Matson Navigation Company, Inc. v. Department of Transportation

District Court, District of Columbia·Decided August 4, 2022·No. Civil Action No. 2021-1606·Published

Opinion

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

MATSON NAVIGATION COMPANY,

INC.,

Plaintiff, Civil Action No. 21-1606 (RDM) v.

U.S. DEPARTMENT TRANSPORTATION, et al.,

Defendants.

MEMORANDUM OPINION

Plaintiff Matson Navigation Company, Inc. (“Matson”) seeks review of Defendant

Maritime Administration’s (“MARAD”) decision approving the replacement of a vessel

operating under the Maritime Security Program—the APL Guam—with another vessel—the

Herodote—owned by Intervenor-Defendant APL Maritime, Ltd. (“APL”). Dkt. 1. (Compl.).

Matson contends that MARAD’s approval order violates the Administrative Procedure Act

(“APA”), 5 U.S.C. § 706(2)(A), because it is arbitrary, capricious, and not in accordance with

law. Dkt. 1 at 33, 34 (Compl. ¶¶ 184, 197). Defendants have moved to dismiss Matson’s

complaint on the ground that MARAD’s invocation of 46 U.S.C. § 50501 as a partial basis for its

order vested exclusive jurisdiction to review that order in the court of appeals. Dkt. 15-1 at 1;

Dkt. 17 at 1–2. Because this case presents the same jurisdictional issues that the Court resolved

in its prior decision in Matson Navigation Co. v. United States Department of Transportation,

1 466 F. Supp. 3d 177 (D.D.C. 2020) (“Matson II”), the Court will GRANT Defendants’ motions

and DISMISS the case for lack of jurisdiction.

I. BACKGROUND

A. Statutory Background

In the Maritime Security Act of 1996, Pub. L. No. 104-239, 110 Stat. 3118, Congress

provided for the establishment by “[t]he Secretary of Transportation, in consultation with the

Secretary of Defense” of “a fleet of active, commercially viable, militarily useful, privately

owned vessels to meet national defense and other security requirements and maintain a United

States presence in international commercial shipping.” 46 U.S.C. § 53102(a). This Maritime

Security Fleet “consist[s] of privately owned, United States-documented vessels for which there

are in effect operating agreements.” Id. Pursuant to this authority, the Secretary established the

Maritime Security Program (“MSP”), see 46 U.S.C. §§ 53101–53111, and delegated its

administration to the Maritime Administrator, who heads MARAD, see 49 C.F.R. § 1.93(a). For

a vessel to participate in the MSP, it must meet several eligibility requirements that advance the

purposes of the MSP, including requirements concerning the vessel’s ownership and

documentation, its commercial viability, its suitability for national defense or military purposes,

and its operation in foreign commerce. See 46 U.S.C. § 53102(b). Contractors must enter into

“operating agreements” with MARAD that cover vessels subject to the Program. See id.

§ 55103; 46 C.F.R. § 296.2 (defining “MSP [o]perating [a]greement” as “the assistance

agreement between a Contractor and MARAD that provides for MSP payments”). Operating

agreements are “effective only for 1 fiscal year” but are “renewable.” 46 U.S.C. § 53104(a).

The Secretary makes fixed payments to the contractors under the operating agreements. See 46

2 U.S.C. § 53106(a)(1)(A) (setting the annual payment for each vessel for fiscal years 2018, 2019,

and 2020 at $5,000,000).

The statute also provides a mechanism for replacing vessels subject to MSP agreements

with new vessels. Under 46 U.S.C. § 53105(f), “[a] contractor may replace a vessel under an

operating agreement with another vessel that is eligible to be included in the Fleet under

section 53102(b), if the Secretary, in conjunction with the Secretary of Defense, approves the

replacement of the vessel.” Section 53102(b), as discussed, sets forth numerous requirements for

vessels to be eligible to join the MSP. This case chiefly concerns one such requirement: that a

“vessel meets the requirements of paragraph (1), (2), (3), or (4) of [§ 53102(c)].” Id.

§ 53102(b)(1). Section 53102(c) outlines certain requirements related to the ownership or

operation of MSP vessels. As relevant here, paragraphs (1), (2), and (4) of § 53102(c) require, as

one of the conditions of their fulfillment, that a vessel be owned by, operated by, or chartered to

“a person that is a citizen of the United States under section 50501.” Id. § 53102(c)(1), (2)(A)(i),

(4)(B). Section 50501, in turn, provides that “a corporation, partnership, or association is

deemed to be a citizen of the United States only if the controlling interest is owned by citizens of

the United States,” with the caveat that, “if the corporation, partnership, or association is

operating a vessel in the coastwise trade, at least 75 percent of the interest must be owned by

citizens of the United States.” Id. § 50501(a).

B. Factual Background

In January 2005, the Secretary of Transportation entered into nine agreements with APL,

permitting nine APL vessels to operate as part of the MSP. See Matson II, 466 F. Supp. 3d at

183. In December 2014, APL applied to MARAD for authorization to replace two of those

vessels. Id. On October 22, 2015, MARAD approved APL’s application to replace the APL

3 Cyprine with the APL Guam in the MSP fleet (the “2015 Approval Order”). Dkt. 1 at 14

(Compl. ¶ 71). In December 2016, MARAD approved APL’s application to replace the APL

Agate with the APL Saipan (the “2016 Approval Order”). Id. at 15–16 (Compl. ¶¶ 80–83).

Plaintiff Matson provides ocean freight carrier services in the Pacific region and serves

several of the same routes as APL. Id. at 5, 6 (Compl. ¶ 23, 26). Shortly after MARAD’s

approval of the replacement vessels, Matson filed an administrative protest with MARAD in

which it challenged the vessels’ eligibility for the MSP. Matson Navigation Co., Inc. v. U.S.

Dep’t of Transp., 895 F.3d 799, 802–03 (D.C. Cir. 2018) (“Matson I”). MARAD rejected

Matson’s appeal, concluding that APL’s vessels met the relevant statutory criteria. Id. at 803.

On June 2, 2017, Matson sought review of MARAD’s approvals in the D.C. Circuit. Id.

Following briefing and oral argument, the D.C. Circuit dismissed Matson’s petition for lack of

jurisdiction. Id. at 806. With respect to Matson’s challenge to MARAD’s 2015 Approval Order,

the court of appeals held that it lacked jurisdiction because Matson failed to file a timely petition

for review. Id. at 804–05. And with respect to the 2016 Approval Order, the D.C. Circuit held

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