Bean Dredging, LLC v. United States ( 2010 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
BEAN DREDGING, LLC, et al.,
Plaintiffs,
Civil Action No. 08-1508 (CKK)
v.
UNITED STATES OF AMERICA,
Defendant.
MEMORANDUM OPINION
(March 30, 2010)
Plaintiff Bean Dredging, LLC (“Bean Dredging”),1 successor in interest to Bean Dredging
Corporation, filed this lawsuit under the Administrative Procedure Act (“APA”), 5 U.S.C. § 701et seq., seeking judicial review of the final agency action of the National Pollution Funds Center
(“NPFC”) denying Bean Dredging’s claim under the Oil Protection Act of 1990, 33 U.S.C. §
2701, et seq., for reimbursement of costs and damages incurred in connection with an oil
pollution incident in Humboldt Bay, California on September 6, 1999. This matter comes before
the Court on the parties’ cross-motions for summary judgment. The Court has conducted a
searching review of the parties’ motions and responsive briefing, the attachments thereto, the
relevant statutes, regulations and case law, and the record of this case as a whole. For the reasons
1
Also named as Plaintiffs in this action are Bean Dredging’s underwriters in interest,
Navigators Insurance Services of Texas, Inc., National Union Fire Insurance Company and Water
Quality Insurance Syndicate. As indicated in the Complaint, these entities are U.S. domestic
insurers of oil pollution risks, each of which provided pollution liability insurance to Bean
Dredging and paid some or all of the removal costs and damages at issue in this litigation. See
Complaint, Docket No. [1], ¶ 5. For the purposes of this Memorandum Opinion, the Court need
not differentiate between Bean Dredging and its insurers and shall therefore refer to all Plaintiffs
in this case collectively as “Bean Dredging.”
set forth below, the Court shall GRANT-IN-PART and DENY-IN-PART the United States’ [19]
Motion for Summary Judgment, shall DENY Bean Dredging’s [20] Motion for Summary
Judgment, and shall remand this matter to the NPFC for further proceedings consistent with this
Memorandum Opinion. Specifically, the Court DENIES WITHOUT PREJUDICE both the
United States’ [19] Motion for Summary Judgment and Bean Dredging’s [20] Motion for
Summary Judgment with respect to Bean Dredging’s claims that the NPFC erred when it
misinterpreted and misapplied the term “seas” as used in 46 C.F.R. § 44.340(a)(1), and shall
remand this matter to the NPFC for further explanation of its interpretation of the relevant
regulations and its reasons for rejecting the interpretation advanced by Bean Dredging. In
addition, the Court shall GRANT the United States’ [19] Motion for Summary Judgment and
shall DENY Bean Dredging’s [20] Motion for Summary Judgment insofar as Bean Dredging
asserts that the NPFC’s final determination is inconsistent with the MCIR and is therefore
arbitrary and capricious.
I. BACKGROUND
A. Statutory Background
Congress passed the Oil Pollution Act (“OPA”) of 1990 in response to the disastrous
March 1989 oil spill involving the Exxon Valdez in Prince William Sound, Alaska. Water
Quality Ins. Syndicate v. United States, 522 F. Supp. 2d 220, 226 (D.D.C. 2007). Pursuant to the
terms of the OPA, “each responsible party2 for a vessel . . . from which oil is discharged . . . into
or upon the navigable waters . . . is liable for the removal costs and damages . . . that result from
2
In the case of a watercraft vessel, the “responsible party” is “any person owning,
operating, or demise chartering the vessel.” 33 U.S.C. § 2701(32)(A).
2
such incident.” 33 U.S.C. § 2702(a). This includes all removal costs incurred by the United
States government and certain removal costs incurred by other individuals as well as damages to
natural resources, property, etc. Id. § 2702(b).
In certain circumstances, however, the OPA permits responsible parties to limit their
financial liability for removal costs and damages and to seek reimbursement for costs incurred.
See 33 U.S.C. §§ 2704, 2708. A responsible party who believes it is eligible for reimbursement
may submit its claim for removal costs or damages directly to the Oil Spill Liability Fund. Id. §
2713. The NPFC, which is a part of and administered by the U.S. Coast Guard, a component of
the Department of Homeland Security, is responsible for processing claims for reimbursement
under the OPA. Pl.’s Stmt. ¶ 3. The NPFC may deny a claim for reimbursement if certain
conditions are not met. In particular, as is relevant to the case at hand, a responsible party is not
eligible for reimbursement of any costs or damages incurred as a result of an oil spill if, inter
alia, “the incident was proximately caused by . . . the violation of an applicable Federal safety,
construction, or operating regulation by the responsible party, an agent or employee of the
responsible party, or a person acting pursuant to a contractual relationship with the contractual
party.” Id. § 2704(C)(1)(B).
B. Factual Background
1. The September 6, 1999 Oil Spill
As indicated above, this lawsuit arises from an oil spill that occurred on September 6,
1999, in Humboldt Bay, California. Bean Dredging Corporation was the operator of the Dredge
3
Stuyvesant (the “Stuyvesant”), the vessel involved in that incident. Pl.’s Stmt. ¶ 1.3 The
Stuyvesant is a diesel propelled, hydraulic hopper dredge that was, at the time of the incident,
operating under a contract with the United States Army Corps of Engineers to perform
maintenance dredging at the Outer Bar channel of the entrance to Humboldt Bay. Id. ¶¶ 4-5, 13.
The immediate cause of the oil spill is not in dispute. The parties agree that the incident
was caused when fuel oil spilled out from a 15 inch fracture in the hull plate of the Stuyvesant’s
aft starboard fuel oil tank. Id. ¶¶ 48, 56. The parties further agree that the fracture in the hull
plate was almost certainly caused when the starboard dredge head4 hit the Stuyvesant’s fuel oil
tank as the vessel executed a 180 degree turn to port during its dredging operations5 at
3
As a preliminary matter, the Court notes that it strictly adheres to the text of Local Civil
Rule 7(h)(2), which applies “to cases in which judicial review is based solely on the
administrative record” and requires that in such cases, “motions for summary judgment and
oppositions thereto shall include a statement of facts with references to the administrative
record.” In setting forth the relevant background, the Court therefore cites to Plaintiff’s
Statement of Facts in support of its Motion for Summary Judgment (“Pl.’s Stmt.”) or
Defendant’s Statement of Material Facts in support of its Motion for Summary Judgment
(“Def.’s Stmt.”), unless controverted by the opposing party’s respective response statement, in
which case the Court shall also cite to Plaintiff’s Response Statement (“Pl.’s Resp.) or the
Defendant’s Response Statement (“Def.’s Resp.”), as appropriate. In addition, where necessary,
the Court shall cite directly to the evidence in the record.
4
The Stuyvesant is outfitted with port and starboard drag arms, which are both lowered
by wire from cranes over the side during dredging operations. Pl.’s Stmt. ¶ 7. Dredge heads,
fitted with 12-inch long spikes, are attached to the ends of each of the drag arms. Id. ¶ 8. During
dredging operations, the dredge sails forward to allow the lowered drag arms and corresponding
dredge heads to scrape the sea bottom and loosen the bottom material, which is then drawn into
the vessel through water jets and piping in the drag arms and deposited into the dredge’s hopper
(an open hatch with runs fore to aft for approximately 15 feet). Id. ¶¶ 9-10.
5
Bean Dredging explains that when operating the Stuyvesant, the vessel dredges a path
along a pre-arranged line, called a “cut.” Pl.’s Stmt. ¶ 11. Upon reaching the end of a cut, the
drag arms are lifted off the ocean bottom and suspended in the water as the dredge turns about
face 180 degrees to start another cut in the opposite direction. Id.
4
approximately 6:00 P.M. on September 6th. Id. ¶¶ 54-56. This is reflected in the Court Guard’s
Marine Casualty Investigative Report (“MCIR”) issued after the incident in question, in which
the Coast Guard indicated that “the vessel apparently rolled several times during the turn and the
draghead collided with the side plate,” causing the fracture through which the oil leak occurred.
Id. ¶ 57. The Coast Guard further concluded in the MCIR that the accident was likely caused by
bad weather and an error in judgment by the vessel’s crew. See id. While the parties dispute, to
some extent, the severity of the weather conditions existing in Humboldt Bay at the time of the
incident, this dispute is not material for purposes of the instant Memorandum Opinion. Rather, it
is sufficient to note that Bean Dredging itself concedes that at the time of incident the Stuyvesant
was encountering at least “occasional” swells of 10 feet or greater. See id. ¶ 25 (“Captain
Howcraft estimated that the seas and swells were anywhere from approx. six feet to twelve feet
(at times).”); see also ¶¶ 91-92.
The oil spill was first noticed at approximately 7:10 P.M. on September 6th, at which
time the Stuyvesant immediately notified the Coast Guard Station at Humboldt Bay, Bean
Dredging’s site office, and the National Response Center, that the spill had occurred. Id. ¶¶ 32-
38. Precautions were undertaken to minimize the spill and to patch the fracture in the hull plate.
Id. ¶¶ 40-45. By approximately 2:00 A.M. the following morning (i.e., September 7, 1999), the
fuel oil had been contained and the Coast Guard permitted the Stuyvesant to sail to shore for
repairs. Id. ¶ 46. The Coast Guard estimated that approximately 2,100 gallons of Intermediate
Fuel Oil 180 was lost before the oil spill was ultimately contained. Id. ¶ 53. Bean Dredging
alleges that it incurred uncompensated removal costs in the amount of $8.5 million and that it
5
had also agreed to pay an additional $7.8 million in damages as part of a settlement with the
National Resource Trustees and the State of California as compensation for injuries sustained to
various natural resources as a result of the oil spill. Id. ¶¶ 64-68.
2. Proceedings Before the NPFC
On September 2, 2005, Bean Dredging filed a claim with the NPFC for reimbursement of
removal costs and damages (the “Claim”). Id. ¶ 71. Bean Dredging asserted in its Claim that it
was entitled under the OPA to a limitation on its financial liability for the oil spill and requested
reimbursement of approximately $11.7 million in incurred removal costs and damages. Id.
The NPFC initially denied the Claim on December 14, 2006, based, in relevant part, on
its determination that Bean Dredging was ineligible for reimbursement under the OPA because
the spill had been caused by the vessel’s violation of two federal operating and safety regulations
— specifically, 46 C.F.R. § 44.340 and 46 C.F.R. § 42.09-1(c). Id. ¶ 73; see also Administrative
Record (“A.R.”) at 8.6 The former regulation provides, in relevant part, that “[e]ach hopper
dredge assigned a working freeboard may be operated at drafts from the normal freeboard to the
working freeboard if,” inter alia, the “[s]eas are not more than 10 feet.” 46 C.F.R. §
44.340(a)(1). The latter regulation provides that “[t]he master of the vessel for which a load line
certificate has been issued shall be responsible for the maintenance of such certificate on board
such vessel and for compliance with its terms and conditions.” 46 C.F.R. § 42.09(1)(c). The
load line certificate in turn provides that the Stuyvesant may be operated at its working freeboard
6
The NPFC also determined that Bean Dredging was barred from bringing its Claim
under the terms of its dredging contract and as well as under the terms of a release executed at
the completion of the Humboldt Bay project. Pl.’s Stmt. ¶ 73. This determination, however, is
not at issue in the present litigation.
6
in seas, inter alia, that are “[n]ot more than 3 meter waves.” A.R. at 115.7
On June 6, 2007, Bean Dredging submitted a Request for Reconsideration to the NPFC.
Pl.’s Stmt. ¶ 74. As is of relevance to this Memorandum Opinion, Bean Dredging argued that the
NFPC’s decision denying its Claim was in error because: (1) its vessel had not been operating in
violation of either 46 C.F.R. § 44.340 or 46 C.F.R. § 42.09-1(c) at the time of the incident; and
(2) the NPFC’s decision contradicted the Coast Guard’s MCIR. See A.R. at 1751-53. With
respect to the first of these arguments, Bean Dredging directed the NPFC to the Notice of
Proposed Rulemaking for 46 C.F.R. § 44.340, and argued that the history of the regulation
demonstrated that the term “seas” as used in that regulatory provision was intended to refer
specifically to the “significant wave height” Id. at 1752. As Bean Dredging explains and as the
United States does not dispute, the phrase “significant wave height” is a term of art in the field of
oceanography that is defined as the average height of the highest one-third of waves encountered
over a specified period of time. See Pl.’s MSJ at 16; Def.’s Opp’n at 2 (conceding that “there is
an oceanographic term ‘significant wave height’ which means just what Bean Dredging asserts,”
but disputing that the term should be applied to the regulations at issue). Bean Dredging
therefore argued in its request for reconsideration that the language in 46 C.F.R. § 44.340(a)(1)
7
The Court notes that while Bean Dredging initially disputed before the NPFC that the
cited regulations applied to the Stuyvesant at the time of the incident, see A.R. at 40-41, Bean
Dredging has not raised a similar argument before this Court. Accordingly, there is no dispute
that these regulations applied to the Stuyvesant at the time in question, such that the dredge was
required to operate within the boundaries set forth in the regulatory provisions — including the
requirement that the dredge not operate in seas more than 10 feet. Given the parties’ agreement
that the Stuyvesant was required to operate in compliance with these regulatory provisions, the
Court need not delve into a discussion of the terms “working freeboard” and “normal freeboard,”
which both involve technical concepts unfamiliar to the average layperson.
7
prohibiting a vessel from operating in “seas” of more than 10 feet is properly construed as
prohibiting a vessel from operating only in seas in which there is a significant wave height of 10
feet — i.e., seas in which waves of more than 10 feet occur with a degree of regularity and not
just occasionally or at times. A.R. at 1752. Accordingly, while Bean Dredging conceded that its
vessel was operating in seas that at times encountered waves of over 10 feet, it argued that the
evidence in the record did not necessarily demonstrate that the vessel was operating in seas with
a significant wave height of more than 10 feet. See id. at 1752-53. Bean Dredging therefore
urged that the NPFC’s finding that the Stuyvesant was in violation of the cited regulations was in
error.8
With respect to Bean Dredging’s second argument, it directed the NPFC to the MCIR
issued with respect to the September 6, 1999 oil spill and noted, in relevant part, that the MCIR
did not reflect any determination by the Coast Guard that the incident had been caused by
8
Although neither party has directly addressed this issue, it appears that the relevant
requirements for operating at the working freeboard that are listed on the load line certificate —
and which must be complied with pursuant to 46 C.F.R. § 42.09-1(c) — are drawn directly from
46 C.F.R. § 44.340(a). See 46 C.F.R. § 44.340(b) (requiring the dredge’s load line certificate
indicate on its fact each restriction included in paragraph (a)); see also A.R. at 115 (certifying
that the ship had been surveyed and the freeboards assigned in accordance with 46 C.F.R. Part
44). In other words, the load line certificate simply reiterates the requirements set forth in 46
C.F.R. § 44.340 that obligate a vessel working at drafts from the normal freeboard to the working
freeboard to operate only in certain circumstances — including, as is relevant here, that the seas
are not greater than 10 feet. This in turn implies that the interpretation of term “seas,” as used in
46 C.F.R. 44.340, should also apply to the interpretation of the requirements set forth in a
vessel’s load line certificate. Although in this case the load line certificate prohibited operation
in seas with waves of more than 3 meter (or 9.842 feet) — rather than 10 feet, as is used in the
regulatory provision — the parties indicate that this minimal difference is immaterial to their
pending cross-motions for summary judgment. See Def.’s MSJ at 3, n 4; Pl.’s MSJ at 15, n. 5.
8
violations of any federal operating or safety regulations. Id. at 1751.9 Bean Dredging therefore
urged that “[t]he NPFC’s determination in this case is in direct contradiction to the conclusion of
the U.S. Coast Guard investigators who were on the scene at the time in question, with best
access to all of the relevant evidence.” Id.On November 13, 2007, the NPFC issued a decision affirming the initial denial of Bean
Dredging’s Claim for reimbursement under the OPA. Pl.’s Stmt. ¶ 76. In particular, the NPFC
affirmed its initial finding that the Stuyvesant had been operating at the time of the incident in
violation of 46 C.F.R. § 44.340 and 46 C.F.R. § 42.09-1(c) and that the Stuyvesant’s violations
of these federal operating and safety regulations had caused the incident at issue. Id. ¶ 77. In so
finding, the NPFC rejected the two arguments raised by Bean Dredging in its request for
reconsideration.
With respect to Bean Dredging’s first argument regarding the correct interpretation of the
term “seas,” the NPFC noted that this argument had been advanced by Bean Dredging in its
request for reconsideration. A.R. at 18. The NPFC, however, did not provide any explicit
discussion of this argument in its final decision affirming denial of the Claim. See generally id.9
At the time Bean Dredging submitted its initial Claim to the NPFC in September of
2005, the NPFC was not permitted to consider MCIRs in administrative proceedings regarding
claims under the OPA. This prohibition was based on the Coast Guard’s broad interpretation of
46 U.S.C. § 6308, which provides that MCIRs are not “admissible as evidence or subject to
discovery in any civil or administrative proceeding, other than an administrative proceeding
initiated by the United States.” See 71 Fed. Reg. 60553, 60553 (explaining previous prohibition
on the use of MCIRs in OPA claim proceedings). In October of 2006, however, the Coast Guard
issued a Notice of Interpretation, in which it indicated that it was reversing its prior interpretation
of 46 U.S.C. § 6308, as it concerned the use of MCIRs in claim proceedings under the OPA;
specifically, the Coast Guard announced that the NPFC would now be permitted to “consider
and rely on any part of a MCIR in determining whether to pay or deny a claim.” Id. at 60554.
9
at 12-26. Nonetheless, it is abundantly clear that the NPFC ultimately rejected Bean Dredging’s
assertion that the relevant regulations were violated only if the vessel had been operating in seas
with a significant wave height of 10 feet or more; the NPFC made no attempt to determine
whether the “significant wave height” at the time of the incident was in excess of 10 feet, but
rather affirmed that the record evidence sufficiently demonstrated that the vessel had operated in
waves in excess of 10 feet (without reference to any specific frequency requirement) and was
therefore in violation of its load line certificate and 46 C.F.R. § 44.340. See id. at 20-23. Given
that the NPFC did not provide any discussion in its written decision regarding Bean Dredging’s
argument on this point, however, there is no explanation on the record as to why the NPFC
rejected application of the term “significant wave height” to the relevant regulations. See
generally id. at 12-26.
In addition, the NPFC rejected Bean Dredging’s second argument that the NPFC’s initial
determination was in error because it contradicted the MCIR. See id. at 20-21. Unlike its
rejection of Bean Dredging’s regulatory argument, the NPFC provided a clear explanation for its
decision not to rely on the MCIR. Specifically, the NPFC explained that the Coast Guard, in its
Notice of Interpretation announcing its decision to permit the use of MCIRs in OPA claim
proceedings, explicitly stated that the “NPFC is not bound by any part of the investigation” and
indeed “can reach not only different facts but also different opinions or conclusions than the
opinions or conclusions in the MCIR.” Id. at 20 (citing 71 Fed. Reg. 60553, 60554 and 72 Fed.
Reg. 17574, 17545). The NPFC therefore rejected any claim by Bean Dredging that the NPFC
was bound by statements and/or findings in the MCIR. Id. In addition, the NPFC explained that,
10
while the Coast Guard did not cite the Stuyvesant for violations of 46 C.F.R. § 44.340 or 46
C.F.R. § 42.09-1(c), it did initiate an administrative penalty proceeding [against the Stuyvesant] .
. . for violati[ons] of 33 U.S.C. § 1321,” which provides for administrative penalties against
owners or operators of vessels responsible for oil discharges. Id. As such, the NPFC concluded
that “[t]he mere fact that the Coast Guard prosecuted a penalty action under 33 U.S.C. § 1321instead of alleging all possible regulatory violations does not establish that the vessel complied
with 46 C.F.R. § 44.340 or the load line certificate at the time of the incident.” Id. For these
reasons, the NPFC affirmed its initial denial of Bean Dredging’s Claim. Id. at 23.
C. Procedural Background
Bean Dredging filed the instant lawsuit on August 28, 2008, seeking judicial review of
the NPFC’s decision denying its Claim for reimbursement under the OPA. See Complaint,
Docket No. [1]. The parties subsequently filed cross-motions for summary judgment, which are
now pending before the Court. See Def.’s MSJ, Docket No. [19]; Pl.’s MSJ, Docket No. [20].
Briefing on the parties’ motions is now complete. See Def.’s Opp’n, Docket No. [23]; Pl.’s
Opp’n, Docket No. [22]; Pl.’s Reply, Docket No. [24].10 Accordingly, the cross-motions are now
ripe for the Court’s review and resolution.
II. LEGAL STANDARD
Both parties agree that the NPFC’s decision to deny Bean Dredging’s claim for
reimbursement under the OPA is properly analyzed under the standard of review set forth in the
APA, pursuant to which a court must set aside an agency action that is “arbitrary and capricious,
10
The Court notes that the United States declined to file a reply in support of its motion
for summary judgment.
11
an abuse of discretion, or otherwise not in accordance with the law.” 5 U.S.C. § 706. This
standard of review is highly deferential to the agency, so that a court need not find that the
agency’s decision is “the only reasonable one, or even that it is the result [the court] would have
reached had the question arisen in the first instance in judicial proceedings.” Am. Paper Inst.,
Inc. v. Am. Elec. Paper Serv. Corp., 461 U.S. 402, 422 (1983). Rather, to survive the “arbitrary
and capricious” standard, an agency need show only that it “‘examine[d] the relevant data and
articulate[d] a satisfactory explanation for its action, including a rational connection between the
facts found and the choice made.” PPL Wallingford Energy LLC v. Fed. Energy Regulatory
Comm’n, 419 F.3d 1194, 1198 (D.C. Cir. 2005) (quoting Motor Vehicle Mfrs. Ass’n, v. State
Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983) (internal punctuation omitted). The Court is
not entitled to substitute its judgment for that of the agency. Citizens to Preserve Overton Park,
Inc. v. Volpe, 401 U.S. 402, 416 (1971). This is particularly so where an agency “is evaluating
scientific data within its technical expertise;” in such a case, the Court must give the agency “an
extreme degree of deference.” Am. Farm Bureau Fed’n v. Envtl. Prot. Agency, 559 F.3d 512,
519 (D.C.Cir. 2009) (internal quotation marks omitted).
“‘The party challenging an agency’s action as arbitrary and capricious bears the burden of
proof.’” City of Olmsted Falls v. Fed. Aviation Admin., 292 F.3d 261, 271 (D.C. Cir. 2002)
(quoting Lomak Petroleum, Inc. v. Fed. Energy Regulatory Comm’n, 206 F.3d 1193, 1198 (D.C.
Cir. 2000)). An agency decision must generally be affirmed on the grounds stated therein, and a
reviewing court may not attempt to supply “a reasoned basis for the agency’s action that the
agency itself has not given.” Motor Vehicle Mfrs. Ass’n, 463 U.S. at 43. Consistent with this
12
review standard, judicial review is confined to the full administrative record before the agency at
the time the decision was made. Envtl. Def. Fund, Inc. v. Costle, 657 F.2d 275, 284 (D.C. Cir.
1981).
III. DISCUSSION
Bean Dredging advances two principal arguments in favor of its motion for summary
judgment challenging the NPFC’s denial of its Claim and in opposition to the United States’
cross-motion for summary judgment. First, Bead Dredging argues that the “NPFC erred when it
misinterpreted and misapplied the meaning of the term ‘seas’ as set forth in 46 C.F.R. §
44.340(a)(1).” Pl.’s MSJ at 14. Second, Bean Dredging contends that the NPFC’s decision its
Claim is arbitrary and capricious because it contradicts the Coast Guard’s Marine Casualty
Investigation Report. Id. at 20. The Court shall address each argument in turn below.
A. The NFPC’s Interpretation of “Seas” as Used in 46 C.F.R. § 44.340(a)(1)
Bean Dredging first argues that the NPFC erred when it failed to interpret the term “seas,”
as used in 46 C.F.R. § 44.340(a)(1), as specifically referring to “significant wave height.” As
described above, it is clear that the NPFC rejected Bean Dredging’s argument that the relevant
regulations were violated only if the vessel had been operating in seas with a significant wave
height of 10 feet or more. See supra at pp. 9-10. However, as Bean Dredging correctly points
out, the NPFC’s written decision does not contain any explicit discussion of this decision.
Accordingly, while it is apparent from review of the NPFC’s decision that it rejected Bean
Dredging’s position, the record is devoid of any explanation as to the reasons for this rejection.
Nor did the NPFC clearly explain the contours of its own interpretation of the regulation in
13
question. Although it appears that the NPFC interpreted the regulations at issue to prohibit the
operation of a vessel in seas with waves of more than 10 feet without reference to any specific
frequency requirement, there is no actual discussion in the record indicating how the NPFC itself
defines “seas” of more than 10 feet, as that phrase is used in 46 C.F.R. § 44.340(a)(1). This is
particularly significant because the regulation itself is ambiguous; it does not include any
definition for the term “seas” and, as Bean Dredging points out and the United States does not
dispute, the term “seas” may “have a different connotation to different people, i.e., wave height,
swell height, combined wave height, wind wave height, etc.,” Pl.’s MSJ at 18.
The United States has also failed in its present pleadings to provide the Court with any
evidence as to the reasons for or the exact contours of the NPFC’s decision regarding the proper
interpretation of 46 C.F.R. § 44.340(a)(1). Although the United States does advance certain
arguments in its briefing in an effort to explain the NPFC’s decision — for example, stating that
the NPFC “discounted” the approach suggested by Bean Dredging “because it was inapplicable
to real-world operations and thus irrelevant,” see Def.’s MSJ at 14, and asserting that the NPFC’s
own interpretation of the regulation is appropriate because “the regulation is meant to be applied
by individual mariners and vessel owners, not oceanographers, in limiting a vessel’s operations,”
Def.’s Opp’n at 4 — these statements are made without any record support. The unsupported
representations of counsel, presented solely in the parties’ pleadings on summary judgment, are
insufficient and cannot be relied upon by the Court.
Accordingly, while the United States argues that the NPFC’s interpretation of its own
regulations is entitled to substantial deference, see Def.’s MSJ at 10, the Court cannot — without
14
a forthright agency interpretation — determine whether deference is, in fact, appropriate in this
case. Similarly, the Court cannot evaluate whether the NPFC’s rejection of the regulatory
interpretation urged by Bean Dredging was arbitrary and capricious without an explanation as to
its reasons for the rejection. It is well established that “‘the focal point for judicial review should
be the administrative record already in existence, not some new record made initially by the
reviewing court.’” Florida Power & Light Co., 470 U.S. at 743 (quoting Camp v. Pitts, 411 U.S.
138, 142 (1973)). “If the record before the agency does not support the agency action, if the
agency has not considered all relevant factors, or if the reviewing court simply cannot evaluate
the challenged agency action on the basis of the record before it, the proper course, except in rare
circumstances, is to remand to the agency for additional investigation or explanation. The
reviewing court is not generally empowered to conduct a de novo inquiry into the matter being
reviewed and to reach its own conclusions based on such an inquiry.” Id. Rather, “[t]he task of
the reviewing court is to apply the appropriate APA standard of review to the agency decision
based on the record the agency presents to the reviewing court.” Id.For these reasons, the Court must remand this case back to the agency for further
explanation as to the interpretation of the relevant regulations it adopted and its reasons for
rejecting the interpretation advanced by Bean Dredging. Both the United States’ [19] Motion for
Summary Judgment and Bean Dredging’s [20] Motion for Summary Judgment are therefore
DENIED WITHOUT PREJUDICE with respect to Bean Dredging’s claims that the NPFC erred
when it misinterpreted and misapplied the term “seas” as used in 46 C.F.R. § 44.340(a)(1).11
11
Given the Court’s conclusion, above, that this case must be remanded back to the
agency for further explanation, it shall not at this time address Bean Dredging’s related
15
B. The Coast Guard’s Marine Casualty Investigation Report
Second, Bean Dredging argues that the NPFC’s decision denying Bean Dredging’s Claim
is arbitrary and capricious because it is inconsistent with and contradicts the Coast Guard’s
MCIR that was issued with respect to the September 6, 1999 oil spill. While the Court has
already determined that this case must be remanded back to the agency for further explanation
with respect to Bean Dredging’s first argument, as discussed above, the Court nonetheless briefly
addresses this second argument in order to provide guidance to the agency on remand.
In support of its argument, Bean Dredging directs the Court to the Coast Guard’s MCIR,
which — as Bean Dredging emphasizes — does not contain any citations from the Coast Guard
for violation of either 46 C.F.R. § 44.340 or 46 C.F.R. § 42.09-1(c). Pl.’s Stmt. ¶ 58. According
to Bean Dredging, the NPFC acted arbitrarily and capriciously when it disregarded this fact and
found to the contrary that the Stuyvesant had violated these regulatory provisions. Pl.’s MSJ at
20-22. The Court, however, does not agree.
As an initial matter, the MCIR does not appear on its face to contradict the NPFC’s final
decision denying Bean Dredging’s Claim. The MCIR itself indicates that “[t]he sea state was
reported to be anywhere from 8 to 12 feet” in Humboldt Bay at the time of incident. Pl.’s Stmt. ¶
57. The MCIR further observes that the “sea state at the opening of the channel (referred to as
the ‘rock and roll alley’),” which is where the incident was reported to have occurred, “is much
more pronounced and severe.” Id. The MCIR concluded that the incident “appears to be caused
arguments challenging the NPFC’s evidentiary decisions regarding the weather conditions in
Humboldt Bay at the time of the incident. The reasonableness of the NPFC’s evidentiary
decisions depends, in part, upon the proper interpretation of the relevant regulations.
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by bad weather and an error in judgment in the part of the pipeman.” Id. The MCIR’s findings
are therefore entirely consistent with the NPFC’s determination that the Stuyvesant had been
operating in seas with waves in excess of 10 feet at the time of the incident and that this was the
proximate cause of the accident.
Bean Dredging nonetheless argues that the MCIR and the NPFC determination are
inconsistent with each other because the MCIR, unlike the NPFC decision, did not cite the
Stuyvesant for violations of either 46 C.F.R. § 44.340 or 46 C.F.R. § 42.09-1(c). In essence,
Bean Dredging urges that the MCIR’s silence should be read as indicating that the Coast Guard
investigators affirmatively found that the Stuyvesant had not violated either regulatory provision.
Even assuming that the Court were to accept this predicate assertion — which is a questionable
assumption on the record now before the Court — it is nonetheless clear that the NPFC was
under no obligation to reach the same conclusions as reflected in the MCIR. As the NPFC
correctly explained in its final decision, “the NPFC is not bound by such reports of
investigation,” 71 Fed. Reg. 60553, 60554, and “can reach not only different facts but also
different opinions or conclusions than the opinions and conclusions in the MCIR,” 72 Fed. Reg.
17574, 17575. In announcing that the NPFC would now be permitted to consider MCIRs, the
Coast Guard explained that its intent was to avoid the agency “having to duplicate the
investigative process in order to gather evidence that was included in a Marine Casualty
Investigation Report (MCIR),” which “in turn, resulted in delays while those duplicative
investigative efforts were carried out.” Id. at 60553. To that end, the Coast Guard indicated that,
“[w]hile any part of such a MCIR may be considered, it is the enclosures to such a report, such as
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witness statements, navigation records and vessel logs that will most likely bear on any
determination to pay or deny a claim.” Id. at 60554. It is therefore clear that in permitting the
NPFC to consider the MCIRs in administrative claim proceedings, the Coast Guard intended
only to provide the NPFC with a resource to assist in the gathering of relevant facts and evidence,
and not to bind the NPFC to any specific legal conclusions or factual findings set forth in the
MCIR.
Accordingly, the fact that the NPFC — but not the Coast Guard investigators responsible
for the MCIR — found that Stuyvesant had violated 46 C.F.R. § 44.340 and 46 C.F.R. § 42.09-
1(c) does not, by itself, demonstrate that the NPFC’s decision was arbitrary or capricious. The
NPFC was free to conduct a de novo review of the evidence and to reach its own conclusions.
As such, absent a specific, identified error in the NPFC’s final determination, the simple fact that
the NPFC reached a different conclusion than is reflected in the MCIR as to the statutory
violations but not as to the factual predicate is insufficient to establish that the denial of Bean
Dredging’s Claim was arbitrary or capricious. The United States’ [19] Motion for Summary
Judgment is therefore GRANTED and Bean Dredging’s [20] Motion for Summary Judgment is
DENIED insofar as Bean Dredging asserts that the NPFC’s final determination is inconsistent
with the MCIR and is therefore arbitrary and capricious.
IV. CONCLUSION
For the reasons set forth above, the Court shall GRANT-IN-PART and DENY-IN-PART
the United States’ [19] Motion for Summary Judgment, shall DENY Bean Dredging’s [20]
Motion for Summary Judgment, and shall remand this matter to the NPFC for further
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proceedings consistent with this Memorandum Opinion. Specifically, the Court DENIES
WITHOUT PREJUDICE both the United States’ [19] Motion for Summary Judgment and Bean
Dredging’s [20] Motion for Summary Judgment with respect to Bean Dredging’s claims that the
NPFC erred when it misinterpreted and misapplied the term “seas” as used in 46 C.F.R. §
44.340(a)(1), and shall remand this matter to the NPFC for further explanation of its
interpretation of the relevant regulations and its reasons for rejecting the interpretation advanced
by Bean Dredging. In addition, the Court shall GRANT the United States’ [19] Motion for
Summary Judgment and shall DENY Bean Dredging’s [20] Motion for Summary Judgment
insofar as Bean Dredging asserts that the NPFC’s final determination is inconsistent with the
MCIR and is therefore arbitrary and capricious. And appropriate Order accompanies this
Memorandum Opinion.
Date: March 30, 2010
/s/
COLLEEN KOLLAR-KOTELLY
United States District Judge
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