Courts Of Appeal Have Exclusive Jurisdiction Under The Hobbs Act For Marad’s Determination Of Citizenship Of Vessel

In June, a United States District Court for the District of Columbia, held that it lacked subject matter jurisdiction to review the Department of Transportation (“DOT”) and  Maritime Administration’s (“MARAD”) decision that the citizenship of a vessel satisfied the requirements of 46 U.S.C. § 50501.  In Matson Navigation Co, Inc. v U.S. Department of Transportation et. al—F. Supp. 3d—(D.C. 2020), the court ruled that the Court of Appeals had exclusive jurisdiction pursuant to the Hobbs Act, 28 U.S.C. § 2342, to review MARAD’s 2015 decision that a commercial vessel satisfied the citizenship requirements to enroll in the Maritime Security Program, 46 U.S.C. §§ 53101 – 53111.

            The Maritime Security Act of 1996, Pub. L. No. 104-239, 110 Stat. 3118, provides that the Secretary of the DOT, in conjunction with the Secretary of Defense, shall establish “a fleet of active, commercially viable, militarily useful, privately owned vessels to meet national defense and other security requirements and maintain a United States presence in international commercial shipping.”  46 U.S.C. §53102(a). This fleet “consists of privately owned United States-documented vessels for which there are in effect operating agreements.”  This private fleet is named the Maritime Security Program (“MSP”). MARAD is the official MSP administrator and executes “operating agreements” with participating vessels in the program.  46 C.F.R. 296.2.  In 2015, participating vessels were required to operate either exclusively in foreign trade or in “mixed foreign commerce and domestic trade.” Participating vessels may be replaced, although the vessel owner must demonstrate to MARAD that the replacement vessel will be operated in accord with the MSP requirements.

            In the late summer of 2015, shipowner APL provided MARAD notice that APL had found a replacement vessel for a ship currently enrolled in the MSP program.  Specifically, APL stated that it intended to operate the replacement vessel named the APL Guam, between the United States and Guam.  Two months later, MARAD approved the APL Guam as eligible to participate in the MSP program and subsequently amended the existing operating agreement to include the new ship.  MARAD’s decision to include the APL Guam in the MSP program included a specific finding that APL, as the owner, satisfied the U.S. citizenship requirements of 46 U.S.C. §50501.[1]

            Plaintiff Matson filed a complaint pursuant to the Administrative Procedures Act (“APA”) against DOT and MARAD in federal district court.  Specifically, Matson challenged MARAD’s determination that the APL Guam was entitled to participate in the MSP. APL intervened.  Citing 5 U.S.C. §706(2)(A), the court acknowledged that it had the authority to vitiate agency determinations that are “arbitrary, capricious, or otherwise not in accordance with law.”

            MARAD filed a motion  to dismiss Plaintiff’s claims regarding the APL Guam arguing that the Court lacked jurisdiction. In its analysis, the Court determined that MARAD’s “citizenship determination pursuant to §50501 was a “necessary predicate to” its finding that the APL Guam was eligible for the MSP program as a replacement vessel and that “the courts of appeals have exclusive jurisdiction to review the entire determination.” Accordingly, the Court held that the Hobbs Act specifically states in §2342 that the “court of appeals has exclusive jurisdiction to enjoin, set aside, suspend (in whole or in part), or to determine the validity of” . . . “all rules, regulations, or final orders of (A) the Secretary of Transportation issued pursuant to section 50501.” Finally, the Court determined that “it lacks jurisdiction to consider Matson’s challenge to MARAD’s 2015 Approval Order authorizing the substitution of the APL Guam for the existing MSP vessel.”  Plaintiff Matson has filed an appeal of the Court’s decision.

[1] In 2016, MARAD approved APL’s replacement of another vessel with the APL Saipan.  The District Court’s decision concerning the second replacement vessel is not discussed in this synopsis.

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