American Petroleum Tankers Parent, LLC v. United States , 943 F. Supp. 2d 59 ( 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
(May 6, 2013)
Plaintiff American Petroleum Tankers Parent, LLC, pursuant to the Administrative
Procedure Act (“APA”), 5 U.S.C. 701 et seq., challenges the Maritime Administration’s decision
denying the Plaintiff’s application for loan guarantees intended to allow the Plaintiff to refinance
loans used to construct five petroleum tankers. Presently before the Court is the Defendants’
[18] Motion to Dismiss the Supplemental Complaint. Upon consideration of the pleadings1 and
the relevant legal authorities, the Court finds 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 and is thus reviewable by
the Court. The Court further finds the Plaintiff has stated a claim challenging the Secretary of
Transportation’s order requiring the Administrator to refer applications to the Credit Council for
a recommendation. However, the Plaintiff failed to state a claim for relief or establish the
Court’s subject matter jurisdiction with respect to its request that the current Maritime
1
See Defs.’ Mot., to Dismiss, ECF No. [18]; Pl.’s Opp’n, ECF No. [19]; Defs.’ Reply,
ECF No. [22].
Administrator be recused from considering the Plaintiff’s application if the case is remanded to
the agency for further consideration. Accordingly, the Defendants’ motion is GRANTED IN
PART and DENIED IN PART.
I. BACKGROUND
American Petroleum Tankers Parent (“APT”) is majority-owned by investment funds
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
are 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 Administrator of the
Maritime Administration, 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).
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
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
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).3 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.’ Ex. A ¶ 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 recommendation 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
3
The Supplemental Complaint alleges the Secretary of Transportation requires the
Credit Council to grant authorization to the Administrator before he may employ an independent
expert. Suppl. Compl. ¶ 32. It is unclear from the Defendants’ motion if this allegation is
disputed. Defs.’ Mot. at 6.
3
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 $400 million debt incurred to construct the tankers owned by APT.
Suppl. Compl. ¶ 2. The Maritime Administration accepted APT’s application as complete on
December 2010. Id. As part of the review process, the Department of Transportation Credit
Council makes a recommendation to the Maritime Administration regarding each application.
Id. at ¶ 3. The Plaintiff alleges that the Credit Council refused to consider its application in light
of the fact the Plaintiff is owned by a private equity firm. Id.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, 2013, the Plaintiff modified its application, in relevant part, to reduce the
guarantee amount to $340 million. Suppl. Compl. ¶ 5; Pl.’s Ex. B (8/1/12 Decision Ltr.) at 4.
Two days later, the Administrator denied the Plaintiff’s original application, acknowledging that
it did not consider the July 28 revisions to the application, indicating a review of the amended
4
application would require “a comprehensive financial analysis” that could not be completed by
August 31. Pl.’s Ex. B 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. Pl.’s Ex. C. 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., ECF No. [14]. The first count
of the supplemental complaint alleges that the Administrator’s decision denying the Plaintiff’s
application was 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 asks the Court to order the
Administrator to recuse himself from consideration of the Plaintiff’s application on remanded,
and requiring a de novo review of the amended application by a new official within the Maritime
Administration. Id. at 39-40. The Defendants now move to dismiss the first and third counts for
lack of subject matter jurisdiction, the second count for failure to state a claim, and the third
count on the alternative grounds of failure to state a claim.
II. LEGAL STANDARD
The Defendants move to dismiss the supplemental complaint under Federal Rules of
Civil Procedure 12(b)(6) and 12(b)(1). To survive a motion to dismiss pursuant to Rule 12(b)(1),
the plaintiff bears the burden of establishing that the court has subject matter jurisdiction. Moms
Against Mercury v. FDA, 483 F.3d 824, 828 (D.C. Cir. 2007). In determining whether there is
jurisdiction, the Court may “consider the complaint supplemented by undisputed facts evidenced
in the record, or the complaint supplemented by undisputed facts plus the court's resolution of
6
disputed facts.” Coal. for Underground Expansion v. Mineta, 333 F.3d 193, 198 (D.C. Cir.
2003) (citations omitted). “At the motion to dismiss stage, counseled complaints, as well as pro
se complaints, are to be construed with sufficient liberality to afford all possible inferences
favorable to the pleader on allegations of fact.” Settles v. U.S. Parole Comm’n, 429 F.3d 1098,
1106 (D.C. Cir. 2005). “Although a court must accept as true all factual allegations contained in
the complaint when reviewing a motion to dismiss pursuant to Rule 12(b)(1),” the factual
allegations in the complaint “will bear closer scrutiny in resolving a 12(b)(1) motion than in
resolving a 12(b)(6) motion for failure to state a claim.” Wright v. Foreign Serv. Grievance Bd.,
503 F. Supp. 2d 163, 170 (D.D.C. 2007) (citations omitted).
Federal Rule of Civil Procedure 12(b)(6) provides that a party may challenge the
sufficiency of a complaint on the grounds it “fail[s] to state a claim upon which relief can be
granted.” Fed. R. Civ. P. 12(b)(6). “[A] complaint [does not] suffice if it tenders ‘naked
assertion[s]’ devoid of ‘further factual enhancement.’” Ashcroft v. Iqbal, 556 U.S. 662, 129 S.
Ct. 1937, 1949 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557 (2007)). Rather, a
complaint must contain sufficient factual allegations that, if accepted as true, “state a claim to
relief that is plausible on its face.” Twombly, 550 U.S. at 570. “A claim has facial plausibility
when the plaintiff pleads factual content that allows the court to draw the reasonable inference
that the defendant is liable for the misconduct alleged.” Iqbal, 129 S.Ct. at 1949. The Court
may consider “the facts alleged in the complaint, documents attached as exhibits or incorporated
by reference in the complaint,” or “documents upon which the plaintiff's complaint necessarily
relies even if the document is produced not by [the parties].” Ward v. D.C. Dep’t of Youth
Rehab. Servs., 768 F.Supp.2d 117, 119 (D.D.C. 2011) (citations omitted).
7
III. DISCUSSION
A. Count One of the Supplement Complaint
The Plaintiff’s first cause of action alleges that the Administrator’s denial of the
Plaintiff’s initial and amended applications was arbitrary, capricious, an abuse of discretion, or
otherwise contrary to law, in violation of 5 U.S.C. § 706(2). The Defendants move to dismiss
this claim on two grounds: (1) that the Plaintiff’s injury is not redressable by the Court, therefore
the Plaintiff lacks standing; and (2) that the Administrator’s decision to grant or deny an
application for a Title XI loan guarantee is committed to agency discretion by law, and is thus
unreviewable. Neither argument has merit.
1. The Plaintiff Has Standing to Challenge the Denial of Its Applications for
Title XI Loan Guarantees
“[T]he irreducible constitutional minimum of standing contains three elements”:
(1) injury in fact, (2) a causal connection between the injury and the conduct complained of, and
(3) a likelihood that the injury will be redressed by a decision in the plaintiff's favor. Lake
Carriers’ Ass’n v. EPA, 652 F.3d 1, 5 n.2 (D.C. Cir. 2011) (quoting Lujan v. Defenders of
Wildlife, 504 U.S. 555, 560 (1992)). The Defendants argue the Plaintiff lacks standing to
challenge the Administrator’s decisions because its injury is not redressable by the Court because
on remand, “the Administrator could still deny the application because granting Plaintiff’s loan
guarantee application would ‘exhaust available funds[.]’” Defs.’ Mot. at 22. The Defendant
contends that “[t]he Administrator has already made the determination that Plaintiff’s application
should be denied for this reason. As a result, reconsideration of Plaintiff’s application would not
change the outcome, and thus will not ‘redress’ Plaintiff’s injury.” Id. Assuming for the sake of
argument that the Defendant is correct that the Administrator could deny the application on the
“exhaustion of funds” rationale alone, the Plaintiff still has standing to challenge the
8
Administrator’s denial of its applications.
A claim is justiciable “so long as the relief sought would constitute a necessary first step
on a path that could ultimately lead to relief fully redressing the injury.” Tel. & Data Sys., Inc. v.
Fed. Commc’n Comm’n, 19 F.3d 42, 47 (D.C. Cir. 1994) (citation omitted). The Plaintiff’s
requested relief—vacatur of the Administrator’s denial and remand for further consideration—is
a “necessary first step” on the course that could lead to the Administrator granting the Plaintiff’s
application. The Plaintiff may not ultimately prevail if the Court vacates the Administrator’s
decision, but it “cannot prevail unless [the Court] do[es] so,” which is sufficient to satisfy the
redressability requirement for constitutional standing. Power Co. of Am., L.P. v. Fed. Energy
Regulatory Comm’n, 245 F.3d 839, 842 (D.C. Cir. 2001) (citation omitted).
2. The Maritime Administrator’s Decision Regarding Title XI Loan
Guarantee Applications Is Not Committed to Agency Discretion by Law
The Administrative Procedure Act provides for judicial review of certain agency actions,
and requires the reviewing court to set aside any “agency action, findings, and conclusions”
found to be, among other things, “arbitrary, capricious, an abuse of discretion, or otherwise not
in accordance with law.” 5 U.S.C. § 706(2)(A). However, judicial review is not available where
the agency action “is committed to agency discretion by law.” Id. § 701(a)(2). The Supreme
Court has articulated as least two scenarios in which this exclusion applies: (1) “in those rare
instances where statutes are drawn in such broad terms that in a given case there is no law to
apply,” Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 410 (1971); and (2) when
“the statute is drawn so that a court would have no meaningful standard against which to judge
the agency’s exercise of discretion,” Heckler v. Chaney, 470 U.S. 821, 830 (1985). “Agency
actions in these circumstances are unreviewable because the courts have no legal norms pursuant
to which to evaluate the challenged action, and thus no concrete limitations to impose on the
9
agency’s exercise of discretion.” Sierra Club v. Jackson, 648 F.3d 848, 855 (D.C. Cir. 2011)
(citation omitted).
Section 701(a)(2) “provides a ‘very narrow exception’ that applies only in ‘rare
instances.’” Cody v. Cox, 509 F.3d 606, 610 (D.C. Cir. 2007) (quoting Volpe, 401 U.S. at 410).
Courts “begin with the strong presumption that Congress intends judicial review of
administrative action[] unless there is persuasive reason to believe that such was the purpose of
Congress.” Ramah Navajo Sch. Bd., Inc. v. Babbitt, 87 F.3d 1338, 1343-44 (D.C. Cir. 1996)
(citations omitted). To determine whether an action is committed to agency discretion courts
consider “both the nature of the administrative action at issue and the language and structure of
the statute that supplies the applicable legal standards for reviewing that action.” Sec’y of Labor
v. Twentymile Coal Co., 456 F.3d 151, 156 (D.C. Cir. 2006) (citation omitted).
a. Nature of the Administrator’s Decision
The Defendants initially argue that “the decision not to issue a loan guarantee [] is
quintessentially a matter of agency discretion.” Defs.’ Mot. at 17. “The question of whether,
and in what amount, a government loan should be afforded” often involves “issues of judgment
and choice . . . which require the exercise of informed discretion.” Helgeson v. Bureau of Indian
Affairs, 153 F.3d 1000 (9th Cir. 1998); cf. Lincoln v. Vigil, 508 U.S. 182, 192 (1993) (“The
allocation of funds from a lump-sum appropriation is [an] administrative decision traditionally
regarded as committed to agency discretion.”). However, “Congress may always circumscribe
agency discretion to allocate resources by putting restrictions in the operative statute[],” as
Congress did with respect to the Title XI loan guarantee program. Lincoln, 508 U.S. 193.
Congress articulated a number of very specific criteria to consider in determining whether an
obligation was eligible for a Title XI guarantee. Moreover, the statute identifies certain types of
10
vessels that should be given priority. 46 U.S.C. § 53706(c). Thus, the agency’s decision is not
unreviewable simply because it concerns a loan guarantee, although the nature of the decision
may favor a more circumscribed review of that decision. Robbins v. Reagan, 780 F.2d 37, 48
(D.C. Cir. 1985).
b. Language and Structure of the Title XI Loan Guarantee Program
With respect to the language and structure of the statute, the Defendants argue that
permissive nature of the Administrator’s authority—that he may guarantee eligible obligations—
demonstrates the decision is committed to agency discretion by law. Defs.’ Mot. at 18 (citing 46
U.S.C. § 53702(a)). “When a statute uses a permissive term such as ‘may’ rather than a
mandatory term such as ‘shall,’ this choice of language suggests that Congress intends to confer
some discretion on the agency, and that courts should accordingly show deference to the
agency’s determination.” Dickson v. Sec’y of Def., 68 F.3d 1396, 1401 (D.C. Cir. 1995).
“However, such language does not mean the matter is committed exclusively to agency
discretion.” Id. “[L]anguage allowing for discretion does not create unlimited discretion. . . .
Thus, courts routinely conclude that judicial review is available notwithstanding statutory
language that seemingly allows for unlimited discretion.” Inova Alexandria Hosp. v. Shalala,
244 F.3d 342, 348 (4th Cir. 2001) (citation omitted) (finding regulation providing that the
Provider Reimbursement Review Board “may dismiss” an appeal was reviewable); cf. Mulloy v.
United States, 398 U.S. 410, 415 (1970) (“Though the language of 32 CFR § 1625.2 is
permissive, it does not follow that a board may arbitrarily refuse to reopen a registrant’s
classification.”).
The D.C. Circuit in Menkes v. Department of Homeland Security, 486 F.3d 1307 (D.C.
Cir. 2007), considered a challenge to the Coast Guard’s decision not to permit an independent
11
pilot to provide pilotage service pursuant to 46 C.F.R. § 401.720(b). Id. at 1310. Section
401.720(b) provides in relevant part that “[w]hen pilotage service is not provided [by the
authorized pool] because of a physical or economic inability to do so, . . . the Director may order
any U.S. registered pilot to provide pilotage service.” 46 C.F.R. § 401.720(b). In finding that
the decision as to whether the pool is physically or economically able to provide pilotage service,
the court noted that “[t]o be sure, the Director might be entitled to a good deal of deference in
determining whether the pool was physically or economically able to provide adequate service,
but that does not mean the Director could make such decisions unreasonably.” Menkes, 486 F.3d
at 1313; see also Dickson, 68 F.3d at 1401 (statute providing that Army Board for Correction of
Military Records “may excuse a failure to file” within the statute of limitations did not preclude
review under the APA); see Amador Cnty., Cal. v. Salazar, 640 F.3d 373, 381 (D.C. Cir. 2011);
Marshall Cnty. Health Care Auth. v. Shalala, 988 F.2d 1221, 1225 (D.C. Cir. 1993).4 The fact
that the Administrator is not by statute commanded to guarantee all eligible obligations does not
preclude this Court from reviewing the Administrator’s decision to deny an application for a loan
guarantee.
c. Standard to Apply in Reviewing the Administrator’s Exercise of
Discretion
The Defendants further argue that the Administrator’s decision is unreviewable because
“[n]o statute or regulation prescribes an exclusive list of criteria that the Administrator considers
4
The Defendants’ reliance on the Ninth Circuit’s decision in Helgeson v. Bureau of
Indian Affairs, 153 F.3d 1000 (9th Cir. 1998), is misplaced in large part because it is contrary to
the D.C. Circuit’s approach to permissive statutory language. Moreover, even under Helgeson,
the Court could still entertain claims that the Administrator’s decision was based on factors
outside those permitted by statute, id. at 1003, including the Plaintiff’s claim that the
Defendants’ consideration of the Credit Council’s recommendation was contrary to law, Suppl.
Compl. ¶ 104.
12
in making his decisions.” Defs.’ Mot. at 19.5 Although the statute permits the Administrator to
consider “other relevant criteria” with respect to particular issues, it does not provide the
Administrator unbridled discretion to deny an application. In fact, each of the statutory
provisions cited by the Defendants places some bounds on the criteria the Administrator may
consider in reviewing an application. Section 53708(a) articulates five criteria the Administrator
shall consider in determining whether the obligation at issue “will be economically sound.” 46
U.S.C. § 53708(a). This section further provides that the Administrator may consider “other
relevant criteria.” Id. § 53708(a)(5). Plainly, the Administrator’s discretion is limited to
considering other criteria relevant to whether the underlying obligation will be economically
sound. The same limitation applies to criteria set forth in 46 C.F.R. § 298.14(b)(6), which
indicates the Administrator will consider “other relevant criteria” in “making the economic
soundness finding.”
The Defendants also point to section 53707(a), which indicates the Administrator cannot
guarantee an obligation unless the obligor has “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) (emphasis added). Congress limited the Administrator’s discretion to
considering qualifications necessary for a specific purpose, namely the operation and
maintenance of the underlying collateral. Finally, Defendants rely on 46 C.F.R. § 298.17(a),
which indicates that “[i]n evaluating project applications, we shall also consider whether the
5
Elsewhere in their motion, the Defendants assert that “[t]he Administrator can consider
any factors he ‘may prescribe’ in evaluating a loan guarantee application.” Defs.’ Mot. at 22
(quoting 46 U.S.C. § 53702(a)). The plain text of section 53702(a) permits the Administrator to
prescribe the terms of guarantees issued by the Maritime Administration, but does not address
the Administrator’s authority to determine the criteria for reviewing applications for loan
guarantees. 46 U.S.C. § 53702(a) (“The [] Administrator, on terms the [] Administrator may
prescribe, may guarantee [obligations].”).
13
application provides for” any one of six factors. 46 C.F.R. § 298.17(a). By its plain text this
regulation articulates a closed universe of factors; it does not contain any language indicating the
Administrator will consider “other criteria” or that the relevant factors “including but are not
limited to” those listed in the regulation. Id.In sum, Congress may not have articulated an exhaustive list of criteria the Administrator
may consider in reviewing an application for a Title XI loan guarantee, but Congress did limit
the Administrator to considering factors relevant to particular inquiries, such as the economic
soundness of the application, or the obligor’s qualifications to maintain the vessels used as
collateral. Nor do the Defendants argue that these standards—e.g., economic soundness—are
unmanageable for the Court to apply upon review of the Administrator’s decision. Similar
standards have been found to provide sufficient guidance to courts in reviewing agency
decisions. Cody, 509 F.3d at 610 (“high quality and cost-effective” medical care); Menkes, 486
F.3d at 1314 (“physical and economic” ability to provide sufficient service).
For the first time in their reply, the Defendants argue that the statute fails to provide a
manageable standard for the Court to employ because the statute does not articulate factors to
consider in denying an application, but rather sets forth only the criteria to determine if an
application is eligible for a guarantee. Defs.’ Reply at 6. Confronted with similarly structured
statutes, the D.C. Circuit has concluded that courts can use the factors outlined in the statute to
review the agency’s eligibility determination, and courts may also review the agency decision to
ensure it was not based on factors not disclosed in the relevant statute or regulations.
The regulation at issue in Menkes provided that the Coast Guard may order independent
pilots to provide pilotage service if the pool of pilots authorized to provide services could not
“physical[ly] or economic[ally]” provide pilotage services. 486 F.3d at 1310 n.3 (quoting 46
14
C.F.R. § 401.720(b)). The D.C. Circuit found the regulation provided a sufficiently manageable
standard for a court to employ in reviewing the decision not to appoint an independent pilot. Id.
at 1313. The court explained
To be sure, the Director might be entitled to a good deal of deference in
determining whether the pool was physically or economically able to provide
adequate service, but that does not mean the Director could make such decisions
unreasonably. For example, it would be presumably arbitrary and capricious for
the Coast Guard to ignore an obvious unfilled demand for pilotage service, or to
change its standards for determining what level of service is adequate without
explanation. Also dubious would be a refusal to appoint a pilot for reasons not
mentioned in the regulations, such as an effort to force the pilot to join the
Association.
Id. Similarly in Dickson, the Army Board for Correction of Military Records’ could excuse a
party’s failure to file within the statute of limitations if it was “in the interest of justice.” 68 F.3d
at 1399. The court concluded that it could review the Board’s finding that it would not be in the
interest of justice to excuse late filings in three cases pending before the Board. Id. at 1404.
Likewise here, the Court can review the Administrator’s determination that the Plaintiff’s
applications were not economically sound, as well as consider the Plaintiff’s allegation that the
Administrator denied its applications for reasons not mentioned in the statute or accompanying
regulations. In the end, the Court may owe a great deal of deference to a determination by the
Administrator that the funds available to the Title XI loan guarantee program are not best spent
on the Plaintiff’s application. But before reaching that question, the Court has jurisdiction to
review the Administrator’s threshold finding that the Plaintiff’s applications were not
economically sound and thus ineligible for the requested guarantees.
B. Count Two of the Supplemental Complaint
The Plaintiff’s second cause of action alleges that in light of the 2006 and 2008
amendments to the Title XI loan program authorizing the Administrator to grant or deny
15
applications, “the Secretary’s continued interference with the Administrator’s performance of his
ministerial and discretionary responsibilities regarding Title XI applications in general and
APT’s application in particular is arbitrary, capricious and otherwise not in accordance with
law.” Suppl. Compl. ¶ 113. The Defendants move to dismiss the second cause of action,
arguing that “Plaintiff has failed to state a claim under the APA because no statute or regulation
prevents the Secretary or the Credit Council from advising the Administrator about loan
guarantee applications.” Defs.’ Mot. at 23.
Before turning to the amendments to the Title XI loan guarantee program, the Court notes
that the Defendants’ characterization of the issue is misleading. The question is not whether the
Secretary of Transportation or Credit Council can offer advice to the Maritime Administrator.
Rather, the relevant question is whether the Secretary of Transportation can require the Maritime
Administrator to submit applications to the Credit Council for review, and to obtain the
Council’s non-binding recommendation before the Maritime Administrator issues a final
decision on the application. In other words, the second cause of action turns on whether the
Secretary of Transportation can impose additional burdens on the Administrator in reviewing
applications under Title XI despite the fact that Congress transferred authority over the Title XI
loan guarantee program to the Administrator.6
Prior to 2006, the Secretary of Transportation (or the Secretary of Commerce, where
relevant) was vested with the authority to guarantee obligations under the Title XI loan program,
and the Secretary delegated that authority to the Maritime Administrator. 49 C.F.R. § 1.66(e)
(2005). The National Defense Authorization Act for Fiscal Year 2006 amended the Title XI
6
This case does not require the Court to consider whether the Maritime Administrator,
on his accord, may seek the advice of the Credit Council or others within the Department of
Transportation before granting to denying applications for Title XI loan guarantees.
16
program to grant the Maritime Administrator the authority to guarantee loan obligations rather
than the Secretary of Transportation. Pub. L. 109-163, § 3507, 119 Stat. 3136 (2006). However,
the changes enacted by the 2006 National Defense Authorization Act were not reflected in the
subsequent codification of Title 46 of the United States Code. See Codification of Title 46, Pub.
L. 109-304, 120 Stat. 1485 (2006). Accordingly, the National Defense Authorization Act for
Fiscal Year 2008 amended the now-codified provisions of the loan program to reflect that the
Administrator was authorized to guarantee obligations under Title XI. Pub. L. 110-181, § 3522,
122 Stat. 3 (2008).
The 2008 National Defense Authorization Act also made certain “findings” as to the Title
XI loan guarantee program, including that the program “has a long and successful history of ship
construction with a low historical default rate,” but that “[t]he current process for review of
applications for maritime loans in the Department of Transportation has effectively discontinued
the program as envisioned by the Congress,” and “[t]he President has requested no funding for
the loan guarantee program.” Pub. L. 110-181, § 3517(a)(2)-(4). Congress thus required the
Administrator to develop and implement “a comprehensive plan for the review of applications,”
in order to ensure that each application is accepted or rejected within the statutory timeframes.
Id. at § 3517(b).
The plain text of the Title XI loan guarantee program, as modified by the 2006 and 2008
amendments, grants the Maritime Administrator exclusive authority to grant or deny
applications. 46 U.S.C. § 53702(a) (“[The] Administrator, on terms . . . [the] Administrator may
prescribe, may guarantee or make a commitment to guarantee the payment of the principal of and
interest on an obligation eligible to be guaranteed under this chapter.”). The Administrator also
has exclusive authority to determine whether an independent analysis of an application should be
17
conducted by third party experts. 46 U.S.C. § 57308(d). The Defendants argue that if Congress
had intended to eliminate the Secretary’s involvement in the Title XI program, it would have
done so explicitly. It is hard to see how Congress could have been any more explicit: in
transferring authority over the program to the Administrator, Congress eliminated all references
to the Secretary of Transportation in the relevant statutory provisions and inserted the Maritime
Administrator in his place. There simply is no textual basis for the Defendants’ assertion that the
Secretary can impose additional conditions on the Administrator’s approval or denial of
applications for Title XI loan guarantees after Congress gave authority over the program to the
Administrator.
The legislative history of the 2006 amendments lends further support to the notion that
the Secretary cannot impose additional conditions on the Administrator’s exercise of authority in
connection with the Title XI loan guarantee program. The Conference Report for Public Law
109-163 explained that “[t]he conferees intend for the [Maritime Administration] to retain
adequate resources with sufficient expertise to perform all functions of this program without
requiring assistance from the Department of Transportation or other agencies.” H.R. Conf.
Rep. 109-360, at 906 (2005), reprinted in 2005 U.S.C.C.A.N. 1678, 1887 (emphasis added).
With respect to the need for independent analysis of applications, the report indicates
The conferees also agree that the decision to subject loan guarantee applications
to a third-party independent analysis should be based on risk factors enumerated
in [46 U.S.C. § 53702], as amended by this Act. The conferees agree there should
be no rule, regulation, or procedure governing the Maritime Guaranteed Loan
Program that requires a third-party independent analysis for all applications
without regard to these risk factors. When an independent analysis is required,
the conferees would expect only experts in maritime finance or operations be
funded to conduct the analysis.
Id. Admittedly, the Conference Report does not explicitly refer to the Credit Council, but these
statements demonstrate Congress intended for the Maritime Administrator to independently
18
exercise authority over the Title XI loan guarantee program and to exercise his discretion in
deciding when to obtain third party analysis of applications.
In support of their assertion that the Secretary of Transportation may require the
Administrator to refer applications to the Credit Council, the Defendants rely on 49 U.S.C.
§ 109. Section 109 outlines the general structure and authority of the Maritime Administration,
including that the Maritime Administrator “report[s] directly to the Secretary of Transportation
and carr[ies] out the duties prescribed by the Secretary.” 49 U.S.C. § 109(b). Furthermore, “[a]ll
duties and powers of the Maritime Administration are vested in the Secretary.” Id. § 109(d).
The Defendants thus argue that “Section 109 provides the Secretary authority to administer his
Department in the manner he sees fit, including requiring the [Maritime Administration] and its
Administrator to follow his orders and submit loan guarantee applications to the Credit Council.”
Defs.’ Mot. at 24.
When both specific and general provisions cover the same subject, the specific provision
will control. Norwest Bank Minn. Nat’l Ass’n v. Fed. Deposit Ins. Corp., 312 F.3d 447, 451
(D.C. Cir. 2002). This is particularly true, “if applying the general provision would render the
specific provision superfluous.” Id. If, as the Defendants suggest, the Secretary of
Transportation has plenary authority to determine how the Administrator runs the Title XI loan
guarantee program, the 2006 and 2008 amendments replacing all references to the Secretary with
“the Administrator,” were meaningless: the Secretary would have the same authority over the
program as he did prior to the statutory amendments. The Court acknowledges that “[i]t is a
cardinal rule [of statutory construction] that repeals by implication are not favored.” Bullcreek v.
Nuclear Regulatory Comm’n, 359 F.3d 536, 542 (D.C. Cir. 2004) (quoting Morton v. Mancari,
417 U.S. 535, 549 (1974)). But absent an implied repeal of 49 U.S.C. § 109(b) and (d) as to the
19
Title XI loan guarantee program, the 2006 and 2008 statutory amendments to the program are
rendered superfluous.
In sum, Congress specifically amended the Title XI program so that the Maritime
Administrator, rather than the Secretary of Transportation, would have authority to administer
the program, request independent analysis of applications, and ultimately grant or deny
applications. 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 applications. Accordingly, the Defendants’ motion to
dismiss the Plaintiff’s cause of action for failure to state a claim is denied.
C. Count Three of the Supplemental Complaint
The third count of the supplemental complaint alleges, in its entirety, that
Past interference by the Secretary, other Department of Transportation officials
and the DOT Credit Council with the Administrator’s performance of his
ministerial and discretionary responsibilities regarding APT’s Title XI
applications 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.
Suppl. Compl. ¶ 115. The Plaintiff thus asks the Court to issue an order directing (1) that the
Administrator revoke his August 1, 2012 and November 9, 2012 denials of the Plaintiff’s
original and amended applications; and (2) that the Plaintiff’s application be considered de novo
“by the official designated by statute or regulation to succeed to the position of Maritime
Administrator when the incumbent Administrator is disqualified.” Id. at 39-40.
The Defendants move to dismiss the third cause of action, for four reasons: (1) that the
United States has not waived sovereign immunity as to this claim because it does not concern a
final agency action under the APA; (2) recusal of the Administrator constitutes a nonjusticiable
20
political question; (3) the claim fails to state a legal basis for recusing the Administrator; and (4)
recusal is not a remedy authorized by the APA. The Plaintiff responds by asserting that the third
cause of action “unarguably” states a claim under the APA.” Pl.’s Opp’n at 35 n.12. The
Plaintiff thus relies on the APA to find a waiver of sovereign immunity and avoidance of the
political question doctrine. Id. at 31-34.
The Supplemental Complaint cannot reasonably be construed to raise any claim under the
APA. In the first cause of action, the Plaintiff outlines the reasons it argues the Administrator’s
decision was arbitrary and capricious, but omits any reference to any purported bias on the part
of the Administrator. Suppl. Compl. ¶¶ 103-07. The Plaintiff then requests that the Court set
aside the Administrator’s decision “and remand[] this matter to the Administrator for further
consideration.” Id. at 38. The third cause of action, without any citation to the APA, the first
cause of action, or any legal basis for the claim, alleges the Administrator is “incapable of fairly
assessing the merits” of the Plaintiff’s application, and asks that he be removed from
reconsideration upon remand. Id. at ¶ 115. In its current form, the third cause of action does not
state a claim for relief under the APA. Because the third count does not state a claim under the
APA, there is no apparent waiver of sovereign immunity, and the Plaintiff failed to meet its
burden to show the Court has subject matter jurisdiction over this claim.7 Therefore, the Court
shall dismiss count three of the Supplemental Complaint.
IV. CONCLUSION
For the foregoing reasons, the Court finds the agency action at issue in this case is
reviewable. The Plaintiff has standing to challenge the Administrator’s denial of its applications
7
Moreover, because the third cause of action does not purport to state a claim under the
APA, the Court does not reach the issue as to whether the Plaintiff could state a claim under the
APA seeking recusal of the Administrator upon remand.
21
for loan guarantees because a favorable decision from this Court is necessary to remedy the
asserted injury, even if the Administrator ultimately denies the application upon further review.
Moreover, the Administrator’s decision regarding a Title XI loan guarantee application is not
committed to agency discretion by law, and thus reviewable under the Administrative Procedure
Act. The Plaintiff has stated a claim challenging the Secretary of Transportation’s order
requiring the Administrator to refer all applications to the Department of Transportation Credit
Council in order to obtain the Council’s recommendation before the Administrator rules on each
application. Finally, the Plaintiff failed to state a claim under the APA with respect to its request
that the current Administrator be recused from ruling on the Plaintiff’s application on remand.
Absent a viable APA claim, the Defendants have not waived sovereign immunity with respect to
this claim, and the Court lacks subject matter jurisdiction to consider the request for relief.
Accordingly, the Defendants’ [18] Motion to Dismiss the Supplemental Complaint is
GRANTED IN PART and DENIED IN PART. The third cause of action shall be dismissed.
An appropriate Order accompanies this Memorandum Opinion.
/s/
COLLEEN KOLLAR-KOTELLY
UNITED STATES DISTRICT JUDGE
22