United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued December 3, 1997 Decided January 16, 1998
No. 96-5156
OSG Bulk Ships, Inc.,
Appellant
v.
United States of America, et al.,
Appellees
Appeal from the United States District Court
for the District of Columbia
(No. 94cv00006)
Joseph A. Klausner argued the cause for appellant, with
whom Allan A. Tuttle was on the briefs.
Cynthia A. Schnedar, Assistant U.S. Attorney, argued the
cause for the federal appellees, with whom Mary Lou Leary,
U.S. Attorney, John D. Bates and R. Craig Lawrence, Assis-
tant U.S. Attorneys, were on the brief. Michael J. Ryan,
Assistant U.S. Attorney, entered an appearance.
Thomas L. Mills argued the cause for the private appel-
lees, with whom Robert M. Rader, T.S.L. Perlman, Anne E.
Mickey and John W. Butler were on the joint brief. Richard
A. Hibey entered an appearance.
T.S.L. Perlman was on the brief for appellee Mormac
Marine Transport, Inc.
Before: Henderson, Rogers and Garland, Circuit Judges.
Opinion for the Court filed by Circuit Judge Rogers.
Rogers, Circuit Judge: The Maritime Administration has a
longstanding interpretation of the Merchant Marine Act
of 1936 under which any vessel built with the aid of a
"construction-differential subsidy" from the federal govern-
ment, and thus limited at least initially to service in foreign
trade only, can enter domestic trade after the statutorily
defined economic life of the vessel expires. OSG Bulk Ships,
Inc. challenged that interpretation in the district court, which
granted summary judgment to the defendant agency and
several private defendant-intervenors after concluding that,
especially in light of a Supreme Court decision that involved a
closely related issue, the agency's interpretation was unobjec-
tionable. We affirm.
I.
Because building ships and manning them in the United
States was and remains more expensive than in other coun-
tries, Congress enacted the Merchant Marine Act of 1920
(commonly known as "the Jones Act") and the Merchant
Marine Act of 1936 ("the 1936 Act") in an attempt to protect
the American shipping industry against foreign competition.
See Independent U.S. Tanker Owners Comm. v. Lewis, 690
F.2d 908, 911-12 (D.C. Cir. 1982). In these acts, Congress
effectively divided the American commercial shipping fleet in
two--one fleet for domestic trade and one for foreign--and
took different steps to support each. In the Jones Act,
Congress limited trade between domestic ports to ships built
in American shipyards, owned by American citizens, and
operated under the American flag. See 46 U.S.C. app. s 883
(1988). Foreign vessels cannot compete in this domestic
market with the Jones Act fleet. See id.
American ships operating in trade between foreign and
domestic ports do not enjoy the same protection from interna-
tional competition, but in the 1936 Act, Congress instituted
two types of government subsidies in an attempt to make
these vessels competitive in the international market: the
operating-differential subsidy ("ODS") and the construction-
differential subsidy ("CDS"). See id. ss 1151, 1171. Under
the ODS program, the Secretary of Transportation ("the
Secretary") can grant subsidies to American vessels in for-
eign trade to offset the higher operating costs these vessels
generally face compared to their international competitors.
See id. s 1171. Under the CDS program, the Secretary can
enter into contracts to subsidize American shipyards' con-
struction of new vessels to be operated under the American
flag. See id. s 1154.
Because vessels built with the aid of the CDS program
would have an unfair advantage if allowed to compete directly
with the unsubsidized Jones Act ships in domestic trade,
section 506 of the 1936 Act limits CDS-built vessels to opera-
tion "exclusively in foreign trade," with two exceptions. Id.
s 1156.1 First, CDS-built vessels can make certain domestic
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1 Section 506 provides:
Every owner of a vessel for which a construction-differential
subsidy has been paid shall agree that the vessel shall be
operated exclusively in foreign trade, or on a round-the-world
voyage, or on a round voyage from the west coast of the United
States to a European port or ports which includes intercoastal
ports of the United States, or a round voyage from the Atlantic
coast of the United States to the Orient which includes inter-
coastal ports of the United States, or on a voyage in foreign
trade on which the vessel may stop at the State of Hawaii, or
an island possession or island territory of the United States,
and that if the vessel is operated in the domestic trade on any
of the above-enumerated services, he will pay annually to the
Secretary of Transportation that proportion of one-twenty-fifth
of the construction-differential subsidy paid for such vessel as
the gross revenue derived from the domestic trade bears to the
stops on bona fide foreign voyages. See id. Second, the
Secretary may consent to allow CDS-built vessels to engage
in domestic trade for temporary periods up to six months in
any year. See id. In each case, however, the owner of a
CDS-built vessel using one of these exceptions must repay to
the government a portion of the CDS depending on the time
spent in domestic trade compared to the vessel's economic
life, which is established by statute as twenty years for
tankers and twenty-five years for vessels carrying dry goods.
See id.; Pub. L. No. 86-518, ss 1, 3, 74 Stat. 216, 216 (1960);
H.R. Rep. No. 86-1744, at 5-8 (1960), reprinted in 1960
U.S.C.C.A.N. 2383, 2386-87.
The meaning of section 506 cannot be understood without
reference to Seatrain Shipbuilding Corp. v. Shell Oil Co., 444
U.S. 572 (1980). In Seatrain, the Court addressed the legali-
ty of an action under the 1936 Act by the Maritime Adminis-
tration ("MarAd"),2 in which the agency allowed the owners of
a CDS-built vessel to enter the domestic market upon repay-
ment of the CDS to the government. See id. at 574. In
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gross revenue derived from the entire voyages completed dur-
ing the preceding year. The Secretary may consent in writing
to the temporary transfer of such vessel to service other than
the service covered by such agreement for periods not exceed-
ing six months in any year, whenever the Secretary may
determine that such transfer is necessary or appropriate to
carry out the purposes of this chapter. Such consent shall be
conditioned upon the agreement by the owner to pay to the
Secretary, upon such terms and conditions as he may prescribe,
an amount which bears the same proportion to the construc-
tion-differential subsidy paid by the Secretary as such tempo-
rary period bears to the entire economic life of the vessel. No
operating-differential subsidy shall be paid for the operation of
such vessel for such temporary period.
46 U.S.C. app. s 1156.
2 MarAd is an agency within the Department of Transportation
charged with oversight of the United States merchant marine,
including "[a]warding and administering construction-differential
subsidy contracts and operating-differential subsidy contracts to aid
the American merchant marine." 49 C.F.R. s 1.4(j)(1)-(2) (1997).
upholding this action, the Supreme Court ruled that the 1936
Act empowered the Secretary to approve full repayment/
permanent release transactions of this type. See id. at 588-
95. Section 506, the Supreme Court noted, only limited when
temporary exceptions to the foreign-trade-only requirement
would be available; neither that section nor any other ad-
dressed when permanent releases would be permissible, and
the legislative history did not show that Congress intended to
preclude such permanent releases.3 See id. at 588. The
discretion given to the Secretary to administer the 1936 Act,
the Court concluded, was broad enough to allow him to
permit the entry of the vessel into the domestic market. See
id.
The policy upheld in Seatrain reflected MarAd's longstand-
ing view that, under the 1936 Act, when the owner of a CDS-
built vessel has repaid the government for the value of the
subsidy--through monetary repayment, service in the foreign
shipping market for the vessel's economic lifetime, or a
combination of the two--there is no longer any need to
restrict that vessel to service in foreign trade only. Corre-
spondingly, MarAd has allowed CDS-built vessels to enter the
domestic market in the middle of their economic lives upon
repayment of a sum equal to the unamortized value of the
CDS for the remaining portion of the ship's economic life. In
addition, MarAd has long made known its position that the
section 506 foreign-trade-only restriction would lapse, even
without payment, at the end of CDS-built vessels' economic
lives, because at that time the CDS debt to the government
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3 The Court noted in particular that permanent releases into
domestic trade do not carry the same potential for making competi-
tion unfair as temporary releases do: while a CDS-built vessel
unrestrained in its ability to take temporary jaunts into the Jones
Act fleet's preserve would be "capable of taking advantage of every
shift in trade and profitability, skimming the cream and leaving
what remains to the less mobile," the permanent release of a CDS-
built vessel "irrevocably locates the vessel in the unsubsidized fleet
and thus poses no danger of a supercompetitor skimming the cream
from each market." Seatrain, 444 U.S. at 588-89.
had been repaid in full through service in foreign trade.
Seatrain did not invalidate these practices, nor has the agen-
cy retreated from its general interpretation of section 506
since that time.
II.
OSG Bulk Ships, Inc. ("OSG") owns eleven non-CDS tank-
ers carrying oil in domestic trade and leases two more.
Many other companies built tankers with the aid of the CDS
program between 1973 and 1984; the first of these reached
the end of its economic lifetime on August 8, 1993, with thirty
more scheduled to do so by the year 2004. On January 1,
1994, with MarAd's acquiescence, the Coronado became the
first CDS-built tanker to enter the domestic market and
begin to compete directly with OSG's unsubsidized tankers.
In July 1993, before the economic lifetime of any CDS-built
vessel had expired, OSG sought to have the agency reconsider
its interpretation of section 506. Approving the permanent
release of CDS-built vessels whose economic lives had ex-
pired, OSG argued, would be inconsistent with the plain
language of the statute and its underlying purposes. In
response, several other companies urged the agency not to
alter its interpretation. The agency concluded that its inter-
pretation of the 1936 Act was sound, and reported its decision
to reaffirm that interpretation in a series of letters dated
March 31, 1994, and April 1, 1994.
On January 3, 1994, three months before MarAd sent these
letters, OSG filed suit against the agency, challenging Mar-
Ad's interpretation of section 506 under which CDS-built
vessels could enter the domestic market after their economic
lives had passed. Two private companies thereafter inter-
vened as plaintiffs 4 and nine as defendants.5 The district
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4 Attransco, Inc. and Matson Navigation Co., Inc. were the
intervening plaintiffs in the district court, but these companies are
not parties to this appeal.
5 BP Oil Shipping Co., Chestnut Shipping Co., Margate Ship-
ping Co., and Mormac Marine Transport, Inc. were defendant-
intervenors below and remain parties to this appeal. Puerto Rico
court concluded that there was no basis on which to overturn
MarAd's interpretation. Applying the two-step analysis of
Chevron U.S.A. Inc. v. Natural Resources Defense Council,
Inc., 467 U.S. 837 (1984), the court noted that under Seatrain
it was clear first that the statute did not answer the precise
question and second that the Secretary had broad discretion
to implement the statute; thus, MarAd clearly had discretion
to interpret the 1936 Act with regard to permanent release of
CDS-built vessels into the domestic market, and the interpre-
tation it chose was a permissible one. See OSG Bulk Ships,
Inc. v. United States, 921 F. Supp. 812, 818-27 (D.D.C. 1996).
On cross-motions for summary judgment, the court granted
summary judgment for the defendants. See id. at 828.
III.
While our review of the grant of summary judgment is de
novo, see Tao v. Freeh, 27 F.3d 635, 638 (D.C. Cir. 1994), we
affirm substantially for the reasons set forth by the district
court in its opinion. See OSG Bulk Ships, 921 F. Supp. at
812-28. We need only address a threshold jurisdictional
issue and elaborate upon the response to OSG's economic
arguments challenging the reasonableness of MarAd's inter-
pretation.
The jurisdictional issue arises as a result of appellee's
contention that the district court did not even have jurisdic-
tion to hear the case in the first place.6 Appellees character-
ize OSG's complaint as a challenge to MarAd's decision not to
enforce the section 506 ban on domestic trade by CDS-built
vessels in certain instances. Heckler v. Chaney, 470 U.S. 821
(1985), and Crowley Caribbean Transport, Inc. v. Pea, 37
F.3d 671 (D.C. Cir. 1994), establish that agencies' nonenforce-
__________
Maritime Shipping Authority, Aquarius Marine Co., Atlas Marine
Co., Sea-Land Service, Inc., and American President Lines, Ltd.
were defendant-intervenors below but are no longer parties to this
appeal.
6 Notably, only the private appellees press this argument; the
agency itself does not.
ment decisions are generally unreviewable under the Admin-
istrative Procedure Act ("APA"), see Chaney, 470 U.S. at 830-
35; Crowley Carribean Transp., 37 F.3d at 674-75; however,
an agency's adoption of a general enforcement policy is
subject to review. Indeed, in Crowley Carribean Transport,
this court distinguished between "an agency's statement of a
general enforcement policy" and a "single-shot non-
enforcement decision," the former being reviewable even
though the latter may not be. Id. at 676; see also Edison
Elec. Inst. v. EPA, 996 F.2d 326, 333 (D.C. Cir. 1993);
National Wildlife Fed'n v. EPA, 980 F.2d 765, 772-73 (D.C.
Cir. 1992). Because MarAd's action was not such a single-
shot non-enforcement decision, the district court had jurisdic-
tion to consider OSG's complaint, as we have jurisdiction to
hear the appeal. See 28 U.S.C. ss 1291, 1331 (1988).
Turning to the merits, we adopt the analysis of the district
court insofar as it considered whether in section 506 Congress
had decided the issue, in which event the agency must adhere
to the unambiguous expression of congressional intent, and if
not, whether the agency's interpretation of the act is reason-
able in light of the statutory policies and purposes. See
Chevron, 467 U.S. at 842-45.7 Seatrain establishes that
nothing in the 1936 Act spoke directly about whether MarAd
could release CDS-built vessels permanently from their obli-
gations under section 506, and no legislative enactments since
__________
7 OSG contends that review under the arbitrary-or-capricious
standard of section 706(2)(A) of the APA, 5 U.S.C. s 706(2)(A)
(1988), is appropriate instead of Chevron, but this is incorrect.
True enough, when Congress has "explicitly left a gap for the
agency to fill, there is an express delegation of authority to the
agency to elucidate a specific provision of the statute by regulation"
and ensuing regulations are reviewed pursuant to the arbitrary-or-
capricious standard. Chevron, 467 U.S. at 843-44. But when, as
here, Congress has not explicitly delegated rulemaking authority to
the agency charged with administering the statute, the Chevron
analysis is the appropriate means by which to evaluate the agency's
interpretation of the statute. See id. at 844. In any event, apply-
ing the arbitrary-or-capricious standard would not yield a different
result.
Seatrain embody indications of congressional intent on the
matter clear enough to provide an unambiguous answer.
In Seatrain, the Supreme Court upheld a policy under
which the agency allowed a CDS-built vessel to enter the
domestic market upon repayment of the CDS to the govern-
ment. See Seatrain, 444 U.S. at 574. In so doing, the Court
noted that "[section] 506 simply mandates that vessels enjoy-
ing the benefits of a subsidy may move in and out of
domestic commerce only under narrowly circumscribed condi-
tions. It speaks to temporary releases from the foreign-
trade-only requirement, and only to such releases." Id. at
588. Nothing in the 1936 Act or its legislative history, the
Court held, had direct bearing on the Secretary's ability to
regulate permanent releases into the domestic market. See
id. at 590. Although the particular facts in the case involved
CDS repayment before the end of a vessel's economic life, the
analysis in Seatrain establishes, for purposes of the first step
in our Chevron analysis, that at the time, Congress had not
answered the precise question in this case: whether CDS-
built vessels could be permanently released from the section
506 restrictions at the end of their economic lives.
OSG's contention that congressional enactments after Sea-
train show that Congress meant to answer that question in
the negative is meritless. In 1987, in section 505 of the
Supplemental Appropriations Act, Pub. L. No. 100-71, 101
Stat. 391 (1987), Congress forbade MarAd from expending
any funds "for the permanent release of vessels from the
restrictions in section 506 of [the 1936 Act]." Supplemental
Appropriations Act s 505.8 Contrary to OSG's contention,
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8 Section 505 provides:
None of the funds appropriated or made available by this or
any other Act or otherwise appropriated or made available to
the Secretary of Transportation or the Maritime Administrator
for purposes of administering the Merchant Marine Act, 1936,
as amended (46 U.S.C. 1101 et seq.), shall be used by the
United States Department of Transportation or the United
States Maritime Administration to propose, promulgate, or
implement any rule or regulation, or, with regard to vessels
nothing in this section precludes MarAd from interpreting the
1936 Act to allow the permanent release of CDS-built vessels
into the domestic market. Mere appropriations acts, which
on their surface only address funding matters, do not make
changes in substantive law unless they do so explicitly. See
Tennessee Valley Auth. v. Hill, 437 U.S. 153, 190 (1978);
National Treasury Employees Union v. Devine, 733 F.2d
114, 117 n.8 (D.C. Cir. 1984). Neither this text nor its
legislative history contains any expression of congressional
intent clear enough to allow us to infer that this section had
any substantive effect on the 1936 Act.9
Neither can OSG find support for its view that Congress
intended to bar policies such as that adopted by MarAd in
this case in the Maritime Security Act of 1996, Pub. L. No.
104-239, 110 Stat. 3133. In that act, Congress amended the
1936 Act to add a new section 512 providing that restrictions
under section 506 do not apply to CDS-built liner vessels
after "the expiration of the 25-year period beginning on the
date of the original delivery of the vessel from the shipyard."
__________
which repaid subsidy pursuant to the rule promulgated by the
Secretary May 3, 1985 and vacated by Order of the U.S. Court
of Appeals for the D.C. Circuit January 16, 1987, conduct any
adjudicatory or other regulatory proceeding, execute or per-
form any contract, or participate in any judicial action with
respect to the repayment of construction differential subsidy
for the permanent release of vessels from the restrictions in
section 506 of the Merchant Marine Act, 1936, as amended:
Provided, That such funds may be used to the extent such
expenditure relates to a rule which conforms to statutory
standards hereafter enacted by Congress.
Supplemental Appropriations Act s 505.
9 The legislative history behind this particular provision is quite
sparse, but what there is implies that Congress was attempting to
accommodate this court's decision in Independent U.S. Tanker
Owners Committee v. Dole, 809 F.2d 848 (D.C. Cir. 1987). See H.R.
Rep. No. 100-28, at 120-21. The legislative history gives no indica-
tion that Congress meant to effect a substantive change in the 1936
Act.
46 U.S.C.A. app. s 1162 (Supp. 1997).10 OSG claims that the
exclusion of CDS-built tankers from this new section was
purposeful. Even if we were inclined to credit this textual
argument, however, the legislative history does not support
this characterization of section 512. Congress was if anything
endorsing MarAd's general policy: it enacted section 512 to
"reaffirm a longstanding executive branch interpretation of
applicable statutes." H.R. Rep. No. 104-229, at 15 (1996),
reprinted in 1996 U.S.C.C.A.N. 3521, 3528. This amendment
to the 1936 Act does not show congressional intent to pre-
clude MarAd's interpretation of section 506.
Absent congressional indication regarding whether the for-
eign-trade-only requirement of section 506 lapses for CDS-
built vessels at the end of their economic lives, the only
question is whether MarAd's interpretation of the 1936 Act in
this regard was reasonable. See Chevron, 467 U.S. at 843-45.
As the district court noted, in this second step, courts gener-
ally accord great deference to the particular way in which the
agency chooses to implement a statute that it is empowered
to administer. See OSG Bulk Ships, 921 F. Supp. at 821.
"The court must defer to the agency's interpretation so long
as it is reasonable, consistent with the statutory purpose, and
not in conflict with the statute's plain language." Coal Em-
ployment Project v. Dole, 889 F.2d 1127, 1131 (D.C. Cir.
1989); see also Rust v. Sullivan, 500 U.S. 173, 184 (1991).
Given the Secretary's "broad authority to oversee administra-
tion of the [1936] Act," Seatrain, 444 U.S. at 585, this court
has stated that an interpretation of the 1936 Act by MarAd
"must be accepted 'unless it is manifestly unreasonable.' "
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10 As codified, section 512 provides:
Notwithstanding any other provision of law or contract, all
restrictions and requirements under sections 1153, 1156, and
1212 of this Appendix applicable to a liner vessel constructed,
reconstructed, or reconditioned with the aid of construction-
differential subsidy shall terminate upon the expiration of the
25-year period beginning on the date of the original delivery of
the vessel from the shipyard.
46 U.S.C.A. app. s 1162.
Liberty Maritime Corp. v. United States, 928 F.2d 413, 419
(D.C. Cir. 1991) (quoting National Wildlife Fed'n v. Gorsuch,
693 F.2d 156, 174 (D.C. Cir. 1982)).
As Seatrain establishes, MarAd's interpretation does not
conflict with the plain language of the statute. The 1936 Act
does not directly address when the agency can grant CDS-
built vessels permanent releases from the section's restric-
tions. See Seatrain, 444 U.S. at 588-90. Furthermore, the
Supreme Court concluded, "[o]n the face of the statute, the
Secretary's broad contracting powers and discretion to ad-
minister the [1936] Act seem to comprehend the authority" to
allow the permanent release of CDS-built vessels upon the
repayment of their subsidies to the government. Id. at 588.
There is no basis in the statute upon which to conclude that
this broad discretion would not allow MarAd to interpret the
1936 Act to allow permanent release upon expiration of CDS-
built vessels' economic lives as well as upon such repayment.
Hence, we need only elaborate on the district court's
analysis by emphasizing, in response to OSG's economic
arguments, that MarAd's interpretation accords well with the
general purposes of the 1936 Act. In the act, Congress
explicitly enumerated these purposes, the primary one being
this: "It is declared to be the policy of the United States to
foster the development and encourage the maintenance of ...
a merchant marine." 46 U.S.C. app. s 1101 (1988);11 see
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11 Section 1101 provides:
It is necessary for the national defense and development of its
foreign and domestic commerce that the United States shall
have a merchant marine (a) sufficient to carry its domestic
water-borne commerce and a substantial portion of the water-
borne export and import foreign commerce of the United
States and to provide shipping service essential for maintaining
the flow of such domestic and foreign water-borne commerce at
all times, (b) capable of serving as a naval and military auxilia-
ry in time of war or national emergency, (c) owned and
operated under the United States flag by citizens of the United
States, insofar as may be practicable, (d) composed of the best-
equipped, safest, and most suitable types of vessels, construct-
also Liberty Maritime Corp., 928 F.2d at 419. The MarAd
interpretation at issue in this case furthers this goal: if CDS-
built vessels can enter the domestic trade after the expiration
of their economic lives, it is more likely that there will be a
fleet of American ships "sufficient to carry [the nation's]
domestic water-borne commerce ... and to provide shipping
service essential for maintaining the flow of ... domestic and
foreign water-borne commerce at all times." 46 U.S.C. app.
s 1101. This is particularly so given that, if CDS-built
vessels whose economic lives have expired cannot enter the
domestic trade, the alternative is likely the scrapyard: such
vessels no longer receive operating-differential subsidy pay-
ments, see id. s 1175(b), and American vessels have difficulty
competing in the international shipping market even with the
benefit of the ODS program. As the Supreme Court conclud-
ed in Seatrain, "a permanent release from the foreign-trade-
only requirement may quite directly further the general goals
of the [1936] Act." Seatrain, 444 U.S. at 588.
Undoubtedly, a further purpose of the 1936 Act and section
506 in particular is "to protect unsubsidized U.S. shipowners
from the unfair competition of subsidized U.S. shipowners,"
Liberty Maritime Corp., 928 F.2d at 413 (citing Seatrain, 444
U.S. at 586-87), but we see no inconsistency between MarAd's
interpretation of section 506 and this statutory end. In a
July 1964 internal memorandum, MarAd concluded that the
owner of a CDS-built vessel who has paid off the CDS either
in cash or through service in foreign trade is, in effect, "in the
same position as if he had paid the full domestic price; that
is, he should not be required to make further repayments,
and should not be bound to an exclusive foreign trade obli-
__________
ed in the United States and manned with a trained and efficient
citizen personnel, and (e) supplemented by efficient facilities
for shipbuilding and ship repair. It is declared to be the policy
of the United States to foster the development and encourage
the maintenance of such a merchant marine.
46 U.S.C. app. s 1101. The Jones Act contains a similar statement
of congressional purpose. See 46 U.S.C. app. s 861 (1988).
gation."12 Once the economic life of a CDS-built vessel has
expired, in MarAd's view, that vessel is no longer different in
any relevant way from an unsubsidized vessel in the Jones
Act fleet. Hence, MarAd has consistently avowed, there is no
reason to "protect" that fleet from the competition from CDS-
built vessels that have served their time in foreign trade.
This view of the competitive equities is reasonable: OSG
has given no compelling reason why it is inherently unfair to
admit a CDS-built vessel into the domestic market. Although
allowing subsidized vessels to compete directly with unsubsi-
dized vessels would be unfair if there were no offsetting
factor to balance competitive conditions, the benefit of the
subsidy is counterbalanced by the restriction of CDS-built
vessels to the foreign market through their economic lives.13
By contrast, the Jones Act fleet is free at all times to exploit
economic opportunities in both domestic and foreign markets,
and MarAd's conclusion that the competition between Jones
Act vessels and CDS-built vessels whose economic lives have
expired will not be unfair is reasonable. The mere fact that
the CDS-built vessels once had a subsidy could not be signifi-
cant or the Supreme Court would not have concluded in
Seatrain that, "at least where repayment of the CDS includes
some amount reflecting capital costs which would have been
incurred had no subsidy been available, such a transaction
merely permits a once subsidized vessel to enter the domestic
trade on a footing equal to that of vessels already in that
trade." Seatrain, 444 U.S. at 589-90 (footnote omitted).14
We see no significant difference between repayment for the
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12 Memorandum from Graydon L. Andrews, Acting General
Counsel, Maritime Administration, to Maritime Subsidy Board,
Maritime Administration 5 (July 28, 1964).
13 Of course, these vessels can enter the domestic market under
the limited exceptions in section 506, but only upon proportional
repayment of their CDS. See 46 U.S.C. app. s 1156.
14 This reasoning was presaged by Judge Bazelon's dissent in
the decision of this court reversed by the Seatrain Court. See
Alaska Bulk Carriers, Inc. v. Kreps, 595 F.2d 814, 843 (Bazelon, J.,
dissenting) (D.C. Cir. 1979).
CDS in money and repayment through service in the foreign
trade; in neither case does the vessel formerly encumbered
with a CDS possess an unfair competitive advantage over
vessels never so encumbered. Indeed, if anything, allowing
CDS-built vessels to enter the domestic trade after the
expiration of their economic lives is more fair than the
practice upheld by the Supreme Court in Seatrain: allowing
the permanent release of CDS-built vessels from the section
506 restrictions before the natural expiration of their econom-
ic lives means that Jones Act vessels are less able to prepare
for the entry of new competitors in the domestic market.
OSG contends also that the interpretation does not further
certain other goals of the 1936 Act, such as the goals of
ensuring that the merchant marine remain modern and,
concomitantly, stimulating the domestic shipbuilding industry.
See 46 U.S.C. app. ss 1101, 1157, 1158, 1160 (1988). OSG
claims that MarAd's interpretation conflicts with these statu-
tory purposes in that it does not take old ships out of service
at the end of their economic lives, but actually encourages
them to remain active. Again, however, MarAd's interpreta-
tion of section 506 does not act counter to these goals because
CDS-built vessels whose economic lives have expired are, for
all relevant purposes, identical to those built without subsidi-
zation. No one would suggest that MarAd should forcibly
retire all vessels after they reach a certain age, although
doing so would ensure a modern fleet and stimulate domestic
shipbuilding. The way the agency meets these goals is a
matter to which it is entitled to some discretion. Indeed,
given the proper level of deference we owe to MarAd, the
agency's interpretation need not further every statutory pur-
pose in the 1936 Act. MarAd's approach furthers the overall
purposes of the statute, and OSG has presented no reason to
disturb the agency's judgment about how best to weigh the
individual purposes to effectuate Congress's overall goals.
See Continental Air Lines, Inc. v. Department of Transp.,
843 F.2d 1444, 1450-52 (D.C. Cir. 1988).15
__________
15 In an unpersuasive alternative argument, OSG insists that
MarAd could not adopt a general policy, but instead should have to
Finally, we conclude as well that MarAd's explanation of
why its interpretation of the 1936 Act was consistent with the
statutory purposes, though cursory, was sufficient. Cf. id. at
1451-53. OSG insists that MarAd's pronouncements of the
interpretation at issue in this case were cursory and circular
and inadequately addressed the policies and purposes of the
1936 Act. To the contrary, as the district court concluded,
"[t]he agency has considered and explained its interpretation
of Section 506 in a detailed and reasoned fashion consistent
with the statutory purpose." OSG Bulk Ships, 921 F. Supp.
at 826. MarAd has explained that the CDS-built vessel that
has paid off its CDS either in cash or through service in
foreign trade for its economic lifetime is, in effect, in the same
position competitively as the non-CDS vessel that was free to
engage in domestic trade all the while. Even though the
agency may not have explicitly mentioned and weighed every
statutory purpose in making this conclusion, its views with
regard to those purposes are inherent in the explanation; for
instance, there was no further need to address the economic
fairness of this interpretation of section 506, given the view
that, after the expiration of their economic lifetimes, CDS-
built vessels would essentially be in the same competitive
position as Jones Act vessels. On these particular facts,
though we would certainly find a lengthier explanation help-
ful, we cannot say that MarAd's explanation was insufficient.
__________
weigh, upon every application of a CDS-built vessel to enter the
domestic fleet, whether such entry would be consistent with the
purposes and policies of the 1936 Act. This argument is evidently
(and mistakenly) based on the declaration in Seatrain that the
Secretary had broad discretion whether to allow the particular
permanent release in question in that case. See Seatrain, 444 U.S.
at 597. The Court did not, however, say that the Secretary would
have to consider the appropriateness of each such permanent
release on a case-by-case basis. It would be a perverse result
indeed if the Supreme Court's deliberate affirmation of the breadth
of the agency's discretion in such matters actually precluded the
agency from adopting a general rule in this case. Cf. Independent
U.S. Tanker Owners Committee, 809 F.2d at 850-51.
Given the instruction of Seatrain and the absence of later
congressional directive, MarAd's discretion to award perma-
nent releases to the section 506 foreign-trade-only restriction
is extremely broad: as long as the agency does not allow
CDS-built vessels to take the subsidy without paying for the
benefit with some currency of value under the 1936 Act--
either money or service in the foreign shipping market--the
agency will likely be acting within its discretion. The inter-
pretation of the 1936 Act at issue in this case is well within
the realm of permissible interpretations. Accordingly, we
affirm the grant of summary judgment.