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OVERSEAS SHIPHOLDING GROUP v. SKINNER

June 28, 1991

OVERSEAS SHIPHOLDING GROUP, INC., Plaintiff,
v.
SAMUEL SKINNER, et al., Defendants



The opinion of the court was delivered by: RICHEY

 I. INTRODUCTION

 This is yet another segment of the labyrinth of litigation surrounding a final rule issued by the Department of Transportation and the Maritime Administration ("MARAD") allowing four very large crude tankers ("VLCCs") to repay construction-differential subsidies (CDS) in exchange for the right to operate in the domestic trade on a permanent basis. *fn1" The Court now considers the parties' cross-motions for summary judgment with regard to MARAD's compliance with the National Environmental Policy Act ("NEPA"), 42 U.S.C. § 4321, et seq. Upon careful consideration of the pleadings, the administrative record and the applicable law, the Court grants the motion for summary judgment filed by the federal defendants and grants the motion for summary judgment by the defendant-intervenors, Atlantic Richfield Company, BP Oil Shipping Company, USA, and American Petrofina, Inc. In addition, the Court denies the motion of the Plaintiff Overseas Shipholding Group, Inc.

 II. BACKGROUND

 To enhance the ability of United States merchant vessels to compete in foreign commerce, the Merchant Marine Act of 1936, 46 U.S.C.App. §§ 1101 et seq., authorizes the Secretary of Transportation to subsidize the construction costs for ships built in this country. The construction-differential subsidy program (CDS) presumes that the vessels receiving the CDS are "operated exclusively in the foreign trade, or on around-the-world voyage." Id. §§ 1151, 1156. Unfortunately, however, these efforts to bolster American competitiveness in foreign shipping faltered in the late-1970s. Due to an oversupply of tankers and reduced demand for foreign oil, many of the subsidized VLCCs were not fully employed. See 52 Fed.Reg. at 23,522.

 While the foreign oil trade was depressed, the domestic trade was booming due to the Alaskan pipeline. The demand for American-flag tonnage in the domestic oil trade had increased to the point that ships in the domestic trade had insufficient tonnage to meet the demand. Id. MARAD planned to alleviate the shortage by permitting CDS-built VLCCs to enter the domestic trade for a temporary period not to exceed six months in any twelve-month period, under the condition that the vessel owner repay a pro rata share of the CDS. See 46 U.S.C.App. § 1156; 46 C.F.R. § 250 et seq. The agency's authority to "approve full-repayment/permanent release transactions" was upheld by the Supreme Court in Seatrain Shipbuilding Corp. v. Shell Oil Co., 444 U.S. 572, 100 S. Ct. 800, 63 L. Ed. 2d 36 (1980).

 In 1980, the Secretary of Commerce issued an interim rule which was effective immediately and limited the full repayment option to tankers over a certain weight. Under this interim rule, the Secretary could accept repayment under "exceptional circumstances" after a determination that the vessel was unlikely to be employed in the foreign trade. See 54 Fed.Reg. 68,393 (1980). This rule was upended by the Court of Appeals, however, because the agency failed to provide an adequate general statement of the rule's basis and purpose as required by the Administrative Procedure Act ("APA"), 5 U.S.C. § 553(c). Independent U.S. Tanker Owners Committee v. Lewis, 223 U.S. App. D.C. 185, 690 F.2d 908, 918-20 (D.C.Cir. 1982) ("ITOC I"). The VLCC Bay Ridge, which repaid its CDS under this provision, was permitted to remain in the domestic commerce. Id. at 931.

 The Secretary of Transportation then issued a revised rule in 1985 providing that, for a one-year period, any tanker could repay the CDS in return for domestic shipping privileges. See 50 Fed.Reg. 19,170 (1985) (hereinafter, "1985 Rule"). Pursuant to the 1985 Rule, three VLCCs, the Arco Independence, Arco Spirit, and Brooklyn, repaid their CDS in exchange for the right to enter domestic commerce. See 52 Fed.Reg. 23,522 (1987). As part of the rulemaking process, the agency performed an Environmental Assessment ("EA"), as required by NEPA and 40 C.F.R. § 1500 et seq., and found that the proposed rule would have no significant impact on the human environment. See Administrative Record at 93-160 (hereinafter, "AR"). The District Court upheld the rule, and summarily dismissed Plaintiff OSG's claims that the 1985 Rule was enacted in violation of NEPA. Independent U.S. Tanker Owners Committee v. Dole, 620 F. Supp. 1289, 1294 n. 10 (D.D.C. 1985) (Jackson, J.). The District Court was reversed on appeal for the agency's failure to identify the basis and purpose of the rule as required by the APA. Independent U.S. Tanker Owners Committee v. Dole, 258 U.S. App. D.C. 6, 809 F.2d 847, 854 (D.C.Cir. 1987) ("ITOC II"), cert. denied sub nom., Atlantic Richfield Co. v. Independent U.S. Tanker Owners Committee, 484 U.S. 819, 108 S. Ct. 76, 98 L. Ed. 2d 39 (1987). The Court of Appeals did not reach the NEPA issue.

 MARAD returned to the proverbial drawing board and, through informal rulemaking, propounded another repayment rule in 1987. See 52 Fed.Reg. 23,522 (1987) (hereinafter, "1987 Rule"). In contrast to the 1985 Rule, the 1987 Rule would allow repayment of CDS subsidies only by those vessels already operating in the permanent domestic trade pursuant to prior approvals that had been invalidated by the courts. Id. at 23,524. In other words, only four vessels were impacted: Bay Ridge, Arco Independence, Arco Spirit, and Brooklyn. Id. at 23,536. During the course of the 1987 rulemaking, MARAD prepared another EA, as required by NEPA and the applicable regulations, and again determined that the proposed rule would have no significant impact on the human environment. See AR at 1387-1420. This Court invalidated the rule on numerous procedural grounds, and did not reach the merits of the Plaintiff OSG's renewed NEPA claim. Independent Tanker Owners Committee v. Burnley, Civ. Action Nos. 87-1685 and 87-2102 (D.D.C. April 29, 1988). The Court of Appeals reversed, finding that the 1987 Rule was properly enacted and had an adequate statement of basis and purpose. See Independent Tanker Owners Committee v. Skinner, 280 U.S. App. D.C. 148, 884 F.2d 587 (D.C.Cir. 1989), cert. denied, 495 U.S. 904, 109 L. Ed. 2d 286, 110 S. Ct. 1922 (1990) ("ITOC III"). The Court of Appeals did not reach the merits of OSG's NEPA claim. However, the Court of Appeals granted OSG's motion to modify the mandate and remanded the case for resolution of the NEPA claims. See Independent U.S. Tanker Owners Committee v. Skinner, 284 U.S. App. D.C. 64, 901 F.2d 1116 (D.C.Cir. 1990). Thus, this Court now considers on cross-motions for summary judgment whether MARAD issued the 1987 Rule in compliance with NEPA.

 III. ANALYSIS

 The parties' claims on the cross-motions for summary judgment revolve around three issues: (1) does OSG have standing to sue under NEPA; (2) does Judge Jackson's dismissal of OSG's NEPA claims in ITOC II bind this Court as a matter of stare decisis or law of the case; and (3) does MARAD's finding that the 1987 Rule creates no significant impact on the human environment constitute an arbitrary, capricious or irrational decision?

 In order to grant a motion for summary judgment, the moving party must demonstrate that there are no genuine issues of material fact and that the party is entitled to judgment as a matter of law. See F.R.Civ.P. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986). The parties have identified no genuine issues of material fact precluding summary judgment. Moreover, the parties have not suggested that the Court undertake fact-finding to supplement the administrative record. Accordingly, the administrative record governs the Court's consideration of whether MARAD's finding of no significant impact ("FONSI") in its Environmental Assessment ("EA") was arbitrary, capricious or irrational. See also Camp v. Pitts, 411 U.S. 138, 141, 93 S. Ct. 1241, 1244, 36 L. Ed. 2d 106 (1973) (citing Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 91 S. Ct. 814, 28 L. Ed. 2d 136 (1971) (courts' fact-finding in review of informal agency action generally confined to administrative record)).

 Because the rule in question was enacted in 1987, the Court must confine its review of the full administrative record to the material before the agency at the time the decision was made. "To review more than the information before the Secretary at the time she made her decision risks our requiring administrators to be prescient or allowing them to take advantage of post hoc rationalizations (citation omitted)." Walter O. Boswell Memorial Hosp. v. Heckler, 242 U.S. App. D.C. 110, 749 F.2d 788, 792 (D.C.Cir. 1984). However, the Court must review the agency's decision under the lens of current legal precedent. See, e.g., Thorpe v. Housing Authority of Durham, 393 U.S. 268, 89 S. Ct. 518, 526, 21 L. Ed. 2d 474 (1969).

 A. Plaintiff OSG has Standing to Assert a NEPA Claim

 To have standing, the plaintiff "must establish that the injury he complains of (his aggrievement, or the adverse effect upon him) falls within the 'zone of interests' sought to be protected by the statutory provision whose violation forms the legal basis for his complaint." Lujan v. National Wildlife Federation, 497 U.S. 871, 111 L. Ed. 2d 695, 110 S. Ct. 3177, 3186 (1990) (citing Clarke v. Securities Industry Ass'n, 479 U.S. 388, 396-97, 107 S. Ct. 750, 755-756, 93 L. Ed. 2d 757 (1987)). The "'creation of a risk that serious environmental impacts will be overlooked' is sufficient to establish the injury necessary for standing under NEPA, 'provided that this injury is alleged by a plaintiff that . . . may be expected to suffer whatever environmental [consequences] the decision may have.'" City of Los Angeles v. NHTSA, 286 U.S. App. D.C. 78, 912 F.2d 478, 483 (D.C.Cir. 1990) (citing City of Davis v. Coleman, 521 F.2d 661, 671 (9th Cir. 1975)). The party seeking review of the agency's decision must "set forth specific facts (even though they may be controverted by the Government)" showing that the party has suffered a cognizable injury under the statute. Lujan, 110 S. Ct. at 3186-87.

 In this action, OSG has alleged that the 1987 Rule created a risk of environmental injury "in that the air and water environment in which plaintiff's vessels, crews and other personnel operate would be made substantially more hazardous." Complaint at para. 36. OSG also alleged that it would suffer economic injury, such as fouling the hull, damaging the condensers and contaminating the ballast tanks, "as a consequence of having to operate its vessels in a polluted environment." Id. Both the federal defendants and the defendant-intervenors contend that these injuries are not within NEPA's zone of interests. The defendants further argue that, even if these injuries are within NEPA's purview, the alleged injuries are too attenuated to provide a basis for standing. These challenges to OSG's ability to sue under NEPA lack merit.

 1. OSG has Standing to Sue on Behalf of its Employees

 OSG, on behalf of its employees, has standing to sue under NEPA. As explained above, OSG challenges the rulemaking because, in its view, enacting the rule without performing a full Environmental Impact Statement ("EIS") creates a risk of air and water pollution in the areas in which the company and its employees do business. See Complaint para. 36. This allegation of harm to the environment will suffice to bring an action under NEPA because the statute was intended to address issues of air and water pollution.

 In Hunt v. Washington State Apple Advertising Comm'n, 432 U.S. 333, 97 S. Ct. 2434, 53 L. Ed. 2d 383 (1977), the Supreme Court established a three-part test for organizational standing. Under this test, an organization may sue on behalf of its members if: (1) its members would otherwise have standing; (2) the interests to be protected are germane to the organization's purpose; and (3) neither the claim asserted nor the relief requested requires the participation of individual members. Id. 97 S. Ct. at 2441. In this case, OSG's employees certainly have standing to challenge a rule which would make their working environment more polluted, and courts have accepted the corporate entity's ability to sue on this basis. See, e.g., Duke City Lumber Co. v. Butz, 382 F. Supp. 362, 374 (D.D.C. 1974), aff'd, 176 U.S. App. D.C. 218, 539 F.2d 220 (D.C.Cir. 1976), cert. denied sub nom., Duke City Lumber Co. v. Knebel, 429 U.S. 1039, 97 S. Ct. 737, 50 L. Ed. 2d 751 (1977) (lumber company plaintiffs "have alleged an injury in fact, namely, damage to the environment in which they work and upon which they depend for their livelihood and continued maintenance of the quality of their lives"); County of Josephine v. Watt, 539 F. Supp. 696 (N.D.Cal. 1982) (lumber company had sufficient injury to challenge rule due to occupational interest in lumbering areas); Cartwright Van Lines, Inc. v. United States, 400 F. Supp. 795 (W.D.Mo. 1975), aff'd, 423 U.S. 1083, 96 S. Ct. 873, 47 L. Ed. 2d 94 (1976) (trucking company's allegations that more circuitous trucking routes would injure environment in which they work was sufficient to sue under NEPA).

 Moreover, the claim asserted and the relief requested do not require the presence of any individual employees. OSG does not seek monetary damages, compare Warth v. Seldin, 422 U.S. 490, 95 S. Ct. 2197, 45 L. Ed. 2d 343 (1975) (disallowing organizational standing for monetary damages), and desires only to force the agency to conduct the analysis required by NEPA in order to prevent the enumerated environmental risks. See International Union, UAW v. Brock, 477 U.S. 274, 106 S. Ct. 2523, 91 L. Ed. 2d 228 (1986) (granting standing where organization tests validity of agency interpretation of applicable law).

 Finally, the interests which OSG seeks to protect are "germane" to the organization's purpose. In Humane Soc. of the United States v. Hodel, 268 U.S. App. D.C. 165, 840 F.2d 45, 58 (D.C.Cir. 1988), the Court of Appeals explained that the germaneness requirement is "undemanding" and requires only "mere pertinence between litigation subject and organizational purpose." See also American Insurance Association v. Selby, 624 F. Supp. 267, 271 (D.D.C. 1985) ("an association's litigation interests must be truly unrelated to its organizational interests before a court will declare that those interests are not germane"). Here, OSG seeks to maintain a safe and healthy working environment in which to sail its ships and crews. While environmental concerns are not the guiding purpose of the corporate organization, the goal of preserving a safe working environment in the waterways is certainly pertinent, if not necessary, to OSG's successful operation.

 2. OSG has Standing to Sue in its Own Behalf

 3. OSG's Claims are not so Attenuated as to Deny Standing Under NEPA

 Next, the federal defendants claim that OSG's alleged injuries "are too general, speculative, and remote to satisfy the basic constitutional requirements for standing." See Memorandum of Points and Authorities in Support of Federal Defendants' Motion to Dismiss the NEPA Claim at 5 (hereinafter, "Fed. Def'ts Motion to Dismiss"). *fn2" This argument does not convince the Court, however, because it assumes the accuracy of the agency's own conclusions and projections without giving the plaintiff the opportunity to demonstrate flaws in the agency's analysis. The argument also misconstrues the NEPA standing jurisprudence.

 The agency acknowledges the risk of an oil spill, see AR at 1399 ("the potential for oil spill is of the greatest concern"), and the possible reconfiguration of tanker traffic in the future as a result of the 1987 Rule. See AR at 1417 (projecting that "more VLCCs and other large tankers [will] replace, where permitted by navigation channel depths, smaller tankers"). The parties disagree as to whether the agency has drawn the correct conclusions from the data collected in the EA process. According to the plaintiff's analysis, the reconfiguration of tanker traffic may result in an increased risk of a major spill due to the presence of the VLCCs in certain sea lanes and the need for increased lightering. The plaintiff may well be incorrect. However, the plaintiff certainly has the right to challenge the agency's decision-making process in the first instance. Whether OSG will ultimately prevail on the merits of the challenge is a question independent of its right to challenge the agency's failure to perform a full EIS.

 Forcing a plaintiff to demonstrate "proof" of the alleged harm at the summary judgment stage of a NEPA case defies the statute's overriding informational and investigative purposes.

 
NEPA's purpose of ensuring well-informed government decisions and stimulating public comment on agency actions effectively lowers the threshold for establishing injury to informational interests. This approach appears to based on the premise that NEPA creates a right to information on the environmental effects of governmental actions; any infringement of that right constitutes a constitutionally cognizable injury, without further inquiry into causation or redressability.

 Competitive Enterprise Inst. v. NHTSA, 284 U.S. App. D.C. 1, 901 F.2d 107, 123 (D.C.Cir. 1990). *fn3" See also City of Los Angeles v. NHTSA, 286 U.S. App. D.C. 78, 912 F.2d 478, 492 (D.C.Cir. 1990) ("The need to fully assess harm before a project is undertaken is a major justification for the broad test courts have laid down for NEPA standing.") (emphasis in original); Public Citizen v. NHTSA, 270 U.S. App. D.C. 199, 848 F.2d 256, 269 n. 2 (D.C.Cir. 1988) (Silberman, J., dissenting on other grounds) (NEPA confers procedural right); Committee for Auto Responsibility v. Solomon, 195 U.S. App. D.C. 410, 603 F.2d 992, 999 (D.C.Cir. 1979), cert. denied, 445 U.S. 915, 63 L. Ed. 2d 599, 100 S. Ct. 1274 (1980) (injuries alleged fairly traceable to GSA's failure to perform an EIS because EIS would have assessed the pollution effects, and then GSA could take steps to redress). See generally Fletcher, The Structure of Standing, 98 Yale L.J. 221, 259 (1988) (NEPA requires plaintiffs to make a "colorable claim that ...


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