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ALASKA EXCURSION CRUISES, INC. v. UNITED STATES

April 17, 1984

ALASKA EXCURSION CRUISES, INC., Plaintiff,
v.
UNITED STATES OF AMERICA, ET AL., Defendants; WESTOURS, INC., Intervening Defendant


Gesell


The opinion of the court was delivered by: GESELL

Plaintiff seeks preliminary injunctive relief preventing the United States from allowing defendant-intervenor Westours, Inc. to conduct boat tours during the coming summer within the harbor of Skagway, Alaska, pursuant to Charter Orders issued by the Maritime Administration (Marad) in 1977 and 1981. *fn1" Plaintiff's principal contentions are that Marad's actions in granting the Charter Orders violated the Shipping Act of 1916, 46 U.S.C. § 802(a), were in conflict with a 1975 Marad General Policy Notice, and were arbitrary and capricious. *fn2" After considering the briefs of the parties and hearing full argument, the Court has determined that plaintiff's motions for preliminary injunction should be denied. *fn3"

 The factors to be considered in passing on a motion for preliminary injunction are well established. They include (1) plaintiff's likelihood of success on the merits; (2) whether irreparable harm will occur in the absence of an injunction; (3) whether other parties will be injured if an injunction is issued; and (4) where lies the public interest. Washington Metropolitan Area Transit Commission v. Holiday Tours, 182 U.S. App. D.C. 220, 559 F.2d 841, 843 (D.C. Cir. 1977).

 Plaintiff has demonstrated little or no likelihood of success on the merits. Its primary argument, that 46 U.S.C. § 802(a) prohibits a non-United States citizen from operating a vessel in coastwise trade, finds little support in the language of that provision read in light of the statutory scheme for regulation of coastwise trade. Section 802(a) states:

 
§ 802. Corporation, partnership, or association as citizen

 Plaintiff contends that the last phrase of § 802(a) prohibits operation of a vessel in coastwise trade by any corporation not 75 percent United States-owned. The Court reads the statute quite differently.

 Section 802(a) delineates which business entities are considered United States citizens "within the meaning of this chapter." Among other requirements, a "controlling interest" in the entity must be owned by United States citizens. For those vessels "in the coastwise trade," however, a greater degree of United States ownership is required; the entity which operates them must be 75 percent United States-owned in order to "be deemed a citizen of the United States" "within the meaning of this chapter." Section 802(a) is thus definitional in character. It does not grant any privileges or impose any restrictions, but merely groups corporations, partnerships, and associations into those deemed United States citizens and those deemed non-citizens. Any privileges or restrictions which follow from this distinction must be found elsewhere in the Act.

 With respect to coastwise trade two other complementary provisions serve to impose substantive restrictions on those not deemed United States citizens under § 802. Pursuant to 46 U.S.C. § 289 a vessel must be United States-owned in order to engage in coastwise trade. *fn5" Moreover, approval must be obtained from the Secretary of Commerce before any United States-owned vessel can be leased to "any person not a citizen of the United States." 46 U.S.C. § 808. Sections 289, 802 and 808, therefore, provide the statutory mechanism for ensuring American ownership and ultimate control of the coastwise merchant marine fleet. Operation of United States-flag vessels in coastwise trade by noncitizens is not, as plaintiff argues, absolutely barred by § 802(a), but is rather left to the discretion of the Secretary of Transportation under § 808.

 No contention is made that Westours is a United States citizen within the meaning of § 802(a). It therefore must obtain approval under § 808 to engage in coastwise trade, and it has done so. *fn6" The vessels it operates are United States owned. *fn7" Westours' operation of its boat tours in the Skagway harbor thus appears to be in accord with the statutory requirements set down by Congress, and plaintiff's argument that § 802(a) has been violated shows little merit. *fn8"

 Plaintiff also argues that the grant of Charter Orders to Westours by Marad conflicts with a 1975 General Policy Notice which stated that Marad "will no longer grant its approval pursuant to the provisions of 808 and 835 of Title 46, U.S.C., for the demise or bareboat charter of vessels in the coastwise trade to persons who do not meet the standards of 802(a) of Title 46, U.S.C." 40 Fed. Reg. 28,832 (July 9, 1975).

 It is clear, and the government does not contest, that Marad's actions in approving Westours' charters are inconsistent with the 1975 Notice. The issue is whether Marad is bound by that statement. Because the General Policy Notice was simply a notification to the public of the course of conduct Marad intended to take, and was not issued as a rule or regulation pursuant to the Administrative Procedure Act, 5 U.S.C. § 552 et seq., the Court does not believe the Notice is likely to be held to have the binding effect of law.

 The distinction between a substantive, binding rule and a mere statement of policy was explained by the D.C. Circuit in Pacific Gas & Electric Co. v. Federal Power Commission, 164 U.S. App. D.C. 371, 506 F.2d 33 (D.C. Cir. 1974).

 
An administrative agency has available two methods for formulating policy that will have the force of law. An agency may establish binding policy through rulemaking procedures by which it promulgates substantive rules, or through adjudications which constitute binding precedents. A general statement of policy is the outcome of neither a rulemaking nor an adjudication; it is neither a rule nor a precedent but is merely an announcement ...

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