Federal Court Rebukes Coast Guard
In Case Challenging Jones Act Rights
Seabulk Trader Was Refitted in China

(See the Court Decision [pdf])

A U.S. District Court Judge in Alexandria, VA, has found the Coast Guard failed to properly enforce the Jones Act when it granted coastwise trade authorization for a tanker vessel owned and operated by Seabulk systems because the ship had been refitted with an inner hull and new ballast tanks in China. “This decision is a powerful precedent in support of our position in the Metal Trades case challenging kit ships that the Coast Guard authorized at Aker’s Philadelphia Shipyard,” declared Metal Trades Department President Ron Ault. Ault pointed out that the Coast Guard used some of the same “circular logic and unsubstantiated claims to justify its actions in the Aker decision.”

Ruling on April 24, 2008 in the case brought against the Coast Guard by the Shipbuilders Council of America against Seabulk and the Coast Guard, Judge Leonie Brinkema found that the Coast Guard failed to act “reasonably” in issuing authorization in 2005 to the owner to have the ship refitted with an inner hull and new ballast tanks by a Chinese shipyard, and, again in 2007, when the Coast Guard signed off on Seabulk’s request for a permanent “endorsement” to allow the vessel to be put back in service. The Coast Guard wrote an authorization letter the day after it received Seabulk’s request even though the work description provided two years earlier differed substantially from the work that was ultimately done on the ship.

“Because the existing record does not support the Coast Guard’s issuance of the coastwise endorsement for the Seabulk Trader, the Court will remand this matter to the Coast Guard with instructions to revoke the coastwise endorsement. The agency [Coast Guard], in its discretion, may initiate further proceedings with respect to the Seabulk Trader so long as those proceedings are consistent with this opinion,” Brinkema said.

Brinkema relied on three key points in remanding the issue back to the Coast Guard for re-examination:

• First: The Coast Guard relied on a non-existent formulation to find that the new inner hull applied in China was not a “major component” of the vessel. The judge found the Coast Guard’s position “not persuasive” on this point, noting that the legislative history of the Jones Act establishes that “Congress broadly intended to prohibit the foreign construction of ‘any major component’ of the hull or superstructure” of vessels engaged in coastwise trade but left it up to the Coast Guard to determine what a “major component” is. However, she added, the Coast Guard’s determination “must be reasonable,” suggesting that such an assessment might focus on “physical size, cost or function, or “its importance to the vessel’s seaworthiness.”  Judge Brinkema also sited legislative history to note that Congress specifically instructed that interpretations also take into account “any component which relates to or changes the configuration of the vessel.
• Second, Brinkema found, the Coast Guard did not explain or demonstrate how “a piecemeal addition of a foreign-built hull or deck onto the vessel materially differs from a wholesale addition of a pre-constructed foreign-built hull or deck onto a vessel.
  “In either case,” the judge wrote, “the shipowner would be securing the foreign construction of a major component of the vessel—the very result that the Jones Act aims to prohibit.”
• Third, and finally, Brinkema said, the distinctions that the Coast Guard used in arriving at its interpretation “will lead to arbitrary applications of the Jones Act.”
  “Shipowners could easily frustrate the entire operation of the Second Proviso [of the Jones Act] simply by dictating the manner of installation.”
  She called the Coast Guard’s interpretation “unfaithful to the text, history and purpose” of the Jones Act. “For these reasons, the Coast Guard decision is invalid and must be remanded to the agency for further proceedings.”

#          #            #

 

 

Metal Trades Department, AFL-CiO • 815 16th Street, NW •Washington, DC 20006

Phone: 202-508-3705 • Fax: 202-508-3706 • email: metaltradesweb@aol.com

Contact Us | Links