301 F. Supp. 3d 99
D.C. Cir.2018Background
- In 2016 the U.S. Coast Guard adopted a new methodology for setting Great Lakes pilotage rates used to charge international shippers.
- Plaintiffs (representatives of international shippers) challenged the 2016 Rule under the Administrative Procedure Act, arguing the Coast Guard acted arbitrarily and capriciously in multiple respects.
- The court previously found two lawful defects: (1) the Coast Guard applied a 10% upward adjustment to Canadian benchmark pilot compensation without a reasoned explanation for that magnitude; and (2) the Coast Guard failed to account for revenue from vessel-size "weighting factors" when setting rates.
- The Court reserved remedy in its prior opinion and ordered supplemental briefing; parties proposed remedies including vacatur, recalculation, refunds, or remand.
- The Court concluded the defects were material but that vacating the rule would be highly disruptive (potentially triggering retroactivity issues and refunds), so it remanded to the Coast Guard without vacatur.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of 10% adjustment to Canadian benchmark compensation | The 10% upward adjustment is arbitrary and unsupported and thus unlawful | Coast Guard contends an upward adjustment was justified; 10% reflected agency judgment | Court: Coast Guard erred by failing to justify the specific 10% figure; remand for reasoned explanation or revision |
| Failure to consider weighting-factor revenue | Coast Guard must include weighting-factor revenues when calculating target revenue; omission inflates rates | Coast Guard acknowledged potential merit and later incorporated weighting factors in 2017 rule | Court: Failure to consider weighting factors in 2016 was arbitrary and capricious; practical mootness of the issue does not affect remedy |
| Appropriate remedy (vacatur, refunds, recalculation, or remand) | Plaintiffs seek vacatur of 2016 Rule, retroactive recalculation, and refunds/credits for overcharges | Coast Guard argues remand without vacatur is appropriate to avoid disruptive retroactive consequences | Court: Weighing seriousness of defects against disruption, court remands for agency reconsideration but declines to vacate the 2016 Rule |
Key Cases Cited
- Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (arbitrary-and-capricious standard and limits on substituting court judgment for agency)
- Allied-Signal, Inc. v. U.S. Nuclear Reg. Comm'n, 988 F.2d 146 (factors for vacatur vs. remand—seriousness of defects and disruptive consequences)
- Bowen v. Georgetown Univ. Hosp., 488 U.S. 204 (presumption against retroactive rulemaking absent clear congressional authorization)
- Heartland Reg'l Med. Ctr. v. Sebelius, 566 F.3d 193 (vacatur can be inappropriate where vacatur would force substantial retroactive payments)
- Am. Bioscience, Inc. v. Thompson, 269 F.3d 1077 (typical APA remedy is vacatur of invalid rule and remand)
- Milk Train, Inc. v. Veneman, 310 F.3d 747 (remand without vacatur appropriate when the status quo ante cannot be restored)