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04/15/65 Alcoa Steamship Company, v. Federal Maritime

April 15, 1965




Before it adopted the rule, the Commission, relying solely on § 21, had ordered Alcoa to permit Commission auditors to examine its books, accounts and records, so that the Commission might "evaluate and verify" a financial report it had made to the Commission of its activities in the domestic offshore trades during fiscal year 1962. In No. 18667, Alcoa challenges this order; in No. 18818, it challenges the rule.


Petition for Rehearing Denied June 15, 1965.


Bazelon, Chief Judge, and Washington and Wright, Circuit Judges. J. Skelly Wright, Circuit Judge (dissenting).


The Alcoa Steamship Company, a subsidiary of the Aluminum Company of America, is a maritime carrier operating in both the foreign and domestic commerce of the United States, in both common and private carriage. Pursuant to the Intercoastal Shipping Act of 1933, *fn1 the Federal Maritime Commission has extensive regulatory authority over its operations as a common carrier in the domestic offshore commerce of the United States.

In conjunction with these responsibilities, the Commission is empowered by § 21 of the Shipping Act of 19162 to require

". . . any common carrier by water . . . to file with it . . any periodical or special report, or any account, record, rate, or charge, or any memorandum of any facts or transactions appertaining to the business of such carrier . . .. Such report, account, record, rate, charge, or memorandum shall be under oath whenever the Board . . so requires, and shall be furnished in the form and within the time prescribed by the Board . . .."

Relying upon this section and its general rulemaking powers, the Commission recently adopted for use in its regulation of the domestic offshore trades the following rule, 46 C.F.R. § 512.5 (29 Fed.Reg. 7721, June 17, 1964):

"All working papers (irrespective of by whom prepared) in support of all exhibits and schedules submitted, as well as the books and records of the carrier, shall be made available upon request for examination by auditors representing the Federal Maritime Commission, and said auditors shall be permitted to make copies of such records to the extent they deem necessary."

In both cases, it appears that Alcoa would not object to an audit limited to its activities in the domestic offshore trades, but that the Commission has insisted on its authority and purpose to extend its audit to whatever papers of the steamship company or its parent seem likely to throw light on those activities. This, Alcoa asserts, the Commission may not do. Its argument, however, is not that the scope of the Commission's audit power is limited to records arising directly from its activities in the domestic offshore trades. Rather, it argues that § 21 confers no power on the Commission to audit or otherwise inspect any of its business papers. Were the Commission to exercise such a power, it claims, the confidentiality of its records would be destroyed, to its competitive disadvantage.

Contrary to the Commission's contention, neither prior cases nor the language of § 21 settle the issue thus framed. In previous cases validating the Commission's authority to obtain information under § 21,3 the phrase "account, record, rate, charge, or any memorandum of any facts or transactions appertaining to the business of such carrier" has been construed only in a context where the matter sought was a copy, summary, list or other form of submission prepared specially for the Commission and suitable for permanent deposit with it. Original corporate documents were not involved. Moreover, the fact that the statute refers to filing rather than "producing" or "inspecting" lends support to the view that original corporate documents are not within the section's coverage. And, as will appear, the legislative history is to the same effect. Finally, the Commission conceded in argument that it does not have authority under § 21 to prescribe a uniform system of accounts. Yet § 21 provides that the documents the Commission may require to be filed "shall be furnished . . . in the form . . . prescribed by the [Commission]." Were it established that the Commission could require original corporate papers to be filed, it would seem that it could prescribe a uniform system of accounts.

We think the legislative considerations which are Alcoa's chief reliance in both appeals demonstrate that there was no agency power to inspect corporate documents under the Shipping Act prior to the amendment of that Act in 1961.4 Where Congress has consistently made express its delegation of a particular power, its silence is strong evidence that it did not intend to grant the power.5 There is no reference to the power to inspect in § 21, although such authority is expressly conferred both in the prior Interstate Commerce Act6 and in subsequent acts regulating motor carriers,7 water carriers,8 air carriers,9 and carriers by pipeline and electric transmission.10 Moreover, the statutes conferring inspection powers also confer special authority to hire inspectors, and a special duty of confidence upon the inspectors, usually enforced by criminal sanctions.11 Apparently, Congress considers the privacy of corporate records from commercial competitors an important condition of inspection by a regulatory agency. Yet these conditions, too, are absent from § 21.12

The history of the Shipping Act itself reveals that Congress intended fewer investigatory and regulatory powers for the Shipping Board (the Commission's predecessor) than were possessed by other regulators of commerce.13 Maritime carriers, unlike railroads, are in direct competition with foreign carriers who may not be subject to the Commission's investigatory power. Committee reports indicate that Congress feared burdening American carriers with a competitive disadvantage, and therefore intentionally drafted § 21 to confer on the Board "only a part of the power of the Interstate Commerce Commission."14 This restrictive intent is confirmed by § 27, which establishes the ...

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