Diamond Services v. Curtin Maritime

99 F.4th 722
CourtCourt of Appeals for the Fifth Circuit
DecidedApril 17, 2024
Docket23-20118
StatusPublished
Cited by1 cases

This text of 99 F.4th 722 (Diamond Services v. Curtin Maritime) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Diamond Services v. Curtin Maritime, 99 F.4th 722 (5th Cir. 2024).

Opinion

Case: 23-20118 Document: 68-1 Page: 1 Date Filed: 04/17/2024

United States Court of Appeals for the Fifth Circuit ____________ United States Court of Appeals Fifth Circuit

No. 23-20118 FILED April 17, 2024 ____________ Lyle W. Cayce Diamond Services Corporation, Clerk

Plaintiff—Appellant,

versus

Curtin Maritime Corporation; Department of Homeland Security; National Vessel Documentation Center; United States Coast Guard; United States of America; Commandant Linda L. Fagan, United States Coast Guard; Port of Houston Authority,

Defendants—Appellees. ______________________________

Appeal from the United States District Court for the Southern District of Texas USDC No. 4:22-CV-2117 ______________________________

Before Richman, Chief Judge, and Haynes and Duncan, Circuit Judges. Stuart Kyle Duncan, Circuit Judge: Under federal law, vessels may dredge in United States waters only if they are “built in the United States.” The agency tasked with making this determination is the United States Coast Guard. Curtin Maritime Corporation (“Curtin”) sought the Coast Guard’s ruling that its dredging barge, the DB AVALON (“AVALON”), could operate in United States Case: 23-20118 Document: 68-1 Page: 2 Date Filed: 04/17/2024

No. 23-20118

waters, despite the fact that the vessel would incorporate foreign-made spuds and a crane. The Coast Guard ruled the AVALON would be considered United States-built. One of Curtin’s competitors challenged that ruling as arbitrary and capricious. The district court deferred to the Coast Guard’s reasonable interpretation of its own regulations, see Kisor v. Wilkie, 139 S. Ct. 2400, 2415 (2019); Auer v. Robbins, 519 U.S. 452 (1997), and granted the Coast Guard summary judgment. We AFFIRM. I. A. Federal law imposes certain requirements before a vessel may dredge in the navigable waters of the United States. Among other things, a vessel must have “a certificate of documentation [“COD”] with a coastwise endorsement.” 46 U.S.C. § 55109(a)(3). 1 CODs are issued by the National Vessel Documentation Center (“NVDC”), an arm of the Coast Guard. Only vessels “built” or “rebuilt” in the United States are eligible for a coastwise endorsement. Id. §§ 12112(a)(2)(A), 12132(b). A vessel is rebuilt in the United States “only if the entire rebuilding, including the construction of any major component of the hull or superstructure, was done in the United States.” Id. § 12101(a). Coast Guard regulations flesh out this statutory framework. The regulations consider a vessel built in the United States if (1) “[a]ll major components of its hull and superstructure are fabricated in the United States,” and (2) “[t]he vessel is assembled entirely in the United States.” 46 C.F.R. § 67.97(a), (b). Conversely, a vessel is “deemed rebuilt foreign” (hence, not built or rebuilt in the United States) when “any considerable part _____________________ 1 The vessel must also be wholly owned by and, if applicable, chartered by U.S. citizens. See id. § 55109(a)(1), (2).

2 Case: 23-20118 Document: 68-1 Page: 3 Date Filed: 04/17/2024

of its hull or superstructure is built upon or substantially altered outside of the United States.” Id. § 67.177; see also id. § 67.177(a)–(g) (setting out “parameters” to determine whether a vessel is “rebuilt foreign”). The regulations define “hull” as “the shell, or outer casing, and internal structure below the main deck which provide both the flotation envelope and structural integrity of the vessel in its normal operations.” Id. § 67.3. “Superstructure” is defined as “the main deck and any other structural part above the main deck.” Ibid. The Coast Guard uses two different tests to determine whether work done to a vessel’s hull or superstructure qualifies it as rebuilt foreign. With respect to vessels of any hull construction, the “major component” test deems a vessel rebuilt foreign “when a major component of the hull or superstructure not built in the United States is added to the vessel.” Id. § 67.177(a). The Coast Guard defines “major component” as a “new, separate and completely-constructed unit” weighing more than 1.5% of the vessel’s steelweight. With respect to steel- or aluminum-hulled vessels only, the “considerable part” test considers the relative weight of the work done on the hull or superstructure. See id. § 67.177(b). 2

_____________________ 2 Specifically, the considerable part test provides: (1) A vessel is deemed rebuilt when work performed on its hull or superstructure constitutes more than 10 percent of the vessel’s steelweight, prior to the work, also known as discounted lightship weight. (2) A vessel may be considered rebuilt when work performed on its hull or superstructure constitutes more than 7.5 percent but not more than 10 percent of the vessel’s steelweight prior to the work. (3) A vessel is not considered rebuilt when work performed on its hull or superstructure constitutes 7.5 percent or less of the vessel’s steelweight prior to the work. Id. § 67.177(b)(1)–(3).

3 Case: 23-20118 Document: 68-1 Page: 4 Date Filed: 04/17/2024

B. On September 10, 2019, Curtin applied to the Coast Guard for a preliminary determination that its dredging barge, the AVALON, would be eligible to operate in coastwise trade. See id. § 67.177(g) (establishing requirements for a “preliminary rebuilt determination”). The AVALON would be constructed of steel at a shipyard in the United States. Curtin’s application explained, however, that the vessel’s spuds 3 and crane would be removed from a foreign vessel and installed after being shipped to the United States. The crane would be “bolted to the [AVALON’s] hull, not welded, using a mounting ring,” and the spuds would also be removable. On September 24, 2019, the NVDC’s Director issued a determination that the AVALON “would be considered built in the United States” under 46 C.F.R. § 67.97 and not “rebuilt foreign” under § 67.177. Because the crane and spuds would be removable, the AVALON would “remain a complete and intact vessel and [would] be fully capable of operating as a vessel without the spuds and crane.” As a result, “the spuds and crane would be considered outfitting and not part of the hull or superstructure.” 4 Accordingly, the AVALON would be eligible for a coastwise endorsement.

_____________________ 3 Spuds are long stakes attached to a dredge that bore into the ground underneath the water to provide the dredge increased stability while dredging. See Dredge, Encyc. Britannica, https://www.britannica.com/technology/dredge-excavation#ref29604 (Dec. 19, 2023) [https://perma.cc/4A2Q-LP6R]. 4 The Director found support for her conclusions in a Coast Guard Memorandum titled Review Criteria for Steel Weight Components wrt U.S. Build and Foreign Rebuild Determinations. Section (i) of the Memorandum provided that cranes are considered outfitting and thus not part of the hull or superstructure. Spuds are not directly addressed in the Memorandum, but the Director analogized spuds to detachable buoyant floats in Section (e). Because spuds and detachable buoyant floats are both used to augment a vessel’s stability during certain operations but are otherwise unnecessary for the vessel’s

4 Case: 23-20118 Document: 68-1 Page: 5 Date Filed: 04/17/2024

In April 2021, Curtin contracted with Conrad Shipyard (“Conrad”) in Amelia, Louisiana, to construct the AVALON’s hull and superstructure. The AVALON’s outfitting work was done in Morgan City, Louisiana.

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99 F.4th 722, Counsel Stack Legal Research, https://law.counselstack.com/opinion/diamond-services-v-curtin-maritime-ca5-2024.