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Comment: Because of the many amendments to the Canal Zone Code, and lack of availability of all of the sections thereof in one document, it is certainly understandable that Mr. Chandler's office in preparing the letter, may possibly have overlooked the new section 245 of the Canal Zone Code, as amended by Public Law 808, 80th Congress, which reads in part:

***Within the meaning of the laws of the United States relating to venue in civil actions, the corporation shall be deemed to be an inhabitant and resident both of the southern judicial district of New York and of the Canal Zone."

Thus it would appear at least that there is room for legislative direction as to where venue might lie, since the corporation resides in both judicial districts. 2. Propriety of placing before a court.-The letter points out that courts are constituted to handle transactions for which there are definite standards either by law or regulations. He adds that no criteria are prescribed for the exercise by the court of appeals of the jurisdiction purportedly to be conferred upon it by the proviso, beyond what the letter described as "vague” terms, i. e., “unlawfully withheld" and "unreasonably delayed." He described these as too uncertain for court action.

Comment: Actually, the terms cited by the letter are lifted bodily from the Administrative Procedure Act. The Administrative Procedure Act provides for a right of court review of Government agency action without such action necessarily having been judicial or quasi-judicial in character.

Section 10 provides that "except so far as (1) statutes preclude judicial review or (2) agency action is by law committed to agency discretion—

"(a) RIGHT OF REVIEW.—Any person suffering legal wrong because of any agency action or adversely affected or aggrieved by such action within the meaning of any relevant statute, shall be entitled to judicial review thereof. "(b) FORM AND VENUE OF ACTION.-The form of proceeding for judicial review shall be any special statutory review proceeding relevant to the subject matter in any court specified by statute or, in the absence or inadequacy thereof, any applicable form of legal action * * * in any court of competent jurisdiction ***

"(c) REVIEW ABLE ACTS.-Every agency action made reviewable by statute and every final agency action for which there is no other adequate remedy in any court shall be subject to judicial review. * * *

"(e) SCOPE OF REVIEW.- -So far as necessary to decision and where presented the reviewing court shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of any agency action. It shall (A) compel agency action unlawfully withheld or unreasonably delayed, (B) hold unlawful and set aside agency action, findings, and conclusions found to be (1) arbitrary, capricious, *****

3. Lack of adequate record.-The letter states that the court of appeals acts only on a record either of a proceeding in a district court or an administrative agency. "The provision lacks any provision for an appropriate record for consideration of a court of appeals," the letter states.

Comment: This objection does not appear to be valid. Two types of matters would come before the court under such a provision. The first might be an appeal from a decision of the corporation, establishing a particular tolls rate, after holding a hearing and making an adjudication. A court review of this kind of an agency act is clearly provided for in section 10 (c) of the Administrative Procedure Act. (See italicized portion of sec. 10 (c), above).

The second might be an appeal from a refusal of the Panama Canal Company to even so much as hold a hearing. In such a case, the appeal would be from agency action "unlawfully withheld" as in section 10 (e), quoted above. In the case of this second type of appeal, it certainly may be said, as Mr. Chandler's letter alleges, that there would not be as complete a record nor the same kind of a record as one resulting from a tolls hearing. The record would presumably be constituted by a request of an interested party for a hearing and the failure of the Company to hold such a hearing. If this were taken to the appellate court in the first instance, as the bill proposes, certainly the time of the Government and the toll payers would be conserved, since an appeal to that court would probably result if it were handled in the first instance in the district rather than appellate court. We therefore believe that the language of the bill as it now stands is proper for either type of appeal.

However, if after further discussion with Mr. Chandler's office, the committee feels that there would not be a sufficient record for an appellate court in the second type of appeal, then we would be agreeable to changing section 9 of the

bill so as to make the last sentence thereof read as follows: "Provided, however, That the Court of Appeals of the Second Circuit shall have exclusive jurisdiction to review the acts of the corporation under this section and the District Court for the Southern Judicial District of New York shall have exclusive jurisdiction to compel corporate action unlawfully withheld or unreasonably delayed."

This would have the effect of handling the first type of court review in the appellate court and the second in the district court. We do not believe such a change is necessary, but would be agreeable to it if the committee and Mr. Chandler's office felt it might facilitate administration of the section.

We are grateful for Mr. Chandler's review of this portion of the bill. If, in attempting to answer his comments, we have overlooked anything, we do hope it can be brought to our attention, so that we may have a further opportunity to offer suggestions. Our desire is to submit workable legislation. If you desire to submit the information in this letter to Mr. Chandler's office for review and comment, it certainly would be most satisfactory with us, and to that end we are enclosing three extra copies of this letter.

Very truly yours,


R. E. MAYER, President.

New York, N. Y., April 3, 1956.

Chairman, Committee on Interstate and Foreign Commerce,

United States Senate, Washington, D. C.

SIR In the recent hearings conducted by your committee with respect to S. 2167, a bill to transfer the Canal Zone Government and the Panama Canal Company to the Department of Commerce, a number of references were made to the tolls litigation now pending in the Federal Court at New York (Grace Line, et al. v. Panama Canal Company). This is a suit brought by 12 leading United States-flag shipping companies to enforce their rights to lower tolls under existing law.

The Committee on Panama Canal Tolls is a committee of the plaintiffs to supervise the litigation and act as liaison between them and legal counsel.

The committee, as such, and the plaintiffs, as such, have not participated in the hearings on S. 2167 except that Mr. James Sinclair, president and general manager of Luckenbach Steamship Co., made a statement supporting the bill on behalf of that company.

If the Commerce Committee believes that the views of our committee as to existing law are relevant, reference should be made to the complaint and brief in the lawsuit. These were tendered to the Commerce Committee by Mr. Sinclair.

In his testimony General Seybold, Governor of the Canal Zone and President of the Panama Canal Company, referred several times to his thesis that under existing law the Company was warranted in charging the losses of its so-called "business operations" against tolls, as it has done.

For the reasons set forth in our brief, the existing law does not authorize this practice. Not only are we so advised by our own legal counsel, but the General Accounting Office has so ruled in its 1954 audit report, page 2.

Moreover, the GAO audit report, at page 15, indicates that the General Counsel of the Panama Canal Company has given his opinion to General Seybold to the same effect. Plaintiffs have endeavored to obtain a copy of this opinion through the discovery processes of the court, but the Panama Canal Company has vigorously resisted these efforts and at present has procured a court order staying them pending the court's rulings on preliminary jurisdictional questions. If the plaintiffs' interpretation of the GAO report is correct—and that interpretation is confirmed by the Canal Company's resistance to efforts to obtain the opinion through legal procedures-the Canal Company's practice is in defiance of the law as construed by its own legal adviser.

Because the interest of this committee, as such, is in the judicial enforcement of existing legal rights rather than in new legislation, we confine our comments to this brief statement of our position on the "business operations," which is the substantial issue in the lawsuit.

The committee would be grateful if the Commerce Committee would accept this letter for its files and include it in any publication of its hearings on S. 2167.

Very truly yours,

G. C. CHARLTON, Secretary.


New York, April 9, 1956.

Chairman, Committee on Interstate and Foreign Commerce,

United States Senate, Washington, D. C.

DEAR SENATOR MAGNUSON: Mr. Harry P. Chandler, Director, Administrative Office, United States Courts, has submitted a statement of comment upon section 411 of the Canal Zone Code as proposed to be amended by S. 2167. This letter, sent on behalf of the American Merchant Marine Institute and the Association of American Ship Owners, will discuss the points made by Mr. Chandler.

1. Venue-Second circuit.-Mr. Chandler observes that the Canal Zone is in the fifth judicial circuit, whereas the proposed section 411 subjects the rate orders of the Panama Canal Company to the United States Court of Appeals for the Second Circuit.

The Panama Canal Company is subject to suit both in the Canal Zone and in the Southern Judicial District of New York by specific provision of section 245 of the Canal Zone Code. The Southern Judicial District of New York is, of course, in the second circuit. Accordingly, the Panama Canal Company is, and its predecessor, the Panama Railroad Company, was, a frequent litigant in the second circuit.

Assuming that court review of rates should be by a court of appeals, a subject later discussed herein, either the Second or the Fifth Circuit Court of Appeals would be consistent with section 245 and would provide a court familiar with Panama Canal Company affairs. As the principal offices of most of the United States-flag shipping companies using the canal are in New York, and as the Second Circuit Court of Appeals has had the greatest experience in maritime litigation, that court is the more logical. Obviously both of these courts should not review the same rates.

2. Propriety of court review.-Mr. Chandler's statement disapproves judicial review on the ground that there are no "definite standards" to be applied other than the "vague terms 'unlawfully withheld' and 'unreasonably delayed'."

Section 412 (b) of the Canal Zone Code provides the standards which the Panama Canal Company is required to follow in prescribing tolls. Court review would insure that the Company complied with section 412 (b). It is a fact that the Company has not done so, and a suit is now pending in the District Court for Southern New York to compel it to do so.

Although Mr. Chandler speaks of the lack of a "definite standard," the provisions of section 412 (b) are notably more specific than other statutes conferring rate-making powers on administrative agencies. For instance, section 494 of title 33 of the United States Code, empowering the Army Department to prescribe tolls on bridges over navigable waters, merely requires that the tolls be "reasonable.'

Mr. Chandler also characterizes "unlawfully withheld and unreasonably delayed" as "vague terms" which are "altogether too uncertain to form a basis for court action."

This phrase was lifted bodily from section 10 (e) (A) of the Administrative Procedure Act. This section authorizes "any court of competent jurisdiction" to "compel agency action unlawfully withheld or unreasonably delayed." The draftsman of section 10 (e) (A) had only used language which codified existing judicial practice. As the Supreme Court of the United States said in Virginian Ry. v. Federation (300 U. S. 515, 551):

"It is a familiar rule that a court may exercise its equity powers or equivalent mandamus powers to compel courts, boards, or officers to act in a matter with respect to which they may have jurisdiction or authority."

There are many cases in which courts have compelled administrative agencies to act. Interstate Commerce Commission v. Humboldt Steamship Co. (224 U. S. 474), and Delaware & Hudson R. Corp. v. Williams (129 F. 2d 11 (C. A. 7th)), are illustrative. Cases to compel action by the Secretary of the Interior are especially familiar in the District of Columbia courts, e. g., Wilbur v. Krushnic (280 U. S. 306). As the opinions in these cases reveal the boards or officers ordered to act had unlawfully withheld or unreasonably delayed action; hence the adoption of that phrase in the drafting of the Administrative Procedure Act. The general principle has recently been applied in certain highly publicized cases in which the courts of the District of Columbia have ordered the State Department to grant passports-certainly a form of judicial review far beyond anything proposed here.

3. Propriety of review by a court of appeals as distinguished from a district court. The modern trend in judicial review of rate orders by administrative agencies is review by courts of appeals. Most analogous perhaps is section 505 of title 33 of the United States Code by which the courts of appeals are given jurisdiction to review rate orders made by the Department of the Army with respect to tolls on bridges over navigable waters. Rate orders by the Secretary of Agriculture, the Civil Aeronautics Board, the Federal Maritime Board, and the Federal Power Commission may be appealed directly to the courts of appeals (U. S. C., title 49, ch. 9; title 5, ch. 19A ; title 15, ch. 15B).

Similarly appeals may be taken directly to courts of appeals from decisions by the Secretary of the Treasury with respect to alcohol permits (U. S. C., title 27, sec. 204).

For fuller consideration of this subject reference is made to chapter 19A of title 5 and the report of the House Committee on the Judiciary on that statute (U. S. Congressional Service, 1950, pp. 4303 et seq.). The jurisdiction of the courts of appeals over administrative agencies is also discussed at title 5, section 1291 of United States Code Annotated.

Although it is true that rate orders of the Interstate Commerce Commission are reviewed by district courts (title 28, sec. 1336), the review is by a special court of three judges from whom an appeal may be taken as of right to the Supreme Court. For the reasons stated in the House report referred to above, direct appeals to courts of appeals, and subject to Supreme Court review by writ of certiorari, are now considered better judicial administration.

4. The question of a record.-Mr. Chandler's statement argues that there will be no record for the court of appeals. There are many answers to this argument. (a) Section 411 requires a hearing before final action by the Panama Canal Company. This requirement per se means that a record must be made, as pointed out in Clarksburg-Columbus Short Route B. Co. v. Woodring (90 F. 2d 788 (C. A. D. C.)). In the cited case the court reversed an order of the Secretary of War fixing tolls for a bridge over navigable waters. The court followed Morgan v. United States (298 U. S. 468), which defines the hearing to be held by administrative agencies in fixing rates.

(b) The "clean bill" form of S. 2167, representing suggestions made since its original introduction, declares and crystallizes existing law by providing for "an adjudication determined on the record." This phrase is borrowed from section 5 of the Administrative Procedure Act and was intended to bring into play the specific procedures of that act as well as the requirements of fundamental fairness described in the Clarksburg-Columbus and Morgan cases referred to above.

(c) The courts of appeals are quite capable of dealing with controversies in which, because there has been no hearing, there is no record. Such a situation would, or might, be presented if an aggrieved party sought to compel action “unlawfully withheld or unreasonably delayed." The procedure to be followed by courts of appeals, in the absence of a record, with respect to complaints about the Federal Communications Commission, the Secretary of Agriculture, the Federal Maritime Board, and the Atomic Energy Commission is laid down by title 5, section 1037 (b) and (c) of the United States Code.

When complaint is made that a lower court has unlawfully withheld or unreasonably delayed action, the court of appeals conducts the proceeding in accordance with its inherent powers, usually on affidavits. That this is a very common and frequent matter for courts of appeals is demonstrated inter alia by Mottolese v. Kaufman (176 F. 2d 301 (C. A. 2d)). This opinion reviews considerations applicable in this type of proceeding and, in so doing, indicates how many of them there are.

If, for any reason, the court believed that evidence should be taken and a record made, it could appoint a special master for that purpose, as was done, for instance, in National Labor Relations Board v. Giannesca (119 F. 2d 756 (C. A. 2d)). Such appointments are, however, rarely necessary, because almost always controversies of this character can be disposed of on affidavits.



President, American Merchant Marine Institute, Inc.


President, Association of American Shipowners.


Washington, D. C., April 27, 1956.

Committee on Interstate and Foreign Commerce,

United States Senate, Washington, D. C.

DEAR MR. BOURBON: I have conferred with Mr. C. Dickerman Williams of counsel for the American Merchant Marine Institute, Inc., and the Association of American Shipowners in reference to the letter of the presidents of those bodies to Senator Magnuson dated April 9, 1956, a copy of which you have kindly transmitted to me with your letter of April 12, 1956. I am also communicating with Chief Judge Charles E. Clark of the Court of Appeals for the Second Circuit which would be affected by the legislation referred to in the statement, and will try to comment on the statement after completing consideration of the questions involved with Judge Clark.

With kind regards, I am,
Sincerely yours,



UNITED STATES COURTS, Washington, D. C., May 28, 1956.


Chairman, Committee on Interstate and Foreign Commerce,

United States Senate, Washington, D. C.

DEAR SENATOR MAGNUSON: This will supplement my letter to you of April 27, 1956, concerning a letter written to you on March 30, 1956, by Mr. Robert E. Mayer, president of the Pacific American Steamship Association, apropos of my statement of March 12, 1956, in reference to a pending bill relating to the administration of the Panama Canal (S. 2167).

Without going into detail I will say that I have learned that Mr. C. Dickerman Williams, counsel for the American Merchant Marine Institute and the Association of American Ship Owners, has prepared a revised draft of the bill (S. 2167). Chief Judge Charles E. Clark, presiding judge of the Court of Appeals of the Second Circuit, has concluded that the provision which the revised bill would make for the review in that court of certain actions of the Panama Canal Company is a matter of legislative policy for the Congress. Accordingly I raise no objection to the enactment of legislation along the line of the revised bill. With kind regards, I am, Sincerely yours,


Washington, D. C., April 13, 1956.


Chairman, Senate Committee on Interstate and Foreign Commerce,

Senate Office Building, Washington, D. C. (Attention: Mr. Bourbon.)

DEAR SENATOR MAGNUSON: Enclosed are four copies of a statement on S. 2167 by the national vice president of our federation for the Panama Canal Zone, Mr. Rufus Lovelady.

Your cooperation in including this material in the hearing record on S. 2167 will be deeply appreciated.

Sincerely yours,

National President.


Mr. Chairman, my name is Rufus M. Lovelady. I am a national vice president of the American Federation of Government Employees in charge of the Canal Zone district of that federation. This statement on S. 2167, outlining in brief our position on the bill, is presented in our behalf by a member of our national office staff. My comment is limited to those sections of the bill which we consider of greatest importance to the general welfare of all employees of the Panama Canal enterprise.

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