Manhattan Tankers, Inc. v. Dole, s. 84-5886
| Decision Date | 11 April 1986 |
| Docket Number | 84-5929,Nos. 84-5886,s. 84-5886 |
| Parties | , 252 U.S.App.D.C. 111 MANHATTAN TANKERS, INC., Appellant, v. Elizabeth H. DOLE, Secretary of Transportation, et al. MANHATTAN TANKERS, INC. v. Elizabeth H. DOLE, Secretary of Transportation, et al. Ogden Challenger Transport, Inc., Appellant. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
William E. McDaniels, with whom Kevin T. Baine and F. Lane Heard, III, Washington, D.C., were on brief, for appellant in No. 84-5886 and cross-appellee in No. 84-5929.
Michael J. Ryan, Asst. U.S. Atty., with whom Joseph E. diGenova, U.S. Atty., Royce C. Lamberth and R. Craig Lawrence, Asst. U.S. Attys., Washington, D.C., were on brief, for appellee U.S. in No. 84-5886 and cross-appellant in No. 84-5929.
Hugh N. Fryer, with whom Philip W. Buchen and Craig S. King, Washington, D.C., were on brief, for appellee Ogden Challenger Transport, Inc. in No. 84-5886 and cross-appellant in No. 84-5929.
Before ROBINSON, Chief Judge, and STARR and BUCKLEY, Circuit Judges.
Opinion for the Court filed by Circuit Judge STARR.
As this Nation's dependency upon foreign oil increased over the years, tankers transporting oil to the United States prosperously plied their international routes. The coastwise trade of the United States, as from the earliest days of our Republic, continued as the exclusive preserve of ships that were U.S. owned and U.S.-built. In the wake of the Arab oil embargo of 1973-74 and other shocks to the international oil market, demand for international carriage of oil dropped markedly; meanwhile, the discovery of substantial quantities of oil in Alaska, combined with legislation forbidding its sale abroad, created a significant expansion in the U.S. coastwise trade. Shipping firms whose vessels were disqualified from carrying domestic commerce thereupon undertook to rid vessels of foreign "taint" in order to render those bottoms legally competent to engage in the coastwise trade.
The case before us involves one legal avenue of transforming a vessel formerly limited to foreign trade into a bona fide member of the U.S. domestic fleet. That method is the Wrecked Vessels Statute, a one-sentence measure codified at 46 U.S.C. Sec. 14 (1982). 1 Under its terms, a vessel built abroad which is "wrecked on the coasts of the United States or her possessions or adjacent waters" can enter the ranks of U.S. vessels if two prescribed conditions are met. First, the vessel must be "purchased by a citizen or citizens of the United States"; second, the wrecked vessel must be "repaired in a shipyard in the United States or her possessions ... [so] that the said repairs put upon such vessel [ ] are equal to three times the appraised salved value of the vessel." Id.
In the events that gave rise to this litigation, Avondale Shipyards, Inc. purchased a Japanese-built tanker, the ARKAS (subsequently renamed the OGDEN COLUMBIA), that had collided with a towboat on the Mississippi River. 2 Avondale thereafter invoked the Wrecked Vessels Statute, seeking enrollment by the U.S. Coast Guard of the repaired vessel under that measure. Avondale's effort proved successful, over the vigorous objections of a prospective competitor already plying the coastwise trade, Manhattan Tankers, Inc. Failing in its efforts before the Coast Guard to torpedo the ARKAS' documentation as a U.S. vessel, Manhattan Tankers filed suit in United States District Court against the Secretary of Transportation, among others, seeking to overturn the process by which its unwelcomed competitor had entered the coastwise trade. That challenge failed below, as the District Court granted the Government's motion for summary judgment. For the reasons that follow, we affirm.
In 1982, the Coast Guard promulgated regulations designed to ensure that vessels enrolled under the Wrecked Vessels Statute were indeed qualified to enter the ranks of those built in American shipyards. Specifically, the regulations fleshed out the statutory requirement that the repairs to the vessel exceed three times the "appraised salved value." A primary loophole that the 1982 regulations were designed to close was the failure in the appraisal process to account for future coastwise trading privileges of the rebuilt vessel, an omission which had apparently resulted in unjustifiably low appraisals of wrecked vessels' value. The unhappy consequence of low appraisals was that foreign vessels could undergo relatively little repair work in U.S. shipyards and then "compete unfairly with more expensive United States built vessels" in the coastwise trade. 47 Fed.Reg. 27492 (1982). The remedy for this perverse incentive to wreck a foreign-built vessel on United States shores was to use "the coastwise privilege as an element of the salved value appraisal." Id. In addition, to avoid modest damage transforming a vessel into a "wrecked" condition, the regulations required that, to qualify under the statute, a vessel must have sustained "substantial damage to its hull or superstructure." 46 C.F.R. Sec. 67.19-9 (1985).
Shortly after the regulations were promulgated, Avondale purchased the ARKAS for $7.75 million and promptly requested the Coast Guard to determine that the vessel was potentially qualified for enrollment under the Wrecked Vessels Statute. As expressly authorized by the statute and required by the regulations, the Coast Guard convened a three-member, outside Board of Appraisers to make the requisite findings. Within days after the Board's convening, Manhattan Tankers, through counsel, tendered to the Coast Guard a written request to participate in the Board's proceedings and requested "that certain information relating to the damage to the ARKAS, its salved value, and the cost of repairs be brought to the attention of the Board." Brief for Manhattan Tankers at 11. The efforts were unavailing, however, as the Coast Guard declined to permit adversarial participation in the Board's proceedings and dismissed Manhattan Tankers' proffered information as extraneous.
Soon thereafter, the Board rendered its first report, concluding that the salved value of the ARKAS was $3.5 million. The Coast Guard, however, found the report unsatisfactory for two reasons. First, the Board's determination of substantial damage to the vessel rested in part on a finding of damage to the machinery, whereas the regulations limit the substantial damage inquiry to the hull or superstructure. Second, it was not clear from the Board's brief report that the recently articulated factor of coastwise trading privileges had been taken into account in determining the vessel's appraised salved value.
Returning to the drawing boards, the Board confessed error in not having considered coastwise trading privileges and came forward with a revised salved value of $7 million. The Board also stated expressly that the ARKAS had sustained substantial damage to its hull and superstructure due to collision and fire.
The repairs were then undertaken by Avondale at its shipyard in New Orleans, after the completion of which the Board was reconvened to determine the cost of the repairs. In late 1983, the Board reported that the total cost of all repairs to the ARKAS was slightly in excess of $38 million and that the cost of repairs necessary to bring the vessel into conformity with applicable requirements was $35.7 million. The Board's findings were reviewed and accepted by Joseph A. Yglesias, Chief of the Coast Guard's Merchant Vessel Documentation Division.
Unenamored of the result reached and chagrined by the procedures employed by the Coast Guard in documenting the ARKAS Manhattan Tankers brought suit contending that (1) it was improperly denied the right to participate in the appraisal proceedings; (2) the appraisal proceedings were tainted by the potential for bias on the part of the Board members; (3) the Board and Coast Guard provided no reasoned explanation for their decisions; and (4) the Coast Guard's decision to accept the Board's finding was arbitrary, capricious and an abuse of discretion.
In a thorough opinion, 596 F.Supp. 974 (D.D.C. 1984), the District Court rejected Manhattan's various challenges. Manhattan Tankers' only specific authority for the asserted right of competitors to participate in the appraisal proceeding, Independent U.S. Tanker Owners Committee v. Lewis (ITOC), 690 F.2d 908 (D.C.Cir.1982), was deemed inapposite. The District Court also rejected the claim that bias infected the Board of Appraisers' proceedings, concluding that the Board was expressly authorized by statute and that its use was consistent with the due-process requirement of an impartial decisionmaker. Plaintiff's substantive attacks on the Coast Guard's decision were equally unavailing. The District Court found that the bases for the Board's and Coast Guard's determinations were sufficiently disclosed to permit effective judicial review. Moreover, the Coast Guard's decision to accept the Board's findings, after its own inquiry, was held consistent with the statutory and regulatory scheme at issue and otherwise in accordance with law.
Because we agree in the main with the District Court's analysis, we will address only in brief Manhattan Tankers' more substantial arguments. 3 First, appellant contends that existing competitors in the coastwise trade are entitled to participate in appraisal proceedings under the Wrecked Vessels Statute. We disagree. No support for such a procedural right is to be found in either the specific statutory provision or the regulations governing the documentation of wrecked vessels. Nor can such a right be divined in the general requirements of the APA. To the contrary, the statutory and regulatory scheme at issue was especially crafted to minimize the costs and burdens of administration. The statute prescribes a set formula for determining documentation eligibility and...
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