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ALASKA EXCURSION CRUISES, INC. v. UNITED STATES

September 28, 1984

ALASKA EXCURSION CRUISES, INC., Plaintiff
v.
UNITED STATES of America, et al., Defendants



The opinion of the court was delivered by: FLANNERY

 FLANNERY, District Judge.

 This matter is before the court on numerous motions by defendants, defendant-intervenor Westours, Inc., plaintiff Alaska Excursion Cruises, Inc. ("AEC"), and potential plaintiff-intervenor Offshore Marine Service Association, Inc. ("OMSA"). Similar motions, including motions to consolidate filed by plaintiff, have been filed in two related cases: AEC v. United States, et al., No. 83-2366, and AEC v. United States, et al., No. 84-0889. The court will grant plaintiff's motions to consolidate. Accompanying Orders set forth the court's rulings on the motions now before it; this Memorandum explains the court's reasons for so ordering and establishes guidelines for the future litigation of these cases.

 BACKGROUND

 This litigation began when AEC filed AEC v. U.S., No. 83-2366, which challenged the U.S. Maritime Administration's ("Marad") approval of three charter orders and Marad's interpretation of the charter order for a ship named the GLACIER QUEEN, authorizing defendant-intervenor Westours to operate vessels off the coast of Alaska in alleged competition with a harbor tour service run by plaintiff AEC. In its original complaint, AEC, assuming that the vessels were American-owned but operated by the foreign-owned Westours, alleged that Marad's approval of the charter orders violated the requirements of the Shipping Act of 1916, 46 U.S.C. §§ 801 et seq., as amended, and a 1975 Marad Policy Notice pertaining to charter orders for foreign operated vessels. AEC also alleged that Marad's interpretation of the GLACIER QUEEN charter order as permitting a harbor tour operation in Alaska's Skagway harbor, in direct competition with plaintiff, was arbitrary and capricious and not in accordance with the law and Marad regulations. Cross-motions for summary judgment on these claims were filed, and became ripe for decision in February 1984. However, before this court, which was on assignment in another jurisdiction, could rule on these motions, plaintiff filed the related action AEC v. U.S., No. 84-0889. In its original complaint in that action, plaintiff added the U.S. Coast Guard as a defendant, essentially realleged the allegations of its complaint in No. 83-2366, and additionally alleged that the Coast Guard's issuance of "Certificates of Documentation" to the Westours operated vessels violated the above-noted provisions and regulations governing documentation of vessels. On March 21, 1984, plaintiff filed a motion for preliminary injunction in both cases, seeking an injunction against Westours' operation of its Skagway harbor tour until the merits of these cases were decided. In this court's absence, United States District Judge Gerhard A. Gesell denied plaintiff's motions and subsequent motions for reconsideration, on the ground that plaintiff was unlikely to succeed on the merits and the equities forbade issuance of an injunction, see Memorandum filed April 17, 1984 in No. 83-2366 and No. 84-0889. 595 F. Supp. 14. Thereafter, OMSA filed a motion to intervene, and defendants and defendant-intervenors filed motions for summary judgment in No. 84-0889. This court, having recently returned but not yet having ruled on the dispositive motions in No. 83-2366 or No. 84-0889, convened a status conference on July 2, 1984. At that status conference, AEC indicated that during discovery subsequent to Judge Gesell's ruling in No. 84-0889, it had uncovered evidence that would change the posture of both cases and would make the court's ruling on the pending dispositive motions unnecessary.

 Since that status conference, the parties have filed a flurry of motions. AEC now alleges that, on the basis of newly discovered evidence, the court can no longer assume that the vessels at issue are American owned but foreign operated. AEC now alleges that the vessels are, in fact, owned and operated by Westours, a foreign corporation. AEC now argues that the court should not rule on the primary issue presented by its original complaints, namely, whether the agencies acted improperly in permitting operation of American owned but foreign operated vessels, since it is now AEC's contention that the boats are foreign owned, which would allegedly make the agency approvals patently unlawful. AEC seeks to amend its complaints in both cases. Its proposed amended complaint in No. 83-2366 alleges that Marad had reason to know of the vessels' foreign ownership, and acted arbitrarily and capriciously and without regard to the law in ignoring that information and approving the charter orders. AEC's proposed amended complaint in No. 84-0889 alleges that the Coast Guard, faced with evidence of foreign ownership, violated its regulations, the Vessel Documentation Act, 46 U.S.C. §§ 12101, et seq., and Section 802(a) of the Shipping Act, 46 U.S.C. § 802(a), by documenting the vessels as American owned. AEC has also filed motions to compel discovery on the ownership issue in both cases, and seeks an enlargement of time to file its response to the summary judgment motions in No. 84-0889 until discovery is completed.

 The United States and Westours vigorously oppose AEC's efforts to amend its complaint and initiate further discovery. They argue, inter alia, that AEC's contentions regarding foreign ownership are meritless and have not yet been presented to Marad or the Coast Guard, and that the court should not permit AEC to amend its complaint or compel discovery for these reasons. Further, argue defendants, the court should decide the jurisdictional issues presented in previously filed summary judgment motions before proceeding and, since AEC's motions to amend should be denied, the court should decide the legal issues presented in the original complaints and thus dismiss these cases.

 DISCUSSION

 A. Introduction

 Rather than discussing each of the many motions before the court separately, the court will summarize its holdings in this Introduction, discuss the legal issues permeating the motions filed in Parts B through E, and set forth its rulings on each motion in attached Orders.

 First, the court holds that AEC has standing to challenge only Marad's and the Coast Guard's actions with regard to the GLACIER QUEEN. AEC has not adequately demonstrated that the operation of the FAIRWEATHER or the GLACIER QUEEN II is injuring or threatens to injure its interests to give it standing to challenge agency approvals of those vessels. Second, the court holds that several of the issues presented by the heretofore filed summary judgment motions should be decided now to avoid future confusion in this litigation. The court agrees with Judge Gesell's reasoning that Marad and Coast Guard approval of an American owned but foreign operated vessel is not violative of the provisions of the Shipping Act and not forbidden by Marad's non-binding 1975 Policy Notice. The court will defer ruling, however, on the propriety of Marad's interpretation of the GLACIER QUEEN charter order as permitting a harbor tour.

 Third, the court holds that Alaska Excursion's motions to amend its complaints will be granted so that the ownership issue can be considered. However, the court believes that both of these cases, filed against the United States, are properly treated as straightforward challenges to agency actions. Therefore, the court will deny plaintiff's motions to lift the protective order in No. 83-2366 and compel further discovery in No. 84-0889. The court believes that administrative exhaustion principles permit court review of the agencies' approvals in light of alleged evidence of foreign vessel ownership, but do not permit this court to go beyond a properly designated administrative record to litigate the ownership issue de novo. Therefore, the court will deny plaintiff's discovery motions, but will order both the Coast Guard and Marad to supplement their administrative records with all evidence of the ownership of the GLACIER QUEEN that was before them when they issued their relevant approvals. The court will later review the two administrative records to decide if the agencies acted arbitrarily or not in accordance with law. Although the court will be reviewing distinct administrative records, it believes consolidation of Nos. 83-2366 and 84-0889 is in the interest of judicial economy. Finally, the court will deny OMSA's motion to intervene.

 B. Jurisdictional Issues

 In the dispositive motions heretofore filed in both cases and in their oppositions to plaintiff's motions to amend its complaints, the federal defendants and Westours vigorously argue that the principles of standing, exhaustion of administrative remedies, and laches bar plaintiff from bringing these actions. With regard to the standing challenge, all sides agree that the law is well established. The Supreme Court's most recent formulation of standing requirements echoes the Court's prior holdings that a plaintiff must demonstrate constitutionally required injury and must show that he falls within the "zone of interests" protected or regulated by the statute allegedly violated by defendants' actions. Valley Forge Christian College v. Americans United for Separation of Church and State, 454 U.S. 464, 472-75, 102 S. Ct. 752, 758-60, 70 L. Ed. 2d 700 (1982); accord, Association of Data Processing Service Organizations v. Camp, 397 U.S. 150, 90 S. Ct. 827, 25 L. Ed. 2d 184 (1970); Autolog Corp. v. Regan, 235 U.S. App. D.C. 178, 731 F.2d 25 (D.C.Cir.1984). To meet the constitutional requirement, a plaintiff must show, inter alia, "that he personally has suffered some actual or threatened injury as a result of the putatively illegal conduct of the defendant." Valley Forge, 454 U.S. at 472, 102 S. Ct. at 758. In these cases, plaintiff challenges Marad's and the Coast Guard's approval of charter orders and certificates of documentation, respectively, for three vessels operated by Westours: the FAIRWEATHER, the GLACIER QUEEN II, and the GLACIER QUEEN. Plaintiff operates a harbor tour service in the Skagway harbor near Juneau, Alaska, and has demonstrated no fixed intention to operate vessels outside the Skagway harbor area. But of the three vessel approvals being challenged, defendants have only authorized the GLACIER QUEEN to operate a competing harbor tour in the Skagway harbor area. The vessel now named the GLACIER QUEEN II is currently authorized only to operate a ferry service in the distant Prince William Sound, see Plaintiff's Complaint in No. 83-2366 at para. 6; Charter Order MA-4409(a). The vessel now named the FAIRWEATHER is currently authorized only to operate a ferry service in either the Skagway harbor or the Prince William Sound. Id. at P 8; Charter Order MA-5257. Plaintiff has not demonstrated that a ferry service in the distant Prince William Sound or a point-to-point ferry service in the Skagway harbor area competes in any way with its harbor tour service, or that it is injured or threatened by the operation of those services. In fact, under the current charter orders for the GLACIER QUEEN II and the FAIRWEATHER, Westours cannot operate a competing harbor tour service; to do so it would have to obtain additional Marad approval as it did with respect to the GLACIER QUEEN. It was only by Marad's recent interpretation of the GLACIER QUEEN's charter order MA-5258 that the agency authorized a competing harbor tour service that could injure plaintiff's business. Plaintiff therefore has standing only to challenge the charter order and its interpretation by Marad for the GLACIER QUEEN; it has not demonstrated that the other two vessels, or Marad's approval of their charter orders, operate so as to injure or threaten injury to AEC. Therefore, plaintiff has constitutional standing only to challenge agency action with regard to the GLACIER QUEEN.

 Defendants and Westours argue that, even with regard to the GLACIER QUEEN, plaintiff falls outside the "zone of interests" protected by the Shipping Act of 1916. Further, in their oppositions to plaintiff's motions to amend its complaints, defendants argue that plaintiff falls outside the "zone of interests" protected by the Vessel Documentation Act administered by the Coast Guard. Thus, argue defendants, plaintiff fails to satisfy the "prudential" prong of the standing test. Defendants contend that the Shipping Act, which governs foreign ownership and operation of coastwise vessels, was intended to ensure a viable American merchant marine for defense purposes, and that Congress did not intend by the Act to protect Americans from foreign economic competition. The court disagrees. As the Court of Appeals for the District of Columbia Circuit recently made clear, a plaintiff satisfies the prudential "zone of interests" tests if it can show even a slight indicia that it was intended to be protected by the statute in question, Autolog Corp., 731 F.2d at 29. Plaintiff has pointed the court to language in a relevant Senate Report and to Marad's own interpretation of the Shipping Act that indicate that the Act's regulation of foreign control was intended, in part, to benefit American shipowners competing economically in the coastwise trade. See authorities cited in Plaintiff's Memorandum of Points and Authorities in Opposition to Defendant's Motion to Dismiss, filed January 27, 1984 in No. 83-2366, at 7-13; Sen.Rep. No. 573, 66th Cong., 2d Sess. (1920). Plaintiff competes economically with Westours' GLACIER QUEEN in the Skagway harbor, and thus falls within the "zone of interests" protected by the Act, even though the Act's primary purpose was to ensure a strong American merchant marine. See Autolog Corp., supra.

 Defendants and Westours argue that even if plaintiff falls within the "zone of interests" protected by the Shipping Act, it does not fall within the zone protected by the Vessel Documentation Act, and therefore has no standing to amend its complaint to challenge the Coast Guard's administration of that Act. Westours argues that the Vessel Documentation Act is merely procedural, and that the only persons with standing to challenge its enforcement are those whose vessels are being documented thereunder. Again, the court disagrees. Although the Act is admittedly procedural in nature, its requirements were established to ensure American ownership of vessels so that the requirements of the Shipping Act of 1916 can be enforced. As discussed above, a secondary purpose of the Shipping Act is to protect American shipowners from foreign competition. If documentation errors lead to the conclusion that a foreign ship is American, then the Shipping Act cannot be properly enforced. The two acts, then, together ensure that the purposes of the Shipping Act are carried out, and the ...


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