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and we will have to visit many States, but I am going to let the cat out of the bag. Senator Morse said, “The people I represent on the Pacific coast are entitled to be heard,” and we had the option of San Francisco, Seattle, and Portland. Í love your beautiful city, but Senator Morse is the majority ranking member of the Senate subcommittee and the entire Public Welfare Committee, next to Chairman Hill, and was naturally entitled to have his home State selected, as I would have done if the situation had been reversed. Naturally, when we first reached a determination there would be a Pacific coast hearing, then it would naturally go to the State of the Senator who had the seniority. That is our procedure, there are no exceptions, and this is what the Senate has followed for many years.

Mr. DEWEY. It is also fitting that I should say at the outset that the industry is extremely fortunate in having Senator Morse on this committee, who has had so many years of experience in the maritime field.

There are still arbitration agreements with your name on them that have stood the test of time. You have served the country well in many arbitration situations bring parties together, as I hope and trust can be the case again in this instance. This is something that must be said, you do get riffraff from all sides in these things, but from the industry standpoint we are extremely proud that you have taken this role and given the broad shoulders to some tough questions.

Senator MORSE. We are glad to have you.

Mr. Dewey. My name is Ralph B. Dewey, president of Pacific American Steamship Association, with offices in San Francisco and Washington, D.C. I am representing my own organization as well as Pacific Maritime Association, the industry's labor relations association, on this occasion.

I 'am accompanied by Mr. J. Stewart Harrison, counsel for our organization, and also in the room is Mr. Jack Jones, the director of the safety program of the Pacific Maritime Association, a safety program which I am going to mention later and of which we are very proud.

Our organizations represent American shipowners on the Pacific coast and the stevedore contractor and terminal companies whose clientele includes both foreign- and American-flag vessel operators. We are employers of approximately 15,000 longshoremen, all under contracts with the International Longshoremen's and Warehousemen's Union. These men are protected when working aboard our vessels under the Longshoremen's and Harbor Workers' Compensation Act, which act s. 2485 would amend in a number of substantial ways. We are in accord with the objectives of the basic act. However, we have objections to some of the proposed amendments in S. 2485. In addition, we have some reforming amendments of our own to offer.

We do not oppose reasonable monetary increase in the act's weekly disability benefits. We are only too aware of the substantial increase in weekly longshore wages since 1961 when the present $70 weekly benefit rate was established. On the Pacific coast average weekly wages of class A longshoremen increased 42 percent between 1961 and 1966 ($121 to $171 per week). While a 30 to 40 percent increase might be justifiable in terms of our regional longshoremen's wage increases, we fully realize that other segments of the maritime industry, or the shipyard industry, or the District of Columbia, or others covered under the act may have a much different wage history by which to measure a justifiable increase. The Congress, of course, is concerned with all the industries covered in the act in arriving at a new rate. The Congress must also be concerned, it seems to us, with establishing rates and coverages not too much at variance with State acts.

I have mentioned, Mr. Chairman, certain features of the act that are highlights of the present amendments to the act and indicated the number of States which exceed that provision as it appears in the Longshore and Harbor Workers Act. There will be other testimony more in detail on this, but it suffices to say at this juncture that in all its features the Longshore Act exceeds almost every other State and upon that balance the entire act, even now without any changes, is an extremely generous act as compared to the State compensation acts.

(The information referred to above follows:) The Longshoremen's and Harbor Workers' Act is only surpassed in coverage at present by the following number of States:

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Mr. DEWEY. We base our support for any substantial increase in the quantitative benefits upon one basic equalizer which the entire maritime industry needs desperately, that is, upon amendments to the pertinent sections of the act which would eliminate the unprecedented liability burden created by the courts in allowing third party actions and judgments based on the warranty of seaworthiness against the vessel upon which the longshoremen work. This problem has already been developed in detail in the November hearing. The committee has already received into the November hearing record the maritime industry's “white paper” on this subject, entitled “Compensation and Common Sense," a document upon which we collaborated and concur wholeheartedly as to its integrity as a statement of the problem.

Senator YARBOROUGH. We were waiting for that after the November hearing but counsel advised me they haven't received that yet in Washington.

Have you minority counsel received it?
Mr. MITTLEMAN. I have a copy of it.
Senator YARBOROUGH. Minority counsel say they have seen a copy.
Yours is an uncut copy?
Mr. BENEDICT. Yes.

Senator YARBOROUGH. The majority has not seen that. I see the minority counsel did have a proof page copy.

We thank you very much.

Senator MORSE. Mr. Chairman, I would like to suggest that at the close of our hearing here in Portland, or at the close of Mr. Dewey's testimony, whichever seems to be best from the standpoint of preparing the record, that this document be made a part of the transcript of the record.

Senator YARBOROUGH. It is so ordered. We might consider, Senator Morse, and ask your advice on this, whether we print it in either the middle of the testimony, oral testimony, of the witness or whether we print it as an appendix of the record.

Senator MORSE. I think it ought to be printed as an appendix. Senator YARBOROUGH. This is ordered printed in full as an appendix where it will be easy to see when the record is printed.

(See "Compensation and Common Sense," p. 365.)

Mr. DEWEY. We intend to distribute this statement as widely as necessary to insure public awareness of the crushing burden and legal inequity facing the merchant marine and its allied stevedore contractors. It clearly supports the amendments to S. 2485 proposed by Mr. Scanlon in the November hearings on this bill. For your ready reference, we attach to the end of this statement the text of these maritime industry-supported amendments.

It is enough by way of summary and emphasis that the added cost of these third-party judgments and settlements, a unique situation which only obtains in U.S. ports, and which only obtains in the maritime industries covered in the act, is substantial and very difficult to insure against. It is our best estimate that the cost of third-party liability actions to our west coast ship operators approximate 15 to 20 percent over and above the approximately $15 million of annual

premiums or self-insured costs incurred under the State acts and the Federal act. This is a bonus remedy entirely unnecessary for the protection of longshoremen, which inures largely to the benefit to certain attorneys. It is of dubious benefit and sometimes of negative effect on claimants, and was certainly not contemplated by Congress when it passed the Longshoremen's and Harbor Workers' Act in 1927. In that act the scheduled workmen's compensation benefits were to be adjudged “without fault” and were to be exclusive of all other remedies except for negligence third-party actions. Yet we are now confronted with a chain of court decisions which require a vessel which is dead in the water and subject to none of the perils of the sea" to warrant seaworthiness (an absolute, not a relative liability) to a visiting worker.

We thus have an unprecedented burden on one segment of U.S. industry arising from absence of seaworthines being determined by the courts to be any imperfect condition present on the ship, or worse yet, an imperfect condition of ship, related gear or cargo ashore, which may have been present when the accident to the longshoreman occurred. We have the further problem of the vessel owner being forced by circumstances to implead his stevedore contractor, thereby seeking indemnity from the contractor/employer. This process, in nearly all of the cases, brings us full circle back to the stevedore contractor who is ultimately held liable for damages over and above the compensation provided by the statute. The contractor must either absorb or pass back to this ship client this liability, thus destroying the concept of "without

fault” compensation which the 1927 act said was the worker's exclusive remedy.

Who pays, really? Since the ship hires the stevedore contractor it is the ship operator who perforce pays not only his own costs as a "third party" but also those incurred by his contractor who he impleaded.

The ship operator eventually must pass his costs on in the freight rate to his customer, and thus the shipper of cargoes in ocean trade finally gets the bill.

. If most of this extra cost of third-party suits went to the longshoreman, it might be somehow more palatable. But only a portion goes to the injured man, the lion's share goes to expense of litigation and into the hands of plaintiffs' lawyers who have found in these third-party suits a veritable paradise since they need no longer prove negligence to get a judgment. No other industry in America suffers as does ours under the daily cloud of an absolute liability such as this. It is worthy of note that those covered under the Federal Employees' Compensation Act do not have such duplicative remedy in the Federal Torts Claims Liability Act.

Unless this matter is cleared up by the Congress as per our requested amendments, our industry should not, in all fairness and equity, be expected to support the amount of increase proposed in the bill s. 2485. These amendments are centered upon posturing the owner of the premises on which work takes place in the same liability status as the contractor/employer. It leaves completely intact the privilege of a longshoreman to sue a bona fide third party outside the employment relationship, such as owners of trucks, railroads, ports, terminals, gear manufacturers, et cetera, who happen to be on the premises where the work relationship is taking place.

It is fitting here to point out some aspects of the economics of ship operation in U.S. ports in a fiercely competitive world, and how it is affected by wasteful costs such as are now being incurred and would be worsened by this bill unless amended.

Some of our west coast ports, especially in the Puget Sound and San Diego areas, and to some extent in Columbia River and coastal ports, are subject to foreign competition a few dozen miles across the border.

a These ports in Mexico and Canada have no such outlandish costs as do ours in this area of longshore workmen's compensation. The Great Lakes ports would be a further case in point. Many cargoes move to their markets through U.S. ports on a competitive margin of cents per ton in the landed costs. It is a travesty upon the intent of Congress that because at least 50 percent of a third-party cost goes to expense of litigation and to attorneys, it could result in an American port losing lucrative cargoes to a port across the border.

We said earlier that the ship really pays the bill, even when a stevedore contractor is adjudged at fault in a third-party impleading. It is our observation that the American-flag ship is somewhat more of a target for third-party suits than are foreign vessels. This only adds to the competitive difficulties of our merchant marine.

And now some brief comments on our views on the other main features of the bill.

I would paraphrase, Mr. Chairman, that other witnesses will develop these points in more depth, and I have just simply highlighted them for the sake of the record.

(1) To repeat, we would not oppose a reasonable increase in the benefits in section 6(b) of the act, provided third-party seaworthiness relief is included.

(2) We see no need for reducing the 28-day waiting period to 21 days before receiving the first 3 days of compensation but would accept this if the “seaworthiness" relief is granted. Very few State acts provide a waiting period of 21 days, most requiring above 30 days.

(3) We are completely opposed to removing the ceiling on benefits payable under permanent partial disability in section 14(m) of the act. We would agree to the ceiling being increased commensurate with other benefits. Unquestionably, without the ceiling, premiums would be increased tremendously to take care of the open ended liability.

(+) We are opposed to the amendment to section 8(c) of the act, permitting further compensation at the end of a scheduled award. With the abuses already prevalent in determining “loss of wage earning capacity” by the deputy commissioners, this added eligibility would incur endless costs of incalculable amount and is not needed to protect the claimant.

(5) We are opposed to increasing the time for filing claims under the act to a time 1 year after the claimant discovers his work-related injury. This is too risky for the employer and leaves him open to claim for an indefinite period extending many years after the fact. The present maximum of 1 year after the accident for filing is essential and equitable, and is in keeping with other social legislation of similar nature.

(6) We are unalterably opposed to the amendment to section 28(a) of the act to provide for legal fees to be paid by the carrier when an award is “resisted” by an employer. The legal fees should be paid by the claimant if they, in fact, are even needed. This proposed amendment is a boon to attorneys without really benefiting longshoremen and is not based on precedent in other related jurisdictions.

(7) We are opposed to an extra 813 percent weekly benefit being paid'if the claimant has dependents. We know of no State compensation acts that have this feature. It is a thinly disguised means of raising the weekly benefits to 75 percent of earnings. With taxes deducted from a longshoreman's earnings, the 75 percent of earnings concept could well approximate 85 percent or more of take-home pay. The temptation for malingering would be too attractive if 75 percent of earnings are established as the weekly benefit ceiling.

(8) Sections dealing with user charges require special comment in some depth.

Sections 14 and 15 of S. 2485 would require "user charges" to be paid by insurance carriers and self-insurers for the act's safety program and for the administration of the compensation program. We vigorously object to these features.

Speaking for ourselves, the safety program of Pacific Maritime Association, which is applicable to the entire Pacific coast dating back to 1927, is presently costing our segment of the industry close to $500,000 per year.

We feel this input by Pacific Maritime Association's staff and members into water front safety (and training, which is the handmaiden of safety) is an excellent investment and that our declining accident rate is proof positive of its value to management and to our employees.

88-651-68-12

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