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American Petroleum Tankers Parent, LLC v. United States

United States District Court, District Circuit

July 10, 2013

UNITED STATES OF AMERICA, et al., Defendants.



Plaintiff American Petroleum Tankers Parent, LLC, pursuant to the Administrative Procedure Act (“APA”), 5 U.S.C. 701 et seq., challenges the Maritime Administrator’s decision denying the Plaintiff’s applications for loan guarantees intended to allow the Plaintiff to refinance loans used to construct five petroleum tankers. Presently before the Court is the Plaintiff’s [60] Motion to Compel Filing of the Full Administrative Record and for Leave to Conduct Limited Discovery. Upon consideration of the pleadings, [1] the relevant legal authorities, and the record as a whole, the Court finds the Defendants must supplement the Administrative Record to include two speeches by the Secretary of Defense cited by the Maritime Administrator in his denial of the Plaintiff’s revised application, but the Plaintiff’s remaining grounds for supplementation and discovery are unpersuasive. Accordingly, the Plaintiff’s motion is GRANTED IN PART and DENIED IN PART as set forth below.


American Petroleum Tankers Parent (“APT”) is majority-owned by investment funds managed by affiliates of the Blackstone Group, L.P., a publicly traded private equity company. Suppl. Compl., ECF No. [14], ¶ 2. APT owns five 49, 000 deadweight ton petroleum tankers, delivered to APT between January 2009 and December 2010. Id. at ¶ 1. Each of the five vessels is U.S.-flagged and employed in the coastwise trade of the United States. Id. Two of the tankers have (unspecified) specially designed features approved by the United State Navy and are currently on charter to the Navy’s Military Sealift Command. Id.

A. Title XI Loan Guarantee Program

Title XI of the Merchant Marine Act of 1936 authorizes the Maritime Administration, a division of the Department of Transportation, to guarantee loans intended to finance the construction, reconstruction, or reconditioning of vessels that, among other things, are designed principally for commercial use in the coastwise trade. 46 U.S.C. §§ 53702(a), 53706(a)(1)(A)(i).[2] Guarantees may also be issued for refinancing an existing obligation issued to finance the construction, reconstruction, or reconditioning of such vessels. Id. § 53706(a)(5). Applications for Title XI guarantees must be approved or denied within 270 days after the Administrator receives the signed application, though the applicant may request that the time for consideration be extended for up to two years from the date on which the application was received. Id. § 53703(a)(1), (2).

The statute sets forth a number criteria an application must satisfy in order to be eligible for a loan guarantee. The obligor must have “the ability, experience, financial resources, and other qualifications necessary for the adequate operation and maintenance of each vessel that will serve as security for the guarantee.” 46 U.S.C. § 53707(a). The property for which the obligation will be executed must be “economically sound” in light of various factors, including “the market potential for employment of the vessel over the life of the guarantee, ” and “projected revenues and expenses associated with employment of the vessel.” Id. § 53708(a)(2), (3). The Administrator may employ a third party expert to analyze “risk factors associated with markets, technology, or financial structures.” Id. § 53708(d). The statute also provides that the Administrator must give priority to vessels that, among other things, are suitable for service as a naval auxiliary in the time of war or national emergency. 46 U.S.C. § 53706(c).

Pursuant to Department of Transportation Order 2301.1B, after the Maritime Administrator completes his review of the application, the application must be referred to the Department of Transportation Credit Council for review. Defs.’ Mot. to Dismiss Ex. A, ECF No. [18-2], ¶ 9(a). The Credit Council is comprised of various officials within the Department of Transportation, including the General Counsel, the Federal Highway Administrator, the Federal Railroad Administrator, and the Maritime Administrator. Id. at ¶ 5. In addition to setting the Department’s credit policies and procedures, the Credit Council makes recommendations to agencies within the Department regarding applications for various credit assistance programs, including the Title XI loan program. Id. at ¶¶ 3, 9(a). With respect to Title XI applications, the Credit Council provides “a recommendation regarding the financial viability of the proposed project and the merits of the requested credit assistance and its consistency with departmental credit policies.” Id. at ¶ 9(a). The Maritime Administrator is not bound by the Credit Council’s recommendation, and ultimately approves or denies the application. Id.

B. Plaintiff’s Title XI Application and Litigation History

APT submitted an application for a Title XI guarantee on August 30, 2010, seeking loan guarantees to refinance the $470 million debt incurred to construct the tankers owned by APT. Decl. of R. Kurz, ECF No. [60-4], ¶ 10 (indicating the initial application sought $470 million in guarantees). The Maritime Administration accepted APT’s application as complete on December 2010. Suppl. Compl. ¶ 2. The Plaintiff reduced the requested guarantee amount to $400 million in September 2011. Kurz Decl. ¶ 19. The Credit Council initially recommended against the Maritime Administration retaining a third party financial expert to review the application, but subsequently recommended that the Administration proceed with the third party expert analysis. See A.R. 2868-2872. The Maritime Administration retained Scully Capital Services, Inc., to perform the external review in November 2011. Kurz Decl. ¶¶ 21-22.[3]

The Plaintiff’s application was discussed during the June 12 and July 10, 2012, Credit Council meetings. Kurz Decl. ¶¶ 29, 35. Fearing that the Maritime Administration would not act on its application by the statutorily mandated two-year deadline, the Plaintiff filed suit in July 2012 seeking an emergency writ of mandamus to compel the Administrator to grant or deny the application by August 31, 2012. See generally Compl., ECF No. [1]. After an on-the-record conference call with the Court, the Defendants agreed to issue a decision on the Plaintiff’s application by August 31, 2012. Jt. Stip., ECF No. [7]. The Plaintiff accordingly withdrew its motion for emergency relief. Id.

On July 28, 2012, the Plaintiff modified its application in relevant part to further reduce the guarantee amount to $340 million. Suppl. Compl. ¶ 5. Two days later, the Administrator denied the Plaintiff’s original application, acknowledging that it did not consider the July 28 revisions to the application because a review of the amended application would require “a comprehensive financial analysis” that could not be completed by the August 31 deadline. Defs.’ Mot. to Dismiss Ex. B (8/1/12 Decision Ltr.), ECF No. [18-3], at 4. The Administrator explained that the denial of the Plaintiff’s original application was based on several factors: (1) “[the] project is not economically sound overall”; (2) it seeks refinancing for two particularly vulnerable vessels”; and (3) “it seeks to refinance at least three ships over one year old at the time of closing.” Id. Additionally, the Administrator explained that “the amount of the project to be refinanced[] . . . if granted, would consume almost all of the remaining monies available for the ship financing program.” Id.

Following the initial denial of the Plaintiff’s application, the Administrator agreed to consider the Plaintiff’s amended application. Jt. Mot. to Stay, ECF No. [9], ¶ 9. The Administrator denied the amended application on November 9, 2012. Defs.’ Mot. to Dismiss Ex. C (11/9/12 Decision Ltr.), ECF No. [18-4]. In short, the Administrator explained that the amended application was denied because it “remains not economically sound overall, ” “seeks refinancing of two particularly vulnerable vessels, ” “seeks to refinance at last three ships over one year old, ” and if granted, the guarantees sought by the Plaintiffs would “consume almost all of the remaining monies available for the ship financing program.” Id. at 4.

The Plaintiff supplemented its complaint in this matter to reflect the denial of both its original and modified applications. See generally Suppl. Compl. The first count of the supplemental complaint alleges that the Administrator’s decisions denying the Plaintiff’s applications were arbitrary, capricious, or otherwise contrary to law in violation of 5 U.S.C. § 706(2). Specifically, the Plaintiff challenges (1) the Administrator’s consideration of the recommendation of the Credit Council; (2) the finding that the amended application is not economically sound; (3) the finding that the amended application does not warrant priority; and (4) the decision to deny the amended application in part because it would exhaust available funds. Suppl. Compl. ¶¶ 102-07. The second count of the supplemental complaint seeks a “remedy for the Secretary’s unlawful interference, ” pursuant to the APA, namely

an order declaring that the DOT Credit Council has no lawful or valid function with respect to Title XI applications, directing the Secretary to cease and desist from interfering with the Administrator’s performance of his ministerial and discretionary responsibilities regarding Title XI applications in general and APT’s application in particular, and directing the Administrator . . . to cease and desist from submitting such applications to the DOT Credit Council and to grant or deny APT’s application without regard to the opinions, objections, recommendations or authorization of the Credit Council.

Suppl. Compl. at 39. Finally, in the third count of the supplemental complaint, the Plaintiff alleges that “[p]ast interference by the Secretary . . . and the DOT Credit Council with the Administrator’s performance . . . has so infected and prejudiced the deliberative process used by, and the judgment of, the incumbent Administrator that he is incapable of fairly assessing the merits of APT’s Title XI application.” Id. at ¶ 115. The Plaintiff thus asked the Court to order the Administrator to recuse himself from consideration of the Plaintiff’s application on remand, and requiring a de novo review of the amended application by a new official within the Maritime Administration. Id. at 39-40.

Upon the Defendant’s motion to dismiss, the Court determined that the Plaintiff has standing to challenge the Maritime Administrator’s denial of the applications, and that the Administrator’s decision on an application for a loan guarantee is not committed to agency discretion by law and is thus reviewable by the Court. 5/6/13 Mem. Op., ECF No. [25], at 8-15. The Court further concluded that the Defendants failed to identify any statutory or other authority by which Secretary of Transportation can require the Maritime Administrator to submit applications for Title XI loan guarantees to the Credit Council to obtain the Council’s recommendation before the Administrator may grant or deny the application. Id. at 15-20. Finally, the Court found that the Plaintiff failed to state a claim for relief or establish the Court’s subject matter jurisdiction with respect to its request that the current Maritime Administrator be recused from considering the Plaintiff’s application if the case is remanded to the agency for further consideration. Id. at 20-21.

The Court set a briefing schedule for the parties’ cross-motions for summary judgment, and also set a schedule for briefing any motions regarding the scope of the Administrative Record. 6/3/13 Order, ECF No. [28]. The Plaintiff subsequently filed the present motion to compel, which is now ripe for consideration by the Court.


The Administrative Procedure Act directs the Court to “review the whole record or those parts of it cited by a party.” 5 U.S.C. § 706. This requires the Court to review “the full administrative record that was before the Secretary at the time he made his decision.” Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 420 (1971), abrogated on other grounds by Califano v. Sanders, 430 U.S. 99 (1977). Courts in this Circuit have “interpreted the ‘whole record’ to include all documents and materials that the agency directly or indirectly considered . . . [and nothing] more nor less.” Pac. Shores Subdivision, Cal. Water Dist. v. U.S. Army Corps of Eng’rs, 448 F.Supp.2d 1, 4 (D.D.C. 2006) (citation omitted). “[A]bsent clear evidence, an agency is entitled to a strong presumption of regularity, that it properly designated the administrative record.” Id. at 5.

“Supplementation of the administrative record is the exception, not the rule.” Pac. Shores, 448 F.Supp.2d at 5 (quoting Motor & Equip. Mfrs. Ass’n, Inc. v. EPA, 627 F.2d 1095, 1105 (D.C. Cir. 1979)); Franks v. Salazar, 751 F.Supp.2d 62, 67 (D.D.C. 2010) (“A court that orders an administrative agency to supplement the record of its decision is a rare bird.”). This is because “an agency is entitled to a strong presumption of regularity, that it properly designated the administrative record.” Pac. Shores, 448 F.Supp.2d at 5. “The rationale for this rule derives from a commonsense understanding of the court’s functional role in the administrative state[:] ‘Were courts cavalierly to supplement the record, they would be tempted to second-guess agency decisions in the belief that they were better informed than the administrators empowered by Congress and appointed by the President.’” Amfac Resorts, L.L.C. v. Dep’t of Interior, 143 F.Supp.2d 7, 11 (D.D.C. 2001) (quoting San Luis Obispo Mothers for Peace v. Nuclear Regulatory Comm’n, 751 F.2d 1287, 1325–26 (D.C. Cir. 1984)). However, an agency “may not skew the record by excluding unfavorable information but must produce the full record that was before the agency at the time the decision was made.” Blue Ocean Inst. v. Guttierez, 503 F.Supp.2d 366, 369 (D.D.C. 2007). The agency may not exclude information from the record simply because it did not “rely” on the excluded information in its final decision. Maritel, Inc. v. Collins, 422 F.Supp.2d 188, 196 (D.D.C. 2006). Rather, “a complete administrative record should include all materials that might have influenced the agency’s decision[.]” Amfac Resorts, 143 F.Supp.2d at 12 (citations omitted). “[W]hile it is true that data and analysis compiled by subordinates may be properly part of the administrative record despite not having actually passed before the eyes of the Secretary, ” to be included in the Administrative Record, “the data or analysis must be sufficiently integral to the final analysis that was considered by the [Administrator], and the [Administrator’s] reliance thereon sufficiently heavy, so as to suggest that the decisionmaker constructively considered it.” Banner Health v. Sebelius, --- F.Supp.2d ---, 2013 WL 2112169, at *21 (D.D.C. 2013).


The Administrative Record may be “supplemented” in one of two ways, “either by (1) including evidence that should have been properly a part of the administrative record but was excluded by the agency, or (2) adding extrajudicial evidence that was not initially before the agency but the party believes should nonetheless be included in the administrative record.” Wildearth Guardians v. Salazar, 670 F.Supp.2d 1, 5 n. 4 (D.D.C. 2009). Much of the Plaintiff’s motion focuses on the first type of “supplementation”—that is, documents the Plaintiff contends were considered by the Administrator in making his decision but that have been excluded from the Administrative Record. The Plaintiff also challenges the Defendants’ invocation of the deliberative process privilege as grounds for redacting certain documents in the Administrative Record and withholding certain documents from the record in their entirety. Finally, the Plaintiff seeks discovery regarding the process through which the Maritime Administrator made his decision to deny the Plaintiff’s applications. The Court addresses each category in turn.

A. Documents Purportedly Considered by the Agency but Excluded from the Administrative Record

The Plaintiff seeks to compel the Defendants to supplement the Administrative Record to include five categories of documents the Plaintiff contends were considered by the Maritime Administrator in reaching his decision denying the Plaintiff’s applications: (1) memoranda prepared to reflect analysis required by certain Maritime Administration Orders; (2) periodic progress reports to the Credit Council regarding the status of pending applications and weekly activity reports within the Maritime Administration; (3) communications between the Maritime Administration and Scully Capital; (4) communications between the Maritime Administration and Military Sealift Command; and (5) certain communications between employees or agents of the Plaintiff and individuals within the Maritime Administration.[4] Pl.’s Mot. at 12-15. In seeking to force the Defendants to supplement the Administrative Record with documents that were purportedly before the agency, the Plaintiff cannot merely assert that the documents “are relevant, were possessed by the entire agency at or before the time the agency action was taken, and were inadequately considered.” Banner Health v. Sebelius, 2013 WL 2112169 at *10.

Rather, the Plaintiff must articulate “when the documents were presented to the agency, to whom, and under what context.” Pac Shores, 448 F.Supp.2d at 7 (“Although Plaintiffs imply that the Corps possessed some of the documents because Plaintiffs obtained them through a Freedom of Information Act request, there is no evidence that the Corps’ decisionmaker(s) were actually aware of the fourteen documents Plaintiffs seek to include.”). Furthermore, the Plaintiff must offer “reasonable, non-speculative” grounds for their belief that the documents were directly or indirectly considered by the Maritime Administrator. Banner Health, 2013 WL 2112169, at *10. If the Plaintiff “can present such proof showing that [the Administrator] did not include materials ...

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