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Remarks of Commissioner Harold J. Creel, Jr.
The Maritime Administrative Bar Association
May 7, 1997
I appreciate the opportunity to speak with you today about
recent events that directly affect the FMC. It is a pleasure to be
sharing the podium with Mr. Trojborg from the Danish Government.
You'll be happy to hear that I intend to keep my remarks brief
today.
Based on my years working for the Senate Commerce Committee,
I know how legislation is modified and fine-tuned as it is readied
for final consideration. But you all must be as intrigued as I
have been observing the final stages of the process leading up to
what will be the final Senate version of maritime reform
legislation.
I have to tell you about a conversation I had with an
industry representative last week. He called and asked me what I
thought about the most recent changes being proposed in the reform
legislation. Naturally, I asked him what version. He said, "You
know, the one that just came out." I responded, "What day?" He
said, "Just today." And I asked, "What time today?" I think you
all know what I am talking about.
In my remarks today, I would like to speak generally about
U.S. maritime regulation and the future role of the designated
oversight agency. I do not propose to examine each of the relevant
provisions of the current Senate proposal, how they should be
drafted, or their probable impact. Instead, I thought it would be
more appropriate to address the broader picture.
Now, putting aside any subjective views on whether the 1984
Act needs to be changed, or the extent of such change that may be
necessary, allow me to begin with the premise that change will
occur. I think that is evident. And it is a good idea
periodically to revisit any regulatory system to ensure that its
rights, obligations, and basic framework are keeping up with the
industry. And I am encouraged that the legislative process over
the past several months has been such that all divergent interests
can be molded into a law that enhances international trade and
benefits the interests involved in that trade.
We are at a stage now where hopefully positive change can
result from modification of the 1984 Act. The major aims of those
who began the push for reform legislation were to obtain greater
flexibility in negotiating commercial arrangements and to eliminate
what they viewed as overly intrusive regulatory requirements. Fair
enough -- I would not squabble with those basic objectives. In
fact, they have served to focus attention on some basic
regulatory concepts and led us to the bill that was passed by the
Senate Commerce Committee last week.
I am pleased that the Senate bill, S. 414, continues to
recognize the basic tenet that a grant of antitrust immunity
requires appropriate government oversight. This is best achieved
by transparency of actions taken pursuant to such immunity. The
privilege of operating outside the antitrust laws requires ongoing
monitoring. To effectively do its job, the entity charged with
that responsibility must have access to all pertinent information.
S.414 accomplishes that objective. Tariff information will be
accessible to anyone interested in obtaining it. Although it will
be a drastic change from the Commission's current ATFI system,
where all tariff information is readily available from one source,
the key is that tariff information will be available. The tradeoff
for reducing any burdens related to filing tariffs with the
Government is that this information so integral to international
trade will still be accessible. Additionally, all agreements
continue to be filed with the new Intermodel Transportation Board
and are available for public review.
I know you are all totally familiar with the different twists
and turns that the issue of confidential service contracts has
taken. Undoubtedly, it is the centerpiece of the reform proposal.
As currently drafted, the oversight agency will possess the actual
contracts, and the carrier or agreement will publish limited
information about each contract. This approach enables the
contract parties to protect commercially sensitive information,
while advising competing shippers and carriers which commodities
enjoy special deals in specific trade lanes. And the newest
feature, regarding agency confirmation of service contracts that
potentially violate collective bargaining agreements, addresses
a concern that was extremely important to longshore labor unions.
An appropriate balance seems to have been struck which I believe
will satisfy the opposing interests on this issue. I am not
certain how Senator Gorton's proposed amendment, calling for the
ITB to issue periodic aggregated reports on contracts, would work.
I hesitate to comment further until I see the actual proposal.
The proposed changes dealing with the filing of tariffs and
service contracts, as well as related changes to conference
authority, may not be perfect. Nor may they be worded as you or
I would have written them. But the basic principle of information
transparency has been maintained, which in and of itself is a very
important feature.
Another positive aspect of S. 414 is its recognition that
regulated parties must adhere to the rates, services and other
conditions of carriage that they publicly offer. This issue was
very much up for discussion when the regulatory reform effort
began, and there was some doubt whether it would survive. The
Senate has made the policy decision to preserve common carriage in
our ocean trade. Therefore, requiring adherence to the tariff is
only logical.
Ensuring statutory compliance by regulated entities often is
an uncomfortable or disconcerting topic. Too often, I believe,
government overseers are viewed as those nit-picking bureaucrats who
force businesses to comply with the strict letter of the law,
regardless of the impact of noncompliance. Or, they are seen as
the enforcement police with a sole mission of adding revenue to the
U.S. Treasury's coffers. Well, I believe that any compliance or
enforcement effort must begin with the basic proposition that
Congress and the President have agreed on two things when enacting
legislation: (1) certain business practices are not permissible,
and (2) certain other actions are explicitly required for the
greater good of the overall industry involved. Cut to its basics,
a law is enacted because of a perceived need for the restrictions
it imposes or the permissions it grants.
Specifically, the agency's responsibility is to achieve
statutory compliance and ensure equitable trading conditions in
U.S. maritime commerce, using the best means available. That is as
true today as it ever has been. Some have used the legislative
uncertainty over the last couple of years as an excuse to break the
law. Well, I hate to tell you, but the law is the law until it's
changed.
Despite reduced staffing levels and a shrinking budget, the
Commission is determined to appropriately fulfill its oversight
mandate. I believe any review of recent Commission activity in
this regard would bear that out. I resent statements I have read
in the press that we are taking this or that enforcement action
only to save our hide. If that were the case we certainly have not
been very successful at it. The President and Congress have given
us our mandate as specifically laid out in the statutes. I intend
to enforce that authority until directed otherwise by the policy
makers. When they change the mandate, we'll enforce that one too
- vigorously, and in an effective and judicious manner.
I am happy with the direction the Senate has taken regarding
review of agreements under the 6(g) standard and the Commission's
responsibility to oversee the rates and practices of government-
controlled carriers. You are aware of the restrictions the
legislative history to the 1984 Act places on the Commission
regarding implementation of the 6(g) standard. The net result has
been that the Commission has not sought any court injunctions
pursuant to section 6(g) to forestall operation of a filed
agreement. The requirement to show concrete harm certainly has
hindered our ability in this regard. But to draw the conclusion
that the Commission has been ineffective in this area could not be
further from the truth. There have been many instances in which
the potential impact of filed agreements has been questioned. The
majority of cases have resulted in agreement changes which ensure
that proposed carrier activity does not unreasonably increase rates
or reduce service. Those negotiations do not receive much press
coverage, nor does the Commission "gain credit" for the positive
impact we believe those efforts afford the shipping public.
Nonetheless, the Senate's statement that it will modify the 6(g)
legislative history is encouraging in that it will enable us to
more effectively achieve positive results regarding potentially
injurious agreement activity.
As to controlled carriers, I am pleased that S. 414 eliminates
the vessel-flagging loophole that exists in the 1984 Act, while
also making specific modifications to tighten the Commission's
oversight of controlled carrier tariffs. The rate activities of
COSCO in both the Atlantic and Pacific trades have generated a good
deal of interest in the press as well as on Capitol Hill. The
Commission has been monitoring COSCO's activities on an ongoing
basis and has stepped up that monitoring in recent months. I
believe the changes proposed in S. 414 will enhance the ability of
the oversight agency to quickly and appropriately address
controlled carrier rates or actions that negatively affect
commercial carriers and, in the long run, trade in general.
One last issue before I close. I have spoken often about the
structure of the agency assigned responsibility for oversight of
remaining maritime regulatory functions. And I am sure you would
agree that there remains a good deal of oversight to be
accomplished under S. 414. Of primary importance, and I cannot
stress this point enough, is the decisional independence that the
ultimate oversight agency must maintain. Various organizational
structures have been discussed and proposed.
I have advocated maintaining the Commission as a
freestanding, independent agency, to facilitate our efforts to
accomplish our statutory mandates in an efficient manner and
without the undue influence of an executive department. I
consistently have made the argument that our recent actions in the
Japan Port Practices Section 19 case could not have been
accomplished in as timely and as effective a manner if we were
placed within an executive department. An additional factor to
consider is the perception that eliminating the FMC presents to our
trading partners. I believe foreign governments, who respect the
swiftness and effectiveness with which the Commission can act, may
view such action as a restraint on future Commission actions. To
date, the Senate has not been convinced by these arguments.
Nonetheless, I have assured the Senate that the Commission, as
constituted subsequent to any reform legislation, will endeavor to
maintain its decisional independence and promptly address any
restrictive shipping practices by foreign governments.
Let me close by thanking you for the support you have given
the FMC over the years and the professionalism and integrity we
have experienced in our dealings with you. We may not always agree
on the approach to an issue or a final result, but the Commission
has enjoyed an excellent working relationship with the Maritime Bar
to the benefit of your clients and the US taxpayer. I am confident
that the future holds many more years of mutually agreeable
dealings.
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