Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-97-01085/USCOURTS-caDC-97-01085-0/pdf.json

Parties Involved:
American President Lines, LTD
Petitioner
Federal Maritime Commission
Respondent
Sea-Land Service, Inc.
Intervenor for Petitioner
United States of America
Respondent

Document Text:

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 12, 1997 Decided March 13, 1998 

No. 93-1846

SEA-LAND SERVICE, INC.,

PETITIONER

v.

DEPARTMENT OF TRANSPORTATION, ET AL.,

RESPONDENTS

No. 97-1083

SEA-LAND SERVICE, INC.,

PETITIONER

v.

FEDERAL MARITIME COMMISSION AND UNITED STATES OF AMERICA,

RESPONDENTS

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AMERICAN PRESIDENT LINES, LTD.,

INTERVENOR

Consolidated with 

Nos. 97-1084, 97-1085

On Petition for Review of Orders of the 

Federal Maritime Administration

John M. Nannes argued the cause for petitioner. With 

him on the briefs were Richard L. Brusca, Robert S. Zuckerman, James P. Moore and Gary A. MacDonald. 

Steve Frank, Attorney, U.S. Department of Justice, argued 

the cause for respondent, Department of Navy, Military 

Sealift Command. With him on the briefs were Frank W. 

Hunger, Assistant Attorney General, Robert V. Zener, and 

Barbara C. Biddle.

Carol J. Neustadt, Attorney, Federal Maritime Commission, argued the cause and filed the brief for respondent, 

Federal Maritime Commission.

Robert T. Basseches and John Townshend Rich were on 

the briefs for amicus curiae American President Lines, Ltd.

Before: WILLIAMS and ROGERS, Circuit Judges and 

BUCKLEY, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge WILLIAMS.

WILLIAMS, Circuit Judge: In 1993 the United States Maritime Administration ("MarAd") issued two orders (the "modification orders") deleting from several of its own previous 

orders a clause that it had become convinced was legally 

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invalid. In No. 93-1846 Sea-Land Service, Inc. ("Sea-Land") 

appealed from the modification orders. In the course of that 

appeal it became apparent to the court that its resolution 

turned in part on a question within the primary jurisdiction 

of, and then pending before, the Federal Maritime Commission ("FMC"); accordingly we stayed our proceedings pending the FMC's decision. That decision, appealed by both 

sides, is now before us in No. 97-1083 and consolidated cases. 

We uphold a portion of the FMC decision and do not reach 

the other portion. For reasons that will become apparent, 

our ruling on the FMC decision completely undermines MarAd's modification orders, which we accordingly vacate. With 

the modification orders removed from the picture, the earlier 

MarAd orders resume their full original effectiveness.

* * *

Sea-Land is an ocean common carrier, transporting containerized freight, and a U.S. citizen within the meaning of 

certain maritime legislation, namely 46 U.S.C. app. 

§ 808(c)(1). In 1988 Sea-Land acquired twelve large containerships that had been built for and operated by United States 

Lines, Inc. until its bankruptcy in 1986. Sea-Land's purchase was made in conjunction with a Cooperative Working 

Agreement with two foreign carriers, P&O Containers (TFL) 

Limited and Nedlloyd Lijnen P.V. Under the Agreement, 

Sea-Land agreed to charter two of the ships to the foreign 

carriers for a period of time, and to charter and cross-charter 

space with the foreign carriers on all twelve ships. Article 

5(i) of the Agreement, the source of this litigation, prohibited 

the foreign carriers from carrying on Sea-Land's vessels 

cargo that was reserved to U.S.-flag vessels under the cargo 

preference laws of the United States.1

__________

1 The Cargo Preference Acts require the Department of Defense 

to use U.S.-flag vessels for ocean transport of military supplies and 

to transport at least fifty percent of all other Department cargo on 

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Ocean common carriers are regulated by the Shipping Act 

of 1916, 46 U.S.C. app. §§ 801-842, administered by MarAd, 

and the Shipping Act of 1984, 46 U.S.C. app. §§ 1701-1720, 

administered by the FMC. Cooperative working agreements 

among ocean common carriers must be filed with the FMC, 

which must reject agreements not meeting certain formal and 

substantive requirements. See 46 U.S.C. app. §§ 1704, 

1705(b). If not rejected, an agreement becomes effective 

shortly after its filing. See id. § 1705(c). If the FMC at any 

time determines that an agreement is "likely, by a reduction 

in competition, to produce an unreasonable reduction in transportation service or an unreasonable increase in transportation cost," it may seek an injunction against its operation. Id.

§ 1705(g). The 1984 Act exempts these agreements from the 

antitrust laws, but prohibits certain anti-competitive conduct. 

See id. §§ 1706, 1709.

If a cooperative working agreement provides for the charter of U.S.-flag ships to foreign carriers, it must also be filed 

with MarAd for its approval of the charter arrangements. 

See 46 U.S.C. app. § 808(c). Under § 41 of the 1916 Act 

MarAd is to approve charter agreements "either absolutely or 

upon such conditions as the Secretary of Transportation 

prescribes." 46 U.S.C. app. § 839.

Sea-Land accordingly submitted its agreement to both 

agencies in early 1988. The Military Sealift Command 

("Sealift Command"), the branch of the Navy Department 

responsible for procuring transportation of military cargo, 

opposed Article 5(i) of the Agreement before both agencies on 

the grounds that it would "unreasonably restrict competition" 

and raise the costs of such transportation. Despite the 

Sealift Command's objections, MarAd issued charter orders 

approving the agreements. Indeed, the orders, in their Con-

__________

such vessels if carriage is available at "fair and reasonable rates." 

See 10 U.S.C. § 2631(a); 46 U.S.C. app. § 1241(b)(1).

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dition 4, required the parties to adhere to cargo-preference 

limitations identical to those of Article 5(i).

The Sealift Command's attempt to persuade the FMC to 

pursue an injunction proved equally unavailing. The FMC 

noted that Article 5(i) "raised issues under the 1984 Act," but 

correspondence with MarAd apparently satisfied it that MarAd, in imposing Condition 4, saw its orders as "an expression 

of the laws and policies of the United States." This being so, 

the FMC advised the Sealift Command, "this agency has no 

authority to directly overturn an action by MarAd taken 

under sections 9 and 41 of the 1916 Act on any ground; such 

a result must be sought by [Sealift Command] in some other 

forum." The FMC decided to defer any decision on an 

investigationa preliminary step to requesting an injunctionin order to allow the Sealift Command to pursue its 

challenges elsewhere.

On February 16, 1990 the Sealift Command filed a complaint against Sea-Land with the FMC, alleging that Article 

5(i) violated, inter alia, § 10(c)(6) of the 1984 Act, 46 U.S.C. 

app. § 1709(c)(6). That section bars carriers from

allocat[ing] shippers among specific carriers that are 

parties to the agreement or prohibit[ing] a carrier that is 

a party to the agreement from soliciting cargo from a 

particular shipper, except as otherwise required by the 

law of the United States or the importing or exporting 

country, or as agreed to by a shipper in a service 

contract.

46 U.S.C. app. § 1709(c)(6) (emphasis added). The Sealift 

Command's complaint alleged that Article 5(i) constituted a 

proscribed "allocation." Sea-Land responded with a motion 

to dismiss, based in part on a contention that the agreements 

were not "allocations," and in part on the proposition that 

they fell within § 10(c)(6)'s exception because MarAd's charter orders constituted "law of the United States" and, by 

incorporating the restrictive condition, "required" the cargopreference arrangement.

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The Sealift Command had also petitioned MarAd to reconsider its approval of the charter orders. MarAd denied this 

petition while the FMC proceeding was under way. The 

Sealift Command then notified the administrative law judge 

presiding over the FMC proceedings that it was making a 

"recommendation to proper higher authority for further action on the MarAd denial," and the ALJ stayed the FMC 

proceeding to await the result. The "higher authority" 

turned out to be the Department of Defense (Sealift Command's parent Department). That Department, accurately 

viewing the matter as a legal dispute between two executive 

branch agencies, itself and the Department of Transportation 

(MarAd's parent), asked the Justice Department's Office of 

Legal Counsel ("OLC") for a resolution. The Sealift Command argued to OLC that MarAd had exceeded its authority 

in imposing Condition 4 as part of its charter orders.

On October 19, 1993 OLC issued a memorandum answering 

the agencies' claims. First, it found that Article 5(i) of the 

Cooperative Working Agreement was an allocation under 

§ 10(c)(6) of the 1984 Act. It was therefore unlawful unless 

§ 10(c)(6)'s exception for allocations "required by the law of 

the United States" applied. And the exception could not 

apply, thought OLC, because MarAd had no legal authority to 

validate an illegal act. As a result, MarAd on December 3, 

1993 sent orders to Sea-Land modifying each of the charter 

orders by removing the restrictive Condition 4. Sea-Land 

promptly sought judicial review of MarAd's modifications 

here, arguing in part that the restrictive clause did not 

constitute an allocation of shippers within the meaning of 

Section 10(c)(6), and that even if it did, it was legitimized by 

the original MarAd orders, which counted as "law of the 

United States" under the "except" clause. Just after oral 

argument of the case here, MarAd stayed its modification 

orders until 20 days after our resolution of the case. 

That resolution did not follow with the customary speed. 

After oral argument we issued an order on our own initiative 

staying our proceedings pending a decision by the FMC on 

the Sealift Command's complaint against Sea-Land. The 

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validity of the MarAd charter conditions depended at least in 

part on their status under § 10(c)(6), which was, we said, a 

question within the primary jurisdiction of the FMC.

The FMC proceeding, of course, had itself been stayed 

pending our decision, so the matching stays created the risk 

of an Alphonse and Gaston standstill. In fact, however, the 

ALJ promptly lifted the stay in the FMC proceeding. American President Lines, Ltd. ("APL"), a carrier with interests 

akin to Sea-Land's, was allowed to intervene to present legal 

arguments. After initial decisions by the ALJ, the FMC 

issued its report and order on December 10, 1996. The FMC 

agreed with OLC that Article 5(i) did constitute an allocation 

within the meaning of § 10(c)(6). But, disagreeing with OLC, 

the FMC also found that valid MarAd orders were "law of the 

United States," so that the arrangements in question fell 

within the exception, at least potentially. Whether these 

MarAd orders were valid depended on whether they were 

"within the scope of the authority delegated by Congress to 

[MarAd]."

This last issue, the FMC said, was beyond its jurisdiction, 

and already before this Court in No. 93-1846. Presuming the 

MarAd orders valid in the absence of any judicial decision to 

the contrary, the FMC found no violation of § 10(c)(6) and 

dismissed the Sealift Command's complaint, without prejudice 

to reinstitution of the proceeding following our decision in No. 

93-1846. The Sealift Command, Sea-Land, and APL all 

appealed; we consolidated the petitions as No. 97-1083 et al.

With the ball once more in this court, we ordered supplemental briefing in No. 93-1846, limited to the question of 

whether MarAd was "authorized by Congress to issue charter 

orders which contain the military cargo restriction at issue in 

this case." We thus have before us the appeals from both 

agencies.

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In No. 97-1083, we affirm the FMC's decision as to the 

operation of the "except" clause: valid MarAd orders are 

"law of the United States"; therefore, if valid, the orders here 

trigger § 10(c)(6)'s exception and shield Article 5(i) from its 

prohibitions. In No. 93-1846, we reject the Sealift Command's (and the United States's) attack on MarAd's authority 

to issue the ordersnamely, their contention that the orders 

violate § 10(c)(6) itself. As that supposed invalidity was 

MarAd's sole ground for modifying its original orders imposing Condition 4, we vacate the modification orders, thus 

reviving the original orders in full.

* * *

On the question of whether MarAd orders constitute "law 

of the United States" for purposes of § 10(c)(6)'s "except" 

clause, the contending parties before us are the FMC and the 

Sealift Command, the Command having appealed from the 

FMC decision. Sea-Land and APLbeneficiaries of the 

original MarAd orders (or parallel ones) and now caught in 

the crossfire between MarAd and the Sealift Commandhave 

intervened in support of the FMC's view that the orders are 

"law."

The Sealift Command starts with the argument that the 

FMC did not decide the question we asked it to decide, so 

that we should decide it for ourselves without any deference 

to the FMC. This idea depends on a confusion of the 

issuesoddly, a confusion that the FMC order was at pains 

to dispel. The order separated the application of the "except" 

clause into two distinct issues. First was the law question: 

whether valid MarAd orders count as "law of the United 

States" for the purposes of the "except clause." Second was 

the question of whether these particular orders were valid 

MarAd orders, i.e., whether they were within the agency's 

authority. These inquiries are clearly distinct. If, for example, the Securities and Exchange Commission ("SEC") had 

issued the charter orders in question, a court could readily 

find that while valid SEC orders have the force of law, those 

particular ones were ultra vires and invalid. The FMC did 

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decide the first question, and that is the one before us on 

review in No. 97-1083.

We thus turn to the merits of the FMC decision on whether 

a MarAd order is "law of the United States" within the 

meaning of § 10(c)(6). This is, of course, a question of 

statutory interpretation. But whether MarAd should have 

the authority to exempt carriers from the § 10(c)(6) prohibitions is a policy question, one requiring a balancing of the 

pro-competitive interests behind § 10(c)(6) and the rival demands of other policies, such as the promotion of the American merchant marine, entrusted to maritime agencies like 

MarAd. (Here the policies conflict to the extent that the 

cargo preference provisions, aimed at protecting the U.S. 

merchant marine by fencing off certain kinds of foreign 

competition, may raise the cost of U.S. military shipments.) 

It is precisely in answering questions of this sort that the 

expertise and political accountability of administrative agencies command judicial deference. See Chevron v. National 

Resources Defense Council, Inc., 467 U.S. 837, 844-45 (1984); 

Health Ins. Ass'n of America v. Shalala, 23 F.3d 412, 416 

(D.C. Cir. 1994).

We have in fact recognized that the FMC's interpretations 

of the 1984 Act are entitled to Chevron deference. See 

Chemical Manufacturers Ass'n v. FMC, 900 F.2d 311, 314 

(D.C. Cir. 1990). Such deference comes into play, of course, 

only as a consequence of statutory ambiguity, and then only if 

the reviewing court finds an implicit delegation of authority to 

the agency. See Chevron, 467 U.S. at 842-844. The second 

condition is not questioned; as to the first, while the plain 

meaning of § 10(c)(6) may tilt too powerfully against the 

Sealift Command to justify the label "ambiguous," that is a 

defect that does not help the Command.

Violation of a condition imposed by a MarAd order under 

§ 41 is a criminal act punishable by fine or imprisonment. 

See 46 U.S.C. app. § 839. The Sealift Command concedes 

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that agency orders bearing criminal sanctions for violation 

generally qualify as law. It argues, however, that the "except" clause was intended to exempt only the cargo preference laws of the United States and other countries. Had 

Congress intended to include administrative orders, the Sealift Command claims, it would have done so explicitly. The 

Sealift Command then offers a raft of supportive theories, 

arguing that the specific prohibitions of § 10(c)(6) should take 

precedence over any general MarAd mandate to foster the 

merchant marine; that Congress could not have intended to 

allow administrative agencies to provide exemptions from 

§ 10(c)(6); and that a "liberal interpretation" of the "except" 

clause would undermine the general purpose of § 10.

The first argument is sufficiently answered by the observation that had Congress intended to exempt only cargo preference laws, it could well have done that explicitly. The plain 

meaning of a statute is (at least for starters) the one produced by reading its words to have the meaning they do in 

most contexts, and in most contexts, "law" includes an administrative command backed by a criminal sanction. See, e.g., 

Chrysler Corp. v. Brown, 441 U.S. 281, 295 (1979) (substantive agency regulations have "force and effect of law"); Singer v. United States, 323 U.S. 338, 345-46 (1945) (regulations 

backed by criminal sanctions are law); General Motors Corp. 

v. Abrams, 897 F.2d 34, 39 (2d Cir. 1990) (regulations and 

orders have force of law); Black's Law Dictionary 884 (6th 

ed. 1990) ("That which must be obeyed and followed by 

citizens subject to sanctions or legal consequences is a law."); 

see also, e.g., Fidelity Federal Savings & Loan Ass'n v. De 

La Cuesta, 458 U.S. 141, 153 (1982) (federal regulations count 

as law for Supremacy Clause). The Sealift Command tells us 

that the FMC's position is in this context "extraordinary" and 

"contrary to common sense," but does not explain why. 

Under the FMC's reading, § 10(c)(6) allows some federal 

agencies to create exceptions to the section's otherwise unconditional prohibitions. Here that means that agencies 

charged with promoting federal maritime policies can tailor 

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the application of § 10(c)(6) to the needs of those policies. 

We fail to see how such a mechanism is either extraordinary 

or wanting in common sense.

The Sealift Command notes that § 10(c)(6) limits its exception to requirements of "the law of the United States or the 

importing or exporting country" and would have us infer an 

intent to limit the exception to cargo preference laws. Of 

course the import/export reference does suggest the subject 

matter of the laws Congress had in mind, but Condition 4 of 

the MarAd charter approvals addresses that subject matter: 2

it is an administrative order demanding a certain cargo 

preference. But the limitation to exporting or importing 

countries says nothing about the form of legal mandate, i.e., 

whether the term includes administrative as well as direct 

statutory edicts.

Needless to say, the Sealift Command pursues the usual 

quest for support in the legislative history of § 10(c)(6). The 

quest is even more than usually unavailing and requires no 

comment.

If "law of the United States" is in this context ambiguous, 

we think the FMC's reading of the term to encompass the 

MarAd charter orders handily meets Chevron's requirement 

of reasonableness.

* * *

We now turn to the residue of No. 93-1846, which indirectly poses the issue of whether MarAd acted within the scope of 

its delegated authority in issuing the original charter orders. 

In this phase of the case, Sea-Land, joined by intervenor 

APL, staunchly defends the original orders and thus contin-

__________

2 Congress may well have thought that since its language allowed 

exceptions to be created only by laws requiring an "allocation," such 

laws would necessarily deal with cargo preferences. We do not 

reach the issue of whether there is any independent subject-matter 

prerequisite.

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ues the attack on the modification orders; the United States 

and Department of Transportation (MarAd's parent Department) defend the modification orders and thus, necessarily, 

attack the validity of the original orders. As a general 

matter, MarAd rested its original imposition of Condition 4 on 

§ 41 of the 1916 Act, which empowers the agency to approve 

charter agreements "either absolutely or upon such conditions as the Secretary of Transportation prescribes." 46 

U.S.C. app. § 839.

In No. 93-1846, it will be recalled, Sea-Land challenged 

MarAd's 1993 modification orders, which MarAd had justified exclusively by reference to OLC's theory that its original

charter orders imposing Condition 4 were invalid under 

§ 10(c)(6). If OLC's theory is wrong, the modification orders 

lack a necessary foundation, and the original orders must be 

reinstated. The FMC, to be sure, in denying relief to the 

Sealift Command, noted that application of § 10(c)(6)'s exception depended on the validity of the original charter orders; 

but we do not think that observation miraculously expanded 

the set of issues properly raised in No. 93-1846, giving 

MarAd and the Sealift Command license to raise other possible attacks on the original orders. Thus, although MarAd's 

authority under § 41 of the 1916 Act is obviously limitedit 

cannot, for example, condition its approval on payment of a 

fee, see Clapp v. United States, 117 F. Supp. 576, 581 (Ct. Cl. 

1954)we confine ourselves to the single attack on the original orders that was put before us in No. 93-1846.

The United States re-asserts OLC's conclusion that "[w]ithout specific authorization, either in its own organic statute or 

in the other statute at issue, an agency lacks authority to 

require private parties to violate a federal statute." This is 

quite true, see Maislin Indus., U.S. v. Primary Steel, Inc.,

497 U.S. 116, 134-35 (1990), but irrelevant. Given the "except" clause and our earlier conclusion that valid MarAd 

orders are law for purposes of § 10(c)(6), MarAd was not

requiring a violation of § 10(c)(6) so long as it was acting 

within its statutory authority. It was issuing orders that 

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under § 10(c)(6) had the effect of triggering an exception to 

that section's otherwise broad prohibition; § 10(c)(6) cannot 

itself invalidate those triggering orders.

MarAd's belief that the original orders ran afoul of 

§ 10(c)(6) was thus incorrect. And as this erroneous belief 

was the sole basis for the modification of the orders, the 

modifications cannot stand. An agency action, however permissible as an exercise of discretion, cannot be sustained 

"where it is based not on the agency's own judgment but on 

an erroneous view of the law." Prill v. National Labor 

Relations Board, 755 F.2d 941, 947 (D.C. Cir. 1985); see also 

Securities and Exchange Commission v. Chenery Corp., 318 

U.S. 80, 94 (1943) ("[I]f the action is based upon a determination of law as to which the reviewing authority of the courts 

does come into play, an order may not stand if the agency has 

misconceived the law.").3In No. 93-1846, accordingly, we 

vacate the modification orders, thus automatically reinstating 

the orders imposing Condition 4. In consequence, Sea-Land's 

agreement does not violate § 10(c)(6), and the FMC's dismissal of the Sealift Command's complaint (appealed in No. 

97-1084) was correct. We express no opinion as to whether 

at this stage the Sealift Command can initiate some new 

proceeding before or against MarAd, raising any new question about Condition 4 (e.g., a claim that its imposition was an 

abuse of discretion).

* * *

We thus affirm the FMC's Order dismissing the Sealift 

Command's complaint. There remains the ALJ's finding, 

affirmed by the FMC, that Article 5(i) constituted an "allocation" within the meaning of § 10(c)(6). The only parties 

__________

3 Some courts explain this via the principle that agency action 

founded on mistake of law is arbitrary and capricious within the 

meaning of § 706(2) of the Administrative Procedure Act. See, e.g., 

Maez v. Mountain States Tel. & Tel., Inc., 54 F.3d 1488, 1505 (10th 

Cir. 1995).

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taking issue with that finding are Sea-Land and APL. Yet 

they have no complaint with the Order dismissing the Sealift 

Command's complaint against Sea-Land; they do not want 

anything other than a dismissal.4Instead, they take issue 

only with the part of the FMC's decision saying that Article 

5(i) is an allocation.

If they are asking for review merely of that determination, 

an immediate obstacle arises. The statute that provides our 

jurisdiction in this case, 28 U.S.C. § 2342(3), allows review of 

"rules, regulations, or final orders" of the FMCnot of 

reports, reasoning, or findings. See AT&T v. FCC, 602 F.2d 

401, 406-07 (D.C. Cir. 1979) (where AT&T challenged not the 

order but only some underlying findings, court lacked authority to hear appeal under § 2342(1), allowing review of "final 

orders" of FCC). Here the FMC's action appears to be only 

a finding: the ALJ found that Article 5(i) was an "allocation," 

and the FMC "ordered" that that finding "is affirmed." We 

doubt whether the Commission's wrapping its finding in the 

mantle of an order can make it an order for purposes of 

§ 2342; we have said that an FCC letter cannot be considered an order under that section (and the FCC-specific 47 

U.S.C. § 402(a)) without "some modicum of injury, some 

concrete effect upon the station sufficient to support a court's 

jurisdiction," Straus Communications, Inc. v. FCC, 530 F.2d 

1001, 1006 (D.C. Cir. 1976), and the label placed by the 

__________

4 The FMC Order dismisses the Sealift Command's complaint, 

"without prejudice to reinstitution of this proceeding upon motion to 

reinstate the complaint, after issuance of the mandate in D.C. Cir. 

No. 93-1846." A prevailing party may appeal a dismissal without 

prejudice on the grounds that it wants one with prejudice, see, e.g., 

LaBuhn v. Bulkmatic Transport Co., 865 F.2d 119, 122 (7th Cir. 

1988), but given our decision that the original MarAd orders were 

within the scope of MarAd's authority, the FMC Order will become 

dismissal with prejudice by its own terms. Once it has failed to 

prevail in No. 93-1846, the Sealift Command cannot reinstate its 

complaint before the FMC. In any case, the Sea-Land/APL brief 

makes nothing of the FMC's "without prejudice" characterization, 

asking only that its "ruling" on the allocation issue be reversed or 

vacated. Pet. Br. at 44.

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agency on its action is normally not conclusive, Columbia 

Broadcasting System, Inc. v. United States, 316 U.S. 407, 416 

(1942). In any event, apart from the statutory hurdle, there 

is an Article III barrier as well: Sea-Land and APL run 

afoul of the principle that prevailing parties lack standing to 

appeal.

Appellate courts "review[ ] judgments, not statements in 

opinions." California v. Rooney, 483 U.S. 307, 311 (1987) 

(quoting Black v. Cutter Laboratories, 351 U.S. 292, 297 

(1956)). Where the judgment gives a party all the relief 

requested, appeal may not be taken simply to challenge the 

court's reasoning. See, e.g., In re Reporters Committee for 

Freedom of the Press, 773 F.2d 1325, 1328 (D.C. Cir. 1985) 

(citing Electrical Fittings Corp. v. Thomas & Betts Co., 307 

U.S. 241, 242 (1939)).

Aware of this difficulty, Sea-Land and APL turn to International Brotherhood of Elec. Workers v. ICC ("IBEW"), 862 

F.2d 330 (D.C. Cir. 1988), but the exception it carves out is 

too small to accommodate this case. In IBEW, the petitioner 

union challenged the ICC's determination that it had jurisdiction to review an arbitrator's award. The ICC had affirmed 

the award, making the union the prevailing party, but we 

found that the union had standing to challenge the intermediate decision as to the ICC's jurisdiction. Tellingly for present purposes, we noted that the union was "not merely 

quibbling over the agency's rationale in a case in which it has 

prevailed," since what was at issue was not the agency's 

reasoning but its "decision to review arbitration awards." 

862 F.2d at 334. That decision was a policy of general 

applicability, with the same effects as though "the Commission had promulgated a rule," id., and the policy inflicted 

cognizable harm. Indeed, we have since characterized IBEW

as standing for the proposition that "a party who prevails on 

a challenge to a rule as applied is nonetheless permitted to 

appeal from an adverse decision on a facial challenge to the 

rule itself." Telecommunications Research and Action CenUSCA Case #97-1085 Document #337505 Filed: 03/13/1998 Page 15 of 20
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ter v. FCC, 917 F.2d 585, 588 (D.C. Cir. 1990); compare id. at 

588-89 (Silberman, J., concurring) (agreeing on judgment as 

to lack of standing, but distinguishing IBEW as a case 

allowing a winning party "to challenge a general rule if that 

rule remains in existence and creates a cognizable harm 

through its effects on that party's future rights").

But, petitioners might protest, every adjudication embodies 

at least one rule, often several. The FMC's determination 

that agreements like Sea-Land's are allocations is a generally 

applicable interpretation of § 10(c)(6); why cannot Sea-Land 

appeal it? The answer is that what petitioners fail to show is 

not so much the rule as the harm. IBEW's facts were quite 

different. The agency's assertion of jurisdiction there imposed another layer of review on arbitration awards. The 

decision did not suggest that petitioners would lose future 

litigation; it ensured that future litigation would be more 

costly, no matter how often petitioners prevailed. The concrete cost of an additional proceeding is a cognizable Article 

III injury. Cf. Telecommunications Research and Action 

Center v. FCC, 917 F.2d at 588-89 (Silberman, J., concurring) 

(noting need for "cognizable harm"). But mere precedential 

effect within an agency is not, alone, enough to create Article 

III standing, no matter how foreseeable the future litigation. 

See, e.g., Abbs v. Sullivan, 963 F.2d 918, 924 (7th Cir. 1992); 

Radiofone, Inc. v. Federal Communications Comm'n, 759 

F.2d 936, 938 (D.C. Cir. 1985) (separate opinion of Scalia, J.); 

see generally Shell Oil Co. v. FERC, 47 F.3d 1186, 1200-03 

(D.C. Cir. 1995) (reviewing types of continuing harm from 

contents of decision that are enough to give winner of the 

judgment standing); Crowley Caribbean Transport, Inc. v. 

Pena, 37 F.3d 671 (D.C. Cir. 1994) (no standing to assail 

agency's legal reasoning absent concrete injury). Sea-Land 

and APL have pointed us to no consequences flowing from 

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the FMC's general interpretation of § 10(c)(6) that suffice to 

confer standing.

If not the FMC's general interpretation of § 10(c)(6)'s term 

"allocation," what of its particular classification of Article 5(i) 

and equivalent language? Sea-Land and APL pin their 

hopes on a dictum in IBEWthe suggestion that "the prospect that an unfavorable ruling would act as collateral estoppel in subsequent litigation" is sufficient to confer standing on 

an otherwise prevailing party. IBEW, 862 F.2d at 334 (cited 

in Pet. Br. at 2). The dictum in turn relied on Electrical 

Fittings Corp. v. Thomas & Betts Co., 307 U.S. 241 (1939); 

see also Deposit Guaranty Nat'l Bank v. Roper, 445 U.S. 326, 

334-35 & n.7 (1980) (explaining Electrical Fittings). In fact, 

however, review in Electrical Fittings of the findings against 

the winning party did not turn on collateral estoppel effects; 

as the Court later noted, the Electrical Fittings Court did not 

question the court of appeals's statement that there would be 

no preclusive effect. See Roper, 445 U.S. at 334-35.

In any event, an argument from collateral estoppel consequences has elements of circularity. As collateral estoppel 

does not apply to an unappealable determination, see Warner/Elektra/Atlantic Corp. v. County of DuPage, 991 F.2d 

1280, 1282 (7th Cir. 1993), simply holding a ruling unappealable eliminates any prospect of preclusion, id. at 1282-83. To 

cut out of the circle one must inquire whether the disputed 

component of the agency decision has the prerequisites for 

collateral estoppel independent of appealability; if not, then 

collateral estoppel cannot be the basis for appealability.

We need not here explore the conditions under which an 

administrative determination might have an issue-preclusive 

effect in a later judicial proceeding. To have such an effect, it 

must not only satisfy the ordinary requirements of collateral 

estoppel but must also result from a process sufficiently 

similar to a judicial proceeding. See Restatement (Second) of 

Judgments § 83 (1982). Here, the FMC's decision on the 

"allocation" issue lacks one of the ordinary prerequisites: it 

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was not necessary to the judgment. See, e.g., Montana v. 

United States, 440 U.S. 147, 153 (1979); Abbs, 963 F.2d at 

924. Thus, quite independently of their lack of appealability, 

FMC's findings on allocation can give Sea-Land no reasonable concern about preclusive effect. Indeed, ongoing FMC 

proceedings show that the agency understands this: while 

maintaining its position on § 10(c)(6), it does not suggest that 

the findings are preclusive. See 63 Fed. Reg. 3115, 3116 

(1998).

Neither the general interpretation of § 10(c)(6), nor the 

specific findings about these agreements, makes the FMC's 

decision adverse to Sea-Land and APL. Without an adverse 

judgment, or extraordinary circumstances such as enunciation 

of a rule with the kind of injury inflicted in IBEW, objectionable interpretations and findings are not enough to ground an 

appeal.

That does not mean that Sea-Land and APL had no way of 

challenging the FMC's decision on the allocation issue. The 

Sealift Command's appeal, No. 97-1084, is properly before us, 

and Sea-Land and APL have intervened in support of the 

FMC. They could, as intervenors, properly have urged affirmance or remand on any ground presented to the FMC, 

including their argument about the allocation clause. See 

Showtime Networks, Inc. v. FCC, 932 F.2d 1, 4-5 (D.C. Cir. 

1991). This method of presenting issues, defensively and in 

the alternative, is the usual way for prevailing parties to 

protect themselves on appeal from the risk that the appellate 

court may reverse the decisions attacked by the appellants. 

Sea-Land and APL did not employ it; their brief as intervenors, at 2, explicitly restricts itself to the question of whether 

MarAd orders are "law of the United States."

An alternative risk-control device would have been a "conditional" cross-appeal, asking to be heard only if we accepted 

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the Sealift Command's argument about the "except" clause. 

While some circuits treat conditional cross-appeals as outside 

their jurisdiction in these circumstances, evidently on the 

ground that parties may rely on the more conventional intervention procedure, see, e.g., Great American Audio Corp. v. 

Metacom, Inc., 938 F.2d 16, 19 (2d Cir. 1991), most apparently accept them. See generally 15A Charles A. Wright et al., 

Federal Practice & Procedure § 3902 at 78-79 (1992) (collecting cases).

The carriers in fact framed their appeal unconditionally, 

but this circuit, in Showtime, 932 F.2d at 5, appeared willing 

to entertain even a conditional cross-appeal styled as an 

unconditional petition for reviewif the feared judicial embrace of the appellant's position materialized. See also Hartman v. Duffey, 19 F.3d 1459, 1465-66 (D.C. Cir. 1994) (discussing conditional cross-appeals). Thus, if we had accepted 

the Sealift Command's position on § 10(c)(6)'s exception, we 

would hesitate to reverse the FMC without considering SeaLand's and APL's claims on the "allocation" issue.

But where, as here, the losing party's theories are rejected, 

courts appear uniformly to dismiss a conditional cross-appeal. 

Showtime reaches this result, noting to be sure that the party 

bringing the appeal conceded its mootness in such circumstances. See 932 F.2d at 5; see also, e.g., Maschka v. 

Genuine Parts Co., 122 F.3d 566, 572 n.4 (8th Cir. 1997) 

(dismissing cross-appeal as moot after affirming district 

court); Wilson v. New York, 89 F.3d 32 (2d Cir. 1996) ("no 

occasion to reach issues" without reversal); Hartman, 19 

F.3d at 1465 (stating that "the cross-appeal is reached only if 

and when the appellate court decides to reverse or modify the 

main judgment"); see generally Wright, et al., Federal Practice & Procedure, § 3902 at 78-79 (stating that courts decide 

cross-appeals "only if disposition of the appeal makes it 

appropriate"); cf. Council 31 v. Ward, 978 F.2d 373, 380 (7th 

Cir. 1992) (noting that reversal "invigorat[es] the cross-appeal 

and support[s] our jurisdiction"). While characterizing such a 

cross-appeal as moot may be in tension with the general 

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recognition that a court's acceptance of one of an appellant's 

two independent bases for attack does not render the second 

basis moot, see Air Line Pilots Ass'n, Int'l v. UAL Corp., 897 

F.2d 1394, 1397 (7th Cir. 1990), this case presents no reason 

to break out of conventional practice. Thus, on affirming the 

FMC decision on the operation of the "except" clause, we 

dismiss Sea-Land's appeal without reaching the merits.

* * *

In No. 93-1846 we vacate MarAd's modifications to the 

charter orders; in No. 97-1083 and consolidated cases we 

affirm the FMC's dismissal of the Sealift Command's complaint.

So ordered.

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