499 F.2d 587 | Ct. Cl. | 1974
delivered the opinion of the court;
Farrell Lines Inc. contracted with the United States to provide shipping service on essential foreign trade routes for a period of 20 years starting on January 1,1958. Under the contract, the Government was required to pay an operating-differential subsidy. The Maritime Subsidy Board of the Maritime Administration decided that plaintiff’s payments to its employees’ training funds and plaintiff’s costs (in wages and fund contributions) for the cadets or apprentices aboard its ships as a part of a private training program are ineligible for subsidy.
I
Backgrovmd of the Training Payment Controversy
The request for subsidy payments at issue here arises from technological advancements in the shipping industry and the corresponding changes in collective bargaining agreements. In the 1960’s, the advent of modern mechanically complex ships with labor-saving automation brought about both a reduction in crew size on the new ships and a need for technically knowledgeable and skilled personnel. Recognizing both a threat and an opportunity in these new developments, the seafarers’ labor unions introduced the subject of employer support for training into collective bargaining negotiations.
As early as the 1958 bargaining round, the radio officers’ unions sought and obtained additional support for training by means of an agreement to permit the unions’ welfare funds
In 1963, the engineer officers’ union, the National Marine Engineers Beneficial Association (MEBA), agreed with the owners to take part of a three and one-half percent wage increase (obtained two years earlier after a strike that caused a national emergency) in the form of increased contributions to the MEBA’s Welfare Fund. By agreement between the employers and the union, the welfare trustee then used a portion of the augmented fund to set up and support training for union engineers to “upgrade” their licenses and to learn welding and electricity.
In 1965, the National Maritime Union (NMU) bargained for and received employer contributions of $.25 a day for each NMU crew member employed to compensate for the reduction in the size of the unlicensed crew. With this fund, designated as an “automation fund,” the trustees of the NMU’s Welfare Funds were authorized to establish a school.
The 1965 contract renewals for the MEBA, Masters, Mates and Pilots Union (MM&P), and the American Radio Association were achieved only after a 77-day strike — the longest strike in the history of the offshore shipping industry. The owners sought firm agreement on lesser manning; the officers sought higher wages on the new ships and training for handling them at the owner’s expense. The dispute was settled only after bitter bargaming under pressure for settlement
In the resulting settlement, the training issue for the MEBA was resolved by requiring the subsidized employers to maintain a training program for engineers assigned to automated ships and to pay a premium in wages for these trained engineers. The MM&P did not win their demands for training costs because the arbiter, Professor Walter Gell-horn, held that, although training for deck officers was desirable, it was not essential. The MM&P then elected to allocate part of one of its annual wage increases to a training program.
With the advent of a heavy sealift to Vietnam in 1966, the Government’s employment of ships from the reserve fleet caused a shortage of seamen; sailings were delayed and ships sailed shorthanded. See Maritime Manpower Shortage, Hearings Before the Special House Subcomm. on Maritime Education and Training of the Qomm. on Merchant Marine and Fisheries, 89th Cong., 2d Sess. 129-30 (1966). To help alleviate the shortage, a joint industry-union school was established by MEBA to train engineers for automated ships and to offer an accelerated course for new men seeking to become engineers. The course included on-the-job training through service of apprentice or cadet engineers in vacant engineers’ positions on working ships. The school was financed in part by increased employer contributions to the MEBA training fund, in part by engineers foregoing paxt of a wage increase, and in part by paying the apprentice engineers a low wage (and contributing to the training fund the difference between that pay and the wages of the regular engineers). In 1966, the Kadio Officers Union established a similar apprenticeship program, financing it by reduced contributions to its welfare fund and replenishing the fund by the difference between the regular wage scale and the reduced wage of the apprentice radio officers. Plaintiff was a party to all these collective bargaining agreements and trusts, as
In accordance with Circular Letter No. 8-60 issued in 1960, the operators were required to submit a justification for increases approved and concessions made by them in collective bargaining agreements. Plaintiff submitted requests for the payments in issue, and they were denied by the Subsidy Board and the Secretary of Commerce. The contributions to training funds, designated as Count I, and apprentices costs in wages and fund contributions, designated as Count II, were treated in several actions before the Subsidy Board.
In dealing with Count I, the Subsidy Board, on July 18, 1965, declared that contributions to the MEBA Welfare Fund to be used for training (Docket No. A-14) and contributions to the NMU’s “automation fund” (Docket No. A-15) were ineligible for subsidy. The Subsidy Board based its decision on the fact that the specific use of the fund was not certain and upon its finding that the employer contributions to these funds were not “wages” within Section 603(b) of the 1936 Act. On appeal, the Secretary of Commerce affirmed the Board’s decision as to the MEBA training fund contributions and the MNU “automation fund” costs. The Secretary further held, however, that the disallowances in Docket A-14 could be reconsidered by the Subsidy Board along with other aspects of the Board’s decision that were reversed.
On December 17, 1965, the Subsidy Board reaffirmed its prior position on the MEBA Welfare Fund contributions and the NMU’s “automation fund.” At that time, the Subsidy Board’s action also included a determination affecting plaintiff that was not mentioned in the prior series “A” decisions. The Board found that the 1961 and 1964 agreements with the Radio Officers Union (ROU) were ineligible for subsidy, because they were not within the definition of “wages” under section 603(b) as interpreted in the Manual of General Procedures for Determining Operating-Differential Subsidy Rates (hereinafter sometimes referred to as Manual).
On December 27,1965, plaintiff filed a general petition for reconsideration with the Subsidy Board. Plaintiff also submitted additional information in 1966 and 1967 to the Board concerning the MEBA, NMU, and ROU plans. On Febru
Based on the foregoing, it is the opinion of this Board that the contributions in question are neither “wages” nor “other items of expense” eligible for subsidy participation in keeping with the provisions of the “Manual” and consonant with long-established precedent on this subject by this Board and its predecessor agency, the Federal Maritime Board. Further, in keeping with the Merchant Marine Act of 1936, as amended, the Con-§ress has made specific provisions for training under ection 216 of the Act which does not provide for the type of subsidy herein requested by the subsidized Operators.
Plaintiff appealed the decision in Docket No. A-36 to the Secretary of Commerce. Once again, the Secretary remanded the case to the Board, this time with observations and directions as to procedure. On March 31,1970, the Subsidy Board reaffirmed the earlier decision that training costs for the NMU and the ROU programs were ineligible for subsidy. The Board issued its final decision in Docket No. A-36 on December 10,1970, denying subsidy.
The Maritime Administration first took action with respect to the training costs claimed in plaintiff’s Count II in 1966. Pursuant to Administrative Order No. 184, the Board’s staff rendered a determination in the form of Office of Government Aid Determination No. 13 issued May 2, 1966. On August 9,1966, the Maritime Administration issued Accounting Instruction No. 44 to all operators, stating that in accordance with Government Aid Determination No. 13, wages and expenses for persons assigned to vessels of subsidized operators in a training program other than those assigned in accordance with Section 216 of the Merchant Marine Act would not be eligible for subsidy. On September 29, 1966,
Section 216 of the Merchant Marine Act of 1936, as amended, sets forth the Government’s policy on the training of seamen * * *. The only training for which funds have been authorized by Congress is that which is controlled and supervised by the Government itself. Section 216 is clear on this point. For this reason it would be improper to channel unauthorized subsidy into private training programs through a separate program under Section 603 (b) * * *.
In making this decision, the Board also took cognizance of the provisions of Section 603 (b) of the Act, Article 1-4 of the subsidy contracts, and the “Manual” regulations governing the payment of subsidy on wages and subsistence of officers and crews. Although it was apparent that trainees receive wages per se, the Act, as implemented by the subsidy contract and “Manual” which the subsidized operators have accepted, limits the “wages” subsidy to payments to members of the crew complement or relief complement of subsidized vessels for services rendered and required for the efficient and economical operation of such vessels. In other words, wages of supernumerary personnel are not subsidizable wages because they are paid to. prospective crew members, not regular crew members. Neither can such payments qualify for subsidy under the category “other items of expense.” As long as a specific statute enables Marad to provide training at Government expense, it would not be consistent with the rules of statutory interpretation to find that training expenses are embraced within the general category of ‘‘other items of expense” * * ❖
This view was subsequently reaffirmed by the Subsidy Board on April 7,1970, in a lengthy decision captioned Docket No. A-41.
On November 11,1970, the Subsidy Board rendered a supplemental opinion setting forth its views with respect to subsidies claimed for medical center fund contributions (used primarily for pre-employment medical examinations), a hiring hall fund used to operate union dispatching and hiring
That the present items are overhead or shore expenses and not “fringe benefits,” and for good reason should not be considered for subsidy, is apparent from this opinion and the Board’s previous opinions in these cases. These expenses are shore items because they relate to a medical center, hiring halls and training facilities [excluding apprentices’ service aboard ship], all physically located ashore. They are not related to vessel operations except perhaps to an inconsequential degree. In the same maimer, these expenses do not directly benefit officers and crews of subsidized vessels as is the case with eligible wage or benefit items; they instead benefit unemployed seamen. Further, these expenses are overhead items of the ship operator inasmuch as he is securing a ready, competent pool of manpower. Such service expense is an overhead item.
The final agency decision on the training payment controversy was issued by the Secretary of Commerce on December 23,1970. The Secretary affirmed the Board’s decision in Docket Nos. A-36 and A-41. He held that Section 216 provided specific authorization for such expenditures; that training is more in the nature of an overhead than an operating expense; and that subsidy for training would only be appropriate when it contributes to ship operations as in the case of an apprentice actually serving as a part of the ship’s authorized complement. On the same day, the Secretary reversed the Board’s determinations on the operators’ contributions to the unions for pre-employment medical examinations
As a result of these decisions, the Government has “suspended” all expenses claimed for private training in plaintiff’s subsidy accounts.
There are four types of training payments involved in this case: (1) payments to a trust fund devoted exclusively to training; (2) payments to other welfare funds, portions of which were spent by their trustees for training and other portions for medical, hospital, insurance, and like benefits; (3) apprentices’ pay, and (4) contributions to funds on account of the employment of apprentices. Plaintiff seeks in this action to recover the amount of the subsidy alleged to be due for its payments to the various union training programs.
II
The Eligibility of the Training Payments in Issue for Subsidy
The Merchant Marine Act of 1936 was passed for the purpose of achieving a balance between the costs of building and operating American flag vessels and the costs incurred by competing foreign shippers. It was felt that such public assistance to the shipping industry was necessary for the national defense and the development of foreign and domestic commerce. The public funds provided to achieve a “parity” of operating expenses are .termed the operating-differential subsidy (ODS). The Government is empowered to enter into contracts with American shipowners to provide an ODS with certain limitations on payment of the subsidy set out in Section 603(b) of the Act. As originally enacted, section 603 (b) read in pertinent part:
Such contract shall provide that the amount of the operating-differential subsidy shall not exceed the excess of the fair and reasonable cost of insurance, maintenance, repairs not compensated by insurance, wages, and subsistence of officers and crews, and any other items of expense in which the Commission shall find and determine that the applicant is at a substantial disadvantage in competition with vessels of the foreign country hereinafter referred to, in the operation under United States*495 registry of the vessel or vessels covered by tbe contract, over the estimated fair and reasonable cost of the same items of expense * * * if such vessel or vessels were operated under the registry of a foreign country whose vessels are substantial competitors of the vessel or vessels covered by the contract * * *. 49 Stat. § 2002 (1936) (Emphasis added.)
In compliance with the Act, Article 1-4 of plaintiff’s Contract No. FMB-64 reads:
(a) In order to place the proposed operations of the vessels named in this agreement on a parity with those of foreign competitors, and subject to all the terms of this agreement and effective as prescribed in Article 1-10 of this agreement, the United States shall, pursuant to Section 603(b) of the Act, pay to the Operator, as Operating-Differential Subsidy, sums equal to the excess of the fair and reasonable cost (as determined by the Board) of insurance, maintenance, repairs not compensated by insurance, wages and subsistence of officers and crews, and any other items of expense in which the United States shall find and determine that the Operator is at a substantial disadvantage in competition with vessels of the foreign country hereinafter further described in the operation under United States registry of the vessels covered by this agreement, over the Board’s estimate of the fair and reasonable cost of the same items of expense (after deducting therefrom any estimated increase in such items necessitated by features incorporated pursuant to the provisions of Section 501 (b) of the Act) if such vessels were operated under the registry of a foreign country whose vessels are substantial competitors of the vessels covered by this agreement. Subsidy payments shall be based upon rates determined in accordance with Section 603 (b) of the Act, which rates the Board determines will place the Operator on a parity basis with his foreign flag competitors. Such payments shall be made only with respect to voyages of the vessels named in Article 1-3 hereof performed within the maximum number of voyages authorized in the services described in Article 1-2 hereof. It is understood and agreed that during any national emergency declared by the President of the United States or by Congress of the United States by virtue of which the Operator’s normal commercial subsidized operations are disrupted adjustment of subsidy payments shall be made as determined by the Board pursuant to the methods prescribed in Section 606(1) of the Act or other applicable provisions of law. Board*496 determinations under this Article shall be final and conclusive. (Emphasis added.)
To implement the subsidy program, the Maritime Subsidy Board has followed the practice of making an initial determination as to whether an expenditure claimed by the operator is eligible for the subsidy, that is, whether the 1936 Act authorizes the payment of a subsidy for the particular expenditure. If the Board finds the expense to be eligible, it proceeds thereafter to determine whether the item is one with respect to which the ship operator is at a substantial disadvantage in competition with foreign vessels and, if so, the excess of the fair and reasonable cost incurred by the American operator over the estimated fair and reasonable cost incurred by his foreign competitor for the same item of expense. In this case, the determination by the Subsidy Board, as affirmed by the Secretary of Commerce, has extended only to a decision that payment of the subsidy for the training costs at issue here is not authorized by the provisions of the 1936 Act. Therefore, the primary question before us is whether the plaintiff shipowner’s costs for union training benefits constitute “wages” or “any other items of expense” in the operation of the vessel within the meaning and intent of the applicable statute and the terms of the contract.
1. Both parties agree that the court has jurisdiction to review decisions of the Subsidy Board and the Secretary of Commerce, but they differ as to the scope of review. The issue before us is one of contract interpretation. The scope of the contractual phrase “wages * * * and any other items of expense5’ is a question of law. This court has repeatedly held, in varying contexts, that administrative decisions interpreting the provisions of a contract are not binding on us. See, e.g., Sea-Land Service, Inc. v. United States, ante at 65, 493 F. 2d 1357, 1361 (1974); Northwestern Industrial Piping, Inc. v. United States, 199 Ct. Cl. 540, 545, 467 F. 2d 1308, 1310-11 (1972); Paschen Contractors, Inc. v. United States, 190 Ct. Cl. 177, 180, 418 F. 2d 1360, 1361 (1969); Maxwell Dynamometer Co. v. United States, 181 Ct. Cl. 607, 626, 386 F. 2d 855, 867 (1967). These decisions are based upon Section 2 of the Wunderlich Act, 41 U.S.C. § 322 (1970), which applies to plaintiff’s contract. It makes no difference that a
There remains only a question of whether the subsidy contract in this case creates a discretionary area within which the agency will be allowed a wider scope of authority in carrying out its contractual obligations. While the plaintiff is suing on a contractual right, the Government is quite correct in arguing that the scope of the contractual language is directly related to the statutory authority for the subsidy payments. The Merchant Marine Act of 1936 requires the inclusion of the disputed contractual language, and the parties by the contractual agreement did not intend to alter the plan prescribed by Congress for the payment of subsidies. Cf. Pacific Far East Line, Inc. v. United States, 184 Ct. Cl. at 180-81, 394 F. 2d at 996.
The broad scope of the term “any other item of expense” and the legislative background of its inclusion in the statute (discussed below), and subsequently in the contract, indicate that Congress and the contracting parties intended to' allow the agency some discretion in implementing the subsidy provisions. Neither the contract nor section 603 (b), however, give the agency unlimited discretionary authority in administering the payment of subsidy. The fact that contract article 1-4(a) states that “Board determinations under this Article shall be final and conclusive” does not limit our review. Section 2 of the Wunderlich Act is explicit on this point. 41 U.S.C. § 322 (1970).
We have held that a party vested with contractual discretion must exercise its discretion reasonably and fairly, Fox Valley Engineering, Inc. v. United States, 151 Ct. Cl. 228, 236 (1960), and subsidy contracts are no exception. See Pacific Far East Line, Inc. v. United States, 184 Ct. Cl. at 184, 394 F. 2d at 998. The subsidy payments are not a Government grant. See Moore-McCormack Lines, Inc. v. United States, 188 Ct. Cl. 644, 667, 413 F. 2d 568, 582 (1969). The Government has promised to pay subsidy for the vessel operating expenses under certain conditions, and plaintiff has
2. The Government relies heavily on the arguments presented in the various decisions of the Subsidy Board and the Secretary of Commerce. Basically, the Government contends that the Subsidy Board properly determined that plaintiff’s expenditures for training were ineligible for subsidy, because Section 216 of the Merchant Marine Act was intended to provide the exclusive 'authorization for governmental support of training; that Congress did not consider the payments involved here to be “wages” or “any other items of expense” in the operation of the vessel under Section 603 (b) of the Act ; and that under administrative practice and the criteria established in the 'administrative manual, training payments do not qualify for subsidy treatment.
A. Section 216 of the Merchant Marine Act. Section 216 of the Merchant Marine Act directs the Secretary of 'Commerce to establish the United States Maritime Service as a voluntary training organization and the Merchant Marine Academy for selected (Congressionally nominated) cadets. 46 U.S.C. § 1126 (1970). It also authorizes him to provide training of those cadets on vessels and in shipyards, and to conduct extension and correspondence courses. Id. Defendant’s position is that section 216 is the sole basis through which Government aid may be extended to Government or private training programs. However, the defendant has been unable to convince
Section 216 does not even mention private training, subsidy, subsidy contracts, “wages,” “other items of expense,” or any other of the subsidy provisions of the Act. It does not provide that anything don© under that section is exclusive of anything provided elsewhere in the Act.
Although there is a dispute between the parties as to whether, in fact,
The history of section 216 reveals no express intention to alter or restrict the application of section 603(b), and there is no conflict or manifest inconsistency between the two sections of the statute that would lead to the conclusion that the scope of section 603 (b) was limited by implication. Defendant concedes that, in practice, union programs do not interfere with the administration of section 216.
Finally, defendant maintains that section 216 precludes the payment of subsidy because the training is a subject of predominant Federal interest which should be under Federal control and because the acceptance of the plaintiff’s position would allow operators, in their private capacity, to define the training needs of American seamen and to foist the major share of the financial burden on the public treasury. Both of these contentions simply miss the mark. The 1936 Act. safeguards the treasury against excess public expenditures for training by requiring that the costs be fair and reasonable and that the operator be in a position of substantial disadvantage with respect to Ms foreign competitors. As for Federal control, Congress clearly recognized the Federal responsibility to support the training of seafarers, but nothing in Section 216 of the Act or elsewhere provides that the Maritime Administration facilities shall provide all training of merchant mariners. We find that section 216 was not intended to operate to the exclusion of other training programs wMch are equally consistent with the Act’s general purpose of fostering and encouraging the development of trained personnel. We do not consider whether it would be advisable to have centralized control of all training. Such an inquiry is more properly addressed to Congress.
Generally, courts will not construe a section of an act, in the absence of an umnistakable directive, in a manner which runs counter to the broad goals Congress sought to acMeve. See Federal Trade Commission v. Fred Meyer, Inc., 390 U.S. 341, 349 (1968). The object of the subsidy provisions is to place contractors on a parity of costs with their foreign competitors. A construction of section 216 which would make the private training expenditures in this case ineligible for subsidy may very well preclude the attainment of that objective.
In addition to the argument based on section 216, the various orders and decisions of the Subsidy Board, as approved by the Secretary of Commerce, state several reasons for the Board’s finding that the training payments claimed in Counts I and II are not within the category of “wages” or “any other items of expense.” The stated additional reasons are: Congress did not intend to subsidize shoreside, overhead, or pre-operating expenses; the agency has consistently viewed private training costs as unsubsidizable overhead costs; Congress used the term “wages” in a “take-home-pay” context; and the training payments in issue do not come within the definition of wages in the Manual.
Plaintiff contends that the officers and crews bargained collectively for the training payments as one of the benefits that members of the crew require to induce them to man and work plaintiff’s ships. Consequently, the argument continues, the training payments are part of the “wages” under the union contract, and if not wages, then they are “any other items of expense.”
The Merchant Marine Act of 1936 arose out of the failure of the ocean mail subsidy contract program to establish a permanent United States merchant marine on a sound basis. Various investigations of practices under those contracts revealed that many operators had diverted subsidies to other than shipping operations by such means as the payment of enormous salaries and bonuses to shoreside personnel and by creating affiliated corporations that siphoned subsidies from subsidized corporations.
It is not enough to say that training expenses are shore-side, overhead, or pre-operating costs, because such items are not per se ineligible for subsidy under the statute, and, in practice, subsidies are paid for costs of this type. The training expenses in Count I are no more a pre-operating, shore-side, or overhead expense than are the payments made for pre-employment medical examinations for seamen or the payments made to operate and maintain union dispatching and hiring halls — both of which now receive subsidy. It is interesting to note that the Subsidy Board originally denied sub
On November 25, 1966, the Secretary of Commerce also recognized that severance pay is eligible for subsidy as wages or other items of expense. The training expenses are no more a pre-operating expense than severance pay is a post-operating expense. The fact that an employee actually works for the shipowner prior to receiving severance pay is not a controlling distinction. Moreover, nearly all fringe benefits share the characteristic of being enjoyed ashore. If location ashoro were decisive, then pensions, vacation pay, unemployment compensation, and certain other benefits financed by contributions to welfare funds would be unsubsidizable. Yet the agency has approved the payment of subsidies for the cost of all these items as “other items of expense” and subsidies are paid on them continuously.
Conflicts and inconsistencies in an agency’s construction of a statute may be significant in determining whether to affirm
Notwithstanding its allowance of similar expense items, the Government points out that the Maritime Administration has consistently refused to recognize training costs as eligible for subsidy except in the case of Federal cadets. There is a dispute between the parties as to whether subsidies were paid for apprentices in the early years of the subsidy program and whether the Government is now subsidizing the apprenticeship program used by the Kadio Officers Union.
2. Perhaps the most glaring misapplication of the statutory provision in this case is the fact that training expenses are treated as items of expense on the foreign side in making the subsidy calculations. Under section 603(b), the measure of the subsidy is the excess of the American contractor’s wages and any other items of expense over “the same items of expense” on the foreign side. Plaintiff has presented evidence to show that for at least 20 years the Maritime Administration has included foreign shipowners’ training payments in the foreign “wages” cost in computing the subsidy. The defendant acknowledges that foreign training costs are considered in subsidy calculations. This treatment of training payments as “the same items of expense” on the foreign side in computing the subsidy is a recognition that such payments are “wages” or “any other items of expense” on the American side. The disparate treatment of the domestic and the foreign training payments, counting the expense on the foreign side while excluding such payments from the American side, directly contravenes the system for subsidy payment prescribed by the Congress. While it is common to defer to agency expertise in many matters, the agency charged with administering a statute may not adopt a position inconsistent with the enabling statute. See Volkswagenwerk Aktiengesellschaft v. Federal Maritime Commission, 390 U.S. 261, 272 (1968); National Labor Relations Board v. Brown, 380 U.S. 278, 291 (1965); Benton v. United States, 203 Ct. Cl. 263, 274, 488 F. 2d 1017, 1023 (1973). This is even more true in this case where the Maritime Administration has a contractual obligation to pay subsidies in accordance with the statutory mandate.
4. In 1957, the Maritime Administration, with the approval of the Committee of American Steamship Lines,
Part Seven
Definitions of Subsidizable Items of Expense
Section I — Wages of Officers and Or&ws
Wages consist of the fair and reasonable cost of payments made by the operators directly to or for the benefit of (to the extent indicated below) members of the crew complement and relief complement of subsidized vessels for services rendered and required for the efficient*508 and economical operation of such vessels, provided that they are not recoverable from shippers, receivers or other third parties.
'Crew complement shall be construed to mean, in addition to the master, those officers and ratings approved by the Federal Maritime Board as being eligible for rate-making purposes. Relief complement shall be construed to mean those officers and ratings assigned to relieve in port members of the crew complement.
A. Payments Eligible Fw Rate-Making and Subsidy
Payment Purposes
1. Base Wages.
2. Overtime, including penalty time pay.
8. Vacation pay (earned in subsidized services) including contributions to union vacation funds.
*!* $}* sfe H»
8. Pension, welfare and unemployment fund contributions.
Defendant contends that the definition of wages in the Manual excludes all plaintiff’s training costs, because the fund contributions do not benefit the approved crew complement. Defendant also argues that apprentices do not render services required for the economical and efficient operation of the vessel. The 1957 Manual is defendant’s principal administrative reference and the defendant seeks to apply the Manual as a binding interpretation of the statute and the contract.
5. Kelying on our decisions in Sun Shipbuilding & Dry Dock Co. v. United States, 183 Ct. Cl. 358, 393 F. 2d 807 (1968) and Lykes-Youngstown Corp. v. United States, 190 Ct. Cl. 348, 420 F. 2d 735, cert. denied, 400 U.S. 865 (1970), defendant maintains that plaintiff is bound by the Board’s interpretation of the contract because plaintiff knew or had re'ason to know of this interpretation at the time the contract was executed; consequently, plaintiff accepted the Board’s interpretation. In both of those cases, however, when the contracts were executed, the contracting parties (with the exception of Sun Company) were familiar with the Board’s policy guidance letter and knew the meaning the Government gave to the contract articles in question. This case does not present such clear evidence of knowledge on the part of the plaintiff.
The defendant has not shown that the Maritime Administration had ruled on the eligibility of any of the training expenses in issue or of any training expenditures required by a collective bargaining agreement prior to the date of plaintiff’s contract. As previously discussed, the legislative history of the Merchant Marine Act and the criteria for subsidy payment as stated in the Administrative Manual (especially as such criteria have been applied) do not exclude private training payments from eligibility for subsidy. Defendant has not
6. Defendant also argues that the failure of Congress to amend the Act in the face of the known administrative interpretation over the years constitutes persuasive evidence that such interpretation is the one intended under the statute. While it is recognized that, m certain instances, Congressional acceptance of an administrative interpretation may be inferred from silence over a period of years, such an inference is directly related to the factual circumstances involved in each case. Large scale training programs were first included in collective bargaining agreements in the late 1950’s. Prior to that time, the agency’s position on the possibility of subsidizing the shipowner’s payment of training expenses under collective bargaining agreements had not been sufficiently articulated by the agency to have been approved sub silentio by Congress. The mere fact that subsidies were not customarily paid for a particular item, such as training costs, does not mean that the Congress by its silence intended section 603 (b) to exclude expenses that were not receiving subsidy at any given time.
The 1970 amendments to the Merchant Marin© Act provide the most significant legislation bearing on the subject of Congressional endorsement of the agency’s position. It is established that at least one of the two agency decisions involved in this action was known to the Senate Committee on Commerce while the 1970 Act was still in bill form. See Hearings on S. 3287, Senate Comm. on Commerce, 91st Cong., 2d Sess. 136-38 (1970). The 1970 Act did not simply reaffirm the prior language, however. The Merchant Marine Act of 1970 amended the statutory section 603(b) substituting “sub-sidizable wage costs” for “wages” and “any other items of expense.” 46 U.S.C. § 1173 (b) (1970). The “subsidizable wage costs” are determined by applying an index of the rate of change in wages and benefits to the collective bargaining costs. 46 U.S.C. § 1173(c) (1) (D) (1970). The term “collective bargaining costs” means “the annual cost * * * of all items of expense required of the applicant through collective bargaining or other agreement, covering the employ of
Congressional reenactment in the face of a known administrative interpretation has been found to be a guide in interpreting a statute where Congress reenacted the applicable section of the statute without material change, especially in tax cases. See, e.g., Cammarano v. United States, 358 U.S. 498, 510-11 (1959); National Labor Relations Board v. Gullett Gin Co., 340 U.S. 361, 366 (1951). See also Davis, Administrative Law Treatise § 5.07 (1958). Here, on the other hand, Congress has amended the statutory provision in issue and we are unable to find in such action Congressional acceptance of the agency’s position. The fact that no provision was made in the 1970 Act for retrospective relief from the Board’s published determination, which is a part of this case, is of little aid to us in interpreting the prior statute.
Ill
Further Agency Action
As previously stated, neither the Subsidy Board nor the Secretary of Commerce has determined the fair and reasonable cost of the training expenses in issue, nor has an administrative finding been made that these are items of expense as to which the plaintiff is at a substantial disadvantage in competition with foreign vessels.
We agree that the training expense which plaintiff was required to pay as a result of such collective bargaining agreements constitutes an important, and perhaps the most important, factor in the determination of whether such costs are fair and reasonable. However, we do not agree that the results of the collective bargaining agreements, even if made at arm’s length and in good faith, are conclusive on this question. In that connection, defendant has called our attention to a letter of January 8,1970, from plaintiff’s attorneys to the Secretary of the Maritime Subsidy Board. In that letter it was stated, among other things, that the fairness and reasonableness of the training costs involve many issues of law, of fact, and of mixed law and fact, including a study of the costs of comparable programs elsewhere.
We can well understand the indignation which plaintiff has expressed over the delays which occurred in the administrative process of determining the eligibility of the training costs — a procedure which cumulatively consumed a period of more than 4 years. However, if plaintiff is correct in stating that the Subsidy Board already has all or most all of the information needed for the determinations to be made on remand, those determinations can be made with dispatch. While we hold that the applicable statute and the contract authorize the Subsidy Board and the Secretary to make an initial determination of the remaining questions, we are not required to grant the agency an unreasonable period.of time for making such decisions! Public Law No. 92-415, 28 U.S.C. §1491 (Supp. II, 1972), empowers the court to remand appropriate matters to any administrative body or official with such directions as we deem just and proper.
Accordingly, it is ordered that, defendant’s motion for summary judgment and plaintiff’s cross motion for summary judgment are denied without prejudice: Pursuant to P.L. 92-415, supra, and the court’s General Order No. 3 of 1972, it is further ordered that this case is remanded to the Maritime Subsidy Board and the Secretary of Commerce, for a period not to exceed 6 months, for their determination of the questions stated above in a manner consistent with this.decision. Further proceedings in the court shall be stayed, during the period fixed by this order of remand. Defendant’s counsel is designated to advise the court by letter to the Clerk of the status of the remand proceedings as provided for in Paragraph 9 (a) of the General Order with such advice to be given at intervals of 90 days or less commencing from the date of this decision.
The 1936 Act contemplated that the subsidy program would be administered by the United States Maritime Commission. In subsequent reorganizations the functions of the United States Maritime Commission in administering subsidy payments have passed to other administrative bodies. In 1950, the Federal
We are concerned with the language of the Merchant Marine Act of 1936, as amended, prior to the changes made in 1970 (84 Stat. 1018).
When founded, this school qualified for and obtained a grant under the Federal Manpower Development and Training Act (42 U.S.C. § 2583 (1970)), became licensed by the State University of New York, and trained many seamen. The NMU curriculum covered all the trades of unlicensed ratings; especially notable was its course for deck engine mechanics, a rating created for automated ships.
Automation, cargo handling, and other subjects were offered iu this program and during the manpower shortage after 1968 unlicensed seamen were trained to become officers. The MM&P ultimately also gained an increase in employer contributions to the fund.
For a detailed statement of the provisions of Sections 216 and 603(b) of the Merchant Marine Act and the Manual see discussion infra.
In its decision of September 5, 1968, the Subsidy Board stated that payments to the medical center fund were unsubsidizable under the 1936 Act and tbe Manual. In that opinion, the Board emphasized that at the time of the pre-employment medical examination, the seaman is not employed on a subsidized vessel operating in subsidized service and that such expenses were commonly regarded as an administrative overhead expense regardless of their incorporation in the collective bargaining agreement (Docket No. A-34).
In Docket No. A-40, decided on March 31, 1970, the Subsidy Board refused to pay subsidy for activities of the hiring halls because the CDS was not intended to cover union shoreside overhead costs of this type.
It is not necessary in this action to scrutinize the legal validity of the procedures used by the Subsidy Board and the Secretary of Commerce in determining eligibility. The case is basically presented to us on the merits as a question of law, and we reach our decision on that Issue.
This factual dispute does not create a material issue of fact that would prevent our reaching the merits on the parties’ cross-motions for summary judgment under Rule 101(d).
In 1938, the forerunner of section 216(a) was added, creating the united States Maritime Service and directing the Commission to report back to Congress on training. Act of June 23, 1938, § 44, ch. 600, 52 Stat. 965. In 1939, section 216(b) was added providing for training of merchant marine cadets. Act of Aug. 4, 1939, § 5, ch. 417, 53 Stat. 1182.
There have been instances of duplication in the types of courses offered. The Board has conducted open training courses in radar, lifeboat handling and firefighting, gyrocompass, loran, NBC warfare and damage control. Plaintiff and at least one union offer courses in some of these fields.
See S. Rep. No. 898, 74th Cong., 1st Sess. 18-33 (1935) ; H.R. Doc. No. 118, 74th Cong., 1st Sess. 11 (1935).
S. 2582, 74th Cong., 1st Sess. § 505(c) (1935) ; H.R. 7521, 74th Cong., 1st Sess. § 505(c) (1935).
See Hearings on H.R. 7521 before the House Committee on Merchant Marine and Fisheries, 74th Cong., 1st Sess. 691 (1935) ; Hearings on S. 2582 before the Senate Committee on Commerce, 74th Cong., 1st Sess. 153-54 (1935).
See Hearings on H.R. 7521, supra note 13, at 696; Hearings on S. 2582, supra note 13, at 212, 521-22 (1935).
The House Committee initially amended its bill to cover “insurance, maintenance repairs, wages and subsistence of officers and crews, and any other items of expense (excluding shore expenses) m which the Authority may deem that the applicant is at a substantial disadvantage in competition with vessels of the foreign country * * H.R. 8555, 74th Cong., 1st Sess. § 522(b) (1935) (emphasis added). In this form, the bill was reported and passed the House. H.R. Rep. No. 1277, 74th Cong., 1st Sess. 22-23 (1935) ; 79 Cong. Rec. 10289 (1935). When the bill was finally enacted, however, the parenthetical phrase (excluding shore expenses) had been deleted.
See Hearings on 7521, supra note 13, at 910; Hearings on 2582, supra note 13, at 522-23.
Def. Ex. 2.
The Secretary’s determinations cited above were not mandated by the changes in the Act of October 21, 1970, amending the Merchant Marine Act of 1936. For the first 2 years only, the 1970 Act exempts from collective bargaining costs “items of cost that have been disallowed by the Secretary of Commerce prior to ninety days following October 21, 1970 * * 46 U.S.C. § 1173(c) (1) (B) (1970). The Secretary’s decisions were within this 90-day period.
Plaintiff has shown that members of the Radio Officers TJnlon apprenticeship program receive subsidy for the time the members serve In the position of Chief Radio Officer. The training requirements during this part of the program are Imposed only by the union. The Chief Radio Officer, as defined by the Maritime Administration, Is a radio operator who has met all the requirements of the Federal Communications Commission, 47 C.F.R. § 83.152, and the U.S. Coast Guard, 46 C.F.R. Subpart 10.13, and serves as the radio officer In complete charge of and responsible for the radio room. While the union considers the employee In training during his service as a Chief Radio Officer, the Maritime Adminlstraton does not. That situation is distinguishable from the situation presented In Count II where the apprentice is not recognized by the regulatory bodies as a licensed engineer. The Maritime Administration’s payment of subsidy to the radio officers, designated by the union contract as an “apprentice”, is not directly inconsistent with its position In this case on the interpretation of Sections 2X6 and 603(b) of the Act.
In one of Its few reported cases tie Federal Maritime Board Reid that the cost of repatriating seamen from a foreign port as required by a collective bargaining agreement is wages. The rationale was that wages include what ever the seamen bargained for. American President Lines, Ltd. — Final Subsidy Rates, 1949, 1950, 4 F.M.B. 329, 333 (1953).
We decide this case on its facts. It is not necessary to reach the question of whether all the benefits in a collective bargaining package fall within the category of “any other Items of expense.”
Now succeeded by the American Institute of Merchant Shipping.
In addition to interpreting contract article I-4(a), defendant emphasizes that the Manual applies by virtue of contract article II-9(g) which binds the operator to observe defendant’s rules and regulations “governing the selection of cadets or apprentices to be carried on subsidized vessel(s) as an expense of subsidized operation, and their minimum wages, working conditions, status, duties and course of training.”
The single exception is that involving certain training plans for the years 1961 — 1964. In 1962. the Subsidy Board determined that the costs under all collective bargaining agreements made in the 1961 bargaining round were- fair and reasonable. That determination covers the costs of at least one training program in this case, the first engineers’ program. In 1966, the Secretary of Commerce found that all costs under labor agreements made before 1965 were fair and reasonable.
Def. Memo Ex. 31.
Plaintiff’s memo In Docket No. 402-70, American Emport Isbrandtsen Lines, Inc. v. United States at page 47.