AMERICAN CRUISE LINES v. UNITED STATES OF AMERICA, UNITED STATES MARITIME ADMINISTRATION, UNITED STATES DEPARTMENT OF TRANSPORTATION, PETE BUTTIGIEG, IN HIS OFFICIAL CAPACITY AS SECRETARY OF TRANSPORTATION, LUCINDA LESSLEY, IN HER OFFICIAL CAPACITY AS THE ACTING MARITIME ADMINISTRATOR
No. 22-1029
United States Court of Appeals for the Second Circuit
March 15, 2024
August Term 2023
Argued: January 12, 2024
AMERICAN CRUISE LINES,
Petitioner,
v.
UNITED STATES OF AMERICA, UNITED STATES MARITIME ADMINISTRATION, UNITED STATES DEPARTMENT OF TRANSPORTATION, PETE BUTTIGIEG, IN HIS OFFICIAL CAPACITY AS SECRETARY OF TRANSPORTATION, LUCINDA LESSLEY, IN HER OFFICIAL CAPACITY AS THE ACTING MARITIME ADMINISTRATOR,
Respondents,
VIKING USA LLC, RIVER 1,
LLC,
Intervenors.
Before: CALABRESI and PÉREZ, Circuit Judges, and NARDACCI, District Judge*
On petition for review of a final decision of the United States Maritime Administration pursuant to
The United States Maritime Administration (“MARAD“) issued a final decision confirming the legality of an agreement between River 1, LLC and Viking USA LLC as a “time charter” subject to standing approval under
AFFIRMED.
JONATHAN BRIGHTBILL (Spencer W. Churchill, Constantine Papavizas, on the brief), Winston & Strawn, LLP, Washington, D.C., for Petitioner.
CASEN ROSS (Charles W. Scarborough, on the brief), Civil Division, United States Department of Justice, Washington, D.C., for Respondents.
SHAY DVORETZKY (Kyser Blakely, Parker Rider-Longmaid, and Hanaa Khan, on the brief), Skadden, Arps, Slate, Meagher & Flom LLP, Washington, D.C., for Intervenor Viking USA LLC.
ARTHUR R. KRAATZ (Thomas Kent Morrison, on the brief), Phelps Dunbar LLP, New Orleans, LA., for Intervenor River 1, LLC.
MYRNA PÉREZ, Circuit Judge:
Viking River Cruises, participating in this litigation through its subsidiary Viking USA LLC (“Viking“), has long offered cruises on rivers around the world, particularly in Europe and Egypt. This case concerns whether Viking‘s recent expansion into the United States and the Mississippi River cruise market through a charter agreement with River 1, LLC (“River 1“), an American company and a subsidiary of Edison Chouest Offshore, was legal under federal maritime law. The United
BACKGROUND AND APPLICABLE LAW
A series of federal maritime statutes colloquially known as the “Jones Act” generally bars foreign-owned companies from engaging in “coastwise” commerce, meaning commerce taking place between different ports within the United States. See, e.g.,
Two Jones Act provisions are at issue in this case. The first is the Passenger Vessel Services Act of 1886, which bars foreign-owned vessels from transporting passengers “between ports or places in the United States to which the coastwise laws apply.”
In order to access the rapidly growing Mississippi River cruise market, Viking, a Swiss company, established a unique arrangement with River 1. Under the agreement, River 1 would construct a cruise ship which Viking would then charter for cruises on the Mississippi River. River 1 employees would manage the ship‘s maritime activities, while Viking employees would manage the onboard entertainment operation.
MARAD regulations provide for a standing blanket approval for most forms of charter agreements. See
Petitioner American Cruise Lines challenges that final decision, alleging that Viking and River 1‘s agreement should instead be construed as a “bareboat” charter.1
River 1 continued construction of the ship it planned to charter to Viking throughout the pendency of MARAD‘s decision-making process. And several months after MARAD‘s March 2022 decision, in September 2022, the Viking Mississippi set sail.2 Viking now offers a variety of
Notes
DISCUSSION
We conclude that American Cruise Lines has standing to pursue this petition. However, we affirm MARAD‘s decision and process in this matter.
A. Standard of Review
Our review of agency actions under the Administrative Procedure Act is “narrow and deferential.” Kakar v. U.S. Citizenship & Immigr. Servs., 29 F.4th 129, 132 (2d Cir. 2022) (internal citations omitted). We may only “set aside an agency action that is arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law.” Id. (citing Alzokari v. Pompeo, 973 F.3d 65, 70 (2d Cir. 2020) (internal quotation and citation omitted)). An agency‘s decision is arbitrary and capricious only if “the agency has relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise.” Id. (internal quotation marks omitted) (quoting Alzokari, 973 F.3d at 70).
B. Standing
As an initial matter, we determine that American Cruise Lines has standing to challenge MARAD‘s final decision. River 1 and Viking argue that because there is no guarantee that MARAD will pursue an enforcement action if their final decision is vacated, American Cruise Line‘s alleged injuries in the form of increased competition are not redressable.
“To satisfy the redressability element of Article III standing, a plaintiff must show that it is ‘likely, as opposed to merely speculative, that the [alleged] injury will be redressed by a favorable decision.‘” Soule v. Conn. Ass‘n of Schs., Inc., 90 F. 4th 34, 47 (2d Cir. 2023) (en banc) (quoting Lujan v. Defs. of Wildlife, 504 U.S. 555, 561 (1992)). However, a plaintiff “need not show that a favorable decision will relieve [their] every injury.” Larson v. Valente, 456 U.S. 228, 243 n.15 (1982). A remedy that “would serve to . . . eliminate any effects of” the alleged violation that produced the injury is sufficient. Steel Co. v. Citizens for a Better Env‘t, 523 U.S. 83, 105–06 (1998).
River 1 and Viking may well be correct that MARAD will not immediately bring an enforcement action against them if this Court vacates MARAD‘s decision. However, American Cruise Lines identifies at least two injuries that a favorable outcome would more definitively redress. First, vacatur of MARAD‘s final decision would give American Cruise Lines a new opportunity to engage with a public notice and comment process. And second, vacatur would likely prevent River 1 and Viking from imminently expanding into other markets where it would compete against American Cruise Lines—namely, the Snake River in the Pacific Northwest. Because a favorable decision would likely alleviate these injuries, we conclude that American Cruise Lines has standing to challenge MARAD‘s decision.
C. MARAD‘s Final Decision
On the specific facts of this record, we cannot say that MARAD‘s final decision was arbitrary and capricious. MARAD conducted a careful, fact-intensive analysis of the proposed agreement between River 1 and Viking and applied blackletter maritime law and analogous regulations to reach a reasonable conclusion: that the agreement constituted a time charter subject to the
1. Blackletter Maritime Law
MARAD primarily relied on blackletter maritime law to conclude that the agreement between River 1 and Viking constituted a time charter.
Our precedent on what constitutes a time charter under blackletter maritime law is relatively clear. Under a time charter, “the charterer engages for a fixed period of time a vessel, which remains manned and navigated by the vessel owner, to carry cargo wherever the charterer instructs.” Nissho-Iwai Co. v. M/T Stolt Lion, 617 F.2d 907, 914 (2d Cir. 1980). By contrast, “[t]he fundamental characteristic of a demise or bareboat charter is the shifting of the exclusive possession and control of the chartered vessel from the owner to the charterer during the charter period.” Blanco v. United States, 775 F.2d 53, 57–58 (2d Cir. 1985) (internal quotation marks omitted); see also Fitzgerald v. A.L. Burbank & Co., 451 F.2d 670, 676 (2d Cir. 1971) (“To create a demise the owner of the vessel must completely and exclusively relinquish possession, command, and navigation thereof to the demise. . . . [A]nything short of such a complete transfer is a time or voyage charter.“) (internal quotations and citations omitted); Am. Petroleum & Transp., Inc. v. City of New York, 737 F.3d 185, 187 n.1 (2d Cir. 2013) (“In a demise or bareboat charter, the charterer is owner pro hac vice of the vessel, and the charterer is treated as the owner of the vessel with a sufficient property interest to recover lost profits. The demise charter is tantamount to, though just short of, an outright transfer of ownership.” (internal quotation marks and citation omitted)). This court “start[s] with the general presumption that the owner does not mean to put his vessels into the possession of the charterer, and that the presence of his own crew on board is very strong presumptive evidence that he does not, which only very cogent circumstances will overthrow.” Hansen v. E.I. DuPont de Nemours & Co., 33 F.2d 94, 96 (2d Cir. 1929) (internal citations and quotations omitted).
MARAD‘s determination that River 1 and Viking‘s proposed agreement constituted a time charter under blackletter maritime law precedent was reasonable. The agreement between River 1 and Viking does not grant Viking exclusive possession and control of the cruise ship in any way that blackletter maritime law recognizes as sufficient to create a bareboat charter.
A number of other facts support MARAD‘s finding that the agreement is a time charter. Most importantly, River 1 is responsible for providing the crew for the ship, and River 1‘s “vessel master” will oversee the ship‘s operations. As noted above, “the presence of [the ship owner‘s] crew on board is very strong presumptive evidence” that an agreement is a time charter. Id. (internal quotation marks and citation omitted).
It is true that the agreement allows Viking to request that the vessel master be replaced. However, Viking may only do so in the context of unsatisfactory performance, and Viking has no power to direct who that replacement should be. The vessel master is always “selected and paid by” River 1. See In re: The Spokane, 294 F. 242, 245–46 (2d Cir. 1923). Further, the agreement gives River 1‘s vessel master the power to decline any Viking request that she deems unreasonable or determines could create a safety risk.
Additionally, River 1 bears primary responsibility for the ship‘s day-to-day maintenance and care. “If the owner [of the vessel] is responsible for keeping the vessel in good condition during the life of the charter or if the owner supplies the master and crew, it is extremely unlikely that there has been a demise to the charterer,” and “the mere fact that the charterer has some control over the master or that the charterer selects the routes to be taken or the cargo to be carried” does not establish a bareboat charter. Fitzgerald, 451 F.2d at 676 (citations omitted). While Viking is responsible for passenger-related expenses, River 1 is required to “maintain the ship in a condition acceptable for use as a passenger cruise vessel,” see Joint App‘x at 90, an obligation that requires it to conduct all maintenance and repair, procure fuel for the ship, and provide insurance for the ship itself and the machinery onboard.
Finally, Viking‘s ability to set the itinerary is consistent with the maritime law definition of a time charter. In Fitzgerald, we affirmed that a typical time charter allows the charterer to “select[] the routes to be taken or the cargo to be carried.” Fitzgerald, 451 F.2d at 676.
2. Analogous MARAD Regulations
MARAD‘s analysis of blackletter maritime law was sufficient on its own to reach the conclusion that the agreement between River 1 and Viking constituted a time charter, and thus find that the agreement did not constitute an impermissible transfer of control to a foreign corporation under
Although it has done so with respect to some other Jones Act provisions, MARAD has not promulgated regulations for evaluating whether a charter of a passenger vessel to a non-citizen represents an impermissible transfer of control. Thus, for additional authority to support its decision in this matter, MARAD looked to
American Cruise Lines not only claims that the agreement between Viking and River 1 violates the per se impermissible control factors outlined in
American Cruise Lines focuses on three aspects of the charter agreement that it says suggest impermissible foreign control under the regulation. More specifically, American Cruise Lines asserts that: (1) the agreement requires Viking to absorb certain standard operating costs and business risks, (2) Viking may direct that the vessel master be removed, and (3) the financing for the ship‘s construction gave Viking impermissible equity in the ship itself. On the record before us, we cannot say MARAD erred notwithstanding these arguments.
Regarding the operating costs and business risks,
Regarding Viking‘s ability to have River 1‘s vessel master removed, the American Fisheries Act regulations suggest that an agreement may not “limit the actions of or replace the chief executive officer . . . of the entity which owns the” vessel.
Finally, American Cruise Lines suggests that Viking used a pre-paid charter hire to advance the funds for the ship‘s construction and thus finance the ship in a manner that a separate American Fisheries Act regulation,
D. MARAD‘s Decision-Making Process
In addition to its substantive allegations, American Cruise Lines also alleges that MARAD failed to follow the notice and comment provisions applicable to this case. We determine that these arguments are without merit and hold that MARAD properly complied with all procedural requirements in reaching its March 2022 final decision.
As discussed above, River 1 and Viking initially sought confirmation from MARAD that their agreement constituted a time charter pursuant to
At the time River 1 and Viking initially sought confirmation, MARAD was under no statutory or regulatory obligation to provide a notice and comment period for confirmations under
We conclude that MARAD fully complied with the new procedural requirements the 2021 NDAA imposed regarding this transaction. MARAD posted a summary of River 1‘s request on a public website on July 30, 2021, and opened a 60-day period for the public to submit comments. The summary included many key facts upon which MARAD eventually relied to conduct its analysis as to whether the agreement was a time charter, including that “River 1 would be responsible for hiring, provisioning, and paying the vessel‘s marine crew,” “River 1 would be responsible for vessel maintenance and repair,” “River 1 would be responsible for insuring the vessel,” and “Viking would make an advance charter hire payment that would be used by River 1 to cover the delivered price of the vessel.” Joint App‘x at 260. And when MARAD eventually published its final decision, it specifically responded to arguments the public had submitted in a thoughtful and reasonable manner. See Spec. App‘x at 1. We determine that this summary and MARAD‘s subsequent consideration of the comments they received were “detailed” enough to satisfy the new procedural requirements that the 2021 NDAA imposed on MARAD.
American Cruise Lines alleges that MARAD‘s July 2021 notice was too vague to provide for meaningful public comment. This argument reads too much into what Congress intended to require of MARAD. American Cruise Line‘s analogy to the National Environmental Protection Act (“NEPA“) and our precedent in Brodsky v. United States Nuclear Regulatory Commission, 704 F.3d 114 (2d Cir. 2013), is incorrect. NEPA imposes a more proscriptive notice requirement than § 3502(b) of the NDAA does, requiring a “detailed statement” rather than a “detailed summary.” And in Brodsky, the agency allowed for no public participation at all. MARAD allowed for public notice and comment in this case—American Cruise Lines’ disagreement is only as to degree. Nothing in Brodsky sets a specific amount of public participation an agency must allow, and “judicial review of the procedure an agency fashions to discharge its statutory duties is generally deferential.” New York v. Fed. Energy Regul. Comm‘n, 783 F.3d 946, 955 (2d Cir. 2015). We see no legal error in MARAD‘s process under the 2021 NDAA.
CONCLUSION
We do not suggest today that, as a matter of law, charter arrangements such as this one are per se legal under the Passenger Vessel Services Act of 1886, the Shipping Act of 1916, or other Jones Act provisions. We merely conclude that, based on the record before it, MARAD did not act in an arbitrary and capricious manner in confirming that this particular arrangement constituted a valid time charter and was not an impermissible transfer of control of a vessel to a non-citizen. If American Cruise Lines or any other interested party feels that MARAD‘s review was not demanding enough, that is an issue they shall have to take up with Congress.
We have considered American Cruise Lines’ remaining arguments and find them to be without merit. For the foregoing reasons, we AFFIRM the final decision of the United States Maritime Administration.