judgments for an employee or very low judgments when the employee appears to have strongly contributed to the accident himself.

Before any action is taken in any other facets of this proposed bill, we feel consideration should certainly be given to the additional costs now faced by the employers as a result of these third-party suits and the lack of additional benefit being received by employees when thirdparty action is allowed under the Longshoremen and Harbor Workers' Act. The employee is forced to pay large attorney's fees which naturally raise the amount of his claim, which is eventually borne, to some extent, by the employer.

The companies I represent all operate within 100 air miles of the ports of Prince Rupert, Vancouver, and New Westminster, British Columbia. Since these ports, under Canadian law, do not face the thirdparty costs now faced by American companies, we are again placed in an unfair competitive position with respect to all cargoes which are handled as commonly called in the industry "O.C.P.", and commodities that can be generated or shipped from our Middle West or the Canadian Middle West. As an employer of American labor, we feel our labor is skilled enough and has the proper equipment to compete with our Canadian neighbors despite our higher wages and benefits, but when we add in the additional factor of an insurance cost that is brought completely out of line with what is compensation for the injured worker by the nebulous factor of a possibly very large suit and a large amount of money being awarded, we are placed in a noncompetitive position by the very law put into effect by the Federal Government, which was supposedly to give relief to the injured worker and stability to the employers in that they would have an insured cost to use when bidding for these competitive cargoes through our American ports.

Payrolls in the waterfront area within which we operate amount to approximately $90 million a year. All of these payrolls compete directly with Canadian ports for various worldwide cargoes, of which transportation is a large percentage of their cost factor. They use the transportation cost when evaluating the sale of any commodity which is being sold on the world market.

Referring to your consideration of adding a higher compensation rate to injured workers, this is not as alarming to us as we feel the injured worker should definitely receive his measure of compensation; but we urge you to consider the high cost of third-party suits which are not of great benefit to the employee and, at the present time, are rapidly climbing to the rate of putting the employer out of business and jeopardizing these $90 million worth of payroll which are presently competing in the world market.

In reference to the user charge that is presently being considered, this is, again, another additional cost which, we feel, to some extent, is being unfairly placed upon our industry which is already weakened by our high cost of labor and material. We strongly recommend deletion of this section as we are not allowed to choose the people who administer the program or have any direction or control over the program, but are being requested to pay for the cost which is being presently borne by the Federal Government. It appears to us unrealistic to ask for somebody else to pay for the cost of a regulatory program and not give to the industry any say with regard to how the pro

gram is carried out or the employees that are presently being employed to administer the regulations. The user cost will add another increased cost to the American employer versus our Canadian neighbor which has a large staff of government people who oversee waterfront activity and, as far as our Canadian neighbors are concerned, the stevedore and steamship industry receive more aid than is received by an American employer. Canadian Government officials are not only responsible for regulations in Canada, they are also safety directors which in the United States the employer hires and handles himself with regard to unsafe working conditions aboard various foreign vessels. Thus, by adding to the employers in the United States the cost of the regulatory program, over which we have no control over the regulations or the people who are administering that program, we are again being placed by our Government in an uncompetitive position with foreign stevedoring firms.

In summing up my position with reference to S. 2485, I feel that anything that is paid out by the industry for their injured employees should be paid directly to the employee as compensation, which results in the lowest administrative cost to the employer and the employee and results in the highest amount of final dollars reaching the person for whom relief has been sought by the Compensation Act. By continuing to allow third-party suits, which only ends with the employer paying an increased cost in court fees and especially legal fees which are doubled, the employer has been forced to pay a higher cost to protect his employee and the employee has received very little benefit. We are in favor of employees receiving under the act the compensation they are entitled to receive, but I certainly feel that the third-party costs that are presently being passed on by the steamship companies directly to the stevedore companies are unfair and unrealistic and could easily jeopardize the wages and working conditions that are the highest and best for longshoremen of any place in the world today. Despite these high wages and working conditions with the use of these skilled men and mechanical equipment, we are able to compete on an equal basis with foreign countries and our Compensation Act is of benefit to the American employer in that he has been able to schedule his overall costs, including injuries, but continuing to allow third-party claims despite the act supposedly making the injured workmen whole, is completely throwing the insurance costs out of line with our competitors and is thus making us uncompetitive in the world market.

If this statement that I have given you, I am only reflecting the actual experience of a stevedore who has been operating on the waterfront since 1925, and I have spoken in laymen's language with regard to the financial burden which is being placed upon us by the Federal Government. We can offset burdens that are of benefit to our employees and which realistically reflect actual cost, but financial burdens which are placed upon us by third-party suits and user charges, which we feel are unrealistic, impose a burden which makes it extremely difficult for the American employer to continue competing in world markets. In this instance, we are not competing with other employers in the United States or requesting special treatment or subsidies. We are only requesting to be treated equally by our Government as the people with whom we must compete are treated by their government,

and third-party suits and user charges only increase the disadvantages we presently have been able to overcome to maintain our share of the world's shipping trade.

Thank you for the time allowed and we urgently request your amending the act to eliminate third-party claims and deletion of the "user" charge. Thank you, gentlemen.

Senator YARBOROUGH. Mr. Smith, in your statement you point out that the Canadian Government has people who oversee the waterfront activity where that is left up to private industry here. Then you say they also have safety directors which in the United States the employer handles himself wih regard to unsafe working conditions aboard foreign vessels. In the United States the employer is forced to do this. Isn't our Coast Guard supposed to make inspections of these ships for safety?

Mr. SMITH. Senator Yarborough, in reference to both Coast Guard and BLS I made it clear I am speaking of the companies I am connected with at this time. We have an organization referred to as APB, Accident Prevention Bureau, furnished to the employer by the association. We have BLS furnished to the employers by the Government. We have Coast Guard inspections furnished to us by the Government. Our company pays a safety director a good wage in my estimation, sometimes as much as our regular longshoremen get, from $12,000 to $15,000 a year, and I wish he was here to verify it, for nothing but to protect my company in relationship to having a safe working condition and safety action that will assist and continually having our premiums go down. I am not self-insured, although I am a company that is in a retroposition so that there is only one way I can beat the insurance company and that is to have a lot of loss and go out of business. If I stay in business I will have to stay in business based on 130 to 145 percent of the payment out must be in premiums to allow the insurance company to stay in business. The Coast Guard do not inspect my ships for that purpose.

Senator MORSE. I think you made a very strong prima facie case on the user charges and I think you have rebutted further the record on the third party suits. I think this puts it squarely up to both the Department of Labor and Department of Justice and this Committee to answer and also to the representatives of the workers on the third party suits. I don't know if there is an area of adjustment that can be worked out. Of course it is easy for us to be worked out in collective bargaining, but that doesn't give us any out as as far as our responsibility is concerned. I see both sides to this bill, the workers and the employers know we are going to grapple with the third party suit problem and see what can be worked out."

Mr. SMITH. The question was asked by counsel from another testimony, was these any figure they could use that could tie down third party additional costs. We have broken out in our insurance and I am speaking only from my companies' standpoint that operate in the areas we operate, but from an overall, 211⁄2 years ago when our policy was written, we had set aside a dollar fifteen cents per hundred dollars to cover our third party suit above a figure. That was raised a year ago to 15 cents. It is now $2. By the 1st of January 1968 it was raised another 25 cents, so in less-this was written in July, which will be 3 years this coming July-so in 212 years that has gone up in my com

pany a total of 50 percent. In other words, 50 percent of a dollar and a half is 75 cents. Does that answer your question you asked?

Mr. MITTELMAN. Yes. What percentage of your total premiums does that $2.50 entail? You have a cost per hundred dollars of payroll for insurance

Mr. SMITH. I would say in the field of 25 to 30 percent. Again I don't have the exact figures.

Mr. MITTELMAN. Thank you.

Senator YARBOROUGH. Any further questions from any of the staff or Senator Morse?

Thank you, Mr. Smith, for your testimony.

Gentlemen, before proceeding with the next witness we will have a 10-minute recess.

(There followed a short recess.)

Senator YARBOROUGH. The hearing will come to order and we will hear from Mr. Dennis Lindsay.

STATEMENT OF DENNIS LINDSAY, COUNSEL FOR THE MASTER CONTRACTING STEVEDORE ASSOCIATION OF THE PACIFIC

COAST, INC.

Mr. LINDSAY. Mr. Chairman, Senator Morse, I am Dennis Lindsay. I am an attorney in this State, senior partner in the law firm of Krause, Lindsay & Nahstall. Our firm, you might say, specializes in maritime type of law. We have been doing it for quite a few years and we certainly are one of the sets of attorneys that you have been hearing about today who have certainly benefited by these third-party actions. I want you to bear in mind that we have had an economic stake in it and what we are suggesting is nonetheless made with that in mind.

I am appearing here today, of course, for the Master Contracting Stevedore Association of the Pacific Coast. You should have in mind that this is an organization of some 30 stevedoring firms that do the direct stevedoring work in Oregon, Washington, California, and in southern Alaska. These are the direct employers, the ones who particularly are governed by the Longshore Act and will feel the very changes that are coming.

I have prepared a rather lengthy statement. I would prefer, if it is possible, Mr. Chairman and Senator Morse, that it be put into the record. I think I will be of much more help to you if I look at you directly and, in effect, touch the high points and summarize what I have to say.

Senator YARBOROUGH. I will order your entire statement, Mr. Lindsay, printed in the record, together with the exhibits that you have attached, being various tables of laws and benefits on laws that illustrate and illuminate your statement. It will be studied.

Go ahead and present your statement in your own way.

Mr. LINDSAY. I would be remiss if we didn't start out the hearings by certainly the association acknowledging our thanks to you and Senator Morse for coming out here. We are thankful that he had the, you might say, the pull he had so we might have the hearing out in our own home State, but it really has been a convenience and a real help to have you out here. We don't have the bells of the Senate rung, we don't have a lot of other, in effect, what to you isn't distraction but

perhaps to us is. It kind of gives us a chance to talk to you eyeball to eyeball.

Now, what I would like to do before

Senator YARBOROUGH. I must say it is easier for us to meet in Washington, but Senator Morse insisted that the west coast interest have an opportunity to have a hearing on the west coast.

Mr. LINDSAY. We are rather thankful he did.

What I would like to do so we don't duplicate and step on each other's toes here, would be to try to give you, if I might, a consensus sort of a summary of where we stand on this, as I see it as the counsel for this association. I think I can do that without taking too many of your minutes.

Now, I think the starting point is just what is our general attitude, how do we feel about this proposed amendment to the act. Certainly you have to say that ours is an affirmative, positive one. We are not here in any hang-dog opposition.

We recognize the importance of a Longshore Act to all the employees, the employers I am speaking for, and we have but two limitations. They are worries, but they are rather important limitations. We want to do what we can within the limits, you might say, of our economic capabilities, and this means a cost process which your committee is going to work on; and, second, we want to do it within the context of, if possible, eliminating or curtailing what the industry, as you have heard, really versus the main cancer in its whole body, and that is these third-party cases.

Now, I think to, first of all, handle this thing is to come at the proposed bill the way that Mr. Robertson did. You can kind of think of it as really having three parts. I think this is a convenient way for you as well as for ourselves to think of it. You have provisions which really relate to increased benefits. You take the existing numbers and change them. The pattern is the same. The second phase, writing in new provisions, new concepts that are being put in there. The third category we can talk to are the so-called user charges, which are the building up of your second injury fund, you are paying expenses of administering the Safety Act, and, third, you are paying the expenses of administering the act.

Senator YARBOROUGH. First, building up the user funds increase from $1,000 to $5,000.

Mr. LINDSAY. I think you will find no particular, or at least in our section of the country, and you are out here to get our feelings as against others, our attitude is really kind of helpful and optimistic, we will go along with that, but the aspect of the second injury fund, I will come to, that is, building it up to 300,000 is another matter.

Let me, if I can break it into three categories, analyze it as we see. The first category on increased benefit. The real guts of this bill is right there. Essentially that is where you rang the maximum average up to a hundred naught five a week on your disability where you raise your death benefits, and, third, where you propose to take off your 24,000 maximum compensation ceiling. That is what this act is basically about. I think that is what Mr. Murnane and Mr. Stern are interested in obtaining above all for their men. Above that I think you will find on the increasing of it, as the witnesses have told you, we are going to go along with it, but we want to give you further economic data, which I will come to in a moment.