Overseas Shipholding Group, Inc. v. Skinner

• Decision Date: 28 June 1991
• Docket Number: Civ. No. 87-2102 (CRR).
• Citation: 767 F. Supp. 287
• Parties: OVERSEAS SHIPHOLDING GROUP, INC., Plaintiff, v. Samuel SKINNER, et al., Defendants.
• Court: U.S. District Court — District of Columbia

767 F. Supp. 287

OVERSEAS SHIPHOLDING GROUP, INC., Plaintiff, v. Samuel SKINNER, et al., Defendants.

Civ. No. 87-2102 (CRR).

United States District Court, District of Columbia.

June 28, 1991.

COPYRIGHT MATERIAL OMITTED

Allan A. Tuttle and Michael D. Esch, with Joseph A. Klausner of Patton, Boggs & Blow, on the brief, Washington, D.C., for plaintiff Overseas Shipholding Group, Inc.

Sandra M. Schraibman and Mona B. Alderson, Asst. U.S. Attys., with Stuart M. Gerson, Asst. Atty. Gen., and Jay B. Stephens, U.S. Atty. for District of Columbia, on the brief, for Federal defendants.

A. Stephen Hut and Stephen M. Cutler of Wilmer, Cutler & Pickering, Washington, D.C., with Michael Joseph, Thomas L. Mills and E. Alex Blanton of Dyer, Ellis, Joseph & Mills, on the brief, Washington, D.C., for Atlantic Richfield Co. and BP Oil Shipping Co., U.S.A.

Daniel Joseph and Jonathan S. Spaeth of Akin, Gump, Strauss, Hauer & Feld, Washington, D.C., with Roy G. Bowman and Richard H. Saltsman of Verner, Lipfert, Bernhard, McPherson & Hand, on the brief, Washington, D.C., for American Petrofina, Inc.

OPINION

CHARLES R. RICHEY, District Judge.

I. INTRODUCTION

This is yet another segment of the labyrinth of litigation surrounding a final rule issued by the Department of Transportation and the Maritime Administration ("MARAD") allowing four very large crude tankers ("VLCCs") to repay construction-differential subsidies (CDS) in exchange for the right to operate in the domestic trade on a permanent basis¹. The Court now considers the parties' cross-motions for summary judgment with regard to MARAD's compliance with the National Environmental Policy Act ("NEPA"), 42 U.S.C. § 4321, et seq. Upon careful consideration of the pleadings, the administrative record and the applicable law, the Court grants the motion for summary judgment filed by the federal defendants and grants the motion for summary judgment by the defendant-intervenors, Atlantic Richfield Company, BP Oil Shipping Company, USA, and American Petrofina, Inc. In addition, the Court denies the motion of the Plaintiff Overseas Shipholding Group, Inc.

II. BACKGROUND

To enhance the ability of United States merchant vessels to compete in foreign commerce, the Merchant Marine Act of 1936, 46 U.S.C.App. §§ 1101 et seq., authorizes the Secretary of Transportation to subsidize the construction costs for ships built in this country. The construction-differential subsidy program (CDS) presumes that the vessels receiving the CDS are "operated exclusively in the foreign trade, or on around-the-world voyage." Id. §§ 1151, 1156. Unfortunately, however, these efforts to bolster American competitiveness in foreign shipping faltered in the late-1970s. Due to an oversupply of tankers and reduced demand for foreign oil, many of the subsidized VLCCs were not fully employed. See 52 Fed.Reg. at 23,522.

While the foreign oil trade was depressed, the domestic trade was booming due to the Alaskan pipeline. The demand for American-flag tonnage in the domestic oil trade had increased to the point that ships in the domestic trade had insufficient tonnage to meet the demand. Id. MARAD planned to alleviate the shortage by permitting CDS-built VLCCs to enter the domestic trade for a temporary period not to exceed six months in any twelve-month period, under the condition that the vessel owner repay a pro rata share of the CDS. See 46 U.S.C.App. § 1156; 46 C.F.R. § 250 et seq. The agency's authority to "approve full-repayment/permanent release transactions" was upheld by the Supreme Court in Seatrain Shipbuilding Corp. v. Shell Oil Co., 444 U.S. 572, 100 S.Ct. 800, 63 L.Ed.2d 36 (1980).

In 1980, the Secretary of Commerce issued an interim rule which was effective immediately and limited the full repayment option to tankers over a certain weight. Under this interim rule, the Secretary could accept repayment under "exceptional circumstances" after a determination that the vessel was unlikely to be employed in the foreign trade. See 54 Fed.Reg. 68,393 (1980). This rule was upended by the Court of Appeals, however, because the agency failed to provide an adequate general statement of the rule's basis and purpose as required by the Administrative Procedure Act ("APA"), 5 U.S.C. § 553(c). Independent U.S. Tanker Owners Committee v. Lewis, 690 F.2d 908, 918-20 (D.C.Cir. 1982) ("ITOC I"). The VLCC Bay Ridge, which repaid its CDS under this provision, was permitted to remain in the domestic commerce. Id. at 931.

The Secretary of Transportation then issued a revised rule in 1985 providing that, for a one-year period, any tanker could repay the CDS in return for domestic shipping privileges. See 50 Fed.Reg. 19,170 (1985) (hereinafter, "1985 Rule"). Pursuant to the 1985 Rule, three VLCCs, the Arco Independence, Arco Spirit, and Brooklyn, repaid their CDS in exchange for the right to enter domestic commerce. See 52 Fed.Reg. 23,522 (1987). As part of the rulemaking process, the agency performed an Environmental Assessment ("EA"), as required by NEPA and 40 C.F.R. § 1500 et seq., and found that the proposed rule would have no significant impact on the human environment. See Administrative Record at 93-160 (hereinafter, "AR"). The District Court upheld the rule, and summarily dismissed Plaintiff OSG's claims that the 1985 Rule was enacted in violation of NEPA. Independent U.S. Tanker Owners Committee v. Dole, 620 F.Supp. 1289, 1294 n. 10 (D.D.C.1985) (Jackson, J.). The District Court was reversed on appeal for the agency's failure to identify the basis and purpose of the rule as required by the APA. Independent U.S. Tanker Owners Committee v. Dole, 809 F.2d 847, 854 (D.C.Cir.1987) ("ITOC II"), cert. denied sub nom., Atlantic Richfield Co. v. Independent U.S. Tanker Owners Committee, 484 U.S. 819, 108 S.Ct. 76, 98 L.Ed.2d 39 (1987). The Court of Appeals did not reach the NEPA issue.

MARAD returned to the proverbial drawing board and, through informal rule-making, propounded another repayment rule in 1987. See 52 Fed.Reg. 23,522 (1987) (hereinafter, "1987 Rule"). In contrast to the 1985 Rule, the 1987 Rule would allow repayment of CDS subsidies only by those vessels already operating in the permanent domestic trade pursuant to prior approvals that had been invalidated by the courts. Id. at 23,524. In other words, only four vessels were impacted: Bay Ridge, Arco Independence, Arco Spirit, and Brooklyn. Id. at 23,536. During the course of the 1987 rulemaking, MARAD prepared another EA, as required by NEPA and the applicable regulations, and again determined that the proposed rule would have no significant impact on the human environment. See AR at 1387-1420. This Court invalidated the rule on numerous procedural grounds, and did not reach the merits of the Plaintiff OSG's renewed NEPA claim. Independent Tanker Owners Committee v. Burnley, Civ. Action Nos. 87-1685 and 87-2102, 1988 WL 48522 (D.D.C. April 29, 1988). The Court of Appeals reversed, finding that the 1987 Rule was properly enacted and had an adequate statement of basis and purpose. See Independent Tanker Owners Committee v. Skinner, 884 F.2d 587 (D.C.Cir.1989), cert. denied, ___ U.S. ___, 110 S.Ct. 1922, 109 L.Ed.2d 286 (1990) ("ITOC III"). The Court of Appeals did not reach the merits of OSG's NEPA claim. However, the Court of Appeals granted OSG's motion to modify the mandate and remanded the case for resolution of the NEPA claims. See Independent U.S. Tanker Owners Committee v. Skinner, 901 F.2d 1116 (D.C.Cir.1990). Thus, this Court now considers on cross-motions for summary judgment whether MARAD issued the 1987 Rule in compliance with NEPA.

III. ANALYSIS

The parties' claims on the cross-motions for summary judgment revolve around three issues: (1) does OSG have standing to sue under NEPA; (2) does Judge Jackson's dismissal of OSG's NEPA claims in ITOC II bind this Court as a matter of stare decisis or law of the case; and (3) does MARAD's finding that the 1987 Rule creates no significant impact on the human environment constitute an arbitrary, capricious or irrational decision?

In order to grant a motion for summary judgment, the moving party must demonstrate that there are no genuine issues of material fact and that the party is entitled to judgment as a matter of law. See F.R. Civ.P. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The parties have identified no genuine issues of material fact precluding summary judgment. Moreover, the parties have not suggested that the Court undertake fact-finding to supplement the administrative record. Accordingly, the administrative record governs the Court's consideration of whether MARAD's finding of no significant impact ("FONSI") in its Environmental Assessment ("EA") was arbitrary, capricious or irrational. See also Camp v. Pitts, 411 U.S. 138, 141, 93 S.Ct. 1241, 1244, 36 L.Ed.2d 106 (1973) (citing Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 91 S.Ct. 814, 28 L.Ed.2d 136 (1971) (courts' fact-finding in review of informal agency action generally confined to administrative record)).

Because the rule in question was enacted in 1987, the Court must confine its review of the full administrative record to the material before the agency at the time the decision was made. "To review more than the information before the Secretary at the time she made her decision risks our requiring administrators to be prescient or allowing them to take advantage of post hoc rationalizations (citation omitted)." Walter O. Boswell Memorial Hosp. v. Heckler, 749 F.2d 788, 792 (D.C.Cir.1984). However, the Court must review the agency's decision under the lens of current legal precedent. See, e.g., Thorpe v. Housing Authority of Durham, 393 U.S. 268, 89 S.Ct. 518, 526, 21 L.Ed.2d 474 (1969).

A. Plaintiff OSG has Standing to Assert a NEPA Claim

To have standing, the plaintiff "must establish that the injury he complains of (his aggrievement, or the adverse effect ...