FMC LAW JUDGE LEVIES $4-MILLION PENALTY ON SEA-LAND

FMC LAW JUDGE LEVIES $4-MILLION PENALTY ON SEA-LAND    A U.S. Federal Maritime Commission administrative law judge has assessed a maximum civil penalty of $4.1 million on Sea-Land Service Inc., for “knowingly and willfully” committing tariff and forwarder-related violations of the Shipping Act of 1984.
   This long-running case has been in two parts. On March 5, 2002, Judge Frederick M. Dolan Jr. ruled that Sea-Land was liable for certain alleged violations. His new ruling, on Jan. 30, falls in the penalty phase of the FMC proceeding.
   Respondents have 22 days to file comments on Dolan’s penalty ruling. A final decision will be rendered in late May.
   Dolan ruled that Sea-Land had violated section 10(b)(1) of the act “on 149 shipments by charging shippers the inapplicable rates on cargo in 20-foot containers when Sea-Land moved the cargo in 40-foot containers. The cargo did not comply with the tariff rule as to equipment substitution since the cargo exceeded the tariff limits on weight and measure.”
   Sea-Land also “violated section 10(b) (4) on the same 149 shipments because the fact that the cargo’s weight and measure exceeded the tariff limit for equipment substitution was concealed by an unjust and unfair device or means. Sea-Land and the shippers, acting in concert, thus misused the applicable tariff equipment substitution provision,” Dolan wrote in his initial penalty decision.
   “Sea-Land was also found … to have paid compensation to ocean forwarders who did not perform the statutorily mandated services … and paid compensation to a person (with) a revoked FMC license, both in violation of section 19(d)(1) in 435 instances. Also, Sea-Land, in 170 instances, knowingly paid forwarder compensation to a forwarder who had a beneficial interest in the shipments,” Dolan said.
   In its rebuttal argument, included in Dolan’s initial penalty decision, Sea-Land said, “the scope of the Bureau of Enforcement’s proposal is so far-reaching that it impacts settled forwarder practices across the industry. If a penalty is assessed for practices that are allegedly common throughout the industry, not only will Sea-Land be unfairly victimized, it would throw industry forwarder practices into turmoil.”
   The alleged violations occurred between 1996 and 1998. Maersk acquired Sea-Land Service in late 1999 from CSX Corp.
   For the full text of Dolan’s ruling [docket 98-06], see https://www.fmc.gov/Dockets/98-06%Initial Decision.htm.