is, from time to time, a surplus of vessels at United States Atlantic ports. It was the opinion of the witness that if Seas had placed the extra ship into its Trade Route No. 15A service at the present time it would have resulted in too many sailings now and left a gap later in its regular schedule. This opinion of applicant's witness is supported by the fact that Seas was willing to make only a two-month time charter, whereas a round-trip voyage on Trade Route No. 15A would take at least three months.

It was further testified by applicant's witness that United Statesflag service on the route would not be adequate if the present charter should not be granted. The witness testified that applicant's vessels have been running full or substantially full on both the outbound and inbound voyages during 1952, and that it has been necessary for applicant to refuse cargo offered both in the United States and in South and East Africa. It was stated by the witness that should the present application for two Government-owned vessels be granted, those vessels will sail substantially full in both directions. The witness stated that, so far as he knows, all other lines operating in the trade are running full. It appears from the evidence that no privately owned United States-flag vessels are available for charter on reasonable conditions and at reasonable rates for use in this service.

FINDINGS, CERTIFICATION, AND RECOMMENDATIONS

On the basis of the facts adduced in the record, the Board finds and hereby certifies to the Secretary of Commerce :

(1) That the service under consideration is in the public interest; (2) That such service is not adequately served; and

(3) That privately owned United States-flag vessels are not available for charter from private operators on reasonable conditions and at reasonable rates for use in such service.

The Board recommends that any charter which may be granted pursuant to the findings in this case be for an indefinite period, subject to the usual right of cancellation by either party on 15 days' notice, and subject further to annual review of the charter as provided in Public Law 591. The Board also recommends that any such charter include provisions to protect the interests of the Government under its operating-differential subsidy agreement with applicant. By the Board. APRIL 17, 1952.

(Sgd.) A. J. WILLIAMS,

Secretary.

FEDERAL MARITIME BOARD

No. 712

CARRIER-IMPOSED TIME LIMITS ON PRESENTATION OF CLAIMS FOR FREIGHT ADJUSTMENTS

Submitted March 6, 1952. Decided April 30, 1952

The Board does not have jurisdiction, without allegations of violation of some provision of the Shipping Act, 1916, to establish rules relating to carrierimposed time limitations on claims for freight adjustments.

Chalmers G. Graham, Leonard G. James, Gilbert C. Wheat, John R. Mahoney, Burton H. White, Elkan Turk, John Tilney Carpenter, William H. Atack, and Harold B. Finn for petitioners.

Charles Noble and G. J. Burt for Coastwise Line, Walter A. Rohde for San Francisco Chamber of Commerce, L. H. Wolters for Golden State Company, Ltd., Howard H. Fisher for California Packing Corporation, A. W. Brown for Pabco Products, Inc., Clement T. Mayo for Department of the Navy, Department of Defense, and General Services Administration, and E. Craig Kennedy for General Accounting Office, interveners.

Francis T. Greene, John Mason, Joseph A. Klausner, and Allen Dawson for the Board.

REPORT OF THE BOARD ON MOTION TO DISMISS

BY THE BOARD:

Notice was published in the Federal Register of April 26, 1951, of the institution of a proceeding, under section 4 of the Administrative Procedure Act, section 204 of the Merchant Marine Act, 1936, and sections 14, 14(a), 15, 16, 17, 18, and 22 of the Shipping Act, 1916, as amended, to consider the adoption of a rule governing the right of common carriers by water, subject to the Board's jurisdiction, to limit the time for presentation by shippers and consignees of claims for freight adjustments.

1

The above-mentioned notice stated that public hearings would be held before an examiner, at which interested persons would be given the opportunity to submit evidence and argument as to (1) the necessity or desirability of such a rule, and (2) the provisions which might be incorporated therein. The notice specified four particular questions relative to the proposed rule on which evidence and argument were desired and stated that the hearings would be conducted subject to the Board's rules of procedure, except that (1) the examiner would transmit recommendations and the record of proceedings directly to the Board without the opportunity for exceptions or argument, and (2) interested persons not attending the proposed hearings would be allowed to submit verified statements, which would become a part of the record notwithstanding section 201.125 (b) of the Board's rules of procedure, which provides that, in a formal hearing at a rule making procedure, verified statements submitted by persons not present at the hearing for cross-examination will be excluded from the record if objected to.

Hearings were held in San Francisco on August 20, 23, and 24, 1951. At the outset of the hearings, counsel representing certain Pacific coast conferences moved to dismiss the proceeding for lack of jurisdiction, and subsequently a formal motion to dismiss was filed. Argument on the motion to dismiss was heard before the Board in San Francisco on October 16, 1951, and also in Washington on February 6, 1952. Interested parties were given until March 6, 1952, to file briefs; and briefs from a number of the parties whose appearances are noted have been received. The motion to dismiss is based on two broad grounds: (1) that the Board does not have jurisdiction to conduct a rule-making proceeding in the manner prescribed in the notice; and (2) that the Board does not have jurisdiction, in any event, to issue any rule which would determine the proper time limitation for presentation by shippers and consignees for freight adjustments.

1 The notice states that evidence and argument would be desired on the following questions:

(a) Whether any time limitation allowing less than two years within which to file any claim for freight adjustment conflicts with section 22. Shipping Act, 1916, in that such shorter period deprives the shipper of the statutory time in which to claim reparation. (b) Whether, if no such conflict exists, it is reasonable and otherwise lawful for carriers to require claims for freight adjustments to be filed within six months of shipment, and, if not, what constitutes a reasonable and lawful time.

(c) Whether, if no such conflict exists, it is reasonable and otherwise lawful for carriers to require the shipper to file claims based upon wrong weight or measurement, or on misdescription, before the shipment is delivered by the carrier; and, if not, what constitutes a reasonable and lawful time.

(d) All other questions relevant to a determination of a proper time limitation within which shippers may be required by carriers to file claims for adjustments of freight charges.

I. The first objection thus raised is procedural rather than jurisdictional. It is pointed out that section 8(a) of the Administrative Procedure Act requires in rule-making proceedings either that the examiner make a recommended decision, or, if the entire record is certified to the Board for its decision, that the Board issue a tentative decision with an opportunity for interested parties to file exceptions thereto, except in such cases where the Board finds upon the record that due and timely execution of its functions imperatively and unavoidably require a different procedure.

Several of the counsel appearing before the Board, both at San Francisco and Washington, argued that section 4 of the Administrative Procedure Act is incorrectly cited in the Board's notice as an enabling statutory provision for the proposed rule making. No statutory jurisdiction is claimed by the Board under section 4; the notice merely recites that the proceeding will be conducted thereunder. The notice thus contains an express statement that the Board is adopting an informal rule-making procedure under section 4 and not a formal rule-making procedure under sections 7 and 8 of the Administrative Procedure Act.

Section 8 of the Administrative Procedure Act by its terms applies to cases "in which a hearing is required to be conducted in conformity with section 7." Section 7 applies to hearings required to be conducted thereunder by the provisions of sections 4 and 5. Section 5 concerns adjudications and is thus not material to the present rule-making procedure. Section 4 provides for and permits an informal rulemaking procedure but requires the formal procedure of section 8 only "where rules are required by statute to be made on the record after opportunity for an agency hearing." None of the statutory enabling provisions cited in the Board's notice requires a formal notice or hearing in connection with the rule-making proceeding thereby instituted. For an explanation of the difference between informal and formal rule-making procedure see the Attorney General's Manual on the Administrative Procedure Act, page 31.

Since the notice states that section 4 of the Administrative Procedure Act is the framework in which the hearing on the proposed rule making is to proceed, it is well within the requirements of that section for the Board to direct the examiner to transmit his recommendations and the record directly to the Board without an opportunity for exceptions or oral argument. It is also not violative of the Administrative Procedure Act for the notice to provide that interested persons not attending the hearings would be permitted to submit verified statements without regard to rule 201.125 (b) of the Board's rules of procedure, which operates ordinarily to exclude written testimony if the

4 F. M. B.

witness is not present for cross-examination. We also believe that there is no policy consideration compelling the Board to adopt a procedure requiring the examiner who conducted the hearing to submit a recommended decision to the Board.

II. The present motion, however, raises a more important and fundamental question which is directed to the Board's jurisdiction. The basic issue thus presented is whether the Board has, in any event, any statutory authority to make rules with respect to carrier-imposed time limitations on presentation of claims for freight adjustment. For the reasons explained below, we find that our jurisdiction is lacking and that the proceedings must, therefore, be dismissed.

Our authority to proceed must be based upon some statutory provision. As recently declared by Congress in section 9 of the Administrative Procedure Act, 5 U. S. C. A., chapter 19,

In the exercise of any power or authority

(a) In General.-No sanction shall be imposed or substantive rule or order be issued except within jurisdiction delegated to the agency and as authorized by law.

If the proposed rule were to apply only to "common carriers by water in interstate commerce" subject to our regulation under section 18 of the Shipping Act, 1916, we might find support for jurisdiction. Under that section such carriers are required to establish "just and reasonable regulations and practices relating thereto and to the issuance, form, and substance of tickets, receipts, and bills of lading." Similarly, if the rule were to apply only to carriers who are parties to conference or other agreements subject to our approval under section 15 of the Act, we might find jurisdiction on the theory that the proposed rule was necessary to avoid detriment to the commerce of the United States. But the proposed rule is not so limited. Hence, to support jurisdiction for the present proceeding we must find authority to adopt a rule of general application to all common carriers by water.

The Shipping Act, 1916, contains no general grant of rule-making power, but the Merchant Marine Act, 1936, after transferring to the Maritime Commission in section 204 (a) "all the functions, powers, and duties vested in the former United States Shipping Board by the Shipping Act, 1916”, provides in section 204 (b):

The Commission is hereby authorized to adopt all necessary rules and regulations to carry out the powers, duties, and functions vested in it by this Act.

Thus, the Maritime Commission had, and the Board now has, authority to adopt rules to carry out the powers, duties, and functions given to the Shipping Board by the 1916 Act. The special sections