going vessels or vice versa and hence are "transshipped" within the meaning of the Interstate Commerce Act. That the port's operations are subject to the regulatory jurisdiction of this agency seems clear, and our assertion of jurisdiction was undertaken only after consulting with the Federal Maritime Commission and obtaining their concurrence as to our jurisdiction. In view of the foregoing, we do not favor enactment of H.R. 9128. If we can be of further assistance, we would like to hear from you. Sincerely yours, Hon. EDWARD A. GARMATZ, GEORGE M. STAFFORD, Chairman. DEPARTMENT OF STATE, Washington, D.C., November 26, 1971. Chairman, Committee on Merchant Marine and Fisheries, U.S. House of Representatives, Washington, D.C. DEAR MR. CHAIRMAN: The Secretary has asked me to reply to your letter of June 16, 1971 requesting comment on H.R. 9128, a bill "To confer exclusive jurisdiction on the Federal Maritime Commission over certain movements by barge in foreign commerce". The Department has no objection to the proposed legislation from the standpoint of foreign policy and would defer to the views of other government agencies more directly concerned. The Office of Management and Budget advises that from the standpoint of the Administration's program there is no objection to the submission of this report, Sincerely yours, DAVID M. ABSHIRE, Assistant Secretary for Congressional Relations, GENERAL COUNSEL OF THE TREASURY, Hon. EDWARD A. GARMATZ, Chairman, Committee on Merchant Marine and Fisheries, U.S. House of Representatives, Washington, D.C. DEAR MR. CHAIRMAN: Reference is made to your request for the views of this Department on H.R. 9128, "To confer exclusive jurisdiction on the Federal Maritime Commission over certain movements of merchandise by barge in foreign commerce." Section 27 of the Merchant Marine Act, 1920 (46 U.S.C. 883), with exceptions not here relevant, prohibits the transportation of merchandise between points embraced within the coastwise laws in vessels which are not entitled to engage in the coastwise trade. Thus, regardless of the ultimate origin or destination of merchandise, it may not be transported in nonentitled vessels between its coastwise point of transshipment and its coastwise point of lading and unlading. The bill would provide for exclusive jurisdiction by the Federal Maritime Commission over "all transportation of merchandise by barge between ports in the United States" when the barge is used to transport merchandise "as a service substituted in lieu of a direct vessel call by a common carrier by water in foreign commerce," which we take to mean in lieu of a call by the importing or exporting vessel. Pursuant to section 102 of Reorganization Plan No. 3 of 1946 (60 Stat. 1097), the regulation of vessels in the coasting trade (with which section 27 of the Merchant Marine Act, 1920, is concerned) was assigned to the Commissioner of Customs. Because of the ambiguity of H.R. 9128, the Treasury is unable to determine whether the bill would affect responsibilities of this Department under section 27 of the Merchant Marine Act, 1920, in respect of barges employed in the carriage of imported cargo or cargo for export, where the barges are being used in lieu of the importing or exporting vessel. If the intent of the bill is to transfer to the Federal Maritime Commission Treasury's functions under section 27 to the extent that barges are affected, the Department would oppose enactment, for there is no apparent reason why section 27 matters with respect to barges should be transferred to the Federal Maritime Commission, while section 27 functions with respect to other types of vessels continue to be performed by the Treasury Department. If. on the other hand, the bill is not intended to affect such Treasury functions, the Department would not favor its enactment, for it is phrased in language so general that, in order to determine whether the Federal Maritime Commission or the Bureau of Customs has jurisdiction, there would first have to be a determination of whether barge service is "in lieu of a direct vessel call bya common carrier." Difficulties in such determinations would arise at locations which are accessible to importing or exporting vessels and would result in time consuming and costly investigations. The Treasury Department would not oppose a bill to confer appropriate jurisdiction on the Federal Maritime Commission over matters relating to transportation of merchandise by barge between ports in the United States, if it is worded in terms specific enough to leave functions of this Department undisturbed. The Treasury Department assumes that your Committee will obtain the views of other agencies, such as the Departments of Defense, Commerce, and Transportation, which may have an interest in the subject matter of H.R. 9128. The Department has been advised by the Office of Management and Budget that there is no objection from the standpoint of the Administration's program to the submission of this report to your Committee. Sincerely yours, SAMUEL R. PIERCE, Jr., Mr. DINGELL. Containerization has resulted in difficulties for many of our smaller ports in attracting foreign trade, as container ships are generally forced to limit their calls to a few large ports on each coast. We understand that the Port of Sacramento, one of our smaller ports, has pioneered a unique method of attracting foreign trade by means of a feeder system to and from the San Francisco Bay area. We further understand that this feeder system has caused some confusion as to whether the domestic water transportation segment of such cargo moving in our foreign trade should be subject to the regulatory jurisdiction of the Federal Maritime Commission or the Interstate Commerce Commission. The Chair wishes to note that this is considered a problem of some importance to our international trade. The bills before us this morning are addressed to this problem, and would facilitate foreign trade through smaller ports of the United States by conferring exclusive regulatory jurisdiction on the Federal Maritime Commission. We look forward to receiving the views of the various interested parties, including the two regulatory agencies concerned with this problem. The Chair will recognize at this time a member of the committee, Mr. Robert Leggett. STATEMENT OF HON. ROBERT L. LEGGETT, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA Mr. LEGGETT. Thank you very much, Mr. Chairman. I would ask unanimous consent to insert in the record my formal statement at this point, and I will not go over it word by word. I am going to yield, of course, to my senior colleague and coauthor of this legislation, Mr. John E. Moss, to explain in general terms the nature of the legislation and to introduce the director of our port authority and the counsel for the port authority. Mr. DINGELL. Thank you very much. At this point, your full statement will be inserted in the record. (The statement referred to follows:) STATEMENT OF CONGRESSMAN ROBERT L. LEGGETT Mr. Chairman, I am pleased to appear before you this morning to support my bill, H.R. 9128 and an identical measure, H.R. 9614, by my colleague in the California delegation, Congressman John Moss. The proposed legislation would confer exclusive jurisdiction on the Federal Maritime Commission over transportation of merchandise between ports in the United States and furnished as a service substituted in lieu of a direct vessel call by a common carrier by water. The need for this legislation arises from the fact that many of our smaller ports have been experiencing difficulties in attracting general cargo. The fast growing technique of containerization is accentuating that problem. Operating costs and other factors have forced container ship owners to limit their calls to a few larger ports on each coast. The consequences of this can spell disaster for the small ports. It was in order to adapt to these new realities of ocean transportation that the Port of Sacramento conceived a unique method of attracting general cargo which it designated as its Container Barge Service. This new service involves the movement of cargo in containers placed aboard a barge leased by the Port of Sacramento and moved by tug between Sacramento and the San Francisco Bay area ports, a distance of approximately 80 miles. This feeder service is offered to carriers only as a substitute for a direct vessel call. If the large ocean going vessel were to call at Sacramento, the cargo movement would be under the jurisdiction of the Federal Maritime Commission. Since both ports and the ocean carrier are under the jurisdiction of the Federal Maritime Commission, it would seem a needless duplication to have a second Federal agency, the Interstate Commerce Commission, exercising regulatory authority. I introduced H.R. 9128 after a review of the facts convinced me that such legislation was needed to resolve a jurisdictional “gray" area between the two Federal agencies. I am pleased to note that the Director of the Port of Sacramento, Mr. Melvin Shore, will testify before you this morning. Mr. Shore conceived the Container Barge Service and has been responsible for its successful operation. As such there is no one more qualified to explain it and to answer any questions the Committee may have. Thank you. Mr. DINGELL. The Chair is now most pleased to welcome a very distinguished friend, a very distinguished and able Member of this Congress, the Honorable John E. Moss, of California. Mr. Moss. STATEMENT OF HON. JOHN E. MOSS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA Mr. Moss. Mr. Chairman, first I want to express my personal appreciation to you for arranging these hearings at this time. I think the legislation before the committee is extremely important. I am hopeful that we can get favorable action on it. I have a brief statement that I would like to make at this time. The legislation before you would confer exclusive jurisdiction on the Federal Maritime Commission over certain movements by barge between ports in the United States furnished as a service substituted in lieu of a direct vessel call. Members of this committee are well aware of the changes which development of the technique of cargo containerization has brought to the field of oceanborne commerce. Among other things, it has necessitated construction of truly gigantic container ships. Because these ships are expensive to construct and operate, they tend to limit their calls to the larger ports. As a result, the small ports have watched general cargo originating in, or destined for their service areas bypass them and move by other modes of transportation to or from the larger ports where the container ships dock. As a small, but very efficient port faced with this very problem, the port of Sacramento responded by initiating a novel method of accommodating itself to these new realities of ocean commerce. It inaugurated a waterborne feeder service called its container barge service. Under this service concept, which is offered to carriers only, cargo is moved between Sacramento and San Francisco Bay area ports on containers which are placed aboard a barge leased by the port of Sacramento. The cargo moves in or out of Sacramento on a through-ocean bill of lading. The port of Sacramento serves as agent for the prime carrier. From the beginning of the container barge service, the port of Sacramento was convinced that the operation was subject to the jurisdiction of the Federal Maritime Commission. It filed a tariff covering this service with that agency nearly 2 years ago. However, the Interstate Commerce Commission soon expressed the view that the movement might be subject to its regulatory control. The legislation before you today would clear up the ambiguity of dual regulation by conferring the exclusive jurisdiction of the Federal Maritime Commission over the service. I feel that there are compelling reasons for the enactment of this legislation. For one thing, the port terminals at each end of the movement are subject to FMC jurisdiction. If the same cargo moved between the two ports on the same deep sea vessel, the operation would clearly be under the Federal Maritime Commission regulatory jurisdiction. Hence it would seem only logical where a barge is substituted for a direct vessel call that the movement should receive the same regulatory treatment. Mr. Chairman, I strongly urge the approval of the legislation, and with the Chair's permission, I would like at this time to introduce the port director of the port of Sacramento, a port which is physically located in Congressman Leggett's district, formerly in mine. It is one in which I have a strong interest, and it has been ably guided for quite a number of years by Mr. Shore. Mr. DINGELL. I am certain the Chair and the committee would be most pleased to have Mr. Shore join you at the witness table, and we would be most pleased to hear his testimony. STATEMENT OF MELVIN SHORE, PORT DIRECTOR AND CHIEF ENGINEER, PORT OF SACRAMENTO, SACRAMENTO, CALIF. Mr. SHORE. Congressman Moss and Mr. Chairman, the Port of Sacramento is what is commonly referred to as one of the smaller ports. As such it has been faced with the problem of what to do with containerization. As the ships have continued to get larger and larger, the opportunity to bypass the smaller ports has been magnified. Much of this, Mr. Chairman, is covered in my written statement, copies of which have been made available to you, but if I may, I would like to summarize it for you. Mr. DINGELL. At this point, your full statement in written form will be inserted in the record. (The statement referred to follows:) STATEMENT OF MELVIN SHORE, DIRECTOR, PORT OF SACRAMENTO My name is Melvin Shore. I am the Director of the Port of Sacramento, a political subdivision of the State of California. I appear before you today to urge approval of H.R. 9128 and 9614. These bills address themselves to the solution of a problem faced by the smaller ports of this country. HISTORY OF THE PROBLEM A transportation revolution has been in the making this last decade with the advent of containerization. This transportation method has grown at a speed far surpassing that of the expectations of many. The economics of transporting containers across the oceans has demanded that the vessels be built larger and larger. With this, of course, the investment in the vessels has grown. The logical outgrowth of this trend is the need for the steamship companies to maximize their time at sea-the time when the vessel is earning its way. This in turn has led to the need to restrict the number of ports of call that the vessels can make which in turn has created the problem for the smaller ports. The smaller ports invariably are the ones to be bypassed in this changing transportation system. AN INNOVATIVE SOLUTION The Port of Sacramento has pioneered a solution to this problem. It has quite literally moved its wharves to the ship while the latter is at a San Francisco Bay port. This is accomplished with the use of a barge, operated by the Port itself. As a port, we much prefer to see the vessel call directly. Where this is not economically feasible, we make it possible for the ship to continue to serve its customers in our area through the medium of our Container Barge Service (CBS). The Port's barge moves the containers between the vessel at its San Francisco Bay port and the Port of Sacramento. This service is ONLY offered to the vessel in lieu of their direct call to load or unload cargoes at the Port of Sacramento. The service is covered by a tariff and charges are collected from the steamship company who finds it economical to pay our charges in lieu of sending its vessel for the volumes of cargoes offered. Obviously, should a sufficient volume of cargo be offered, the vessel will call directly. THE DILEMMA The dilemma presented to us is the question of which regulatory agency will have jurisdiction over our service. It is our belief that the service comes under the jurisdiction of the Federal Maritime Commission (FMC) and accordingly we filed our tariff with them when the service was started. Notwithstanding this, the Interstate Commerce Commission (ICC) has implied that they have jurisdiction on the theory that the movement of the container from the vessel to the barge constitutes a transshipment as they themselves (the ICC) have chosen to define the term. We submit that with the changing transportation methods, the Congress itself will want to define the term and not leave it to the enforcing agency to define the limits of its jurisdiction. WHY FMC? First and foremost, it must be recognized that we have addressed ourselves here exclusively to a water-borne feeder system that would be in lieu of a direct vessel call. Except for the economics of the situation, the cargo would move over the same waterway in an ocean vessel that would place the entire movement clearly under the jurisdiction of the FMC. It should be noted that the ocean rate, over which the FMC already has jurisdiction, will include the barge movement charge. In addition, the feeder system is being run between two ports that are under FMC jurisdiction; and by the port that is already under FMC jurisdiction in its other activities. It seems only logical, therefore, that the jurisdiction over waterborne feeder systems that are run in lieu of direct calls by vessels that would otherwise be under the jurisdiction of the FMC should be vested in that agency. To accomplish this, we recommend that the bills be amended by striking "in foreign commerce" and substituting therefore "as defined in Section 1, Shipping Act 1916 |