American Petroleum Tankers Parent, LLC v. United States , 952 F. Supp. 2d 252 ( 2013 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
AMERICAN PETROLEUM TANKERS
PARENT, LLC,
Plaintiff,
Civil Action No. 12-1165 (CKK)
v.
UNITED STATES OF AMERICA, et al.,
Defendants.
MEMORANDUM OPINION
(July 10, 2013)
Plaintiff American Petroleum Tankers Parent, LLC, pursuant to the Administrative
Procedure Act (“APA”), 5 U.S.C. 701 et seq., challenges the Maritime Administrator’s decision
denying the Plaintiff’s applications for loan guarantees intended to allow the Plaintiff to
refinance loans used to construct five petroleum tankers. Presently before the Court is the
Plaintiff’s [60] Motion to Compel Filing of the Full Administrative Record and for Leave to
Conduct Limited Discovery. Upon consideration of the pleadings,1 the relevant legal authorities,
and the record as a whole, the Court finds the Defendants must supplement the Administrative
Record to include two speeches by the Secretary of Defense cited by the Maritime Administrator
in his denial of the Plaintiff’s revised application, but the Plaintiff’s remaining grounds for
supplementation and discovery are unpersuasive. Accordingly, the Plaintiff’s motion is
GRANTED IN PART and DENIED IN PART as set forth below.
I. BACKGROUND
American Petroleum Tankers Parent (“APT”) is majority-owned by investment funds
1
Pl.’s Mot., ECF No. [60]; Defs.’ Opp’n, ECF No. [64]; Pl.’s Reply, ECF No. [65].
managed by affiliates of the Blackstone Group, L.P., a publicly traded private equity company.
Suppl. Compl., ECF No. [14], ¶ 2. APT owns five 49,000 deadweight ton petroleum tankers,
delivered to APT between January 2009 and December 2010. Id. at ¶ 1. Each of the five vessels
is U.S.-flagged and employed in the coastwise trade of the United States. Id. Two of the tankers
have (unspecified) specially designed features approved by the United State Navy and are
currently on charter to the Navy’s Military Sealift Command. Id.
A. Title XI Loan Guarantee Program
Title XI of the Merchant Marine Act of 1936 authorizes the Maritime Administration, a
division of the Department of Transportation, to guarantee loans intended to finance the
construction, reconstruction, or reconditioning of vessels that, among other things, are designed
principally for commercial use in the coastwise trade. 46 U.S.C. §§ 53702(a),
53706(a)(1)(A)(i).2 Guarantees may also be issued for refinancing an existing obligation issued
to finance the construction, reconstruction, or reconditioning of such vessels. Id. § 53706(a)(5).
Applications for Title XI guarantees must be approved or denied within 270 days after the
Administrator receives the signed application, though the applicant may request that the time for
consideration be extended for up to two years from the date on which the application was
received. Id. § 53703(a)(1), (2).
The statute sets forth a number criteria an application must satisfy in order to be eligible
for a loan guarantee. The obligor must have “the ability, experience, financial resources, and
other qualifications necessary for the adequate operation and maintenance of each vessel that
will serve as security for the guarantee.” 46 U.S.C. § 53707(a). The property for which the
2
Title XI also authorizes the Secretary of Commerce to guarantee loans in connection
with fishing vessels and fishery facilities. 46 U.S.C. §§ 53701(13), 53702(a).
2
obligation will be executed must be “economically sound” in light of various factors, including
“the market potential for employment of the vessel over the life of the guarantee,” and “projected
revenues and expenses associated with employment of the vessel.” Id. § 53708(a)(2), (3). The
Administrator may employ a third party expert to analyze “risk factors associated with markets,
technology, or financial structures.” Id. § 53708(d). The statute also provides that the
Administrator must give priority to vessels that, among other things, are suitable for service as a
naval auxiliary in the time of war or national emergency. 46 U.S.C. § 53706(c).
Pursuant to Department of Transportation Order 2301.1B, after the Maritime
Administrator completes his review of the application, the application must be referred to the
Department of Transportation Credit Council for review. Defs.’ Mot. to Dismiss Ex. A, ECF
No. [18-2], ¶ 9(a). The Credit Council is comprised of various officials within the Department of
Transportation, including the General Counsel, the Federal Highway Administrator, the Federal
Railroad Administrator, and the Maritime Administrator. Id. at ¶ 5. In addition to setting the
Department’s credit policies and procedures, the Credit Council makes recommendations to
agencies within the Department regarding applications for various credit assistance programs,
including the Title XI loan program. Id. at ¶¶ 3, 9(a). With respect to Title XI applications, the
Credit Council provides “a recommendation regarding the financial viability of the proposed
project and the merits of the requested credit assistance and its consistency with departmental
credit policies.” Id. at ¶ 9(a). The Maritime Administrator is not bound by the Credit Council’s
recommendation, and ultimately approves or denies the application. Id.B. Plaintiff’s Title XI Application and Litigation History
APT submitted an application for a Title XI guarantee on August 30, 2010, seeking loan
guarantees to refinance the $470 million debt incurred to construct the tankers owned by APT.
3
Decl. of R. Kurz, ECF No. [60-4], ¶ 10 (indicating the initial application sought $470 million in
guarantees). The Maritime Administration accepted APT’s application as complete on
December 2010. Suppl. Compl. ¶ 2. The Plaintiff reduced the requested guarantee amount to
$400 million in September 2011. Kurz Decl. ¶ 19. The Credit Council initially recommended
against the Maritime Administration retaining a third party financial expert to review the
application, but subsequently recommended that the Administration proceed with the third party
expert analysis. See A.R. 2868-2872. The Maritime Administration retained Scully Capital
Services, Inc., to perform the external review in November 2011. Kurz Decl. ¶¶ 21-22.3
The Plaintiff’s application was discussed during the June 12 and July 10, 2012, Credit
Council meetings. Kurz Decl. ¶¶ 29, 35. Fearing that the Maritime Administration would not
act on its application by the statutorily mandated two-year deadline, the Plaintiff filed suit in July
2012 seeking an emergency writ of mandamus to compel the Administrator to grant or deny the
application by August 31, 2012. See generally Compl., ECF No. [1]. After an on-the-record
conference call with the Court, the Defendants agreed to issue a decision on the Plaintiff’s
application by August 31, 2012. Jt. Stip., ECF No. [7]. The Plaintiff accordingly withdrew its
motion for emergency relief. Id.On July 28, 2012, the Plaintiff modified its application in relevant part to further reduce
the guarantee amount to $340 million. Suppl. Compl. ¶ 5. Two days later, the Administrator
denied the Plaintiff’s original application, acknowledging that it did not consider the July 28
revisions to the application because a review of the amended application would require “a
comprehensive financial analysis” that could not be completed by the August 31 deadline.
3
The parties and hereinafter the Court refer to the third party expert as the Independent
Financial Analyst, or “IFA.”
4
Defs.’ Mot. to Dismiss Ex. B (8/1/12 Decision Ltr.), ECF No. [18-3], at 4. The Administrator
explained that the denial of the Plaintiff’s original application was based on several factors: (1)
“[the] project is not economically sound overall”; (2) it seeks refinancing for two particularly
vulnerable vessels”; and (3) “it seeks to refinance at least three ships over one year old at the
time of closing.” Id. Additionally, the Administrator explained that “the amount of the project
to be refinanced[] . . . if granted, would consume almost all of the remaining monies available for
the ship financing program.” Id.Following the initial denial of the Plaintiff’s application, the Administrator agreed to
consider the Plaintiff’s amended application. Jt. Mot. to Stay, ECF No. [9], ¶ 9. The
Administrator denied the amended application on November 9, 2012. Defs.’ Mot. to Dismiss
Ex. C (11/9/12 Decision Ltr.), ECF No. [18-4]. In short, the Administrator explained that the
amended application was denied because it “remains not economically sound overall,” “seeks
refinancing of two particularly vulnerable vessels,” “seeks to refinance at last three ships over
one year old,” and if granted, the guarantees sought by the Plaintiffs would “consume almost all
of the remaining monies available for the ship financing program.” Id. at 4.
The Plaintiff supplemented its complaint in this matter to reflect the denial of both its
original and modified applications. See generally Suppl. Compl. The first count of the
supplemental complaint alleges that the Administrator’s decisions denying the Plaintiff’s
applications were arbitrary, capricious, or otherwise contrary to law in violation of 5 U.S.C.
§ 706(2). Specifically, the Plaintiff challenges (1) the Administrator’s consideration of the
recommendation of the Credit Council; (2) the finding that the amended application is not
economically sound; (3) the finding that the amended application does not warrant priority; and
(4) the decision to deny the amended application in part because it would exhaust available
5
funds. Suppl. Compl. ¶¶ 102-07. The second count of the supplemental complaint seeks a
“remedy for the Secretary’s unlawful interference,” pursuant to the APA, namely
an order declaring that the DOT Credit Council has no lawful or valid function
with respect to Title XI applications, directing the Secretary to cease and desist
from interfering with the Administrator’s performance of his ministerial and
discretionary responsibilities regarding Title XI applications in general and APT’s
application in particular, and directing the Administrator . . . to cease and desist
from submitting such applications to the DOT Credit Council and to grant or deny
APT’s application without regard to the opinions, objections, recommendations or
authorization of the Credit Council.
Suppl. Compl. at 39. Finally, in the third count of the supplemental complaint, the Plaintiff
alleges that “[p]ast interference by the Secretary . . . and the DOT Credit Council with the
Administrator’s performance . . . has so infected and prejudiced the deliberative process used by,
and the judgment of, the incumbent Administrator that he is incapable of fairly assessing the
merits of APT’s Title XI application.” Id. at ¶ 115. The Plaintiff thus asked the Court to order
the Administrator to recuse himself from consideration of the Plaintiff’s application on remand,
and requiring a de novo review of the amended application by a new official within the Maritime
Administration. Id. at 39-40.
Upon the Defendant’s motion to dismiss, the Court determined that the Plaintiff has
standing to challenge the Maritime Administrator’s denial of the applications, and that the
Administrator’s decision on an application for a loan guarantee is not committed to agency
discretion by law and is thus reviewable by the Court. 5/6/13 Mem. Op., ECF No. [25], at 8-15.
The Court further concluded that the Defendants failed to identify any statutory or other
authority by which Secretary of Transportation can require the Maritime Administrator to submit
applications for Title XI loan guarantees to the Credit Council to obtain the Council’s
recommendation before the Administrator may grant or deny the application. Id. at 15-20.
Finally, the Court found that the Plaintiff failed to state a claim for relief or establish the Court’s
6
subject matter jurisdiction with respect to its request that the current Maritime Administrator be
recused from considering the Plaintiff’s application if the case is remanded to the agency for
further consideration. Id. at 20-21.
The Court set a briefing schedule for the parties’ cross-motions for summary judgment,
and also set a schedule for briefing any motions regarding the scope of the Administrative
Record. 6/3/13 Order, ECF No. [28]. The Plaintiff subsequently filed the present motion to
compel, which is now ripe for consideration by the Court.
II. LEGAL STANDARD
The Administrative Procedure Act directs the Court to “review the whole record or those
parts of it cited by a party.” 5 U.S.C. § 706. This requires the Court to review “the full
administrative record that was before the Secretary at the time he made his decision.” Citizens to
Preserve Overton Park v. Volpe, 401 U.S. 402, 420 (1971), abrogated on other grounds by
Califano v. Sanders, 430 U.S. 99 (1977). Courts in this Circuit have “interpreted the ‘whole
record’ to include all documents and materials that the agency directly or indirectly considered
. . . [and nothing] more nor less.” Pac. Shores Subdivision, Cal. Water Dist. v. U .S. Army Corps
of Eng’rs, 448 F. Supp. 2d 1, 4 (D.D.C. 2006) (citation omitted). “[A]bsent clear evidence, an
agency is entitled to a strong presumption of regularity, that it properly designated the
administrative record.” Id. at 5.
“Supplementation of the administrative record is the exception, not the rule.” Pac.
Shores, 448 F. Supp. 2d at 5 (quoting Motor & Equip. Mfrs. Ass’n, Inc. v. EPA, 627 F.2d 1095,
1105 (D.C. Cir. 1979)); Franks v. Salazar, 751 F. Supp. 2d 62, 67 (D.D.C. 2010) (“A court that
orders an administrative agency to supplement the record of its decision is a rare bird.”). This is
because “an agency is entitled to a strong presumption of regularity, that it properly designated
7
the administrative record.” Pac. Shores, 448 F. Supp. 2d at 5. “The rationale for this rule
derives from a commonsense understanding of the court’s functional role in the administrative
state[:] ‘Were courts cavalierly to supplement the record, they would be tempted to second-guess
agency decisions in the belief that they were better informed than the administrators empowered
by Congress and appointed by the President.’” Amfac Resorts, L.L.C. v. Dep’t of Interior, 143
F. Supp. 2d 7, 11 (D.D.C. 2001) (quoting San Luis Obispo Mothers for Peace v. Nuclear
Regulatory Comm’n, 751 F.2d 1287, 1325–26 (D.C. Cir. 1984)). However, an agency “may not
skew the record by excluding unfavorable information but must produce the full record that was
before the agency at the time the decision was made.” Blue Ocean Inst. v. Guttierez, 503
F. Supp. 2d 366, 369 (D.D.C. 2007). The agency may not exclude information from the record
simply because it did not “rely” on the excluded information in its final decision. Maritel, Inc. v.
Collins, 422 F.Supp.2d 188, 196 (D.D.C. 2006). Rather, “a complete administrative record
should include all materials that might have influenced the agency’s decision[.]” Amfac Resorts,
143 F. Supp. 2d at 12 (citations omitted). “[W]hile it is true that data and analysis compiled by
subordinates may be properly part of the administrative record despite not having actually passed
before the eyes of the Secretary,” to be included in the Administrative Record, “the data or
analysis must be sufficiently integral to the final analysis that was considered by the
[Administrator], and the [Administrator’s] reliance thereon sufficiently heavy, so as to suggest
that the decisionmaker constructively considered it.” Banner Health v. Sebelius, --- F. Supp. 2d -
--, 2013 WL 2112169, at *21 (D.D.C. 2013).
III. DISCUSSION
The Administrative Record may be “supplemented” in one of two ways, “either by
(1) including evidence that should have been properly a part of the administrative record but was
8
excluded by the agency, or (2) adding extrajudicial evidence that was not initially before the
agency but the party believes should nonetheless be included in the administrative record.”
Wildearth Guardians v. Salazar, 670 F.Supp.2d 1, 5 n. 4 (D.D.C. 2009). Much of the Plaintiff’s
motion focuses on the first type of “supplementation”—that is, documents the Plaintiff contends
were considered by the Administrator in making his decision but that have been excluded from
the Administrative Record. The Plaintiff also challenges the Defendants’ invocation of the
deliberative process privilege as grounds for redacting certain documents in the Administrative
Record and withholding certain documents from the record in their entirety. Finally, the Plaintiff
seeks discovery regarding the process through which the Maritime Administrator made his
decision to deny the Plaintiff’s applications. The Court addresses each category in turn.
A. Documents Purportedly Considered by the Agency but Excluded from the
Administrative Record
The Plaintiff seeks to compel the Defendants to supplement the Administrative Record to
include five categories of documents the Plaintiff contends were considered by the Maritime
Administrator in reaching his decision denying the Plaintiff’s applications: (1) memoranda
prepared to reflect analysis required by certain Maritime Administration Orders; (2) periodic
progress reports to the Credit Council regarding the status of pending applications and weekly
activity reports within the Maritime Administration; (3) communications between the Maritime
Administration and Scully Capital; (4) communications between the Maritime Administration
and Military Sealift Command; and (5) certain communications between employees or agents of
the Plaintiff and individuals within the Maritime Administration.4 Pl.’s Mot. at 12-15. In
4
Within this section of its motion, the Plaintiff also argued that the Defendants should be
required to supplement the Administrative Record to include “a memorandum for the Credit
Council regarding priorities for Title XI financing.” Pl.’s Mot. at 13. The Defendants indicated
that this memorandum was excluded from the Administrative Record pursuant to the deliberative
9
seeking to force the Defendants to supplement the Administrative Record with documents that
were purportedly before the agency, the Plaintiff cannot merely assert that the documents “are
relevant, were possessed by the entire agency at or before the time the agency action was taken,
and were inadequately considered.” Banner Health v. Sebelius, 2013 WL 2112169 at *10.
Rather, the Plaintiff must articulate “when the documents were presented to the agency, to
whom, and under what context.” Pac Shores, 448 F. Supp. 2d at 7 (“Although Plaintiffs imply
that the Corps possessed some of the documents because Plaintiffs obtained them through a
Freedom of Information Act request, there is no evidence that the Corps’ decisionmaker(s) were
actually aware of the fourteen documents Plaintiffs seek to include.”). Furthermore, the Plaintiff
must offer “reasonable, non-speculative” grounds for their belief that the documents were
directly or indirectly considered by the Maritime Administrator. Banner Health, 2013 WL
2112169, at *10. If the Plaintiff “can present such proof showing that [the Administrator] did
not include materials that were part of its record, whether by design or accident, then
supplementation is appropriate.” Nat’l Mining Ass’n v. Jackson, 856 F. Supp. 2d 150, 156
(D.D.C. 2012) (citation omitted).
1. Memoranda Reflecting Analysis Required by Maritime Administration
Orders
With respect to the first category of documents, the Defendants indicated that the
“memoranda and presentations prepared by MarAd’s offices and personnel in connection with
APT’s application have been produced in the administrative record (although some have been
redacted in part[)],” and that a “formal memorandum” similar to what the Plaintiff describes in
process privilege. The Plaintiff does not dispute that the memorandum is privileged, but
suggests in the Reply that “the drafts provide further evidence of bad faith and improper conduct
and should be included in the AR.” Pl.’s Reply at 15. Therefore, the Court addresses this
memorandum only in the context of the Plaintiff’s request for discovery, infra, Section III.C.
10
its motion does not exist. Defs.’ Opp’n at 7; Decl. of D. Ladd, ECF No. [64-1], ¶ 5.5 The
Plaintiff argues that this “only serves to highlight the need for discovery and supplementation of
the AR with the other documents identified by APT.” Pl.’s Reply at 15. The Court addresses the
Plaintiff’s request for discovery infra, but based on the Defendants’ representation that the
document at issue does not exist and the lack of a response from the Plaintiff, the request to
supplement the Administrative Record with memoranda reflecting certain analysis required by
Maritime Administrative Orders is denied.
2. Periodic Progress Reports & Weekly Activity Reports
Turning to the Plaintiff’s request to supplement the record with “periodic progress
reports” and “weekly activity reports” prepared by the Maritime Administration, the Defendants
argue that “[t]hese documents, to the extent they exist, were merely generated for the purpose of
apprising relevant individuals of the status of various agency matters (including, potentially,
APT). There is no reason to believe that they were ‘considered’ by the Maritime Administrator
in rendering his decisions[.]” Defs.’ Opp’n at 9. In responding to this contention, the Plaintiff
cites case law regarding the scope of the Administrative Record, but offers no evidence to
suggest the Maritime Administrator actually considered these documents, or that the documents
were “sufficiently integral to the final analysis that was considered by the [Maritime
Administrator], and the [Maritime Administrator’s] reliance thereon sufficiently heavy, so as to
suggest that the decisionmaker constructively considered” these documents. Banner Health,
2013 WL 2112169, at *21. The Court agrees that based on the Plaintiff’s own description of the
documents, it is unlikely that the Maritime Administrator considered the reports, constructively
5
Daniel C. Ladd was the Director of the Office of Marine Financing in the Maritime
Administration from September 2011 until September 2012, and oversaw the processing of Title
XI applications. Ladd Decl. ¶ 2.
11
or otherwise.6 Accordingly, the Plaintiff’s motion to compel the Defendants to supplement the
Administrative Record with periodic progress reports and weekly activity reports is denied.
3. Communications between the Maritime Administration & Scully Capital
The third category of documents includes communications between the Maritime
Administration and Scully Capital, including “the retainer agreement between MarAd and
Scully, as well as MarAd’s instructions to Scully as to its duties and responsibilities.” Pl.’s Mot.
at 13. The Plaintiff suggests documents evidencing communications between the Maritime
Administration and Scully Capital must exist because (1) Scully Capital’s final June 2012 report
addressed some of the concerns regarding the draft report which the Plaintiff raised in a
presentation to various Maritime Administration and Credit Council staff; and (2) Scully Capital
produced a supplemental report concerning the Plaintiff’s amended application. Id. at 14. The
Defendants contend that these documents “relate to MarAd’s decisions in only the most
tangential of ways,” and “[w]ritten communications between MarAd and Scully, to the extent
they exist, were [] not considered by the Maritime Administrator; rather, Scully’s reports
themselves were considered.” Defs.’ Opp’n at 9-10. The Plaintiff does not dispute this
contention, and offers no evidence to show the Maritime Administrator relied on
communications between the Administration and Scully Capital. Therefore, there is no basis for
ordering the Defendants to supplement the Administrative Record with these communications
and documents.
6
Furthermore, because there is no evidence to suggest the Maritime Administrator
considered these documents, the fact that the Defendants may not have searched for the
documents is not “evidence that defendants have prepared an AR that is not full and complete”
as the Plaintiff contends. Pl.’s Reply at 15.
12
4. Communications between the Maritime Administration and Military
Sealift Command
The Defendant also seeks to supplement the Administrative Record with communications
between the Maritime Administration and the Military Sealift Command, as well as two public
speeches by then-Secretary of Defense Leon Panetta that were cited by the Maritime
Administration in the November 9, 2012, letter denying the Plaintiff’s revised application. With
respect to the speeches, the Defendants notes the speeches are publicly available, and that the
Defendants do not object to the Plaintiff citing the speeches in its summary judgment briefs.
Defs.’ Opp’n at 12, n.2. “As to the other communications referenced,” the Defendants argue that
the Plaintiff “offers no evidence beyond mere speculation that any such written communications
existed or that they properly would be considered part of the administrative record in this
matter.” Id. at 12. Once again, the Plaintiff does not dispute the Defendant’s contention, but
rather suggests that the Defendants’ response “further demonstrates the need for discovery.”
Pl.’s Reply at 18.7 Accordingly, the Plaintiff’s motion to compel the Defendant to supplement
the administrative record with communications between the Maritime Administration and the
Military Sealift Command is denied. However, because the Defendants do not dispute that the
decision letters from the Maritime Administrator explicitly relied on the public speeches in
denying the Plaintiff’s revised application, the Defendants shall be required to supplement the
Administrative Record with the text of those speeches. See Banner Health, 2013 WL 2112169,
at *27.8
7
The Plaintiff offers no explanation as to why discovery is warranted if such
communications do not exist, see Pl.’s Reply at 18, therefore the Court does not discuss these
communications in the context of the Plaintiff’s request for discovery.
8
“The Secretary does not dispute that Tables 8a and 8b belong in the administrative
record. Rather, the Secretary asserts that Plaintiffs’ request is meaningless . . . [because] the
13
5. Communications between the Plaintiff & Maritime Administration
Fifth and finally, the Plaintiff seeks to supplement the Administrative Record with certain
communications between employees or agents of the Plaintiff and individuals within the
Maritime Administration, specifically Exhibits 3 through 10 to the Declaration of Joseph Click.
Initially, the Court notes that Exhibits 6 and 7 are in the Administrative Record from pages 1715
to 1718 and 2450 to 2451, respectively. The presentation included in Exhibit 10 is also in the
Administrative Record at pages 2573 to 2579. The cover email transmitting the presentation to
the Maritime Administrator does not appear to be in the Administrative Record, but the email
itself does not discuss the merits of the Plaintiff’s application. Rather, the email addresses the
Plaintiff’s strategy for moving forward with its application, providing no reason to believe that
the cover email itself was considered by the Maritime Administrator. Decl. of J. Click, ECF No.
[60-2], Ex. 10 at 1.
With respect to the remaining exhibits, the Defendants emphasize “there is simply no
indication” that any of these documents “were considered by the Maritime Administrator,
directly or indirectly, when he rendered his decisions. Indeed, the sheer number of
communications sent by APT to MarAd throughout the course of its application made it virtually
impossible for the Maritime Administrator to have considered each and every such submission.”
Defs.’ Opp’n at 10-11. The Court agrees. Exhibits 3 and 4 are comprised of emails between the
Maritime Administrator and the Plaintiff, but address scheduling issues and ways to approach the
Credit Council regarding the application. Neither exhibit addresses the substance of the
contents of the Federal Register are subject to judicial notice and can be considered in the Court's
review. . . . [T]hat is not the point. The point is that Tables 8a and 8b are admittedly part of the
administrative record in this case, and the Court shall therefore compel the Secretary to file them
as part of the administrative record and for the Court's convenient reference.” Banner Health,
2013 WL 2112169, at *27.
14
Plaintiff’s application. Thus, although the Maritime Administrator received the emails, the
Plaintiff offers no basis for concluding that he considered these emails—which do not relate to
the merits of the Plaintiff’s application—in deciding to deny the Plaintiff’s applications.
Similarly, Exhibit 5 is a letter from the Plaintiff to the Chairman of the Credit Council requesting
a meeting to discuss the Plaintiff’s application, and Exhibit 8 is an email from the Plaintiff to the
Associate Maritime Administrator of Business and Financial Development in which the Plaintiff
requests a “debriefing” following a Credit Council meeting. Neither the letter nor the emails
were addressed to the Maritime Administrator, and the Plaintiff offers no evidence to suggest the
Administrator considered either exhibit in reaching his decision. Finally, Exhibit 9 is a series of
emails between the Plaintiff and the Associate Maritime Administrator in which the Associate
Maritime Administrator asks a question in connection with the preparations for a Credit Council
Working Group meeting. The Plaintiff also provides some unsolicited advice regarding what the
administration should emphasize to the Credit Council regarding the Plaintiff’s application.
Once again, the Plaintiff offers no evidence or argument to suggest the Maritime Administrator
considered these emails, or relied heavily on the content of these emails such that they should be
deemed to be part of what the Administrators “considered” in reach his decision.
B. Redactions & Withholdings Pursuant to the Deliberative Process Privilege
The Plaintiff also challenges the Defendants’ redaction and withholding of certain
documents from the Administrative Record pursuant to the deliberative process privilege. It is
well established in this District that materials protected by the deliberative process privilege are
not part of the Administrative Record for purposes of review of agency action. Banner Health,
2013 WL 2112169, at *15 (citing Amfac Resorts, 143 F. Supp. 2d at 13 (“[D]eliberative
intraagency memoranda and other such records are ordinarily privileged, and need not be
15
included in the record.”)). As a corollary to this principle, the agency need not provide a
privilege log of the documents withheld pursuant to the privilege. Oceana, Inc. v. Locke, 634 F.
Supp. 2d 49, 52-53 (D.D.C. 2009), reversed on other grounds, 670 F.3d 1238 (D.C. Cir. 2011)
(collecting cases). “Two requirements are essential to the deliberative process privilege: (1) the
material must be predecisional and (2) it must be deliberative.” In re Sealed Case, 121 F.3d 729,
737 (D.C. Cir. 1997). A document is predecisional “if it was generated before the adoption of an
agency policy and deliberative if it reflects the give-and-take of the consultative process.”
Judicial Watch, Inc. v. Food & Drug Admin., 449 F.3d 141, 151 (D.C. Cir. 2006) (citation
omitted). Documents including “recommendations, draft documents, proposals, suggestions, and
other subjective documents which reflect the personal opinions of the writer rather than the
policy of the agency,” are considered deliberative. Coastal States Gas Corp. v. Dep’t of Energy,
617 F.2d 854, 866 (D.C. Cir. 1980). Recommendations from consulting bodies may also fall
within the scope of the deliberative process privilege. Citizens for Responsibility & Ethics in
Wa. v. U.S. Dep’t of Homeland Sec., 514 F. Supp. 2d 36, 44 (D.D.C. 2007).
The Plaintiff objects to the redactions to the following documents in the Administrative
Record made pursuant to the deliberative process privilege: (1) “three short memorandums [sic]
that staff prepared, two of which concern requesting permission from the Credit Council to retain
an independent financial advisor,” AR 2866-2867, 2870-2871; (2) a memorandum concerning
recommendations made by the Independent Financial Advisor in his draft January 2012 report,
AR 2888-2891; (3) spreadsheets and accompanying e-mails of projected financial results for the
Plaintiff’s vessels during the guarantee period, AR 2899-2903, 2915-2916; and (4) PowerPoint
presentations made by the Maritime Administration to the Credit Council, AR 2917-2977. Pl.’s
Mot. at 15-16. The Defendants’ Opposition indicates that it also withheld draft versions of a
16
memorandum from the Maritime Administration for the Credit Council regarding priorities for
XI funding, internal communications and recommendations between the Maritime
Administration staff and offices, and communications between the Maritime Administration and
Scully Capitol pursuant to the deliberative process privilege. Defs.’ Opp’n at 12-13. Apart from
the Plaintiff’s general arguments regarding the Defendants’ invocation of the privilege, the
Plaintiff does not dispute that the documents the Defendants indicated were withheld are in fact
privileged. Accordingly, the Court begins with the parties’ arguments regarding the general
applicability of the privilege in this case, and then addresses the specific redactions challenged
by the Plaintiff.
1. General Applicability of the Privilege
a. Invocation of the Privilege
As a threshold issue, for the first time in its Reply brief, the Plaintiff argues that the
Defendants cannot rely on the deliberative process privilege to redact or withhold documents
“because they have failed to properly invoke the privilege.” Pl.’s Reply at 11; see also id. at 14
(“Neither a plaintiff nor a court can possibly assess the legitimacy of an agency’s claim of privilege
under these well-established rules if they have no idea that documents are being withheld, much less
what the purportedly privileged documents are.”). This argument appears nowhere in the
Plaintiff’s initial motion, despite the fact that the Plaintiff knew the Defendants were relying on
the deliberative process privilege as the basis for redacting certain documents before the Plaintiff
even filed its motion. See Pl.’s Mot. at 15 (“Defendants have redacted large portions of the few
documents in the AR that were created by defendants, claiming that the redacted portions contain
information protected by the deliberative process privilege.”). The Court shall not consider an
argument raised for the first time in the Plaintiff’s Reply, depriving the Defendants of the
17
opportunity to respond. See, e.g., Am. Wildlands v. Kempthorne, 530 F.3d 991, 1001 (D.C. Cir.
2008) (“We need not consider this argument because plaintiffs . . . raised it for the first time in
their reply brief.”); McBride v. Merrell Dow & Pharm., 800 F.2d 1208, 1211 (D.C. Cir. 1986)
(“Considering an argument advanced for the first time in a reply brief . . . is not only unfair to an
appellee, but also entails the risk of an improvident or ill-advised opinion on the legal issues
tendered.”) (citation omitted). Therefore, the Defendants are entitled to rely on the deliberative
process privilege, and are not required to submit a log of privileged documents.
b. Bad faith/Improper Motive
The Plaintiff also argues that the deliberative process privilege does not apply in this case
because “its action both questions the defendants’ subjective intent and challenges the decision-
making process itself.” Pl.’s Mot. at 23.
When a party challenges agency action as arbitrary and capricious the
reasonableness of the agency’s action is judged in accordance with its stated
reasons. Agency deliberations not part of the record are deemed immaterial. That
is because the actual subjective motivation of agency decisionmakers is
immaterial as a matter of law—unless there is a showing of bad faith or improper
behavior.
In re Subpoena Duces Tecum, 156 F.3d 1279, 1279-80 (D.C. Cir. 1998) (citations omitted). The
Plaintiff must make a “strong showing of bad faith” to justify supplementing the Administrative
Record. James Madison Ltd. v. Ludwig, 82 F.3d 1085, 1095 (D.C. Cir. 1996) (citation omitted).
The Plaintiff does not attempt to make this showing in the section of its motion dedicated to the
deliberative process privilege, but rather assumes that challenging the Defendants’ subjective
intent in the Supplemental Complaint is sufficient. Moreover, as discussed infra, the Plaintiff’s
“evidence” of bad faith and improper motive falls short of the “strong showing” of bad faith and
improper motive necessary to warrant discovery in this administrative action. Infra, Section
III.C. For the same reasons, the Plaintiff has failed to make the strong showing of bad faith and
18
improper motive necessary to overcome the deliberative process privilege.
c. Pretext
The Plaintiff also suggests that “[t]he redacted portions, moreover, must be disclosed
because they will confirm that defendant’s stated rationale in denying APT’s applications was
merely a pretext masking its true basis.” Pl.’s Mot. at 24. The Plaintiff cites Public Citizen v.
Heckler, 653 F. Supp. 1229 (D.D.C. 1986), for the proposition that it need only make a “prima
facie showing” that “the agency’s stated rationale is but a pretext masking the true basis of its
decision,” to overcome the invocation of the deliberative process privilege. Id. at 1237 (quoting
San Luis Obispo, 751 F.2d at 1325). It is unclear that the “prima facie” standard articulated in
San Luis Obispo is still applicable in light of the D.C. Circuit’s subsequent decisions in In re
subpoena duces tecum, 156 F.3d at 1279-80, and Ludwig, 82 F.3d at 1095. However, assuming
the Plaintiff need only make a prima facie showing of pretext to overcome the deliberative
process privilege, the Plaintiff fails to do so in this case.
The information redacted in this case was “known to [the agency] at the time of [its]
decisionmaking [and] are directly related to the decision made.” Public Citizen, 653 F. Supp. at
1237. However, the Defendants indicated—and the Plaintiff does not dispute—that the
redactions include information that is both favorable and unfavorable to the agency’s decision.
Defs.’ Opp’n at 19 & n.5; cf. Public Citizen, 653 F. Supp. at 1237 (discussing extra-record
documents that were “adverse to the agency’s position”). The Plaintiff argues that “[o]ther than
the irrational reasoning in the August 1, and November 9, 2012 decision letters, there is nothing in
the AR to support the Administrator’s stated reasons for denying APT’s application.” Pl.’s Mot. at
26 (citation omitted); see also id. (discussing redactions to memoranda prepared by Maritime
Administration staff for the Maritime Administrator). These redactions and alleged omissions do not
19
demonstrate “pretext,” but rather go to whether the record is sufficient to allow the Court to
effectively review the Administrator’s decision. Id. (“The MarAd staff analysis on which the
Administrator relied is not further identified; all staff e-mails and memorandums are so heavily
redacted as to be unhelpful in divining their analyses and conclusions.”). The Plaintiff fails to
articulate why a poorly supported decision, without more, is evidence of pretext. Even if a lack of
adequate support in the record is sufficient to establish pretext, the Court can only make a
determination as to the adequacy of the record upon review of the parties’ dispositive motions.
d. Misconduct
The Plaintiff suggests that “the deliberative process privilege disappears altogether when
there is any reason to believe government misconduct occurred.” Pl.’s Mot. at 27 (quoting Alexander
v. FBI, 186 F.R.D. 170, 177 (D.D.C. 1999)) (citation omitted). However, the Plaintiff fails to
articulate what misconduct the Defendants purportedly engaged in, and merely refers the Court to the
section of the Plaintiff’s motion seeking discovery on the grounds of “bad faith or improper motive.”
Id. (“As next shown with respect to APT’s request to conduct limited discovery, there is more than
just “any reason” to believe that defendants engaged in bad faith and misconduct, and the
deliberative process privilege should be denied here for those same reasons.”). “To invoke the
government-misconduct exception, the party seeking discovery must provide an adequate factual
basis for believing that the requested discovery would shed light upon government misconduct.”
Chaplaincy of Full Gospel Churches v. Johnson, 217 F.R.D. 250, 257 (D.D.C. 2003), reversed in
part and vacated in part on other grounds by In re England, 375 F.3d 1169 (D.C. Cir. 2004) (citing
Judicial Watch of Fla. v. Dep’t of Justice, 102 F. Supp. 2d 6, 15-16 (D.D.C. 2000)).
The allegations in this case do not rise to the level of “misconduct” in cases in which courts
have found the deliberative process privilege should not apply, or at least were sufficient to trigger in
camera review by the court. The Plaintiff makes no attempt to distinguish between its allegations of
20
“misconduct” as compared to purposed bad faith or improper motive on the part of the Defendants,
but the purported “bad faith” in this case—that is, the Credit Council convincing the Administrator to
deny the Plaintiff’s applications because the Plaintiff is owned by a private equity firm—is a far cry
from misconduct. See, e.g., Alexander, 186 F.R.D. at 171 (allegations the “FBI improperly handed
over to the White House hundreds of FBI files of former political appointees and government
employees from the Reagan and Bush Administrations”); Convertino v. United States Dep’t of
Justice, 674 F. Supp. 2d 97, 100 (D.D.C. 2009) (allegations that the Department of Justice leaked
information regarding an investigation into purported prosecutorial misconduct by an Assistant
United States Attorney); Tri-State Hosp. Supply Corp. v. United States, 226 F.R.D. 118 (D.D.C.
2005) (allegations of malicious prosecution). “The deliberative process privilege would soon be
meaningless, if all someone seeking information otherwise protected under the privilege had to
establish is that there was disagreement within the governmental entity at some point in the
decisionmaking process.” Hinckley v. United States, 140 F.3d 277, 285 (D.C. Cir. 1998). The
Plaintiff’s invocation of “misconduct” appears to be nothing more than an attempt to end-run the
more stringent showing the Plaintiff must make to demonstrate bad faith or improper motive
sufficient to overcome the deliberative process privilege.
2. Non-Deliberative Information
The Plaintiff argues unspecified portions of the Defendants’ redactions are likely not
protected by the deliberative process privilege because the information is (1) factual, and/or
(2) part of a determination of benefits. However, the Plaintiff does not identify any specific
portions of documents, but rather asks the Court to conduct an in camera review of the redacted
documents and determine for itself whether any of the information is protected. Based on the
Plaintiff’s own description of the documents and confirmed by the Court’s review of the
documents as presently redacted, facially the documents are pre-decisional and deliberative. The
21
Plaintiff’s objection to the redaction of factual information would seem to apply to the third and
fourth categories of documents, but as set forth below, the Plaintiff’s objection is unpersuasive.
The Defendants have the burden to prove the privilege applies, but bare assertions by the
Plaintiff that unspecified redactions may not be privileged are insufficient to warrant an in
camera review or a more fulsome showing on the part of the Defendants. See San Luis Obispo
Mothers for Peace v. Nuclear Regulatory Comm’n, 789 F.2d 26, 45 (D.C. Cir. 1986)
(“Petitioners must make the requisite showing before we will look at the transcripts. We will not
examine the transcripts to determine if we may examine the transcripts.”).
a. Factual Material
Initially, the Plaintiff argues that “factual materials” fall outside the scope of the
deliberative process privilege; “to be protected the material must comprise part of the
‘deliberative process.’” Pl.’s Mot. at 16-17 (quoting McClelland v. Andrus, 606 F.2d 1278, 1287
(D.C. Cir. 1979). In the context of the Freedom of Information Act, the D.C. Circuit explained
that the applicability of the privilege “does not turn on whether the material is purely factual in
nature or whether it is already in the public domain, but rather on whether the selection or
organization of facts is part of an agency’s deliberative process.” Ancient Coin Collectors Guild
v. U.S. Dep’t of State, 641 F.3d 504, 513 (D.C. Cir. 2011).9 The Ancient Coin court held that
certain factual information was properly withheld because “[t]he factual summaries contained in
the CPAC reports were culled by the Committee from the much larger universe of facts
presented to it and reflect an exercise of judgment as to what issues are most relevant to the pre-
9
As the Plaintiff notes, cases discussing the deliberative process privilege in the context
of Exemption 5 of the Freedom of Information Act are instructive because “in effect Exemption
5 is co-extensive with the common law discovery privileges.” McClelland v. Andrus, 606 F.2d
1278, 1287 n.54 (D.C. Cir. 1979).
22
decisional findings and recommendations.” Id. (citation omitted).
The third category of redactions at issue in the Plaintiff’s motion reflect communications
within the Maritime Administration discussing financial models of the Plaintiff’s application
using different scenarios, and attach spreadsheets reflecting the analysis. AR 2899, 2915.
Similarly, the fourth category of redactions withheld analysis presented by the Maritime
Administration to the Credit Council regarding the Plaintiff’s application. See, e.g., 2927-29
(redacting slides entitled “MARAD Expected Case,” “IFA Stress Case,” and “MARAD-IFA
Stress Case”). This slide on its face reflects the Maritime Administration culling and performing
its own analysis of the data provided by the Defendant, in essence creating new information as
part of the deliberative process. This analysis falls squarely within the privilege afforded to
documents reflecting an agency’s “exercise of discretion and judgment calls.” Ancient Coin, 641
F.3d at 513 (citation omitted).
The Plaintiff’s reliance on American Radio Relay League, Inc. v. Federal
Communications Commission, 524 F.3d 227 (D.C. Cir. 2008), is misplaced. First, the Plaintiff
offers no explanation or legal authority that case law concerning the withholding of documents in
the context of informal rulemaking should apply to adjudicative proceedings. A second case
cited by the Plaintiff, Independent United States Tanker Owners Committee v. Lewis, 690 F.2d
908 (D.C. Cir. 1982), demonstrates why adjudicative and informal rulemaking proceedings are
not equivalent for purposes of public disclosure of agency analysis. As the Lewis court
explained,
A staff report was produced. It differed in fundamental respects from prior staff
reports to which interested parties directed their comments. (Misdirected their
comments, we now should say.) MarAd relied on the report in making a decision
with substantial economic consequences. But the decision was published without
any explanation. The report remained buried in the bowels of the agency.
23
Id. at 926. Public notice and comment is meaningless if the public is commenting on an outdated
position from the agency. The Lewis court acknowledged that “[a]n agency is not obliged to
publish a tentative opinion for comment,” but “where an agency’s analytic task begins rather
than ends with a set of forecasts, sound practice would seem to dictate disclosure of those
forecasts so that interested parties can comment upon the conclusions properly to be drawn from
them.” Id. Here, as in all adjudications, the “agency’s analytic task” began with the Plaintiff’s
application. The need for effective public notice and comment is irrelevant in the context of
adjudicative proceedings.
Second, the American Radio court explained that “[w]here, as here, an agency’s
determination is based upon a complex mix of controversial and uncommented upon data and
calculations, there is no APA precedent allowing an agency to cherry-pick a study on which it
has chosen to rely in part.” Id. at 237. The Defendants are not suggesting in this case that the
Administrator did not rely on the redacted portions of his staff’s analysis. Rather, the
Administrator argues that the redacted analysis of factual data performed by his staff is protected
by the deliberative process privilege. On this record, the redacted “factual” data in the
Administrative Record was properly withheld pursuant to the deliberative process privilege.
b. Determination of Benefits
The Plaintiff further contends that “[t]he deliberative process privilege does not apply to
documents produced by the agency’s staff during its analysis and evaluation of facts necessary to
adjudicate an applicant’s eligibility for government benefits.” Pl.’s Mot. at 17. The Plaintiff
offers no authority for this proposition, apart from a citation to the Attorney General’s Manual on
the Administrative Procedure Act from 1947, explaining the dichotomy between rule making and
adjudication under the APA. Id. Not only does this argument lack any basis in the law, it would
24
wholly eliminate the deliberative process privilege in most adjudicative proceedings before
executive agencies, which by definition often determine whether or not an individual or a party is
eligible for government credit, funds, or other benefits. The fact that the Maritime
Administrator’s decisions determined whether the Plaintiff would be eligible for credit assistance
from the government is not itself sufficient to overcome the deliberative process privilege.
3. Post-Decisional Information
The Plaintiff further argues that a series of PowerPoint presentations from the Maritime
Administration to the Credit Council and associated working group, which were redacted in part
in the Administrative Record, are not protected by the deliberative process privilege because the
presentations are not “pre-decisional.” Pl.’s Mot. at 21. The Plaintiff argues that based on the
Court’s previous finding that the Secretary cannot require the Maritime Administration to seek
the opinion of the Credit Council, “the ‘proposed’ dispositions in MarAd’s presentations to the
Credit Council (and its working group) in effect constituted the Administrator’s final decisions, and
the required presentations to the Credit Council were both ultra vires and post-decisional.” Pl.’s
Mot. at 24.
Though the Court concluded that the Defendant failed to identify any authority permitting the
Secretary of Transportation to require the Maritime Administration to consult with the Credit Council
before issuing a decision on a Title XI loan application, the Court did not hold (as the Plaintiff
suggests) that the Credit Council has no lawful role in the Title XI application process. There is
nothing to suggest that the Maritime Administration could not, for example, seek the opinion of the
Credit Council on his own accord before granting or denying an application. Thus, the Court’s prior
ruling has no effect on the issue of whether a document is “predecisional.” Moreover, a finding that
the Maritime Administrator made a “final” decision regarding the Plaintiff’s applications before
25
consulting with the Credit Council would be counter-factual because at the time the Adminsitrator’s
decisions in this case were finalized, Maritime Order 2301.1B required the Maritime Administrator
to consult with the Credit Council before making his final decision. Documents reflecting the
Maritime Administration’s position before consulting with the Credit Council would
“prematurely disclose the views of the agency,” and are thus protected by the deliberative
process privilege. Coastal States Gas, 617 F.2d at 867.
C. Request for Discovery
The Plaintiff asks the Court for permission to obtain discovery apart from the
Administrative Record, including documents from the Secretary of Transportation and Credit
Council, and deposition testimony of David Matsuda, the Maritime Administrator, George
Zoukee, and Daniel Ladd, the Director of the Maritime Administrator’s Office of Marine
Financing. Pl.’s Mot. at 32-33. The “basic rule” of Administrative Procedure Act is that “a
court’s review of an agency’s decision is confined to the administrative record.” Common Sense
Salmon Recovery v. Evans, 217 F. Supp. 2d 17, 20 (D.D.C. 2002). Discovery is permitted “only
in two circumstances”: (1) upon “a strong showing of bad faith or improper motive”; and (2) “in
the rare case in which the record is so bare as to frustrate effective judicial review.” Cmty. for
Creative Non-Violence v. Lujan, 908 F.2d 992, 998 (D.C. Cir. 1990).
1. Record Sufficient for Effective Judicial Review
First, the Plaintiff argues that because the recommendations of the Credit Council
influenced the Maritime Administrator’s decisions on the Plaintiff’s applications, absent an
administrative record prepared and filed by the Secretary of Transportation and/or the Credit
Council—as opposed to the Maritime Administration—“it is impossible for the Court to review
the Council’s influential recommendations.” Pl.’s Mot. at 28-29. This argument confuses two
26
different inquiries. If the Credit Council or staff for the Secretary of Transportation created
documents that the Maritime Administrator considered in reaching his decision, those documents
by definition must be part of the Administrative Record in this case. But the Plaintiff does not
suggest in this section of its brief that the Maritime Administration omitted any such documents
from the record. The Plaintiff offers no authority for the proposition that an agency involved in
the decisionmaking process, but that is not the ultimate decisionmaker, must submit its own
administrative record. The Administrative Record is not “insufficient” merely because it omits
documents that were considered by a different agency that provided advice to the agency
responsible for making the ultimate decision.
In Saratoga Development Corp. v. United States, 21 F.3d 445 (D.C. Cir. 1994), the
plaintiff made the same argument American Petroleum Tanker makes here. The decisionmaker
in Saratoga, the Pennsylvania Avenue Development Corporation (“PADC”), was required by
statute to consult with the General Services Administration (“GSA”) and the International
Cultural and Trade Center Commission before selecting a developer for a particular project. 21
F.3d at 457. Saratoga argued that the PADC submitted an “incomplete” administrative record to
the District Court because the record did not include technical reports prepared by the GSA and
the Commission regarding the proposals from various developers. Id. The D.C. Circuit rejected
Saratoga’s contention that the exclusion of these reports from the record was in error “for the
simple reason that they were never part of the record in the first place; they were neither
prepared for nor provided to the PADC or its staff.” Id. Furthermore, the D.C. Circuit explicitly
rejected Saratoga’s contention that because of these omissions, discovery was necessary for
effective judicial review. Id. at 458. The Plaintiff’s contention in this case is indistinguishable
from the arguments rejected by the D.C. Circuit in Saratoga. In any event, the Court is not in a
27
position to determine whether the Administrative Record is so bare as to preclude effective
judicial review until the parties’ dispositive motions are fully briefed.
2. Bad Faith or Improper Motive
Second the Plaintiff asserts that “there is strong evidence that the Credit Council engaged
in improper behavior” insofar as “[t]he evidence establishes that . . . Credit Council participation in
the processing of APT’s application was anything but advisory.” Pl.’s Mot. at 29. For the first time
in its Reply, the Plaintiff articulates its theory of bad faith/improper motive, asserting that
APT has made a strong showing that (1) the Credit Council exercised controlling
authority over the Administrator with respect to APT’s application throughout the
administrative process, (2) the Credit Council denied APT’s application and
directed the Administrator to deny it, [and] (3) the Credit Council did so based on
its impermissible bias against private equity firms[.]
Pl.’s Reply at 9. In sum, the Plaintiff relies on four pieces of “evidence” to show the Credit
Council’s improper exercise of control over the Maritime Administrator: (1) the Maritime
Administration’s interactions with the Credit Council; (2) the purportedly unusual procedures
employed by the Maritime Administration in this case; (3) communications between the Maritime
Administration and the IFA; and (4) statements by the Maritime Administrator. To show an
“impermissible bias,” the Plaintiff relies solely on statements from the Credit Council regarding the
fact the Plaintiff is owned by private equity firms. Viewed together, this evidence falls short of the
“strong showing” necessary to warrant discovery in an APA action.
a. Credit Council’s Exercise of Authority Vis a Vis the Maritime
Administrator
The Plaintiff relies on several aspects of the review process in this case in an attempt
show improper influence by the Credit Council. The Plaintiff notes that the Maritime
Administration made eight presentations to Credit Council and/or Credit Council working group
between May and November 2012, including presentations the day before the Maritime
28
Administrator’s decisions were issued in August and November 2012. Pl.’s Mot. at 30. The
Plaintiff further alleges that two of the presentations, from May 31 and June 12 respectively,
indicated the Maritime Administration recommended granted the Plaintiff’s application. Id.Similarly, the Plaintiff notes that the Credit Council’s policy is not to recommend that the
Administration retain an IFA if the Administration believes the application ultimately will be
denied. Id. at 30-31. Ultimately the Plaintiff’s argument boils down to the fact that the Maritime
Administration changed its mind regarding whether the Plaintiff’s applications should be
approved after consultation with the Credit Council.
Discussing the deliberative process privilege, the D.C. Circuit in Hinckley noted that
“governmental decisionmakers will frequently disagree and debate many options before they
reach any final conclusion.” 140 F.3d at 285. Moreover,
the simple fact that Hinckley's treatment team and the Hospital’s Review Board
came to different conclusions does not suggest, in our view, any improper
motivations on the part of the Review Board. As indicated above, Hinckley’s
treatment team and the Review Board have different functions and concerns.
Whereas members of the treatment team are directly responsible for Hinckley’s
therapy and are charged with advocating the treatment program that they believe
will best advance Hinckley’s therapy, the Hospital Review Board is drawn from
all sections of the Hospital and considers a wider array of issues, including most
notably the danger that a conditional release would pose to the community.
Id. at 286. Likewise here, the Maritime Administration and the Credit Council have different
functions and concerns. The Maritime Administration administers the Title XI program in order
“to promote the growth and modernization of the U.S. merchant marine.” Maritime Admin.,
Title XI Federal Ship Financing Program: Program Description
ttp://www.marad.dot.gov/ships_shipping_landing_page/title_xi_home/title_xi_prog_description/
title_xi_prog_description.htm (last accessed July 8, 2013). The Credit Council is comprised of
officials from across the Department of Transportation, and is concerned not only with individual
29
applications for credit assistance, but also the overall status of loan portfolios for the Department
of Transportation’s credit programs, including the Title XI program. Defs.’ Ex. A at 3-4. The
fact that the Maritime Administration’s initial position with respect to the Plaintiff’s application
differed from the ultimate decision reached after extensive consultation with the Credit Council
“does not suggest . . . any improper motivations.” Hinckley, 140 F.3d at 286; see Fed. Commc’n
Comm’n v. Fox Television Stations, Inc., 556 U.S. 502, 514 (holding the APA “makes no
distinction, however, between initial agency action and subsequent agency action undoing or
revising that action”).10
The Plaintiff also argues that the Maritime Administration’s procedures for reviewing the
Plaintiff’s applications deviated from the normal procedures, casting suspicion on the Credit
Council’s role in the review process. According to Jean McKeever, a former employee of the
Maritime Administration who was involved in the Title XI program, once a Title XI application
is complete, “the program office asks the other offices to provide final comments on it in the area
of their expertise. Those comments are presented to the program office in memorandum form.”
Decl. of J. McKeever, ECF No. [60-3], ¶ 3. These memoranda are purportedly later incorporated
into a “recommendation for action” provided to the Maritime Administrator for a final decision
on the application. Id. at ¶ 4. Daniel Ladd indicates that with the exception of an October 4,
2012, Memorandum from the Maritime Administration’s Office of Policy and Plans, A.R. 2907-
2914, “no such formal memoranda were generated or exist with regard to APT’s Title XI
10
In its Reply, the Plaintiff suggests that “[t]here is nothing in the record evidencing
what defendants now claim to be the further consideration and analysis engaged in by MarAd,
much less any documentation of the basis for the abrupt change of views,” on the part of the
Maritime Administration. Pl.’s Reply at 4. One would expect that any documents reflecting
such “further consideration” would be privileged as they would reflect the “give-and-take” of the
consultative process.
30
application.” Ladd Decl. ¶ 5. The Plaintiff asserts, without further explanation, that “[t]he failure
of MarAd staff even to prepare this key mandatory memorandum only serves to highlight the need
for discovery and supplementation of the AR with the other documents identified by APT.” Pl.’s
Reply at 15. However, as the McKeever Declaration indicates, many of these formal memoranda
should have been created long before the Credit Council became involved in the review process. The
fact that the Maritime Administration deviated from allegedly “standard practice” before the
involvement of the Credit Council minimizes the inference that later deviations were a result of
alleged nefarious interference on the part of the Credit Council.
Finally, the Plaintiff argues certain statements by the Maritime Administrator himself
during the decisionmaking process evidence improper influence by the Credit Council. Robert
Kurz, the Chief Executive Officer of American Petroleum Tankers Parent, avers that he spoke
with Administrator Matsuda following the June 12, 2012, Credit Council meeting, at which time
Mr. Matsuda indicated that “while he was continuing to advocate for the APT application,
‘things do not look good.’” Decl. of R. Kurz, ECF No. [60-4], ¶ 30. The timing of this
statement is significant: Mr. Matsuda purportedly made this statement to Mr. Kurz over six
weeks before the initial denial of the Plaintiff’s original application. This statement gives “the
impression” that Mr. Matsuda believed the Credit Council would recommend that he deny the
application, but falls short of the “strong evidence” that the Credit Council improperly influenced
the Maritime Administrator in the six weeks between when the statement was made and when
Mr. Matsuda ultimately issued his decision. Air Transp. Ass’n, Inc. v. Nat’l Mediation Bd., 663
F.3d 476, 488 (D.C. Cir. 2011).
Even if the Court were to credit the Plaintiff’s claim that the procedures for reviewing the
Plaintiff’s application deviated from standard Administration practice as alleged, and assumed the
31
fact the priorities memorandum was not finalized implied the Credit Council did not agree with the
conclusion, viewed along with the Plaintiff’s other evidence, the Plaintiff provides only weak
circumstantial evidence that the Credit Council overstepped its bounds. “Given the presumption
that agency members act in good faith, and the lack of concrete evidence to the contrary,”
discovery is not warranted in this case. Air Transp. Ass’n, 663 F.3d at 488. (citation omitted).
b. Reason for Denial of Plaintiff’s Applications
The Plaintiff emphasizes that the Credit Council expressed concern about the ownership of
the Plaintiff, which the Plaintiff contends is not a valid basis for denying an application. Pl.’s Mot. at
31. But the Administrative Record indicates the concern was not the ownership of the Plaintiff in
isolation, but whether the owners of the Plaintiff had a long-term interest in the project the Maritime
Administration was being asked to finance. A.R. 2868 (noting the Credit Council initially
recommending against retaining an IFA “based on concerns about the ownership structure (75%
by Blackstone and 25% by Cerberus) and the ownership’s long-term interest in the project).”);
see also A.R. 2871 (“In March, 2011 the Credit Council denied MARAD’s prior request . . .
based on concerns about the private equity ownership’s long-term interest and the relatively high
ratio of debt to equity.”). Moreover, despite these concerns, the Credit Council ultimately
recommended that the Administration hire an IFA. A.R. 2872. In context, the statements
concerning the Plaintiff’s ownership are insufficient to justify discovery in this case.
IV. CONCLUSION
For the foregoing reasons, the Court finds only limited supplementation of the
Administrative Record is appropriate in this case. The Maritime Administration shall be
required to supplement the record to include two public speeches by the Secretary of Defense
that the agency relied on and cited in denying the Plaintiff’s revised applications. The Plaintiff
32
failed to demonstrate the other documents at issue in its motion were considered by the Maritime
Administrator as part of his decision denying the Plaintiff’s applications. Furthermore, the
Plaintiff failed to produce sufficient evidence of bad faith or improper motive to overcome the
deliberative process privilege or to obtain discovery in this matter. Accordingly, the Plaintiff’s
[60] Motion to Compel Filing of the Full Administrative Record and for Leave to Conduct
Limited Discovery is GRANTED IN PART and DENIED IN PART.
An appropriate Order accompanies this Memorandum Opinion.
/s/
COLLEEN KOLLAR-KOTELLY
UNITED STATES DISTRICT JUDGE
33