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B-149987, OCT. 14, 1966

B-149987 Oct 14, 1966
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ASKING FOR CERTAIN HANDLING CHARGES ALLEGED TO HAVE BEEN EARNED IN THE MOVEMENT OF MILITARY CARGO FROM WEST COAST PORTS TO FAR EAST PORTS DURING 1952. THE CARGO IN QUESTION WAS HANDLED BY YOUR MEMBERS. TO THE EXCEPTED OR EXEMPT COMMODITIES IT WAS PROVIDED THAT THE BERTH-TERM RATES OF THE PACIFIC WESTBOUND CONFERENCE. UNDER THE TARIFF BASIS APPLYING TO THE EXCEPTED COMMODITIES THE VESSEL OPERATOR WAS REQUIRED TO LOAD AND UNLOAD WITHOUT EXPENSE TO THE OWNER OF THE GOODS. WAS FOR THE ACCOUNT OF THE CARGO. SINCE THE LOADING OF THE VESSELS HERE INVOLVED WAS PERFORMED UNDER MSTS CONTRACTS AT MILITARY TERMINALS. THE STEVEDORE SERVICES WERE PERFORMED BY CIVIL SERVICE EMPLOYEES. THERE ARE SEVERAL INSTANCES.

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B-149987, OCT. 14, 1966

TO WEST COAST AMERICAN-FLAG BERTH OPERATORS:

DURING THE PERIOD FROM FEBRUARY 1960 TO MARCH 1963, MEMBER LINES OF YOUR ORGANIZATION PRESENTED CLAIMS TO THE GOVERNMENT, ASKING FOR CERTAIN HANDLING CHARGES ALLEGED TO HAVE BEEN EARNED IN THE MOVEMENT OF MILITARY CARGO FROM WEST COAST PORTS TO FAR EAST PORTS DURING 1952, 1953 AND 1954.

THE CARGO IN QUESTION WAS HANDLED BY YOUR MEMBERS, PRINCIPALLY, PACIFIC FAR EAST LINE, INC., STATES STEAMSHIP COMPANY AND WATERMAN STEAMSHIP COMPANY, UNDER CONTRACTS WITH THE MILITARY SEA TRANSPORTATION SERVICE (MSTS). THE CONTRACTS GENERALLY PROVIDED FOR GENERAL CARGO RATES ON A MEASUREMENT TON BASIS, EXCEPT THAT THE CONTRACT BASIS OF CHARGES WOULD NOT APPLY TO BULK CARGO, CEMENT, BAGGED GOODS,IRON AND STEEL, AND LUMBER. TO THE EXCEPTED OR EXEMPT COMMODITIES IT WAS PROVIDED THAT THE BERTH-TERM RATES OF THE PACIFIC WESTBOUND CONFERENCE, PUBLISHED IN ITS TARIFF NO. 1- V, WOULD BE APPLIED.

AS A GENERAL RULE, THE MSTS CONTRACT BASIS PROVIDED FOR THE LOADING AND UNLOADING OF THE CARGO BY THE OWNERS, AT NO STEVEDORE OR HANDLING EXPENSE OF THE VESSEL OPERATOR. UNDER THE TARIFF BASIS APPLYING TO THE EXCEPTED COMMODITIES THE VESSEL OPERATOR WAS REQUIRED TO LOAD AND UNLOAD WITHOUT EXPENSE TO THE OWNER OF THE GOODS. BUT THE TARIFF ALSO PROVIDED THAT HANDLING EXPENSE, I.E., MOVING THE GOODS FROM THEIR PLACE OF REST ON THE PIER TO SHIP'S TACKLE, WAS FOR THE ACCOUNT OF THE CARGO.

SINCE THE LOADING OF THE VESSELS HERE INVOLVED WAS PERFORMED UNDER MSTS CONTRACTS AT MILITARY TERMINALS, THE STEVEDORE SERVICES WERE PERFORMED BY CIVIL SERVICE EMPLOYEES, OR BY STEVEDORES ON CONTRACT TO THE MILITARY FACILITY OPERATING THE PIERS. THERE ARE SEVERAL INSTANCES, HOWEVER, WHERE THE CARGO WAS LOADED OVER COMMERCIAL PIERS LOCATED AT SUCH PLACES AS LONG BEACH AND SAN PEDRO, CALIFORNIA, PORTLAND, OREGON, AND SEATTLE, WASHINGTON.

YOU REPORT THAT IN EACH CASE THE VESSEL WAS LOADED UNDER THE CONTRACT OPERATION WITH ALL AVAILABLE CARGO, AND THAT ONLY AFTER THE MANIFEST WAS RECEIVED BY THE VESSEL OPERATOR WAS IT DETERMINED HOW MUCH, IF ANY, EXCEPTED CARGO WAS ABOARD THE VESSEL. THUS, THE PRACTICE DURING THE PERIOD IN QUESTION WAS APPARENTLY FOR THE OPERATOR TO NOTIFY THE CARGO OWNER AS TO WHAT KIND AND HOW MUCH OF THE EXCEPTED COMMODITIES WERE ABOARD. THE OWNER WOULD THEN PREPARE A GOVERNMENT BILL OF LADING WHICH WOULD BECOME THE CARRIER'S SUPPORT FOR A BILL TENDERED AT THE BERTH-TERM RATES FOR THE EXCEPTED COMMODITIES.

SINCE THE BERTH-TERM RATES PROVIDED THAT LOADING AND UNLOADING WERE FOR THE ACCOUNT OF THE VESSEL, AND SINCE THE VESSEL WAS LOADED AT THE WEST COAST PORTS BY OR AT THE EXPENSE OF THE OWNER (WITH SEVERAL EXCEPTIONS), A CHARGE WAS MADE AGAINST THE VESSEL OPERATOR FOR THE COST OF LOADING AND UNLOADING THE EXCEPTED CARGO. THE ARMY GENERALLY RECOVERED THIS COST BY DEDUCTION FROM THE CARRIER'S BILL FOR SERVICES RENDERED ON EACH BILL OF LADING. THE NAVY, FOR THE MOST PART, RECOVERED ITS COSTS BY DRAWING AGAINST DEPOSIT ACCOUNTS SET UP BY THE OPERATORS FOR THAT PURPOSE.

THE PRESENT CONTROVERSY CONCERNS THE HANDLING OF THESE EXCEPTED COMMODITIES. AS BEFORE STATED, THE BERTH-TERM RATES DO NOT INCLUDE THE COST OR EXPENSE OF HANDLING CARGO ACROSS THE PIERS. SUCH EXPENSE IS FOR THE ACCOUNT OF THE OWNERS. IN MOST OF THE INSTANCES IN WHICH YOUR MEMBER LINES PRESENTED CLAIMS, THEY ORIGINALLY ADDED TO THEIR BILLS A HANDLING CHARGE OF 80 CENTS PER 2,000 POUNDS. MSTS DID NOT ALLOW THE CLAIMED 80- CENT CHARGE AT THE TIME PAYMENT WAS MADE FOR FREIGHT. AT THAT POINT, YOUR OPERATORS WERE PAID NOTHING FOR HANDLING; AND SINCE IT WAS NOT UNDERSTOOD THAT THE VESSEL OPERATORS PERFORMED THE HANDLING OR ABSORBED THE COST OF ANY PART OF SUCH SERVICE, THE DISALLOWANCE OF THE 80-CENT CHARGE WAS PROPER. NEVERTHELESS, DURING 1954 THE OPERATORS PRESENTED CLAIMS TO THE ARMY AND NAVY FOR THE HANDLING CHARGE PREVIOUSLY DISALLOWED AND YOUR CLAIMS WERE AGAIN DISALLOWED ON THE BASIS THAT THE VESSEL OPERATORS DID NOT PERFORM THE HANDLING SERVICE.

THESE DISALLOWANCES DO NOT APPEAR TO HAVE BEEN FORMALLY QUESTIONED UNTIL NOVEMBER 1959, WHEN PACIFIC FAR EAST LINES PRESENTED BILLS TO MSTS FOR THE 80-CENT HANDLING CHARGE. IN 1960, OTHER CARRIERS PRESENTED CLAIMS TO THE GENERAL ACCOUNTING OFFICE FOR THIS CHARGE. MSTS REFERRED THE CLAIMS TO THE GENERAL ACCOUNTING OFFICE FOR SETTLEMENT.

THE OPERATORS' POSITION IS THAT THEY ARE ENTITLED TO A HANDLING CHARGE BECAUSE THE LOADING COSTS CHARGED BY THE ARMY AND NAVY INCLUDED A FACTOR FOR HANDLING. ON THE PREMISE THAT THE VESSEL WAS MADE TO STAND A HANDLING COST THAT IS PROPERLY A CHARGE AGAINST THE CARGO, THE VESSEL OPERATORS BELIEVE THEY ARE ENTITLED TO THE FULL TARIFF CHARGE. THEY RELY ON THE THEORY THAT THE ARMY AND NAVY ACTED AS THE VESSEL OPERATORS' AGENTS AND, SINCE THE TARIFF STATED THAT IF THE HANDLING WAS PERFORMED BY THE "CARRIER, ITS AGENT, OR STEVEDORE," THE 80-CENT RATE WAS CHARGEABLE AGAINST THE CARGO.

ON THE BASIS OF THE AVAILABLE INFORMATION WE ADOPTED THE VIEW THAT THE OPERATORS' RIGHT TO HANDLING CHARGES DEPENDED UPON WHETHER OR NOT THE LOADING CHARGE ASSESSED AGAINST THE VESSEL INCLUDED A FACTOR FOR HANDLING, AND, IF THE EXACT AMOUNT THAT WAS INCLUDED FOR HANDLING COULD BE DETERMINED, ONLY THAT SUM WOULD BE REFUNDED. WE SUBSEQUENTLY ESTABLISHED THAT THE ARMY'S SAN FRANCISCO PORT OF EMBARKATION CHARGE FOR LOADING INCLUDED 15 PERCENT OF THE COMMODITY RATE AND TERMINAL CHARGE FOR HANDLING, NAMED IN THEIR SCHEDULE OF CHARGES. WHILE THE ARMY DID NOT PUBLISH THIS 15 PERCENT FACTOR UNTIL JUNE 27, 1955, THEY INFORMED US THAT THE RATES IN EFFECT DURING THE PERIOD OF THE SHIPMENTS IN QUESTION WERE CONSTRUCTED ON SUBSTANTIALLY THE SAME BASIS, AND THAT THE OPERATORS WERE NOT ENTITLED TO ANY GREATER AMOUNT. THE GENERAL ACCOUNTING OFFICE SETTLED APPROXIMATELY 111 CLAIMS AGAINST ARMY SHIPMENTS ON THIS BASIS; NO SETTLEMENT WAS MADE ON THE CLAIMS COVERING NAVY SHIPMENTS, PENDING COMPLETION OF OUR INVESTIGATION.

IN OCTOBER 1965, MR. KEN LYNCH OF THE PACIFIC FAR EAST LINES, AUTHORIZED TO SPEAK ON BEHALF OF THE WEST COAST OPERATORS, MET WITH OUR REPRESENTATIVES TO DISCUSS THE SITUATION. MR. LYNCH AGREED TO FURNISH CERTAIN SPECIFIC INFORMATION, PRIMARILY DEALING WITH THE TIME WHEN THE DETERMINATION WAS MADE OF THE VOLUME OF EXCEPTED ARTICLES LOADED ABOARD A VESSEL UNDER MSTS CONTRACT, AND WITH THE OPERATORS' POSITION THAT THEY COMPLIED WITH THE TARIFF PROVISION REQUIRING THE CARRIER, ITS AGENT, OR STEVEDORE TO PERFORM THE HANDLING SERVICE.

YOUR LETTER, DATED NOVEMBER 11, 1965, STATES THAT THE EXCEPTED COMMODITIES TO BE COVERED BY GOVERNMENT BILLS OF LADING WERE NOT IDENTIFIED UNTIL ALL CARGO WAS LOADED AND THE DESCRIPTION AND QUANTITIES WERE TAKEN FROM THE VESSEL'S MANIFEST. AS TO THE MATTER OF COMPLIANCE WITH THE TARIFF REQUIREMENT THAT THE VESSEL, ITS AGENT, OR STEVEDORE PERFORM THE HANDLING SERVICE, YOU FURNISH AN OPINION PREPARED BY YOUR ATTORNEYS, WHICH IS TO THE EFFECT THAT COMPLIANCE WITH THE TARIFF PROVISIONS IS ACCOMPLISHED UNDER PRINCIPLES OF AGENCY.

THAT OPINION IS PREMISED ON A TARIFF PROVISION THAT WAS NOT APPLICABLE TO CARGO LOADED ON VESSELS AT INDUSTRIAL DOCKS OWNED OR OPERATED BY THE OWNER OF THE CARGO, UNLESS THE VESSEL, ITS AGENT, OR STEVEDORE PERFORMED THE HANDLING SERVICE FROM PLACE OF REST ON INDUSTRIAL DOCKS TO SHIP'S TACKLE. AND THE HANDLING CHARGE ALSO WOULD NOT APPLY ON CARGO HANDLED DIRECT BY SHIP'S TACKLE FROM OPEN-TOP CARS, OR ON LUMBER WHEN DELIVERED ALONGSIDE VESSEL BY BARGE AND LOADED DIRECT TO VESSEL. SEE WESTBOUND CONFERENCE TARIFF NO. 1-V, RULE 10/A) (C).

IT IS CLEAR, THEREFORE, THAT THE RIGHT TO HANDLING CHARGES MAY BE ESTABLISHED ONLY UPON A SHOWING THAT THE VESSEL, ITS AGENT, OR ITS STEVEDORE DID IN FACT PERFORM THE HANDLING SERVICE; APPLICATION OF YOUR THEORY THAT THE GOVERNMENT ACTED AS AGENT FOR THE VESSEL OPERATORS IS NOT JUSTIFIED IN THE CIRCUMSTANCES. IT WOULD SEEM OBVIOUS, IN THIS CONNECTION THAT IF THE CARGO OWNERS PERFORMED ALL THE SERVICES AT THE DOCKS INCIDENTAL TO PLACING THE CARGO IN THE VESSEL, ALLOWANCE OF A HANDLING CHARGE TO THE VESSEL OPERATORS WOULD RESULT IN PAYMENT FOR A SERVICE THAT WAS NOT PERFORMED.

AMONG OTHERS, PACIFIC FAR EAST LINE, INC., STATES STEAMSHIP COMPANY AND WATERMAN STEAMSHIP COMPANY PRESENTED SEVERAL HUNDRED CLAIMS FOR ADDITIONAL AMOUNTS COMPUTED AT THE RATE OF 80 CENTS PER 2,000 POUNDS. THE CLAIMS ARE INDICATED AS BEING DUE IN ORDER TO "RECOVER HANDLING CHARGES ERRONEOUSLY DEDUCTED," OR FOR "HANDLING CHARGES FOR ACCOUNT OF CARGO," OR "HANDLING CHARGES PER WESTBOUND CONFERENCE TARIFF NO. 1-V, RULE NO. 10.' IN NONE OF THE CLAIMS FILED IS THERE ANY EVIDENCE TO ESTABLISH (1) THAT THE VESSEL, ITS AGENT, OR STEVEDORE PERFORMED THE HANDLING SERVICE, OR (2) THAT THE LOADING COSTS ASSESSED AGAINST THE VESSEL INCLUDED A FACTOR FOR HANDLING. IN OTHER WORDS, IN NO CASE DID THE MEMBER LINES ESTABLISH BY COMPETENT PROOF THEIR RIGHT TO THE SUMS CLAIMED.

THE BURDEN IS ON THE CLAIMANTS TO FURNISH EVIDENCE CLEARLY AND SATISFACTORILY ESTABLISHING THEIR CLAIMS (31 COMP. GEN. 340; 23 ID. 907; 18 ID. 980), AND THE RECORD IN THIS GROUP OF CLAIMS DOES NOT ESTABLISH THE GOVERNMENT'S LIABILITY FOR PAYMENT OF THE ADDITIONAL CHARGES CLAIMED. THE ABSENCE OF SUCH EVIDENCE, ALLOWANCE OF YOUR CLAIMS AS STATED IS UNAUTHORIZED. NEVERTHELESS, WE ASKED FOR REPORTS FROM THE ARMY AND NAVY SHOWING THE FACTUAL SITUATION AS TO OPERATIONS AT THE MILITARY TERMINALS DURING THE PERIOD IN QUESTION AND FOR A BREAKDOWN OF THE LOADING COSTS TO DETERMINE WHETHER OR NOT A CHARGE WAS INCLUDED FOR CARGO HANDLING. THE INFORMATION RECEIVED FROM THE ARMY AND NAVY SHOWS A CONSIDERABLE VARIANCE IN THE PRACTICES AND IN THE CHARGES ASSESSED AT THE SEVERAL PORTS.

WITH RESPECT TO TERMINALS WITHIN THE JURISDICTION OF THE ARMY'S SAN FRANCISCO PORT OF EMBARKATION, WE HAVE ALREADY SETTLED A NUMBER OF CLAIMS OF THE PACIFIC FAR EAST LINE ON THE BASIS OF 15 PERCENT OF THE STEVEDORE COMMODITY RATE AND THE TERMINAL CHARGE NAMED IN THE SCHEDULE OF CHARGES PUBLISHED BY HEADQUARTERS, SAN FRANCISCO PORT OF EMBARKATION. THE 15 PERCENT BASIS WAS FIRST PUBLISHED IN CHANGE NO. 1TO SCHEDULE OF CHARGES, SCHEDULE N, EFFECTIVE JUNE 27, 1955. IN THE ABSENCE OF A SHOWING BY THE CLAIMANT LINES THAT THE COST FACTOR OF 15 PERCENT OF THE COMMODITY RATE AND TERMINAL CHARGE WAS INACCURATE FOR THE EARLIER PERIOD OF THESE SHIPMENTS, WE ACCEPTED THE RECOMMENDATION OF THE ARMY THAT SETTLEMENT OF THE CLAIMS COVERING THOSE MOVEMENTS WITHIN THE JURISDICTION OF THE SAN FRANCISCO PORT OF EMBARKATION SHOULD BE ON THIS 15 PERCENT BASIS. JANUARY 8, 1965, UNDER FILE B 149987, WE INFORMED THE MILITARY SEA TRANSPORTATION SERVICE OF OUR INTENTION TO SETTLE THIS PARTICULAR GROUP OF CLAIMS ON THIS BASIS. YOUR MEMBER LINES HAVE PROTESTED SETTLEMENT OF THE CLAIMS ON THE SO CALLED 15 PERCENT BASIS. BUT FOR THE REASONS STATED ABOVE THE SETTLEMENTS MUST BE AND ARE SUSTAINED, INASMUCH AS THERE HAS BEEN NO SHOWING THAT THE VESSEL OPERATORS PAID OR ASSUMED HANDLING CHARGES GREATER THAN 15 PERCENT OF THE COSTS ASSESSED AGAINST THE VESSEL OPERATORS FOR LOADING SERVICE. ALL OTHER PENDING UNPAID CLAIMS COMING WITHIN THE JURISDICTION OF THE SAN FRANCISCO PORT OF EMBARKATION WILL BE SETTLED ON A SIMILAR BASIS, UNLESS THE RECORD IN A PARTICULAR CLAIM JUSTIFIES USE OF A DIFFERENT BASIS.

DURING THE PERIOD 1952 THROUGH 1955 THE SEATTLE PORT OF EMBARKATION OF THE ARMY HAD OPERATIONAL RESPONSIBILITIES AT ANACORTES, BELLINGHAM, AND SEATTLE, WASHINGTON, AND PORTLAND, OREGON. THE ADMINISTRATIVE REPORT AS TO THE SITUATION AT THESE PORTS DENIES KNOWLEDGE OF ANY INSTANCE WHERE THE VESSEL OPERATOR OR ITS AGENT PHYSICALLY MOVED THE CARGO FROM A PLACE AT REST ON THE PIERS TO THE SHIP'S HOOK SO AS TO ENTITLE SUCH OPERATOR TO THE 80-CENT HANDLING CHARGE. UNLESS THE CARRIERS CAN FURNISH COMPETENT EVIDENCE TO SHOW THAT THEY DID PERFORM A HANDLING SERVICE AS TO ANY OF THE SHIPMENTS ON WHICH CLAIMS HAVE BEEN PRESENTED, WE MUST ACCEPT THE ADVICE RECEIVED FROM THE ADMINISTRATIVE OFFICE AS CONTROLLING ON OUR DISPOSITION OF THE CLAIMS RELATED TO THE PORTS MENTIONED ABOVE. SEE 16 COMP. GEN. 325; 45 ID. 99 100.

AS TO THIS GROUP OF CLAIMS THERE THEN REMAINS THE QUESTION AS TO WHETHER, IN INSTANCES WHERE LOADING CHARGES WERE ASSESSED AGAINST THE VESSEL, THE ARMY MAINTAINED A SCHEDULE OF CHARGES SIMILAR TO THE ONE APPLICABLE AT THE SAN FRANCISCO PORT OF EMBARKATION. SOME DOUBT ARISES AS TO WHETHER THE LOADING COSTS IN THE PORT OF SEATTLE AREA INCLUDED A FACTOR FOR HANDLING. IN NOVEMBER 1964, THE ARMY REPORTED THAT IT COULD NOT LOCATE THE SCHEDULE OF CHARGES IN EFFECT DURING THE YEARS 1952 THROUGH 1955. HOWEVER, THE ARMY FOUND THE SCHEDULE OF CHARGES EFFECTIVE OCTOBER 1, 1955. AS TO THIS SCHEDULE IT IS REPORTED:

"PARAGRAPH 5, PART I, ENTITLED GENERAL CONDITIONS, OF THIS 1 OCTOBER 1955 SCHEDULE OF CHARGE, PROVIDES THAT "THIS SCHEDULE WILL APPLY IN THOSE AREAS WHERE THE SEATTLE PORT OF EMBARKATION HAS OPERATIONAL RESPONSIBILITY FOR STEVEDORING.' THE SEATTLE PORT OF EMBARKATION HAD OPERATIONAL RESPONSIBILITIES AT ANACORTES, BELLINGHAM, SEATTLE, AND PORTLAND DURING THE YEARS 1952 THROUGH 1955. THEREFORE, THE SCHEDULE IS APPLICABLE TO SOME OF THE CLAIMS IN ISSUE. PART III CONTAINS THE ARMY RATE SCHEDULE FOR LOADING OR STEVEDORING THE CARGO ABOARD A VESSEL. THESE RATES PERTAIN ONLY TO LOADING THE CARGO WITH THE SHIP'S GEAR OR TACKLE. SINCE IT WAS THE ARMY'S RESPONSIBILITY TO MOVE THE CARGO WITHIN THE TERMINAL TO THE SHIP'S TACKLE, NO RATE SCHEDULE FOR THIS SERVICE WAS INCLUDED IN THE SCHEDULE OF CHARGES. IN FACT, THE SEATTLE PORT OF EMBARKATION ATTEMPTED TO DISTINGUISH BETWEEN INTERCOASTAL SHIPMENTS AND OVERSEAS SHIPMENTS. PARAGRAPH 2 PROVIDED:

"IN THE EVENT IT IS NECESSARY FOR THE SEATTLE PORT OF EMBARKATION TO RECOUP OUT-OF-POCKET COSTS IN CONNECTION WITH INTERCOASTAL SHIPMENTS, THESE RATES WILL BE INCREASED TO INCLUDE THE COST OF HANDLING FROM PLACE OF REST TO SHIP'S TACKLE. SUCH RATES ARE NOW IN THE PROCESS OF DEVELOPMENT AND WILL BE INCORPORATED IN A REVISION TO HIS SCHEDULE AT A LATER DATE.'

CONSEQUENTLY, IT IS QUITE EVIDENT THAT THIS SCHEDULE OF CHARGES DID NOT INCLUDE AN 80 CENTS PER TON HANDLING CHARGE NOR ANY HANDLING CHARGE WHATSOEVER. THE ARMY, IN THIS QUOTED PROVISION, ATTEMPTED TO RESERVE A RIGHT TO ASSESS A HANDLING CHARGE AGAINST VESSEL OPERATORS IN THE FUTURE. WHETHER OR NOT A SUBSEQUENT CHANGE TO THE SCHEDULE OF CHARGES INCLUDED A HANDLING CHARGE EITHER AS A SEPARATE RATE OR AS A COST ELEMENT IN THE STEVEDORE LOADING RATE IS NOT KNOWN. THAT MATTER IS NOT IN ISSUE AND WAS NOT PURSUED. BY REASON OF THE FOREGOING, THIS OFFICE IS OF THE OPINION THAT THE MISSING SCHEDULE OF CHARGES DID NOT INCLUDE ANY HANDLING RATES NOR WERE HANDLING COSTS INCLUDED IN ANY LOADING RATES. THE PRACTICE OF THE ARMY HAD BEEN AND STILL IS TO RETAIN THE PROVISIONS WITHIN A TARIFF AND ONLY INCREASE THE RATES AS THE ARMY'S COSTS OF PERFORMING THE SERVICES ARE INCREASED.

"BASED UPON THE EXPLANATIONS SET FORTH ABOVE TO THE EFFECT THAT THE ARMY TARIFFS CONTAINED NO FACTORS REFLECTING OR INCORPORATING HANDLING COSTS AS SUCH, THE CLAIMS OF THE VESSEL OPERATORS FOR THE RECOVERY OF SUCH CHARGES ARE WITHOUT MERIT, AND SHOULD BE DENIED.'

IT WOULD SEEM, THEREFORE, THAT ON THE RECORD AS MADE BY THE ADMINISTRATIVE OFFICE, NO BASIS EXISTS WHICH WOULD SUPPORT PAYMENT OF THE CARRIERS' CLAIMS FOR HANDLING CHARGES AT THESE PORTS. AS A MATTER OF FACT, IN SOME INSTANCES THE PERTINENT BILL OF LADING RECORD SPECIFICALLY INDICATES THAT NO HANDLING CHARGE IS DUE THE VESSEL.

FOR EXAMPLE, IN MARCH 1963, THE WATERMAN STEAMSHIP COMPANY PRESENTED ITS SUPPLEMENTAL INVOICE NO. G-449E FOR $425.31 HANDLING CHARGES DEDUCTED IN PAYMENT OF ORIGINAL INVOICE G-449C, DATED NOVEMBER 15, 1954. THIS BILL WAS FOR A CARGO OF 369,835 NET BOARD FEET OF LUMBER COVERED BY GOVERNMENT BILL OF LADING NO. WY-4581129, LOADED UPON THE "JEAN LAFITTE" AT BELLINGHAM, WASHINGTON, ON APRIL 25, 1954. WATERMAN BILLED FOR $425.31 HANDLING CHARGES AT THE TARIFF RATE OF $1.15 PER 1,000 BOARD FEET, NOTWITHSTANDING THAT THE BILL OF LADING CONTAINED A NOTATION WHICH READ: "NOTE: HANDLING NOT APPLICABLE AS LUMBER PURCHASE FAS VESSEL.' THE BILL OF LADING FURTHER PROVIDED THAT THE CARGO WAS LOADED BY THE ARMY AND FURTHER CARRIES A NOTATION: "NO LOADING AND/OR DISCHARGING COSTS DUE U.S. GOV-T.' WATERMAN'S INVOICE NO. G-449C SHOWS THAT THE VOYAGE RATE OF $41.25 PER 1,000 BOARD FEET IS A NEGOTIATED F.I.O. (FREE IN AND OUT) RATE.

IN ANOTHER INSTANCE, STATES STEAMSHIP COMPANY LOADED 1,299,071 NET BOARD FEET OF LUMBER AT PORTLAND, OREGON, TERMINAL NO. 1, ABOARD THE S.S. COLORADO ON DECEMBER 17, 1952. GOVERNMENT BILL OF LADING NO. WY 1626311 WAS ISSUED TO COVER THIS SHIPMENT. STATES STEAMSHIP COMPANY BILL NO. 151 AR 3-35 WAS FOR THE FREIGHT EARNED, LESS DISCHARGE COSTS AT YOKOHAMA, JAPAN. NO HANDLING CHARGE WAS CLAIMED ON THIS BILL, WHICH WAS PAID JUNE 2, 1953. ALMOST 7 1/2 YEARS LATER, STATES STEAMSHIP COMPANY PRESENTED ITS BILL NO. 7/326 FOR $1,493.93 HANDLING CHARGES.

THE BILL OF LADING SHOWS THAT THE VESSEL OPERATOR LOADED THIS CARGO, AND IT IS POSSIBLE THAT SOME HANDLING WAS PERFORMED BY THE VESSEL'S STEVEDORE. HOWEVER, IN VIEW OF THE FACT THAT THE SEATTLE PORT OF EMBARKATION REPORTED THAT LUMBER WAS GENERALLY PURCHASED F.A.S. (FREE ALONGSIDE SHIP) AT THE PORTS, AND, ALSO, DUE TO THE POSSIBILITY THAT THE LUMBER MAY HAVE BEEN HANDLED DIRECTLY FROM OPEN TOP CARS, STATES STEAMSHIP COMPANY SHOULD SUPPORT ITS CLAIM WITH EVIDENCE SHOWING THAT HANDLING WAS PERFORMED BY THE VESSEL OPERATOR, OR THAT IT BORE THE COST OF HANDLING BY STEVEDORE.

IT MAY BE NOTED ALSO THAT IN ALMOST EVERY INSTANCE INVOLVING CLAIMS PRESENTED FOR HANDLING CHARGES AT PORTS WITHIN THE JURISDICTION OF THE SEATTLE PORT OF EMBARKATION, NO CLAIM WAS MADE FOR HANDLING WHEN THE CARRIERS FIRST PRESENTED THEIR BILLS FOR FREIGHT CHARGES IN 1952 AND 1953. IT WAS NOT UNTIL SEVEN OR MORE YEARS LATER THAT THE CLAIMS WERE PRESENTED, WITHOUT ANY EVIDENCE TO SUPPORT THE OPERATORS' RIGHT TO THESE CHARGES.

ACCORDINGLY, WE CANNOT ALLOW ANY OF THE CLAIMS FOR HANDLING CHARGES AT PORTS WITHIN THE JURISDICTION OF THE SEATTLE PORT OF EMBARKATION ON THE PRESENT RECORD, BUT WE WILL CONSIDER THE CLAIMS AGAIN IN THE EVENT THE INTERESTED CARRIERS CAN FURNISH EVIDENCE TO SUPPORT THEIR CLAIMS.

THE LARGEST GROUP OF CLAIMS INCLUDES THOSE COMING WITHIN THE JURISDICTION OF THE NAVAL SUPPLY CENTER, OAKLAND, CALIFORNIA. AS PREVIOUSLY INDICATED, SHIPS AT OAKLAND AND STOCKTON ANNEX WERE LOADED OVER GOVERNMENT PIERS AND CARGOES HANDLED IN MOST INSTANCES BY CIVIL SERVICE CREWS. IN SOME INSTANCES THE CARGO WAS LOADED BY STEVEDORES ON CONTRACT TO THE GOVERNMENT.

AS TO THESE CLAIMS YOUR REPORT APPEARS TO CONCEDE THAT THE VESSEL OPERATORS DID NOT HANDLE THESE CARGOES, BUT YOU REFER TO THE AGENCY THEORY WHICH WE CANNOT ACCEPT AS VALID, THAT IS, THAT LOADING COSTS DEDUCTED FROM YOUR DEPOSIT ACCOUNTS SET UP FOR THAT PURPOSE INCLUDED A FACTOR FOR HANDLING ACCOMPLISHED BY THE GOVERNMENT AS YOUR AGENT.

WE REQUESTED ADVICE FROM THE NAVY CONCERNING THE CHARGES ASSESSED AGAINST THE VESSEL OPERATORS FOR LOADING COSTS, AND RECEIVED THE FOLLOWING INFORMATION:

"* * * CHARGES ASSESSED THE CARRIERS IN EACH INSTANCE WERE IN ACCORDANCE WITH AN INDUSTRY/NSC OAKLAND AGREEMENT WHICH WAS CONFIRMED BY AMERICAN PRESIDENT LINES LETTER OF 22 DECEMBER 1952, A COPY OF WHICH IS ATTACHED HERETO AS ENCLOSURE (9). THE CHARGES BILLED IN ACCORDANCE WITH THIS AGREEMENT DID NOT INCLUDE ANY TERMINAL HANDLING CHARGES. HOWEVER, THE GANG COST IN THE CASE OF CIVIL SERVICE STEVEDORES, AND THE COMMODITY RATE USED FOR CONTRACT LABOR, INCLUDED ONE STEVEDORE TO BRING CARGO FROM A POINT OF REST ON THE DOCK TO SHIP'S TACKLE. NO CHARGE WAS MADE FOR USE OF EQUIPMENT. IN VIEW OF THE AGREEMENT, CONFIRMED BY ENCLOSURE (9), WHEREIN THE CARRIERS IN EFFECT AGREED TO ACCEPT BILLING FOR THE EXCEPTED COMMODITIES ON THE BASIS OUTLINED, THIS BUREAU (BUREAU OF SUPPLIES AND ACCOUNTS, WASHINGTON, D.C.) QUESTIONS THE VALIDITY OF CARRIERS' CLAIMS FOR HANDLING CHARGES ON THOSE SHIPMENTS LOADED BY THE GOVERNMENT AT NSC OAKLAND AND STOCKTON ANNEX.'

AS THE ENCLOSED COPY OF THE LETTER OF DECEMBER 22, 1952, INDICATES, ALTHOUGH THERE MAY HAVE BEEN SOME HANDLING SERVICES FOR CARGOES LOADED AT BERTH TERM RATES, NO SEPARATE RECORDS WERE KEPT FOR THIS SO-CALLED EXCEPTED OR EXEMPT CARGO AFFORDED HANDLING. INSTEAD, THE COSTS WERE ADJUSTED TO A BASIS OF AVERAGE PERFORMANCE OF A CERTAIN NUMBER OF TONS OF THE BERTH-TERM COMMODITIES PER GANG HOUR PERFORMANCE. THE AGREEMENT CONTAINED IN THE LETTER OF DECEMBER 22, 1952, REFLECTS THAT THE CARRIERS AND THE NAVAL SUPPLY CENTER ESTABLISHED A SCHEDULE OF LOADING COSTS THAT TOOK INTO CONSIDERATION THE POSSIBILITY OF SOME CARGOES BEING AFFORDED HANDLING SERVICES IN THE LOADING OPERATION, AND RECOGNIZED THAT THE CARGOES ASSESSED MADE AN ALLOWANCE THEREFOR.

AN EARLIER REPORT (1961) MADE BY THE NAVY BUREAU OF SUPPLIES AND ACCOUNTS TO THE MILITARY SEA TRANSPORTATION SERVICE INDICATES THAT CIVIL SERVICE AND GOVERNMENT CONTRACT STEVEDORE CHARGES FOR LOADING CARGO AT MILITARY TERMINALS DURING 1952 AND 1953 WERE CONSIDERABLY LOWER THAN STEVEDORE CHARGES UNDER THE CONTRACT THE STEVEDORES HAD WITH THE WEST COAST AMERICAN -FLAG BERTH OPERATORS. IN OTHER WORDS, HAD THE BERTH-TERM (EXCEPTED) CARGO BEEN HANDLED OVER COMMERCIAL PIERS THE COSTS WOULD HAVE BEEN GREATER THAN THE COSTS ACTUALLY ASSESSED BY THE OAKLAND SUPPLY CENTER, EVEN WHEN THE VESSEL OPERATORS WOULD HAVE COLLECTED THE 80-CENT HANDLING CHARGE.

ON THE BASIS OF AGREEMENT REFLECTED IN THE LETTER OF DECEMBER 22, 1952, AND THE ADMINISTRATIVE RECOMMENDATION AGAINST THE PAYMENT OF CLAIMS FOR HANDLING, THERE IS NO BASIS FOR ALLOWING THE CARRIERS' CLAIMS THAT COME WITHIN THE PURVIEW OF THE CITED AGREEMENT.

A SMALL NUMBER OF CLAIMS HAVE BEEN SUBMITTED FOR CHARGES FOR CARGOES HANDLED AT SAN PEDRO AND LONG BEACH, CALIFORNIA. THE ADMINISTRATIVE REPORT AS TO THOSE CLAIMS CONCEDES THAT SOME OF THESE CARGOES WERE HANDLED OVER COMMERCIAL TERMINALS OR AT MILITARY TERMINALS AT THE EXPENSE OF THE VESSEL OPERATORS. HOWEVER, IT IS REPORTED THAT, DUE TO THE FACT THAT THE SAN PEDRO NAVAL ESTABLISHMENT HAS BEEN DEACTIVATED SINCE 1954, THE RECORDS AS TO THE CARGOES AT THAT PORT ARE NO LONGER AVAILABLE. AS TO LONG BEACH, IT IS REPORTED THE LOADINGS WERE PERFORMED IN SOME INSTANCES BY COMMERCIAL STEVEDORES AND IN OTHER INSTANCES BY CIVIL SERVICE EMPLOYEES. IT IS REPORTED FURTHER THAT WHERE COMMERCIAL STEVEDORES PERFORMED LOADING SERVICES AT THE EXPENSE OF THE VESSEL, THE CARRIER SHOULD BE ABLE TO ASCERTAIN FROM ITS STEVEDORE'S BILL FOR SERVICES IF A CHARGE WAS MADE FOR HANDLING.

AS IN OTHER INSTANCES, THE PROBLEM OF ASCERTAINING IF HANDLING WAS PERFORMED ON ANY PARTICULAR OPERATION IS COMPLICATED BY THE FACT THAT ITEM 10/C) OF WESTBOUND LOCAL TARIFF NO. 1-V PROVIDED THAT HANDLING CHARGES WOULD NOT APPLY ON CARGO HANDLED DIRECT BY SHIP'S TACKLE FROM OPEN-TOP RAILROAD CARS, OR ON CARGO MOVING DIRECT TO SHIP'S HOLD BY GRAVITY OR MECHANICAL CONVEYOR. WHEN THE CLAIMS FOR HANDLING CHARGES WERE RECEIVED BY THE GOVERNMENT AGENCIES INVOLVED, THEY COULD NOT DETERMINE WHAT METHOD OF HANDLING WAS EMPLOYED ON PARTICULAR VESSEL OPERATIONS, SINCE AVAILABLE OPERATIONS RECORDS DID NOT SHOW THIS INFORMATION. WE WILL CONSIDER ANY EVIDENCE THAT THE CARRIERS MIGHT BE ABLE TO FURNISH TO SUPPORT THEIR RIGHT TO HANDLING CHARGES AT SAN PEDRO AND LONG BEACH. AMONG OTHER THINGS, SUCH EVIDENCE SHOULD CONTAIN PROOF OF A CHARGE AGAINST THE VESSEL OPERATOR FOR LOADING COSTS WHERE SERVICE WAS PERFORMED AT MILITARY TERMINALS. ON THIS POINT WE NOTE THAT CERTAIN CLAIMS FOR HANDLING CHARGES COVER CARGO LOADED BY GOVERNMENT PERSONNEL AT PORT HUENEME, CALIFORNIA. THE NAVY REPORTS THAT NO LOADING COSTS HAVE BEEN ASSESSED AGAINST THE VESSEL ON THOSE SHIPMENTS. OBVIOUSLY, IN SUCH CASES NO BASIS EXISTS FOR ALLOWANCE OF THE CLAIMS.

SUMMARIZING, THE CARRIERS' CLAIMS ARE SUBJECT TO THE FOLLOWING DISPOSITION:

1. CLAIMS FOR HANDLING CHARGES ON SHIPMENTS AT PORTS WITHIN THE JURISDICTION OF THE SAN FRANCISCO ARMY PORT OF EMBARKATION ARE FOR SETTLEMENT BY ALLOWING 15 PERCENT OF THE COMMODITY RATE AND TERMINAL CHARGES NAMED IN THE SCHEDULE OF CHARGES USED FOR THAT AREA. SETTLEMENTS ALREADY ISSUED ON THAT BASIS ARE SUSTAINED.

2. THE CLAIMS FOR HANDLING CHARGES INVOLVING SHIPMENTS WITHIN THE JURISDICTION OF THE NAVAL SUPPLY CENTER, OAKLAND, CALIFORNIA, ARE DISALLOWED.

3. ALL OTHER CLAIMS AS TO WHICH ESSENTIAL PROOF IS LACKING ARE DISALLOWED.

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