will transport LNG between Africa and the East Coast of the United States. The only competitive injury that ETG might suffer, according to defendants, is that it would be deprived of the opportunity to acquire more vessels than it currently has.
The defendants also argue that ETG does not meet the constitutional requirement for standing set forth in National Maritime Union of America v. Commander, Military Sealift Command, 263 App. D.C. 248, 824 F.2d 1228, (D.C. Cir. 1987). In that case, the District of Columbia Circuit held that "a litigant must show that he has suffered injury as a result of the defendant's putatively illegal conduct and that his injury both may be traced to the challenged conduct and is likely to be redressed by the judicial relief he seeks." Id. at 1234 (citations omitted). Because ETG never expressed any interest in the vessels until February of this year, the defendants argue that any injury ETG may suffer from is a result of its own doing, not of defendants'.
The Court agrees with the defendants' characterization of the settlement agreement and resulting sale. The "1990 sale" did not take place in a vacuum. It was brought about only as a result of the litigation that the parties have been engaged in throughout the last year, and that litigation was brought about only as a result of MARAD's original attempt to dispose of the LNG vessels through its 1986, 1987, and 1988 solicitations. Although ETG claims that it did not receive all of MARAD's solicitations, it does not dispute that it received some of them and was aware that the vessels were up for bid. ETG apparently made a decision not to submit a bid or even a serious expression of interest. It is evident from the repeated solicitations that MARAD had great difficulty disposing of the vessels during this bidding process. In the intervening years, changes in worldwide energy supply and demand caused an escalation in the value of the vessels. In the last year, ETG has repeatedly expressed its interest in purchasing the vessels at a higher price than that previously offered by Shell, Cabot, or the Argent companies, and at a higher price than the settlement agreement provides for. ETG has nevertheless been foreclosed from the so-called "1990 sale." The Court is aware of ETG's recently submitted bid for the vessels, but the Court finds this bid meaningless: ETG cannot today bootstrap itself into having standing that it never previously had.
The Court's standing analysis must begin with a discussion of Association of Data Processing Service Organizations, Inc. v. Camp, 397 U.S. 150, 25 L. Ed. 2d 184, 90 S. Ct. 827 (1970), in which the U.S. Supreme Court enunciated a two-part test for standing to challenge an administrative decision. First, the plaintiff must establish that "the challenged action has caused him injury in fact, economic or otherwise." Id. at 152. Second, the "interest sought to be protected by the complainant" must be "arguably within the zone of interests to be protected or regulated by the statute or constitutional guarantee in question." Id. at 153. More recently, the Supreme Court has clarified the zone of interests test, describing it as "a guide for deciding whether, in view of Congress' evident intent to make agency action presumptively reviewable, a particular plaintiff should be heard to complain of a particular agency decision." Clarke v. Securities Industry Association, 479 U.S. 388, 107 S. Ct. 750, 757, 93 L. Ed. 2d 757 (1987).
1. Disappointed Bidder Standing
In an attempt to apply the Supreme Court's standing analysis to government contracts cases, this Circuit has developed a doctrine by which a "disappointed bidder in a government contract award has standing under section 702 of the APA, 5 U.S.C. § 702, to act as a 'private attorney general,' in order to 'prevent the granting of [a] contract through arbitrary or capricious action' amounting to 'illegal [agency] activity.'" National Federation of Federal Employees v. Cheney, 280 U.S. App. D.C. 94, 883 F.2d 1038, 1052 (D.C. Cir. 1989), cert. denied, 496 U.S. 936, 110 S. Ct. 3214, 110 L. Ed. 2d 662 (1990) (citing Scanwell Laboratories, Inc. v. Shaffer, 137 U.S. App. D.C. 371, 424 F.2d 859, 864 (D.C. Cir. 1970)). To avoid "nuisance suits" that "could handicap the procurement system," disappointed bidder standing is "conferred only to those bidders who are 'within the zone of active consideration' for the bid's award." Id. (citing National Maritime Union of America v. Commander, Military Sealift Command, 263 U.S. App. D.C. 248, 824 F.2d 1228, 1237-38 n. 12 (D.C. Cir. 1987) (other citations omitted)). As this Court held when it denied ETG's third motion to intervene in the Cabot and Shell cases, "ETG cannot have standing as a disappointed bidder because it wasn't a bidder at all." Cabot LNG Corp. v. Skinner, et al., No. 89-2711, slip op. at 9 (October 4, 1990).
ETG argues that it is a disappointed bidder because it expressed an interest in the vessels in February 1990 and submitted a bid in October 1990. As the Court has already stated, however, these efforts were meaningless because the 1990 sale cannot be considered as wholly separate from the 1986-88 bidding process. The only parties with standing to challenge that bidding process were disappointed bidders such as Cabot. Similarly, the only parties with standing to challenge the settlement of a dispute over the bidding process are disappointed bidders from that bidding process. ETG is not such a disappointed bidder.
ETG also argues that it was precluded from participating in the 1990 sale. It seeks to be treated like the plaintiffs in Coalition for the Preservation of Hispanic Broadcasting v. Federal Communications Commission (FCC), 282 U.S. App. D.C. 200, 893 F.2d 1349 (D.C. Cir. 1990). In that case, this Circuit held that three competitors for broadcast licenses had standing to challenge a settlement of a license renewal dispute. The critical difference, however, is that in Hispanic Broadcasting, the three competitors had filed timely applications for the broadcast license at issue and the settlement was approved anyway, precluding the applicants from being considered. In this case, ETG never bid or expressed an interest in bidding until February 1990, well after the bidding was closed and the Cabot litigation had begun. It was never precluded from being considered as a purchaser of the vessels during the 1986-88 bidding process.
ETG cites Abel Converting, Inc. v. United States, 679 F. Supp. 1133, 1137 (D.D.C. 1988), and Aero Corp. v. Dep't of the Navy, 540 F. Supp. 180 (D.D.C. 1982), for the proposition that a party excluded from a negotiated sale has standing to challenge that sale. These cases are distinguishable. In Abel, government procurement regulations required open competition and notice to incumbent contractors. Plaintiffs were incumbent contractors who did not receive notice of the General Services Administration's (GSA) solicitation for bids for a two-year contract for paper towel products. The court determined that plaintiffs suffered "'injury as a result of the defendant's putatively illegal conduct'" and their "'injury both [could] be traced to the challenged conduct and [was] likely to be redressed by the judicial relief [sought]'" 679 F. Supp. at 1137 (citing National Maritime Union of America v. Commander, Military Sealift Command, 263 U.S. App. D.C. 248, 824 F.2d 1228, 1234 (D.C. Cir. 1987)).
In Aero Corp., the Armed Services Procurement Act (ASPA) did not require formal advertising but did require that procurements "be awarded on the basis of competitive negotiation with all qualified potential contractors" if possible. 540 F. Supp. at 182-83 (D.D.C. 1982) (citing 10 U.S.C. § 2304(g)). Regulations promulgated under the ASPA provided that "'negotiated procurements shall be on a competitive basis to the maximum practical extent.'" Id. at 183 (citing 39 C.F.R. parts 1-39, vol. 1, at 327 (1979)). Despite these statutory and regulatory requirements, the Navy awarded a series of contracts for the overhaul of 49 propeller-driven C-130 airplanes to Lockheed-Georgia Corporation without engaging in any competitive negotiation. The court granted a preliminary injunction, holding that the plaintiff, a competitor in the field of performing maintenance service on C-130 aircraft, was likely to succeed on the merits. The court held that Aero Corp. had standing because it was denied the opportunity to compete for the contracts in violation of the statute. The Acting Comptroller-General had submitted an opinion at the court's request, finding that the Navy had erred in determining that competition was impossible and choosing to engage in sole-source procurement from Lockheed. Id. at 188-89. Because Aero Corp. had been completely denied any chance to compete for the contracts, the court reasoned that:
[Aero's] interest is the interest in competition vel non, not competition in which a particular firm is favored. There is, then, no divergence in the interests of Aero and the public under ASPA on the facts Aero pleads: to grant relief vindicating Aero's asserted interest in competition would presumably also vindicate the coincident public interest in competitive procurement under section 2304(g).
540 F. Supp. at 203.
The case now before the Court is distinguishable from both Abel and Aero Corp. for two reasons. First, the statutory requirements at issue in this case are quite different from those in Abel and Aero Corp. Section 1105(c) of the Merchant Marine Act of 1936, 46 U.S.C. app. § 1275(c), grants the Secretary of Transportation extremely broad discretion to sell vessels acquired through default under the Federal Ship Mortgage Insurance program, 46 U.S.C. app. § 1271 et seq. The pertinent statutory language provides:
Notwithstanding any other provision of law relating to the acquisition, handling, or disposal of property by the United States, the Secretary shall have the right, in his discretion, to complete, recondition, reconstruct, renovate, repair, maintain, operate, charter, or sell any property acquired by him pursuant to a security agreement with the obligor or may place a vessel in the national defense reserve. The terms of the sale shall be as approved by the Secretary.
46 U.S.C. app. § 1275(c) (emphasis added). The defendants and the Secretary, in his November 14, 1990 opinion, interpret this statute to permit the disposal of repossessed vessels without engaging in competitive bidding. They point out that the mortgage insurance program was added to the Merchant Marine Act in 1938. From 1953 to 1972, § 1105(d) of the Act was substantially the same as § 1105(c) is today. The difference was that, instead of the present sentence permitting the Secretary to set the terms of the sale, the section continued with " or may sell the same [repossessed vessels] upon competitive bids for not less than the minimum sales price provided by the Merchant Marine Act, 1936, as amended," (emphasis added). In 1972, Congress deleted this clause and inserted the sentence providing that "the terms of the sale shall be as approved by the Secretary." Ship Financing Act of 1972, Pub. L. No. 92-507, 86 Stat. 909, 914.
The defendants and the Secretary also stress that even before 1972, the Secretary
had the discretion to dispose of repossessed vessels by means of negotiated sale without competition. This is based in part on a Legal Opinion issued on January 24, 1966, by the then general counsel of MARAD. In that opinion, the general counsel, Carl Davis, stated that he believed the former version of the section conferred additional authority on the Secretary to sell repossessed property through competitive bidding, not that it restricted his authority to competitive bidding. He concluded by stating that former § 1105(d) of the Merchant Marine Act of 1936 granted "ample authority to dispose of foreclosed Title XI vessels in any manner in which the Secretary, in his discretion, may deem proper." Administrative Record in Energy Transportation Group, Inc. v. Skinner, et al., No. 90-2502 (A.R. ETG) at 5616. Mr. Davis also submitted an affidavit stating that during his tenure as general counsel, MARAD generally disposed of repossessed vessels "on a negotiated basis, without public advertisement or competitive bids." A.R. at 5730 (affidavit of Carl C. Davis dated October 29, 1990). Mr. Davis' affidavit also states that it was his opinion that such negotiated sales were fully authorized by the Act.
ETG points to an entirely different statute for its proposition that MARAD acted in violation of law by not rebidding these vessels.
ETG argues that the Federal Property and Administrative Services Act (FPASA), 40 U.S.C. § 471 et seq., requires "surplus property" to be disposed of after public advertising for bids. Id. at § 484(e). The Act also provides that "the authority conferred by this Act shall be in addition and paramount to any authority conferred by any other law and shall not be subject to the provisions of any law inconsistent herewith . . . ." Id. at § 474. As the defendants point out, however, § 474 of the Act continues by providing that "nothing in this Act shall impair or affect any authority of -- . . . the United States Maritime Commission with respect to the . . . sale, lease, or charter of any merchant vessel . . . ." Id. at § 474(16). The only restriction on MARAD is that it "shall to the maximum extent that it may deem practicable, consistent with the fulfillment of the purposes of such programs and the effective and efficient conduct of such activities, coordinate its operations with the requirements of this Act . . . ." Id.
ETG argues that this restrictive language means that MARAD may not engage in a negotiated sale unless the Secretary determines that it is not practicable to competitively bid the property. This is clearly what the regulations at issue in Aero Corp. required of the Navy, but it is not what is required of the Secretary. In Aero Corp., the regulations required the contracting officer to assure "'that competitive procurement is not feasible'" before engaging in a noncompetitive procurement. 540 F. Supp. at 183 (citing 32 C.F.R. parts 1-39, vol. 1, at 327 (1979)). No statute or regulation requires such a determination by the Secretary. ETG nevertheless points to the legislative history of the FPASA to show that Congress intended the Secretary to make this determination before disposing of property without competition. In the House Report on the bill, Congress wrote:
It is expected that [the Secretary] will as far as practicable procure, utilize, and dispose of property in accordance with the provisions of the act and the regulations issued thereunder, particularly so far as common-use items and administrative supplies are concerned. . . .