B-153475, JUNE 15, 1964, 43 COMP. GEN. 792

B-153475, JUNE 15, 1964, 43 COMP. GEN. 792

TRANSPORTATION - VESSELS - AMERICAN - CARGO PREFERENCE - TRAINSHIP SERVICE THE USE OF TRAINSHIP SERVICE BETWEEN THE UNITED STATES AND ALASKA TO MOVE MILITARY CARGO IN RAIL CARS WHICH ARE TRANSFERRED WITHOUT UNLOADING TO A FOREIGN BUILT AND FOREIGN REGISTERED SHIP FOR THE OCEAN SEGMENT OF THE TRIP AND, AFTER ARRIVAL AT THE ALASKAN PORT, CONTINUE ON TRACKS TO DESTINATION UNDER A SINGLE THROUGH BILL OF LADING IS NOT THE USE OF RAIL SERVICE BUT TRANSPORTATION BY SEA ON A FOREIGN VESSEL IN VIOLATION OF THE CARGO PREFERENCE ACT OF 1904 (10 U.S.C. 2631), REQUIRING SHIPMENT OF DEFENSE SUPPLIES TO MOVE ON AMERICAN VESSELS, IN VIEW OF THE PURPOSE OF THE PREFERENCE STATUTES TO PROTECT AMERICAN SHIPPING FROM FOREIGN COMPETITION AND THE CLASSIFICATION OF SEATRAIN SERVICE, WHICH IS COMPARABLE TO TRAINSHIP SERVICE, AS A COMMON CARRIER BY WATER AND, THEREFORE, THE DEFENSE DEPARTMENT DOES NOT HAVE AUTHORITY TO UTILIZE SUCH PROPOSED TRAINSHIP SERVICE.

TO THE SECRETARY OF DEFENSE, JUNE 15, 1964:

WE REFER AGAIN TO LETTER OF FEBRUARY 10, 1964, FROM THE ASSISTANT SECRETARY OF DEFENSE (INSTALLATIONS AND LOGISTICS), IN WHICH WE ARE ASKED FOR OUR DECISION AS TO THE AUTHORITY OF THE DEPARTMENT OF DEFENSE TO USE THE SERVICES OF A TRAINSHIP, NOT REGISTERED UNDER THE LAWS OF THE UNITED STATES, AS A SEGMENT OF A RAIL-WATER-RAIL TRANSPORTATION SERVICE BETWEEN POINTS IN THE CONTERMINOUS STATES AND ALASKA.

SPECIFICALLY, THIS SERVICE--- REPORTEDLY SCHEDULED TO COMMENCE IN JUNE 1964--- CONTEMPLATES THE MOVEMENT OF RAIL CARS BY AMERICAN RAIL CARRIERS THROUGH THE NORTHWESTERN CORNER OF THE STATE OF WASHINGTON TO SPECIAL DOCK FACILITIES BUILT ON A PORTION OF THE GREAT NORTHERN RAILWAY NEAR VANCOUVER, BRITISH COLUMBIA. AT VANCOUVER, THE RAIL CARS WILL BE PLACED ABOARD THE TRAINSHIP SS. ALASKA (FORMERLY THE CITY OF NEW ORLEANS) WITHOUT TRANSFER OF LADING. THE RAIL CARS WILL THEN BE TRANSPORTED TO WHITTIER, ALASKA--- A TERMINUS OF THE ALASKA RAILROAD-- AND THERE PLACED ON TRACKS FOR FORWARDING TO ULTIMATE DESTINATIONS IN ALASKA.

THE ALASKA RAILROAD FREIGHT TARIFF NO. 70, ICC F-25, EFFECTIVE MAY 26, 1964, NAMES JOINT AND PROPORTIONAL CLASS AND COMMODITY CARLOAD RATES AND RULES AND CHARGES FOR THIS SERVICE BETWEEN SEATTLE, WASHINGTON, AND ALASKA POINTS. ALSO, SUPPLEMENT 42, TRANS-CONTINENTAL FREIGHT BUREAU TARIFF 5-B, ICC 1674, EFFECTIVE JUNE 10, 1964, SHOWS ROUTES INVOLVING THE GREAT NORTHERN RAILWAY FROM SEATTLE TO DELTA ALASKA TERMINAL, B.C., AND THE ALASKA TRAINSHIP CORPORATION TO WHITTIER, ALASKA.

THERE ARE PRESENTLY TWO THROUGH TRANSPORTATION SERVICES TO WHITTIER BY MEANS OF TUG-TOWED RAIL BARGES WHICH ARE UNDER UNITED STATES REGISTRY AND MANNED BY AMERICAN SEAMEN. ONE SERVICE ORIGINATES IN SEATTLE AND THE OTHER ORIGINATES IN PRINCE RUPERT, BRITISH COLUMBIA (APPROXIMATELY 50 MILES SOUTH OF THE ALASKA PANHANDLE). THE PRINCE RUPERT SERVICE IS IN CONJUNCTION WITH CANADIAN RAILROADS CAPABLE OF HANDLING TRANSCONTINENTAL MOVEMENTS FROM THE CENTRAL AND EASTERN AREAS OF THE UNITED STATES. ALASKA IS ALSO SERVED BY CARGO-VAN BARGE TRANSPORTATION FROM SEATTLE AND BY CONVENTIONAL BREAK-BULK WATER CARRIERS.

THE PROPOSED TRAINSHIP SERVICE IS SAID TO BE SUPERIOR TO RAIL-BARGE SERVICE SINCE IT WILL OPERATE DURING THE WINTER MONTHS, REDUCE TURN AROUND TIME BY AT LEAST 50 PERCENT, AND BE SAFER NOT ONLY BECAUSE THE RAIL CARS WILL BE PROTECTED FROM THE ELEMENTS WITHIN THE HOLD OF THE TRAINSHIP BUT ALSO BECAUSE A SELF-PROPELLED VESSEL IS NOT AS SUBJECT TO WEATHER-CAUSED MISHAPS IN ALASKAN WATERS AS A TOWED VESSEL.

THE CITY OF NEW ORLEANS WAS ORIGINALLY OWNED BY THE WEST INDIA FRUIT AND STEAMSHIP COMPANY AND WAS EMPLOYED IN THE FLORIDA-HAVANA TRADE, BUT BECAUSE OF RELATIONS BETWEEN THE UNITED STATES AND CUBA THE SERVICE WAS DISCONTINUED. A BILL TO AUTHORIZE THE ADMITTANCE OF THIS VESSEL TO AMERICAN REGISTRY AND TO PERMIT THE USE OF SUCH VESSEL IN THE COASTWISE TRADE BETWEEN THE STATE OF ALASKA AND THE STATE OF WASHINGTON WAS BEFORE CONGRESS IN 1963. S. 534, 88TH CONGRESS, 1ST SESS. SINCE THIS VESSEL WAS BUILT IN JAPAN AND REGISTERED UNDER THE LAWS OF THE REPUBLIC OF LIBERIA (HEARINGS BEFORE THE SUBCOMMITTEE ON MERCHANT MARINE AND FISHERIES OF THE SENATE COMMITTEE ON COMMERCE ON S. 534, 88TH CONGRESS, 1ST SESS. 229), ITS OPERATION IN THE COASTWISE TRADE WAS PROHIBITED BY SECTION 4132 OF THE REVISED STATUTES, 46 U.S.C. 11--- WHICH PROHIBITS DOCUMENTATION OF FOREIGN -BUILT VESSELS FOR OPERATION IN THE COASTWISE TRADE--- AND SECTION 27 OF THE MERCHANT MARINE ACT OF 1920 (THE JONES ACT), 46 U.S.C. 883--- WHICH PROHIBITS THE TRANSPORTATION OF MERCHANDISE BY WATER, OR BY LAND AND WATER, EITHER DIRECTLY OR VIA A FOREIGN PORT, BETWEEN POINTS IN THE UNITED STATES EMBRACED WITHIN COASTWISE LAWS, IN ANY OTHER VESSEL THAN A VESSEL BUILT IN THE UNITED STATES, DOCUMENTED UNDER THE LAWS OF THE UNITED STATES, AND OWNED BY CITIZENS OF THE UNITED STATES. TESTIMONY AT THE HEARINGS ON S. 534, PAGES 11, 12 AND 34, REVEALED THAT THE ORIGINAL CONSTRUCTION COST OF THE CITY OF NEW ORLEANS WAS 4.8 MILLION DOLLARS AND THAT IT WOULD COST 7.9 MILLION DOLLARS TO DUPLICATE IN AMERICAN SHIPYARDS. THIS VESSEL HAS A LENGTH OF 487 FEET, A BEAM OF 70 FEET, A CAPACITY OF 56 RAIL CARS, AND A SPEED OF 18 KNOTS.

THE MARITIME ADMINISTRATOR RECOMMENDED AGAINST PASSAGE OF S. 534 BECAUSE (1) A PRECEDENT MIGHT BE SET IN ADMITTING A FOREIGN-BUILT SHIP TO THE DOMESTIC TRADE, THUS UNDERMINING THE JONES ACT, (2) UNITED STATES SHIPYARDS MIGHT BE DEPRIVED OF PROSPECTIVE WORK, AND (3) THE VESSEL WOULD COMPETE WITH AMERICAN VESSELS. PAGE 3 OF THE HEARINGS ON S. 534. IN JUNE 1963 THE SENATE COMMITTEE ON COMMERCE VOTED AGAINST REPORTING OUT THIS BILL. 109 CONG.REC. 10792.

IN THE LETTER OF FEBRUARY 10, 1964, YOUR DEPARTMENT POINTS OUT THAT CERTAIN STATUTES PROVIDE THAT, WITH CERTAIN EXCEPTIONS, ONLY UNITED STATES FLAG VESSELS MAY BE UTILIZED IN THE OCEAN TRANSPORTATION OF MILITARY CARGO, INCLUDING PRIVATELY OWNED VEHICLES AND OTHER PERSONAL EFFECTS OF PERSONNEL BEING TRANSFERRED AT GOVERNMENT EXPENSE. SEVERAL STATUTORY PROVISIONS, SET FORTH IN PERTINENT PART BELOW, ARE MENTIONED:

ONLY VESSELS OF THE UNITED STATES * * * MAY BE USED IN THE TRANSPORTATION BY SEA OF SUPPLIES BOUGHT FOR THE ARMY, NAVY, AIR FORCE, OR MARINE CORPS. * * * IF THE PRESIDENT FINDS THAT THE FREIGHT CHARGES BY THOSE VESSELS IS EXCESSIVE OR OTHERWISE UNREASONABLE, CONTRACTS FOR TRANSPORTATION MAY BE MADE AS OTHERWISE PROVIDED BY LAW. CHARGES MADE FOR THE TRANSPORTATION OF THOSE SUPPLIES BY THOSE VESSELS MAY NOT BE HIGHER THAN THE CHARGES MADE FOR TRANSPORTING LIKE GOODS FOR PRIVATE PERSONS.

ACT OF APRIL 28, 1904, CH. 1766, 33 STAT. 518, AS AMENDED, 70A STAT. 146, 10 U.S.C. 2631.

WHENEVER THE UNITED STATES SHALL PROCURE, CONTRACT FOR, OR OTHERWISE OBTAIN FOR ITS OWN ACCOUNT * * * ANY EQUIPMENT, MATERIALS, OR COMMODITIES, WITHIN OR WITHOUT THE UNITED STATES * * * THE APPROPRIATE AGENCY OR AGENCIES SHALL TAKE SUCH STEPS AS MAY BE NECESSARY AND PRACTICABLE TO ASSURE THAT AT LEAST 50 PERCENTUM OF THE GROSS TONNAGE OF SUCH EQUIPMENT, MATERIALS, OR COMMODITIES (COMPUTED SEPARATELY FOR DRY BULK CARRIERS, DRY CARGO LINERS, AND TANKERS), WHICH MAY BE TRANSPORTED ON OCEAN VESSELS SHALL BE TRANSPORTED ON PRIVATELY OWNED UNITED STATES-FLAG COMMERCIAL VESSELS, TO THE EXTENT SUCH VESSELS ARE AVAILABLE AT FAIR AND REASONABLE RATES FOR UNITED STATES-FLAG COMMERCIAL VESSELS, IN SUCH MANNER AS WILL INSURE A FAIR AND REASONABLE PARTICIPATION OF UNITED STATES-FLAG COMMERCIAL VESSELS IN SUCH CARGOES BY GEOGRAPHIC AREAS: PROVIDED, THAT THE PROVISIONS OF THIS SUBSECTION MAY BE WAIVED WHENEVER THE CONGRESS BY CONCURRENT RESOLUTION OR OTHERWISE, OR THE PRESIDENT OF THE UNITED STATES OR THE SECRETARY OF DEFENSE DECLARES THAT AN EMERGENCY EXISTS JUSTIFYING A TEMPORARY WAIVER OF THE PROVISIONS OF THIS SUBSECTION AND SO NOTIFIES THE APPROPRIATE AGENCY OR AGENCIES * * *.

ACT OF AUGUST 26, 1954, CH. 936, 68 STAT. 832, AS AMENDED, 46 U.S.C. 1241 (B).

ANY OFFICER OR EMPLOYEE OF THE UNITED STATES TRAVELING ON OFFICIAL BUSINESS OVERSEAS OR TO OR FROM ANY OF THE POSSESSIONS OF THE UNITED STATES SHALL TRAVEL AND TRANSPORT HIS PERSONAL EFFECTS ON SHIPS REGISTERED UNDER THE LAWS OF THE UNITED STATES * * *.

ACT OF JUNE 29, 1936, CH. 858, 49 STAT. 2015, 46 U.S.C. 1241 (A).

* * * PRIVATELY OWNED AMERICAN SHIPPING SERVICES MAY BE UTILIZED FOR THE TRANSPORTATION OF MOTOR VEHICLES OWNED BY GOVERNMENT PERSONNEL WHENEVER TRANSPORTATION OF SUCH VEHICLES AT GOVERNMENT EXPENSE IS OTHERWISE AUTHORIZED BY LAW.

ACT OF MAY 28, 1956, CH. 325, 70 STAT. 187, 46 U.S.C. 1241 (C).

IT IS STATED THAT YOUR DEPARTMENT IS PARTICULARLY INTERESTED IN THE APPLICATION OF THE CARGO PREFERENCE ACT OF 1904, 10 U.S.C. 2631.

THE ALASKA TRAINSHIP CORPORATION, WHICH WILL OWN AND OPERATE THE TRAINSHIP, HAS SUBMITTED OPINIONS OF THEIR COUNSEL AND OTHER MEMORANDA TO THE EFFECT THAT THESE STATUTES DO NOT PROHIBIT THE USE OF THE PROPOSED SERVICE BY YOUR DEPARTMENT. IN SUMMARY, THEY TAKE THE POSITION THAT THE SERVICE IS ESSENTIALLY A RAIL SERVICE AND THE QUOTED STATUTES ARE NOT APPLICABLE BECAUSE THEY RELATE TO VESSELS IN WHICH CARGOES ARE LOADED AT THE PORT OF ORIGIN AND DISCHARGED AT PORT OF DESTINATION.

AS YOUR DEPARTMENT POINTS OUT, THE CARRIER'S BASIC THESIS THAT THE SERVICE IS RAIL TRANSPORTATION IS PREDICATED ON TWO FACTS. FIRST, THE CARGO WILL BE PLACED IN A RAIL CAR AT AN INTERIOR POINT OF ORIGIN AND WILL NEVER LEAVE THE CAR, NOR WILL THE CAR LEAVE THE RAILS, UNTIL IT ARRIVES AT FINAL DESTINATION. THE RAIL CAR WILL BE TRANSFERRED FROM RAIL LINES TO A WATER CARRIER ESPECIALLY DESIGNED TO ACCOMMODATE IT ON RAILS AND UPON COMPLETION OF THE WATER SEGMENT OF THE JOURNEY WILL BE MOVED AGAIN TO RAIL LINES, AS IS NORMAL IN THE USE OF A TRAIN FERRY. SUCH A SHIPMENT WILL MOVE FROM ORIGIN TO DESTINATION ON A SINGLE, THROUGH BILL OF LADING. SECOND, NO SINGLE COMPONENT OF THE THROUGH SERVICE WILL BE AVAILABLE TO EITHER THE GOVERNMENT OR THE PUBLIC. THE TRAINSHIP WILL HAVE THE STATUS OF A CONTRACT CARRIER. ITS ONLY CUSTOMER WILL BE THE CONNECTING RAIL CARRIER, WHOSE WATER FACILITY IT WILL BE. NO SERVICE WILL BE AVAILABLE EXCEPT AS A "PACKAGE" UNDER SINGLE-FACTOR RATES IN A RAIL TARIFF APPROVED BY THE INTERSTATE COMMERCE COMMISSION AND TENDERED BY THE RAIL CARRIER. THIS IS DISTINGUISHED FROM THE CONVENTIONAL BREAK-BULK SERVICE WHERE THE CONTRACT OF CARRIAGE IS MADE DIRECTLY WITH THE VESSEL AND THE CARGO IS LOADED IN AND UNLOADED FROM THE VESSEL AT THE PORTS OF SHIPMENT AND DISCHARGE.

THE JURISDICTION OF THE COMMISSION AND ITS AUTHORITY TO APPROVE THE PROPOSED SERVICE UNDER THE SINGLE-FACTOR RATE TARIFF ARE CITED BY THE ALASKA TRAINSHIP CORPORATION AS STATUTORY RECOGNITION OF THE ESSENTIAL NATURE OF THE SERVICE. THE USE OF A FOREIGN-FLAG VESSEL IS AUTHORIZED UNDER CERTAIN CIRCUMSTANCES BY AN EXCEPTION IN THE JONES ACT READING AS FOLLOWS:

NO MERCHANDISE SHALL BE TRANSPORTED BY WATER, OR BY LAND AND WATER, ON PENALTY OF FORFEITURE THEREOF, BETWEEN POINTS IN THE UNITED STATES * * * EITHER DIRECTLY OR VIA A FOREIGN PORT, OR FOR ANY PART OF THE TRANSPORTATION, IN ANY OTHER VESSEL THAN A VESSEL BUILT IN AND DOCUMENTED UNDER THE LAWS OF THE UNITED STATES AND OWNED BY PERSONS WHO ARE CITIZENS OF THE UNITED STATES * * * PROVIDED FURTHER, THAT THIS SECTION SHALL NOT APPLY TO MERCHANDISE TRANSPORTED BETWEEN POINTS WITHIN THE CONTINENTAL UNITED STATES, INCLUDING ALASKA, OVER THROUGH ROUTES * * * RECOGNIZED BY THE INTERSTATE COMMERCE COMMISSION FOR WHICH ROUTES RATE TARIFF * * * SHALL * * * BE FILED WITH SAID COMMISSION WHEN SUCH ROUTES ARE IN PART OVER CANADIAN RAIL LINES AND THEIR OWN OR OTHER CONNECTING WATER FACILITIES * * *.

46 U.S.C. 883.

IN THE LEGAL MEMORANDUM SUBMITTED BY THE ALASKA TRAINSHIP CORPORATION ANALYSIS IS MADE OF THE LEGISLATIVE HISTORIES OF THE 1904 AND 1954 CARGO PREFERENCE ACTS, 46 U.S.C. 1241, AND CONSIDERABLE ATTENTION IS GIVEN TO THEIR PROPER CONSTRUCTION. IT IS ARGUED THAT IT IS DIFFICULT TO BELIEVE THAT CONGRESS, BY THE ENACTMENT OF THE INDICATED EXCEPTION TO THE JONES ACT IN 1958 (REFERRED TO AS THE "THIRD PROVISO"), WOULD HAVE APPROVED THE USE OF SUCH THROUGH ROUTES FOR THE TRANSPORTATION BETWEEN UNITED STATES POINTS OF PRIVATELY OWNED PROPERTY BUT WOULD, AT THE SAME TIME,BE DEEMED BY THE 1904 AND 1954 CARGO PREFERENCE ACTS TO HAVE INTENDED TO PROHIBIT THE USE OF SUCH SERVICE FOR THE TRANSPORTATION OF DEFENSE SUPPLIES OR 50 PERCENT OF OTHER GOVERNMENT PROPERTY. THE CONCLUSION REACHED BY THE CORPORATION IS THAT THE PROPOSED THROUGH TRANSPORTATION SERVICE WAS NOT CONTEMPLATED BY CONGRESS IN 1904 AND 1954 AND THAT SUCH A SERVICE WILL NOT FALL WITHIN THE PURVIEW OF "TRANSPORTATION" OF CARGO "BY SEA" OR ON "OCEAN VESSELS" IN THE SENSE OF THOSE TERMS AS USED IN THE 1904 AND 1954 CARGO PREFERENCE ACTS.

CONGRESSIONAL POLICY TO PROMOTE AND MAINTAIN A STRONG AMERICAN MERCHANT MARINE EXTENDS BACK TO THE FIRST YEAR OF OUR GOVERNMENT WHEN DISCOUNTS WERE ALLOWED ON DUTIES PAID FOR GOODS IMPORTED IN VESSELS OWNED BY AMERICAN CITIZENS. THE ACT OF JULY 4, 1789, CH. 2, SEC. 5, 1 STAT. 24, 27. THIS LEGISLATIVE POLICY HAS CONTINUED SUBSTANTIALLY UNCHANGED TO THE PRESENT DAY. FOR EXAMPLE, THE JONES ACT WAS AMENDED IN 1960 TO PROHIBIT THE COASTWISE OPERATION OF A REBUILT VESSEL UNLESS THE ENTIRE REBUILDING WAS ACCOMPLISHED IN THE UNITED STATES. ACT OF JULY 5, 1960, PUBLIC LAW 86 -583, 74 STAT. 321, 46 U.S.C. 883. FOR A COMPILATION OF THE EARLY PREFERENCE STATUTES, SEE CENTRAL VERMONT TRANSPORTATION CO. V. DURNING, 71 F.2D 273, 276 (1934), AFFIRMED 294, U.S. 33. IN COMMODITIES--- PAN- ATLANTIC STEAMSHIP CORP., 313 I.C.C. 23, 47-48 (1960), REVERSED 199 F.SUPP. 635, MODIFIED 372 U.S. 744, APPEAR EXCERPTS FROM RECENT GOVERNMENT PUBLICATIONS STRESSING THE IMPORTANCE OF COASTWISE SHIPPING FOR NATIONAL DEFENSE PURPOSES AND ALSO FOR THE USE OF THE GENERAL PUBLIC AS AN INTEGRAL PART OF THE NATIONAL TRANSPORTATION SYSTEM. AT THE TIME OF THE PASSAGE OF THE CARGO PREFERENCE ACT OF 1904 THE SECRETARY OF WAR WAS REQUIRED BY STATUTE TO AWARD CONTRACTS FOR THE PURCHASE AND TRANSPORTATION OF SUPPLIES TO THE LOWEST BIDDER. THE APPLICATION OF THESE LAWS RESULTED IN THE TRANSPORTATION OF ALL COAL TO THE PHILIPPINE ISLANDS ON 100 PERCENT FOREIGN BOTTOMS. S.REPT. NO. 182, 58 CONGRESS, 2D SESS. 1. WITH AN AWARENESS OF THE DIFFICULTIES ENCOUNTERED BY THE UNITED STATES AT THE COMMENCEMENT OF THE SPANISH-AMERICAN WAR--- THE SHORTAGE OF AMERICAN SUPPLY VESSELS REQUIRED THE PURCHASE OF 51 FOREIGN STEAMERS, SOME AT AN EXCESSIVE PRICE AND, AS IT TURNED OUT, OF LIMITED USEFULNESS, WHOSE FOREIGN CREWS IN MANY INSTANCES REFUSED TO SERVE UNDER THE AMERICAN FLAG-- - CONGRESS ENACTED LEGISLATION TO RESERVE FOR AMERICAN SHIPS THE TRANSPORTATION OF DEFENSE SUPPLIES. NOT ONLY WAS THIS LEGISLATION INTENDED TO ENCOURAGE A READY MERCHANT-FLEET CAPABILITY IN TIMES OF NATIONAL EMERGENCY, IT WAS ALSO INTENDED TO BE BENEFICIAL IN THE ESTABLISHMENT OF GENERAL COMMERCE, THE EMPLOYMENT OF AMERICAN SEAMEN, AND THE STIMULATION OF THE AMERICAN SHIPBUILDING INDUSTRY. SINCE AMERICAN SHIPS WERE COMPETING WITH CHEAPLY BUILT AND OPERATED FOREIGN VESSELS HEAVILY SUBSIDIZED BY FOREIGN NATIONS, CONGRESS FELT THAT IT SHOULD RESERVE GOVERNMENT TRAFFIC FOR AMERICAN SHIPS--- IN LINE WITH THE POLICY OF OTHER COUNTRIES WHICH REQUIRED THE TRANSPORTATION OF THEIR NATIONAL SUPPLIES IN VESSELS UNDER THEIR OWN FLAG--- EVEN IF THE COST OF SUCH TRANSPORTATION WERE INCREASED BY AS MUCH AS 300 PERCENT. H.REPT.NO. 1893, 58TH CONGRESS, 2D SESS. 2-4 AND 38 CONG.REC. 5799.

THE BROAD SCOPE OF THE 1904 ACT IS INDICATED BY THE FOLLOWING PASSAGES EXCERPTED FROM THE SENATE DEBATE OCCURRING ON FEBRUARY 27, 1904:

MR. PERKINS. * * * MY FRIEND FROM OREGON (MR. MITCHELL) SEEMED TO THINK THERE WAS SOME LOCAL PREFERENCE GIVEN BY THE PROVISIONS OF THIS BILL, AND THAT THE GREAT STATE OF OREGON, WHICH HE IN PART REPRESENTS, WOULD NOT HAVE A FAIR CHANCE. MR. PRESIDENT, THIS IS TOO BROAD A QUESTION TO CONFINE IT TO ANY PARTICULAR PORT OR STATE OR EVEN COAST. IT IS A BROAD, PATRIOTIC QUESTION THAT THE SHIPS SHOULD BE BUILT IN THE UNITED STATES, MANNED AND OFFICERED BY AMERICAN CITIZENS, THAT ARE TRANSPORTING THE MUNITIONS OF WAR AND OUR SAILORS AND THE SUPPLIES OF THE GOVERNMENT FROM ONE PORT OF THE UNITED STATES TO ANOTHER OR FROM ANY PORT OF THE UNITED STATES TO A FOREIGN PORT.

38 CONG. REC. 2464.

MR. PERKINS. * * * I BELIEVE IN BUILDING UP THE MERCHANT MARINE AND THE COMMERCE OF THIS COUNTRY. I BELIEVE IN CARRYING THE FREIGHT AND CARGO AND TRANSPORTING THE SOLDIERS OF OUR ARMY IN VESSELS BUILT IN THE UNITED STATES * * *.

38 CONG.REC. 2465.

MR. PERKINS. IS THERE ANYTHING IN THIS LAW THAT PREVENTS THE GOVERNMENT FROM BUYING AUSTRALIAN OR CARDIFF COAL DELIVERED IN MANILA OR HONOLULU OR THE UNITED STATES?

MR. BACON. I SHOULD THINK MOST UNDOUBTEDLY THERE IS. THAT WOULD CERTAINLY BE A VIOLATION OF THE SPIRIT OF THE LAW. WHAT BENEFIT WOULD THAT BE TO VESSELS OF AMERICAN REGISTRY, IF THE LAW CAN BE EVADED IN THAT WAY?

38 CONG.REC. 2473.

THUS, THE INTENT OF CONGRESS IS PLAINLY MANIFESTED TO INSURE THAT SHIPMENTS OF DEFENSE SUPPLIES MOVE ON AMERICAN VESSELS NOT ONLY BETWEEN THE UNITED STATES AND FOREIGN PORTS BUT BETWEEN TWO UNITED STATES PORTS AS WELL, AND THAT ANY PURCHASING ARRANGEMENTS PERMITTING THE USE OF FOREIGN BOTTOMS IN TRANSPORTING SUCH SUPPLIES WOULD BE IN VIOLATION OF THE MEANING AND SPIRIT OF THE LAW.

IN 26 OP.ATTY.GEN. 415 (1907) THE ATTORNEY GENERAL--- WHILE NOTING THAT THE EVIDENT PURPOSE OF THE 1904 ACT PLAINLY WAS TO ENCOURAGE THE DEVELOPMENT OF AMERICAN SHIPPING--- CONSTRUED THE STATUTE TO MEAN THAT A FOREIGN-FLAG VESSEL MAY BE UTILIZED WHEN NO AMERICAN SHIP IS AVAILABLE. THIS RATIONALE WAS AMPLIFIED BY THE COMPTROLLER OF THE TREASURY IN DECISIONS INDICATING THAT THE USE OF A FOREIGN-FLAG VESSEL WOULD NOT BE PROHIBITED IN CASES OF GRAVE EMERGENCY WHERE AMERICAN VESSELS WOULD NOT BE IMMEDIATELY AVAILABLE. 19 COMP. DEC. 537 (1913), AND 22 COMP. DEC. 307 (1916).

FROM A READING OF THE 1904 CARGO PREFERENCE ACT, ITS LEGISLATIVE HISTORY AND ADMINISTRATIVE INTERPRETATIONS, THERE CAN BE NO DOUBT THAT ITS PRIMARY PURPOSE--- LIKE OTHER IMPORTANT PARTS OF THE UNITED STATES MARITIME LAW--- IS TO PROTECT AMERICAN SHIPPING FROM FOREIGN COMPETITION. IT IS ALSO EVIDENT THAT THE PROPOSED TRAINSHIP SERVICE--- EMPLOYING A FOREIGN BUILT AND REGISTERED SHIP MANNED BY FOREIGN SEAMEN -- WILL BE IN COMPETITION WITH EXISTING TRANSPORTATION SERVICES UTILIZING UNITED STATES BUILT AND REGISTERED VESSELS MANNED BY AMERICAN CREWS. SEE SENATE HEARINGS ON S. 534, PAGES 3, 245 AND 266, AND THE FEDERAL MARITIME BOARD REPORT TO CONGRESS CONCERNING PROPOSALS TO AMEND SECTION 27 OF THE MERCHANT MARINE ACT, 1920, TO PERMIT CANADIAN OR OTHER FOREIGN-FLAG WATER CARRIERS TO PARTICIPATE IN THROUGH LAND-WATER ROUTES BETWEEN THE UNITED STATES AND ALASKA, PUBLISHED IN S.REPT.NO. 1163, 85TH CONGRESS, 1ST SESS. 43-45. THERE CAN BE NO QUESTION, EITHER, THAT THE WATER PORTION OF THIS SERVICE-- - WITH A ROUTING TRAVERSING A PART OF THE PACIFIC OCEAN--- IS "TRANSPORTATION BY SEA," IN THE GENERALLY ACCEPTED MEANING OF THE TERM (DE KERCHOVE'S INTERNATIONAL MARITIME DICTIONARY (1948) DEFINES A "SEAGOING VESSEL" AS A VESSEL FIT TO WITHSTAND THE ORDINARY STRAINS OF A SEA VOYAGE AND WHICH IN THE ORDINARY COURSE OF ITS BUSINESS DOES ACTUALLY GO TO SEA").

WE FEEL THAT THIS, ALONE, IS SUFFICIENT BASIS TO HOLD THAT USE OF THE PROPOSED TRAINSHIP SERVICE IN THE TRANSPORTATION OF DEFENSE SUPPLIES WOULD VIOLATE THE SPIRIT AS WELL AS THE LETTER OF THE 1904 CARGO PREFERENCE ACT. SEE CENTRAL VERMONT TRANSPORTATION CO. V. DURNING, 294 U.S. 33, 38- 39 (1935), AND THE GRANADA, 35 F.SUPP. 892, 894 (1940), FOR CONSTRUCTION, GENERALLY, OF MARITIME PREFERENCE STATUTES. IN ADDITION, HOWEVER, WE ARE NOT CONVINCED THAT THE PROPOSED TRAINSHIP SERVICE IS ESSENTIALLY A "RAIL" SERVICE BECAUSE, AS INDICATED BY THE CARRIER, IT CAN BE CHARACTERIZED AS PROVIDING THROUGH TRANSPORTATION ENTIRELY ON RAILS UNDER A SINGLE BILL OF LADING AND A SINGLE-FACTOR RATE OVER A ROUTE RECOGNIZED BY THE INTERSTATE COMMERCE COMMISSION.

IN INVESTIGATION OF SEATRAIN LINES, INC., 195 I.C.C 215 (1933), ONE OF THE ISSUES PRESENTED TO THE INTERSTATE COMMERCE COMMISSION WAS WHETHER SEATRAIN WAS A "RAILROAD" WITHIN THE MEANING OF SECTION 1 (3) OF THE INTERSTATE COMMERCE ACT) THE TERM "RAILROAD" AS USED IN THE ACT INCLUDED ALL CAR FLOATS AND FERRIES USED BY OR OPERATED IN CONNECTION WITH ANY RAILROAD, 49 U.S.C. 1 (3). SEATRAIN OWNED AND OPERATED VESSELS SIMILAR TO THE SS ALASKA IN THAT THEY WERE DESIGNED TO TRANSPORT BY WATER FREIGHT BROUGHT TO OR MOVED FROM PORTS BY RAILROADS WITHOUT TRANSFERRING THE FREIGHT FROM THE RAIL CARS. THE VESSELS WERE APPROXIMATELY 480 FEET LONG, WITH 63 FOOT BEAMS, AND HAD SPEEDS OF 16.5 KNOTS OR BETTER. THEY WERE OCEAN-GOING VESSELS BUILT TO SPECIFICATIONS OF LLOYDS-REGISTER AND THE AMERICAN BUREAU FOR WORLD WIDE TRADE. THROUGH RAIL SERVICE WAS PROVIDED BETWEEN THE EAST AND GULF COASTS OF THE UNITED STATES AND THE UNITED STATES AND CUBA, VIA THE PORTS OF HOBOKEN, NEW JERSEY, NEW ORLEANS, LOUISIANA, AND HAVANA, CUBA. SOME SHIPMENTS CARRIED BY SEATRAIN MOVED UNDER THROUGH BILLS OF LADING AT SINGLE-FACTOR JOINT THROUGH RATES (FOR A DETAILED DESCRIPTION OF SEATRAIN'S USE OF THROUGH ROUTES, BILLS OF LADING AND RATES, SEE SEATRAIN LINES, INC. V. AKRON, C. AND Y.RY. CO., 226 I.C.C 7 (1938), MODIFIED 243 I.C.C. 199; 259 I.C.C. 297). SEATRAIN IN LITERATURE WHICH IT HAD ISSUED DESCRIBED ITSELF AS:

A SEA-GOING RAILROAD, RUNNING HUNDREDS OR EVEN THOUSANDS OF MILES ACROSS THE OCEAN TO SOME FAR DISTANT PORT WITH A TRAIN OF FREIGHT CARS A MILE LONG. * * * ALTHOUGH IT IS AN OCEAN CARRIER, A SEATRAIN SHIP IS ACTUALLY A FLOATING BRIDGE--- A CONNECTING LINK FOR ALL RAILROADS. IN THE CASE OF CUBA, SEATRAIN HAS LITERALLY ADDED TO NORTH AMERICAN RAILROADS 2,626 MILES OF STANDARD GUAGE CUBAN TRACK. * * * THUS, IT MAY BE SAID THAT THE FUNCTION OF SEATRAIN IS ESSENTIALLY THAT OF AN INTERMEDIATE RAIL CARRIER; IT EXTENDS THE RAILS OUT ACROSS THE SEA.

(195 I.C.C. 215, 220)

THE INTERVENORS IN THE SEATRAIN CASE CONTENDED THAT THE VESSELS OWNED BY SEATRAIN WERE FERRIES OPERATED IN CONNECTION WITH RAILROADS AND THAT, THEREFORE, SEATRAIN WAS A COMMON CARRIER BY RAILROAD SUBJECT TO THE COMMISSION'S JURISDICTION. THE COMMISSION--- AFTER POINTING OUT THAT SEATRAIN VESSELS DIFFERED FROM CAR FERRIES IN THAT THEY WERE LARGE OCEAN- GOING SHIPS, WITH MULTIPLE DECKS, AND TRAVELING OVER A THOUSAND MILES--- HELD THAT SEATRAIN WAS NOT A COMMON CARRIER BY RAILROAD OR AN EXTENSION OF A LINE OF RAILROAD, BUT, INSTEAD, A COMMON CARRIER BY WATER. IN THE ABOVE AND OTHER CASES THE STATUS OF SEATRAIN AS A COMMON CARRIER BY WATER HAS BEEN AFFIRMED. I.C.C. V. HOBOKEN R.CO., 320 U.S. 368 (1943); UNITED STATES V. SEATRAIN LINES, 329 U.S. 424, 429 (1947); INVESTIGATION OF SEATRAIN LINES, INC., 206 I.C.C. 328 (1935). THE WEST INDIA FRUIT AND STEAMSHIP COMPANY--- FORMER OWNER OF THE SS ALASKA--- WAS ALSO CONSIDERED A COMMON CARRIER BY WATER IN THE TRANSPORTATION OF PROPERTY BY TRAINSHIP BETWEEN UNITED STATES AND CUBA. WEST INDIA FRUIT AND STEAMSHIP CO. V. SEATRAIN LINES, 170 F.2D 775 (1948), DISMISSED ON MOTION OF COUNSEL FOR PETITIONER, 336, U.S. 908, AND WEST INDIA FRUIT AND STEAMSHIP CO. V. SEAFARERS' INTERNATIONAL UNION, 1963 A.M.C. 1263, 1267 (1961).

AS SHOWN IN THE LAST MENTIONED CASE THE AMERICAN BUREAU OF SHIPPING IS A NONGOVERNMENTAL INTERNATIONAL SHIP CLASSIFICATION SOCIETY WHICH ACTS AS AGENT FOR AND REPRESENTATIVE OF THE LIBERIAN GOVERNMENT TO PERFORM INSPECTIONS AND SURVEYS OF SHIPS FLYING THE LIBERIAN FLAG. SUPPLEMENT NO. 1 (MAY 1, 1964) OF THE RECORD OF THE AMERICAN BUREAU OF SHIPPING, 1964, SHOWS THAT THE SS ALASKA WAS BUILT UNDER THE SPECIAL SUPERVISION OF THE BUREAU'S SURVEYORS WITH THE HIGHEST HULL AND MACHINERY CLASSIFICATION, TO SPECIAL MODIFIED REQUIREMENTS FOR SERVICE BETWEEN THE EAST COAST OF THE UNITED STATES, SOUTH OF WILMINGTON, NORTH CAROLINA, OR GULF OF MEXICO PORTS, TO CUBA AND THE CARIBBEAN SEA, AND WAS APPROVED BY THE BUREAU'S COMMITTEE FOR SUCH SERVICE. WE UNDERSTAND THAT THE SS ALASKA WILL UNDERGO CERTAIN HULL MODIFICATIONS IN ORDER TO BE SUITABLE FOR THE ALASKA TRADE BEFORE COMMENCING THIS SERVICE. THUS, THE SIZE, SPEED, AND OTHER FEATURES OF THE SS ALASKA ARE COMPARABLE TO THE SEATRAIN VESSELS AND THE OPERATION OF THE PROPOSED TRAINSHIP SERVICE, WITH THROUGH ROUTES, RATES AND BILLS OF LADING, IS SIMILAR TO THAT OF THE SEATRAIN SERVICE.

IN THE LIGHT OF THE CASES CONCERNING THE SEATRAIN SERVICE THE OPERATION OF THE SS ALASKA IN THE PROPOSED SERVICE WOULD NOT BE CONSIDERED COMMON CARRIAGE BY RAILROAD OR AN EXTENSION OF A LINE OF A RAILROAD BUT COMMON CARRIAGE BY WATER. WHILE WE REALIZE THAT SUCH CLASSIFICATION BY THE COMMISSION IN THE SEATRAIN CASE WAS MADE FOR THE PURPOSE OF DETERMINING THE APPLICABILITY OF CERTAIN SECTIONS OF THE INTERSTATE COMMERCE ACT, 49 U.S.C. 1, SUCH A BASIS OF CLASSIFICATION WOULD SEEM TO BE EQUALLY AVAILABLE FOR THE PURPOSE OF DETERMINING WHETHER RAIL CARS TRANSPORTED BY THE SS ALASKA WOULD BE "TRANSPORTATION BY SEA" WITHIN THE MEANING OF THE 1904 CARGO PREFERENCE ACT.

WE ALSO BELIEVE TO BE UNSOUND THE FURTHER ARGUMENT OF THE ALASKA TRAINSHIP CORPORATION--- THAT BY AMENDING THE JONES ACT IN 1958 TO INCLUDE POINTS IN ALASKA IN THE THIRD PROVISO PERMITTING CARRIAGE OF CARGO BY FOREIGN SHIPS FROM CANADIAN PORTS WHERE SUCH CARGO MOVED OVER JOINT AMERICAN-CANADIAN RAIL ROUTES, CONGRESS MUST HAVE INTENDED TO PERMIT THE CARRIAGE OF DEFENSE SUPPLIES UNDER SUCH CIRCUMSTANCES INABROGATION OF THE 1904 CARGO PREFERENCE ACT. SUCH A THEORY IS CONTRADICTED BY THE CENTRAL VERMONT TRANSPORTATION CO. CASE MENTIONED ABOVE, IN WHICH A WATER CARRIER MAINTAINED THAT BECAUSE THE INTERSTATE COMMERCE COMMISSION WAS GIVEN JURISDICTION OVER THE TRANSPORTATION OF PROPERTY PARTLY BY RAIL AND PARTLY BY WATER UNDER AN ARRANGEMENT FOR CONTINUOUS CARRIAGE AND TO ESTABLISH THROUGH ROUTES AND MAXIMUM JOINT RATES FOR SUCH RAIL-WATER TRANSPORTATION, THE JONES ACT WOULD NOT APPLY TO SHIPMENTS BETWEEN UNITED STATES POINTS CARRIED OVER RAIL WATER ROUTES UTILIZING FOREIGN VESSELS. THE LOWER COURT FOUND THAT THE PROVISIONS OF THE INTERSTATE COMMERCE ACT AND THE JONES ACT "ARE ENTIRELY COMPATIBLE, RELATE TO DIFFERENT MATTERS, AND MAY, WITHOUT DIFFICULTY, BE READ TOGETHER" (PAGE 275). THE SUPREME COURT CONCURRED IN THIS VIEW, STATING THAT IT KNEW OF "NO PRINCIPLE OF STATUTORY CONSTRUCTION WHICH WOULD ADMIT OF SUCH A RESULT" (PAGE 40), THAT IS, THE REMOVAL OF AN EARLY STATUTORY MARITIME PROHIBITION, REPEATEDLY REENACTED, BY CONFERRING UPON THE COMMISSION JURISDICTION OVER RAIL WATER ROUTES AND RATES.

IT IS CONCEIVABLE THAT CONGRESS WOULD PERMIT THE AMERICAN PUBLIC, SHIPPING FOR THEIR OWN ACCOUNT--- NOT THE GOVERNMENT-S--- TO EMPLOY FOREIGN VESSELS AND AT THE SAME TIME REQUIRE GOVERNMENTAL SHIPPERS TO EMPLOY ONLY AMERICAN VESSELS. AND THIS HAS BEEN THE CASE SINCE 1904 WITH RESPECT TO DEFENSE SUPPLIES MOVING IN FOREIGN COMMERCE. THE 1958 AMENDMENT, INCLUDING ALASKA IN THE PARTLY CANADIAN RAIL-WATER EXCEPTION TO THE JONES ACT (APPLYING TO TRANSPORTATION BETWEEN POINTS IN THE UNITED STATES), NO MORE ALTERED THIS POLICY THAN DID THE ORIGINAL JONES ACT WHICH IN 1920 PERMITTED THE CANADIAN RAIL-WATER EXCEPTION, EXCLUDING ALASKA. FURTHERMORE, THIS EXCEPTION TO THE JONES ACT WAS ORIGINALLY INTENDED TO AVOID DISTURBANCE OF ESTABLISHED ROUTES, RECOGNIZED BY THE INTERSTATE COMMERCE COMMISSION AS BEING IN THE PUBLIC INTEREST, BETWEEN THE NORTHWESTERN AND EASTERN STATES THROUGH THE LAKE PORTS. THIS WAS EXPECTED TO RESULT IN THE RETENTION BY AMERICAN RAIL CARRIERS OF TRAFFIC WHICH MIGHT HAVE BEEN OTHERWISE DIVERTED TO ALL-WATER TRANSPORTATION BY FOREIGN VESSELS BETWEEN POINTS IN CANADA AND THE UNITED STATES. SEE THE OPINION OF THE SUPREME COURT IN THE CENTRAL VERMONT TRANSPORTATION CO. CASE, PAGE 39. ACCORDINGLY, WE CONCLUDE THAT THE 1958 AMENDMENT OF THE JONES ACT--- INCLUDING ALASKA IN THE THIRD PROVISO--- DID NOT CHANGE THE STRINGENT REQUIREMENTS OF THE 1904 CARGO PREFERENCE ACT. IT SHOULD BE NOTED INCIDENTALLY THAT THE THIRD PROVISO IN THE JONES ACT WAS DESIGNED TO COVER A SITUATION INVOLVING THE GREAT LAKES AND TRANSPORTATION OVER "CANADIAN RAIL LINES" PHYSICALLY LOCATED ON CANADIAN SOIL AND APPARENTLY OWNED BY CANADIAN OR OTHER FOREIGN NATIONALS. IF, IN FACT, THE TRACKS IN THE PROPOSED ROUTE, SITUATED IN CANADA, ARE OWNED AND OPERATED BY THE GREAT NORTHERN RAILWAY, A COMPANY INCORPORATED IN THE UNITED STATES AND OWNED BY ITS CITIZENS, A TECHNICAL QUESTION COULD BE RAISED AS TO THE APPLICABILITY OF THE EXCEPTION IN THE JONES ACT ON THE GROUND THAT "CANADIAN RAIL LINES" ARE NOT INVOLVED--- IN VIEW OF THE PURPOSE AND THE ROUTES INTENDED TO BE COVERED BY THE EXCEPTION TO THE JONES ACT AT THE TIME OF ENACTMENT IN 1920.

THE 1954 CARGO PREFERENCE ACT BY AMENDING SECTION 901 OF THE MERCHANT MARINE ACT OF 1936, 49 STAT. 2015, 46 U.S.C. 1241, PROVIDED PERMANENT LEGISLATION COVERING THE TRANSPORTATION OF A SUBSTANTIAL PORTION OF WATERBORNE CARGOES IN UNITED STATES-FLAG VESSELS. IN H.REPT.NO. 80, ADMINISTRATION OF CARGO PREFERENCE ACT, 84TH CONGRESS, 1ST SESS., PAGE 2, IT IS STATED THAT THE 50-PERCENT PROVISIONS OF THE 1954 CARGO PREFERENCE ACT ARE TO APPLY "IN FOUR KINDS OF SITUATIONS" THE FIRST BEING WHERE THE UNITED STATES "PROCURES, CONTRACTS OR OTHERWISE OBTAINS FOR ITS OWN ACCOUNT EQUIPMENT, MATERIALS, OR COMMODITIES," AND THE REMAINING THREE COVERING TRANSACTIONS INVOLVING FOREIGN SUBJECTS OR NATIONS. THIS FIRST SITUATION IS NOT RESTRICTED IN TERMS TO EITHER FOREIGN OR DOMESTIC COMMERCE. IN HARMONY WITH THE BASIC MARITIME POLICY OF THE UNITED STATES AS STATED IN SECTION 101 OF THE MERCHANT MARINE ACT OF 1936, 46 U.S.C. 1101, AND ON THE BASIS OF THE LANGUAGE ALONE, THE 1954 ACT MIGHT BE REGARDED AS RELATING TO GOVERNMENT WATERBORNE CARGO TRANSPORTED BETWEEN POINTS IN THE UNITED STATES. ON PAGE 10 OF THE LEGAL MEMORANDUM SUBMITTED ON BEHALF OF THE CARRIER COMPTROLLER GENERAL'S DECISION B-140872, DATED MAY 10, 1960, 39 COMP. GEN. 758, IS MENTIONED IN SUPPORT OF THE STATEMENT THAT THE CARGO PREFERENCE ACT OF 1954 APPLIES ONLY" TO TRANSPORTATION IN FOREIGN COMMERCE. WE WISH TO POINT OUT THAT THE SPECIAL SITUATION CONCERNED IN THAT CASE GAVE RISE TO THE STATEMENT THAT THE CARGO PREFERENCE ACT OF 1954 PERTAINED TO "ALL" FOREIGN COMMERCE, AND IT WAS NOT THEN, NOR IS IT NOW, NECESSARY TO DETERMINE WHETHER THE ACT APPLIED "ONLY" ON TRANSPORTATION IN FOREIGN COMMERCE.

ACCORDINGLY, WE BELIEVE THAT UNDER THE 1904 CARGO PREFERENCE ACT AND OTHER STATUTES DEALING WITH PREFERENCE FOR VESSELS REGISTERED UNDER THE LAWS OF THE UNITED STATES, YOUR DEPARTMENT WOULD NOT HAVE AUTHORITY TO UTILIZE THE PROPOSED TRAINSHIP SERVICE.