Hon. WARREN G. MAGNUSON, AMERICAN MERCHANT MARINE INSTITUTE, INC., 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. Respectfully, FRANCIS T. GREENE, President, American Merchant Marine Institute, Inc. GEORGE W. MORGAN, President, Association of American Shipowners. Mr. A. J. Bourbon, ADMINISTRATIVE OFFICE OF THE UNITED STATES COURTS, 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, HENRY P. CHANDLER. ADMINISTRATIVE OFFICE OF THE UNITED STATES COURTS, Washington, D. C., May 28, 1956. Hon. WARREN G. MARNUSON, 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, HENRY P. CHANDLER. AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES, Hon. WARREN G. MAGNUSON, 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, JAMES A. CAMPBELL, STATEMENT OF R. M. LOVELADY ON S. 2167 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. Present law provides that the Panama Canal Company shall be represented by the President of the United States or such officer of the United States as may be designated by him. The President has by Executive order designated the Secretary of the Army to administer the affairs of the Canal Zone Government and the Panama Canal Company, S. 2167 would by substantive law transfer this responsibility from the Secretary of the Army to the Secretary of Commerce and the President with the advice and consent of the Senate would appoint the Administrator, Deputy Administrator, and seven-man Advisory Board for the Corporation. The Canal Zone district of the AFGE does not oppose such transfer if it is spelled out clearly in the law that the Administrator, Deputy Administrator, and each member of the seven-man Advisory Board are selected strictly on the basis of qualifications and with complete disregard to their political affiliation. We feel, however, that unless this is done these men might very well be political appointees to the jobs as a reward for their contribution to a particular party. Running the Panama Canal is a man-sized job. It not only requires outstanding administrative ability, but the man at the head of this enterprise should be an engineer, although that specilization is not considered essential. The most essential qualification is that he be completely free from political pressure. If he is not, it is not at all unlikely that he would be prevailed upon to fill key positions here on the basis of partisan favoritism without regard to the merit system. We are strongly opposed to any legislation that would make the office of Governor of the Canal Zone or its equivalent a political plum. It has never been such; we want it kept that way. There are those here who feel-and I believe justifiably so-that the military are in control of too many functions of the canal establishment. For example, in addition to the Governor and Lieutenant Governor, Army Officers are at the head of the following activities of the Canal Zone Government and the Panama Canal Company: (1) Health Bureau, (2) Engineering and Construction Bureau, (3) Gorgas Hospital, (4) Corozal Hospital, (5) most of the specialized professional services of the Health Bureau, and (6) military assistant to the Governor. Navy officers are assigned to the Panama Canal in the following capacities: (1) Marine Bureau Director, (2) Chief of the Industrial Division, (3) captain of the Port of Balboa, and (4) captain of the Port of Cristobal. We see no sound reason why career civilians would not perform as well or better as the head of these functions. On the contrary, we believe it would be in the interest of the service to break with tradition in the appointment of Army or Navy officers to these posts. S. 2167 would also amend the present law by changing the method of determining certain costs. The new language would require the Republic of Panama to pay for cost of immigration and customs service provided by the Canal Zone Government and for the cost of providing schools for certain of its citizens. The bill would also provide that other agencies of the Government operating on the Canal Zone shall bear their proper share of the cost of maintaining the roads, highways, sewers, and other facilities and services common to a community on the basis of the ratio of military personnel to civilian citizens of the United States and of the Republic of Panama employed by the Panama Canal Company and the Canal Zone Government. These changes meet with our approval and we respectfully recommend that the committee give them favorable consideration. We have held the opinion from the beginning that the present Board of Directors of not less than 9 nor more than 13 (in practice it has never been fewer than 13) is larger than is necessary. It is also our opinion that some members of the Board have been appointed with very little regard for their qualifications for the post, but more for the purpose of giving them recognition for their contribution to a party or for reasons of business association. Regardless of the existence of any real basis for this opinion, it would be difficult if not impossible to convince employees here that some members of the Board have not proposed changes knowing them to be detrimental to the best interest of the employees. We would favor the proposed change in the governing body if the language were amended to stipulate clearly that these nine governing officers shall be selected for appointment on the basis of proved outstanding qualification for the job and not as a reward for their services or contributions to any political party or individual. It is noted that S. 2167 provides that "In determining whether or not a facility if self-supporting, the corporation shall allow as cost the items of overhead, maintenance and operation, depreciation, interest on investment, and a proportionate share of the net cost of the Canal Zone Government." We do not know just how this would be interpreted and applied. We do know, however, that some of the facilities used for purposes other than actual transit of ships include such as commissaries, schools, police and fire protection, sanitation of the Canal Zone, hospitals and dispensaries, housing, maintenance of buildings and grounds, recreational facilities, and the construction and maintenance of streets, sidewalks, and highways. Because of our unique situation, and the fact that we are isolated and set apart from areas in which such services would be provided by city, county, State, and Federal Governments, we feel strongly that the product sold by the Panama Canal (transit of ships) should pay the cost of operating these essential non-revenue-deriving activities. In this view, we are mindful of the fact that the retail price of a stalk of bananas, ton of coal, or kilowatt of electric power is derived by taking into consideration all the costs involved in getting the item to the consumer. We contend the principle is the same in the case of tolls at the Panama Canal. We believe, therefore, that the users of the canal should pay a larger share of the total cost of operating the waterway and all of its auxiliary appurtenances. There are several other features in S. 2167 not touched upon in this statement. We are not qualified at the moment to comment constructively upon them, but consider them more in the nature of perfecting langauge than of substantial change. Our primary interest lies in endeavoring to prevent any changes in the law that might, by faulty interpretation, require us to contribute as much or more of our salary to the operation of the Panama Canal enterprise than we are now forced to do. We trust the committee will keep in mind our position in its deliberations in regard to the proposed legislation and act in a manner that will bring some relief from the financial burden now being borne by the employees here. Mr. Chairman and members of the committee, we apreciate greatly the opportunity of presenting our views in connection with the bill now under consideration. |