédings. The exceptions related to section 18(b) o should be overruled. : ‘ 2. The statements: regarding geogenphiteal loeation. The Examiner’s statements regarding the geographical location of Stockton and San Francisco are that we are ‘dealing “with a single port as against another port in the same geographical area—in fact in the same harbor com- plex” and that “. . . both ports . ... may be described as San ' Francisco Bay urls .. .”. Stockton is up the Sacramento . . . Appendiz Sel River and a long way from San Francisco Bay. The state- ment may be inaccurate, but the entire statement conclud- ing with “Stockton simply does not exist as an ocean port separate from the Golden Gate” serves the useful purpose of highlighting the dominating geographical fact of this ease, and of recognizing the geographical fact which pre- vents Stockton from having superior rights over San Fran- cisco. The fact is that, to serve Stockton once, a carrier — 3 must zo through’ the Golden Gate and pass San Francisco . - at least twice. If Stockton is served, so inevitably is San Francisco. Both carrier. and shipper efficiency result by one. stop and a shorter ocean journey. The total journey by land _ and sea is the same for the shipper in either case. The port in this journey at which commerce is best served'on the facts of this case is, partly at least, where there is.a con- centration of services, particularly if it is a large port that has to be passed i in any event. Arguments 9 “hatural”’. flow of commerce or tributary territory prove little because 4 success of the arguments depends on from where you meas-— uré the flow. I understand the Examiner, to be saying in effect that detriments to commerce have to take this domi- nating fact into consideration, and the measuring point for territory “naturally” tributary or the point where the “nat-_ ural” flow ends is not Stockton, but the Golden Gate. Unless _ carriers and shippers can avoid San Francisco by going to Los Angeles or somewhere else on the Pacific Coast, they should be able to make the most efficient arrangements pos- _ sible to get cargo past the Golden Gate. Any inaccuracy in | the statement does not negative the eorrectness of the essen- tial point. The second exception should be overruled. 3. The statements regarding geographical relationships. The statement regarding Texas City, Houston, Galveston, - ‘ and Beaumont, Texas, is appropriate because ships serving - Appendix. , : 15 Texas City and Houston must pass Galveston coming in or going out to sea or may avoid Galveston by. going to Beaumont north’ up the Gulf Coast to. obtain inland ship- ments. The comparison with San Francisco and Galveston . and Beaumont and Los Angeles is‘accurate. The third ex- ~ _ ception should be. overruled - 4, The statement regarding naturally tributary tétkitory. The fourth exception should be overruled for the reasons given in 2 above. : 5. The statement that existing decisions determine dis- approval. : The existing decistean h d that Beaumont, Pei not. being “within the Galveston Bay group” and. Texas City being in such group, a carrier might compete for traffic by means of an absorption of inland freight without violating the law because traffic through Beaumont: was not “natu- . rally tributary to.Texas: City” which’ was served by the absorbing carrier. Beaumont Port Commission-v. Seatrain e Lines, Inc.; 2 USMC 699 ( 1943). The precedent i is applicable and supports: the ruling in 3 above. The ane en should be overruled. 6. .The conclusion that the rules comply without filing . inland rates, The conclusion that the filed equalization rules sands with section 18(b)(1) without filing any inland carrier rates . - is supported by the reasoning that the amount of the pay- ment is determinable from a reading of the rule. Section 18(b) ( 1): applies to “the rates and charges” of a carrier " “for transportation to and from United States ports and _ foreign ports”. Respondents fixed their ocean rates and the — same rate applies from every terminal port. The equaliza- tion is another’ transaction’ involving a ‘payment based on inland costs pursuant to a prescribed formula. The sixth exception should be overruled. "16 Sete : domain. ; 7. The ‘sueidin that the record does’ not ‘support ° findings. | ; For ‘the Meare reasons ya er dees a « finding and conclusion that as a practical matter the determination ; : of nent is possible. The seventh exception should be overruled. * — : « §. The-statement that the rules do not disedurage use. of Stockton. , The Examiner’s statements that the ssiplication of the equalization rules does not discourage use of Stockton or divert traffic from its natural flow are not determinative of the issues. The rules undoubtedly discoutage.use of Stock- ton by those nearer Stockton who have lower inland trans- portation costs to a port, but can ship just 'as cheaply from. San Francisco as a result of the rule. Such discouragement, however, does not establish violation of a y laws giving Stockton any protected rights to be used instead of San Francisco. Diversion of traffic from “natural flow” supposes a predetermined natural flow which does not exist. ‘The - direction of traffic is determined from moment to moment and operates in the future as-each shipper decides where his self-interest i is best served. The so-called-natural flow is something only seen in retrospect as the collective results of decisions, not a preordained condition that dictates rights to have business. Complainant’s reliance on diversion of a natural flow as a ‘Violation of rights apart from, other mal- practices is misplaced on the facts of this case, regardless of the Examiner’ ~ statements. The eighth exception should be overruled. ‘ . 9. The statement that Stockton does not provide ade- quate service. ‘The facts showed that at Stockton certain general cargo operations were inconvenient and involved added expense, ee liga” 2 | 7 transit and berthing difficulties exist, and government. in- | spections required for export were not available, substan- tiating -the statement that Stockton does not provide ade- quate service for some general cargo shipments. The uneco- nomic nature of cargo available at. Stocktén:is shown by the fact that the commodities: affected by equalization rules average 40 tons per shipment, and in 1961 71% of all-‘Trans- Pacific Conference ships calling at Stockton loaded asilittle -as from 0 to 50 tons of general cargo per departure (Exh. 52). The commodities concerned are largely condensed milk, _ raisins, instant coffee; hides,.and lumber (Exh. 11). Wit- "nesses agreed there was not a cargo to support regu- lar berth service. Ps - &, The ninth exception nia be oveevaied, .10., The statement that the rules are’ not discriminatory. ) The statement that the rules and practices are not dis- criminatory is substantiated by. the reasoning in support of the conclusion there has been no violation of section 16. ~ The tenth exception should be overruled, ; | ‘11. The statement that there is no discrimination be- tween shippers. en ‘The eleventh exception concerning unjust discrimination * «should be overruled for. the reasons given in 10 preceding. 12. The statements kaaanthacs ‘the _— of oe ization. - The statements ene a ding ‘the profitability of on tion are not determinative of any issuées, The ¢laims Te- garding “dissipation” of carrier revenues as having an _ adverse; effect on commerce were not substantiated by fact any more than the Examiner’s statement. abiess? . The twelfth exception should be overruled. _ iat 13. The statement that the rules no ‘not facilitate mal- | atest ~ aan 78 rE na Pam ; i _/* Bach malpractice occurring as a result of the rules must | be adjudicated by proof of specific acts with guilt individu-_ _ ally assessed, Any malpractices are the-results of actions "by people, not the rules. The rules equally permit legitimate practices. If the rules facilitate malpractices, the perpetra- tors of the malpractice, not the enactors of the rule, ‘must’ be blamed,, The diversion-of-cargo ‘part of the statement excepted to” has been discussed above and ruled not con- - trolling. . : sat: e ° "The thirteenth exception should be: siaeneiil a a 14, The. Badings and qeneeecne with respect, to citrus "trait. | | Bey sites é k . e \ : \ ‘ - ° o > “ os & >. 2 t “ i o ra : ‘ Y . 7% * oo be 1 % ; 2 A/S Dén Norske Afrika—Og Searels Sale A/S Tonsberg — ‘A/S Tankfart I~ | TL Drm ieee Te Se es } - A/S Tankfart V , ¢ A/S TankfartIV’ - | ae ig ca Saf Mires Tankfart VI a wie ee, Be (BARBER LINE) © ee, ; ee ae FERN LINES. | Fearnley & Eger and ’ a et A.F. Klaveness & Co., A/S are _-Gkibsaktieselskapet Varild ws ay Gara Skibsaktieselskapet Marina Z eee Appendia Aktieselskabet Glittre - Dampskibsenteressentskabet Garonne a Skibsaktieselskapet Standard — ‘ * Fearnley & Eger sey samen * A/A/S | Skibsaktieselskapet Sangstad © Skibsaktieselskapet Solstad . . Skibsaktieselskapet Siljestad Dampskibsaktieselskabet International . §kibsaktieselskapet Mandeville 'Skibsaktieselskapet Goodwill « Universal Trading & Shipping Agency Se KAWASAKI KISEN KAISHA, LTD. | PACIFIC FAR: EAST LINE, INC. P& O ORIENT LINES ae SEATED STEAMSHIP COMPANY ae sini od Winn /tininitlis estleeais AMERICAN PRESIDENT LINES, LTD. fat P.N. DJAKARTA-LLOYD. BREA Tn sh i s & ISTHMIAN LINES, INC. = %s KLAVENESS LINE __. Skibsaktieselskapet Sangstad i a le Skibsaktieselskapet Solstad Bee Skibsaktieselskapet Siljestad Dampskibsaktieselskabet International Skibsaktieselskapet Mandeville Skibsaktieselskapet Goodwill - Universal Trading & Shipping Agency Aksjeselskap DAMPSKIBSSELSKABET AF 1912 AKTIESELSKAB — ' AKTIESELSKABET DAMPSKIBSSELSKABET SVENBORG se (AP. MOLLER-MAERSK ee FERN LINES Fearnley & Eger and A.F. Klaveness & Co., A/S - Skibsaktieselskapet Varild Skibsaktieselskapet Marina . Aktieselskabet Glittre © ~ = fs Rot ie et ee ae ~ : acai Re a Pe NE Garonne Skibsaktieselskapet Standard Fearnley & Eger Befrgtningatoetaing A/A/S Skibsaktieselskapet Sangstad =, Skibsaktieselskapet Solstad Skibsaktieselskapet Siljestad- Dampskibsaktieselskabet International + +Skibsaktieselskapet Mandeville - __ Skibsaktieselskapet Goodwill Universal Trading & Shipping Agency Akjeselskap ue PACIFIC FAR EA®T LINE, INC. WILHELMSENS DAMPSKIBSAKTIESELSK AB A/S Den Norske Afrika—Og ee A/S Tonsberg A/S Tankfart I A/S Tankfart V bones A/S Tankfart IV ‘ A/S Tankfart VI : (BARBER LINE) tare ? ° --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385603_0382%3A2. Public record. Not legal advice.