Norfolk Dredging Co., Inc. v. U.S.

• Decision Date: 07 July 2004
• Docket Number: No. 04-5040.,No. 04-5041.,04-5040.,04-5041.
• Citation: 375 F.3d 1106
• Parties: NORFOLK DREDGING COMPANY, INC., Plaintiff-Appellee, v. UNITED STATES, Defendant-Appellant, and Bean Stuyvesant, L.L.C., Defendant-Appellant.
• Court: U.S. Court of Appeals — Federal Circuit

375 F.3d 1106

NORFOLK DREDGING COMPANY, INC., Plaintiff-Appellee, v. UNITED STATES, Defendant-Appellant, and Bean Stuyvesant, L.L.C., Defendant-Appellant.

No. 04-5040.

No. 04-5041.

United States Court of Appeals, Federal Circuit.

DECIDED: July 7, 2004.

Rehearing En Banc Denied August 13, 2004.

Michael H. Payne, Starfield & Payne, P.C., of Fort Washington, PA, argued for plaintiff-appellee. With him on the brief was Joseph A. Hackenbracht. Of counsel on the brief was Guilford D. Ware, Crenshaw, Ware & Martin, of Norfolk, VA.

Domenique Kirchner, Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for defendant-appellant United States. With her on the brief were Peter D. Keisler, Assistant Attorney General; David M. Cohen, Director; and Deborah A. Bynum, Assistant Director.

Jeffrey F. Lawrence, Sher & Blackwell, L.L.C., of Washington, DC, argued for defendant-appellant Bean Stuyvesant, L.L.C. With him on the brief was Heather M. Spring.

Before NEWMAN, RADER, and LINN, Circuit Judges.

LINN, Circuit Judge.

Bean Stuyvesant L.L.C. ("Bean") and the United States ("Government") (collectively, "Appellants") appeal from a decision of the Court of Federal Claims granting summary judgment in favor of Norfolk Dredging ("Norfolk") and enjoining the Army Corps of Engineers ("Corps") from awarding a dredging contract to Bean. Norfolk Dredging Co. v. United States, 58 Fed.Cl. 741 (2003) ("Norfolk II"). Because the Court of Federal Claims erred in construing the statutory exception to 46 U.S.C. app. § 292 and in concluding that Bean's activities did not fall within the scope of the statutory exception, we reverse and remand to the Court of Federal Claims with instructions to enter summary judgment in favor of Appellants.

BACKGROUND

This is a bid protest action challenging the legality of Bean's performance of dredging operations under Corps solicitation no. DACW54-03-B-0011 ("the contract"). Bean is a limited liability company organized under Delaware law. Bean is 50% owned by Bean Dredging L.L.C., a U.S. company, and 50% owned by Stuyvesant Dredging Co. ("SDC"), which is in turn wholly owned by a Dutch corporation. Thus, Bean is 50% foreign owned. The MERIDIAN is a non-hopper dredge owned by a U.S. company, Bean Meridian L.L.C. ("Bean Meridian"), and is documented under 46 U.S.C. ch. 121. Hopper dredges are self-propelled vessels that pump dredged material from the channel floor and store the material in containers called hoppers aboard the vessel. Nonhopper vessels are unable to store the dredged material on board; the dredged material must be piped to a separate vessel or location.

On August 8, 2003, the Corps issued bid solicitation no. DACW54-03-B-0011 for dredging in the vicinity of Morehead City Inner Harbor, North Carolina. Because of environmental concerns, the placement of dredged material on the beaches was to be completed between November 2003 and April 2004. Bean was the low bidder, and proposed performing the work using the MERIDIAN, a non-hopper dredging vessel chartered from Bean Meridian. Norfolk was the second lowest bidder.

Norfolk filed an expedited bid protest action in the Court of Federal Claims challenging the legality of Intervenor Bean's performance of the dredging operations in alleged violation of the terms of § 5501 of the Oceans Act of 1992. The parties agreed that Bean should be initially awarded the contract, subject to termination in the event the Court of Federal Claims should find that Bean was not eligible to perform.

The Court of Federal Claims observed that the Foreign Dredge Act of 1906, as amended by § 5501 of the Oceans Act of 1992 (codified at 46 U.S.C. app. § 292), bars foreign-built dredges from operating in U.S. waters. Norfolk II, 58 Fed.Cl. at 743. However, the note following 46 U.S.C. app. § 292 contains exceptions that include SDC and any entity in which it owns an interest. Id. at 744. Thus, the issue was whether Bean could legally charter a U.S.-built and documented non-hopper dredge under the statutory exception. Id. The court construed the statutory exception to 46 U.S.C. app. § 292 to exclude Bean's charter of the non-hopper dredge MERIDIAN pursuant to the contract, and thus Bean was barred from performing the contract by § 5501 of the Oceans Act of 1992. Following the court's denial of the Government's motion for reconsideration, Bean and the Corps entered into a no-cost termination of the contract.

Bean and the Government timely appealed from the Court of Federal Claims' October 14, 2003 order, Norfolk Dredging Co. v. United States, 58 Fed.Cl. 167 (2003) ("Norfolk I"); November 26, 2003 order on motion for reconsideration; and November 26, 2003 Corrected Opinion and Order, Norfolk II. We have jurisdiction from a final judgment of the Court of Federal Claims pursuant to 28 U.S.C. § 1295(a)(3).

DISCUSSION

I. Standard of Review

"This court reviews the Court of Federal Claims' grant of summary judgment de novo." Billings v. United States, 322 F.3d 1328, 1332 (Fed.Cir.2003). The underlying issue of statutory construction is a question of law we review de novo. Id.

II. Analysis

A. Statutory Construction

The Oceans Act of 1992 ("the Act") changed the law regarding the chartering of dredging vessels in U.S. waters. The Act required that a charterer of a dredging vessel in U.S. waters be at least 75% owned by U.S. citizens. Oceans Act of 1992, § 5501(a)(1), Pub. L. No. 102-587, 106 Stat. 5084, codified at 46 U.S.C. app. § 292(a)(2) (2000) (citing the 75% domestic ownership requirements of 46 U.S.C. app. § 802). However, the Act included the following exceptions to this basic rule:

The amendment ... does not apply to —

(A) (i) the vessel STUYVESANT, official number 648540;

(ii) any other hopper dredging vessel documented under chapter 121 of title 46, United States Code before the effective date of this Act and chartered to Stuyvesant Dredging Company or to an entity in which it has an ownership interest; however, this exception expires on December 3, 2022 or when the vessel STUYVESANT ceases to be documented under chapter 121, whichever first occurs; and

(iii) any other non-hopper dredging vessel documented under chapter 121 and chartered to Stuyvesant Dredging Company or to an entity in which it has an ownership interest, as is necessary (a) to fulfill dredging obligations under a specific contract, including any extension periods; or (b) as temporary replacement capacity for a vessel which has become disabled but only for so long as the disability shall last and until the vessel is in a position to fully resume dredging operations; however, this exception expires on December 8, 2022 or when the vessel STUYVESANT ceases to be documented under chapter 121, whichever first occurs....

Id. § 5501(a)(2), codified at 46 U.S.C. app. § 292 note (2000) (respectively, "exceptions (A)(i)", "(A)(ii)" and "(A)(iii)").

It is undisputed that Bean, the charterer of the non-hopper vessel MERIDIAN, was 50% owned by SDC, a foreign enterprise, and thus is prohibited from chartering vessels for dredging in U.S. waters under the terms of 46 U.S.C. app. § 292(a)(2). Norfolk II, 58 Fed.Cl. at 744. The parties principally dispute whether Bean falls into one of the statutory exceptions — (A)(i), (ii), or (iii) — enumerated in the note to 46 U.S.C. app. § 292. The applicability of exception (A)(iii) pertaining to non-hopper dredges is principally contested.

The Court of Federal Claims found that the three statutory exceptions in (A)(i)-(iii) relating to the vessel STUYVESANT, hopper vessels, and non-hopper vessels in § 5501(a)(2) of the Act, were amenable to construction based on their plain meaning. Norfolk II, 58 Fed.Cl. at 752. The court concluded that the "only construction that gives effect to all of the conditions set forth in the exception ... and reads all of subsections (A)(i), (ii), and (iii) together" was the following:

Under subsection (A)(iii), Stuyvesant Dredging Company or an entity in which it has an interest can utilize any nonhopper, even if not yet built, to fulfill contracts entered into utilizing STUYVESANT or any other qualified hopper. In other words, the non-hoppers would be supplemental to the dredging activities involving hoppers. Also, a non-hopper so chartered can be used as a temporary replacement for a hopper or a non-hopper. The latter event would occur when a contract is being performed only by a hopper or a non-hopper that has become disabled.

Id. at 753. The court later noted that

[a]n arrangement would satisfy [exception (A)(iii)] only if the chartered nonhopper vessel "is necessary ... to fulfill dredging obligations under a specific contract," supplementing a hopper vessel documented as of 1992, "including any extension periods," or to complete temporary replacement of a hopper or non-hopper performing a hopper contract.

Id. at 755 (quoting Oceans Act of 1992, § 5501(a)(2)(A)(iii)) (emphasis added).

Appellants argue that the Court of Federal Claims erred in interpreting the statute such that Bean's chartering of the nonhopper dredge MERIDIAN did not fall into exception (A)(iii). They allege that the Court of Federal Claims' statutory interpretation is at odds with the structure of the exceptions in 46 U.S.C. app. § 292 note. According to Appellants, exception (A)(i) applies to the vessel STUYVESANT itself; exception (A)(ii) applies to "any other hopper dredging vessel"; and exception (A)(iii) applies to "any other non-hopper dredging vessel." Because these clauses are separated by semi-colons, Appellants argue that the three numbered clauses are independent. They argue that the Court of Federal Claims impermissibly read limitations into the plain and unambiguous statutory language of exception (A)(iii), specifically that the non-hopper dredges must be documented before the effective date of the Act, and that utilized nonhopper dredges must be supplemental to the dredging...