Alaska Bulk Carriers, Inc. v. Kreps, s. 77-2080
| Citation | 194 U.S.App.D.C. 7,595 F.2d 814 |
| Decision Date | 18 June 1979 |
| Docket Number | Nos. 77-2080,78-1212 and 78-1281,78-1211,s. 77-2080 |
| Parties | ALASKA BULK CARRIERS, INC., Trinidad Corporation, Appellants, v. Juanita M. KREPS, Secretary of Commerce, U.S. Department of Commerce, et al. SHELL OIL COMPANY (a Delaware Corporation), Appellant, v. Juanita M. KREPS (Individually and as Secretary of the United States Department of Commerce Acting in her Official Capacity), et al. ALASKA BULK CARRIERS, INC., Trinidad Corporation v. Juanita M. KREPS, Secretary of Commerce, U.S. Department of Commerce, et al., Polk Tanker Corporation, et al., Appellants. SHELL OIL COMPANY (a Delaware Corporation) v. Juanita M. KREPS (Individually and as Secretary of the United States Department of Commerce Acting in her Official Capacity), et al., Seatrain Shipbuilding Corp. and Polk Tanker Corp., Appellants. |
| Court | United States Courts of Appeals. United States Court of Appeals (District of Columbia) |
Amy Loeserman Klein, Washington, D. C., with whom Olga Boikess and William Karas, Washington, D. C., were on the brief, for appellants in No. 77-2080.
Stephen N. Shulman, Washington, D. C., with whom Joseph A. Artabane and Mark C. Ellenberg, Washington, D. C., were on the brief, for appellant in No. 78-1211.
Michael Kimmel, Atty., Dept. of Justice, Washington, D. C., with whom Earl J. Silbert, U. S. Atty., Barbara Allen Babcock, Asst. Atty. Gen., and Ronald R. Glancz, Atty., Dept. of Justice, Washington, D. C., were on the brief, for appellees, Juanita M. Kreps, Secretary of Commerce, et al.
William E. McDaniels, Washington, D. C., with whom John W. Vardaman, Jr. and Jane E. Genster, Washington, D. C., were on the brief, for appellees, in No. 77-2080 and No. 78-1211 and cross-appellants in No. 78-1212 and No. 78-1281.
Also John M. Rogers, Atty., Dept. of Justice, Washington, D. C., entered an appearance for appellee, Juanita M. Kreps, Secretary of Commerce, et al.
Also Neal Michael Mayer, Washington, D. C., entered an appearance for appellee, Polk Tanker Corp., et al. in No. 77-2080.
Also Jonathan Blank, Washington, D. C., entered an appearance for appellee, Polk Tanker Corp., et al. in No. 77-2080.
Before BAZELON, McGOWAN and WILKEY, Circuit Judges.
Opinion for the Court filed by WILKEY, Circuit Judge.
OUTLINE OF THE OPINION
Alaska Bulk Carries v. Kreps, et al
Page
I. BACKGROUND ................................................... 817
A. Statutory ................................................. 817
B. Factual ................................................... 819
II. THE ISSUE .................................................... 821
III. ANALYSIS OF SECTION 506 OF THE MERCHANT MARINE ACT OF
1936 ......................................................... 822
A. The Language of Section 506 ............................... 822
1. Exclusion of Other Exceptions ......................... 822
2. Findings of Need as Essential Basis for Limited Waiver 823
B. Legislative History of Section 506 ........................ 824
1. The Original 1936 Act ................................. 824
2. 1938 Amendments ....................................... 827
C. Administrative Interpretation ............................. 829
IV. SECTIONS OF THE MERCHANT MARINE ACT OF 1936 RELIED UPON BY
THE AGENCY AND THE TRIAL COURT AS SOURCES OF AGENCY
AUTHORITY .................................................... 833
A. Section 504, Title V, of the Merchant Marine Act of 1936
(46 U.S.C. Sec. 1154) ....................................... 834
B. Section 207, Title V, of the Merchant Marine Act of 1936
(46 U.S.C. Sec. 1117) ....................................... 835
C. Section 1104 (a), Title XI, of the Merchant Marine Act of
1936 (46 U.S.C. Sec. 1274(a)(3)) ............................ 836
V. POLICY OF THE MERCHANT MARINE ACT OF 1936 .................... 839
Conclusion 840
This is an appeal from an unsuccessful challenge in the District Court by appellant-plaintiffs to action taken collectively by the Secretary of Commerce, the Maritime Administrator, and the Maritime Subsidy Board. The Agency (to use the term inclusive of the actions and authority of all appellee-defendants) had removed statutory restrictions barring operations of the 225,000-ton tanker Stuyvesant in the domestic maritime trade in exchange for the repayment (by 20-year promissory notes) of the entire $27.2 million subsidy the Agency had previously paid toward construction of the Stuyvesant. We hold that nothing in the Merchant Marine Act of 1936 1 permits the Permanent removal of the statutory bar to the utilization of construction-subsidized vessels in the domestic maritime trade, and therefore reverse the decision of the District Court.
It has been recognized that the cost of building ships in U.S. shipyards, and likewise the cost of operating vessels with American crews and according to American safety standards, is considerably higher than construction in foreign shipyards or operation with foreign crews. It has also long been recognized that an adequate merchant marine is vital to both the national defense and the commercial welfare of the United States. 2 Since the earliest days of In U.S. foreign commerce, however, the practical competitive situation is otherwise. Every foreign nation with which the United States trades has precisely the same interests and precisely the same right to have cargo passing between the two countries carried in ships of its flag. If the construction and operating costs of the foreign-flag vessels are lower, which they are and have been for many years, then on a purely competitive basis both import and export cargo of the United States will be carried exclusively in foreign-flag vessels. To forestall this highly undesirable situation, Congress for many years has authorized both a subsidy for ships to be built in U.S. yards and an operating-differential subsidy for the manning of American-flag vessels by American citizens in accordance with American safety standards. Under the construction-differential subsidy program, 6 which is the only subsidy at issue here, the Government may pay up to 50% Of the construction costs of vessels needed for the U.S. foreign maritime trade. 7
the Republic, the problem of maintaining an adequate merchant marine in the domestic trade has been solved by preferential legislation that only U.S.-built and U.S.-flag vessels can be operated in commerce between points in the United States. 3 The Jones Act, § 27 of the Merchant Marine Act of 1920, 4 provides that only vessels "built in and documented under the laws of the United States and owned by persons who are citizens of the United States" may engage in domestic trade, defined as trade "between points in the United States, including Districts, Territories, and possessions thereof embraced within coastwise laws . . . ." 5 Since all ships operating in the U.S. domestic trade are both U.S.-built and owned, there has thus never been a need for a subsidy.
The U.S. merchant fleet is thus divided into two distinct segments. The "Jones Act" fleet, which operates in the protected U.S. domestic trade, cannot economically compete in foreign trade with either foreign ships or the U.S. subsidized fleet, because Jones Act ships are built and operated without subsidy and are thus far more costly to their American owners. The subsidized U.S. merchant fleet has never been allowed to compete in the domestic trade, because it would be grossly unfair to allow U.S. vessels which have received a subsidy of up to 50% Of construction costs to compete with U.S. vessels whose owners paid the full costs of construction in U.S. yards. The Jones Act preference legislation, designed to encourage construction in U.S. shipyards and the employment of U.S.-flag vessels in the domestic trade, all without direct cost to the taxpayers, would be completely negated if subsidized U.S.-flag competition were allowed to invade this protected reserve. As a consequence of such competition, American shipowners would be reluctant to build vessels without subsidy and the long-range investment decisionmaking of American shipowners and shipbuilders would be seriously upset. 8
The appellants argue that "(u)ntil the agency actions complained of here, ships built in U.S. shipyards for the subsidized fleet were permanently barred from competing Every owner of a vessel for which a construction-differential subsidy has been paid shall agree that the vessel shall be operated exclusively in foreign trade . . . (or on voyages with intermediate stops as part of world-wide voyages) . . . and that if the vessel is operated in the domestic trade on any of the above-enumerated services, he will pay . . . (a proportional amount of the subsidy). The Secretary may consent in writing to the temporary transfer of such vessel to service other than the service covered by such agreement for periods not exceeding six months in any year, whenever the Secretary may determine that such transfer is necessary or appropriate to carry out the purposes of this chapter. (Proportional repayment of the subsidy again provided.)
with the Jones Act fleet in the protected domestic trade." 9 Appellants point to § 506 of the Merchant Marine Act of 1936 10 as providing this statutory barrier. Section 506 provides that the...
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