UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

MATSON NAVIGATION COMPANY, INC. , Plaintiff

,

v. U.S. DEPARTMENT OF TRANSPORTATION , et al. ,

Defendant s , and APL MARINE SERVICES, LTD

. , et al. ,

Intervenor

- Defendants

. Civil Action No. 1 8

- 2751 (RDM)

AMENDED MEMORANDUM OPINION Plaintiff Matson Navigation Company, Inc. (“Matson”) seeks review of Defendant Maritime Administration’s (“MARAD”) decisions approving the replacement of two vessels that operated under the Maritime Security Program (“MSP”) with two other vessels

— the APL G uam and the APL S aipan

— operated by Intervenor

- Defendants APL Marine Services, Ltd. and APL Maritime, Ltd. (together “APL”)

. Dkt. 1. (C ompl.)

. Matson moves for summary judgment, arguing that an MSP contractor may replace a vessel operating under an MSP agreement with another vessel only if the replacement vessel “operate[s] exclusively in foreign commerce or

. . . in mixed foreign commer ce and domestic trade allowed under a registry endorsement issued under [§] 12111 of [Title 42].” 4 6 U.S.C. § 53105(a) ; Dkt. 20 at 16 ; see also 46 U.S.C. § 53105(f)

. It asserts that MARAD’s decisions permitting APL to replace existing MSP vessels with the APL G uam and the APL S aipan , which Matson asserts do not so operate, were therefore2

arbitrary, capricious, and an abuse of discretion under the Administrative Procedure Act (“APA”), 5 U.S.C. § 701 et seq. , and were otherwise contrary to law or uns upported by substantial evidence in the administrative record. Dkt. 1 at 23

– 28 (Compl. ¶¶ 121

– 54); Dkt. 20
at 24

– 25

. Defendant MARAD responds with a partial motion to dismiss and a cross - motion for summary judgment, Dkt. 24, and Intervenor

- Defendant APL a lso cross - mo ves for summary judgment, Dkt. 21. MARAD first argues that this Court lacks subject

- matter jurisdiction over MARAD’s 2015 determination concerning the APL G uam because that decision was made , in part, pursuant to 46 U.S.C. § 50501, and the cou rts of appeals have exclusive jurisdiction under the Hobbs Act, 28 U.S.C. § 2342(3)(A) , to review orders issued pursuant to § 50501

. Dkt. 24

- 1 at 16

– 18. Second, MARAD and APL argue MARA D may approve the replacement of an MSP vessel with another vessel, so long as the new vessel is “operated

. . . in providing transportation in foreign commerce,” 46 U.S.C. § 53102(b)(1), even if the vessel also operates in domestic trade. Dkt. 24

- 1 at 18

– 27. Because all agree that the APL G uam and the APL S aipan operate at least in part in foreign commerce, Defendants contend that MARAD correctly determined that the vessels were eligible for participation in the MSP as replacement vessels. Id. First, t h e Court concludes that it has jurisdiction to consider only Plaintiff’s challenge to the 2016 eligibility determination for the APL S aipan . Because MARAD’s 2015 eligibility determination for the APL G uam turned, in part, on 46 U.S.C. § 50501 , exclusive ju risdiction over that determination is vested in the courts of appeals , and this Court is without jurisdiction to review that order

. Second, the Court concludes that it cannot discern the basis for MARAD’s 2016 determination respecting the APL S aipan and, in particular, cannot discern whether the agency ( 1 ) construed the statute to permit an MSP contractor to replace an MSP vessel with3

another vessel, so long as that vessel operates at least in part in foreign commerce ; (2) failed to consider the fact that the APL Saipan m ight not operate exclusively in foreign or mixed foreign and domestic trade due to its service to Saipan; or (3) concluded that the APL S aipan operates under a registry endorsement under 46 U.S.C. § 12111 that permits it to engage in t rade between Saipan and the coastal United States. As a result, the agency either completely failed to explain its reason s for approving the replacement or entirely failed to consider an important aspect of the question before it and thus failed to comply with the APA

. The Court will , accordingly, remand the matter to MARAD so that the agency can address in the first instance the important questions of statutory interpretation presented by this case and can set forth its reasoning in a manner that will pe rmit judicial review, if appropriate. Finally, the Court will provide the parties the opportunity to provide additional factual and legal submissions addressing whether the remand should be with or without vacatur. I. BACKGROUND A. The Parties Plaintiff Matson provides ocean freight carrier services from the U.S. west coast to various locations including Guam. AR 6 , 179

. APL is a nother shipping company that operates vessels in commerce between the U.S. mainland, Guam, and Saipan, among other l ocations. AR 83, 116 , 179, 195

. APL presently has nine vessels enrolled in the Maritime Security Fleet. AR 4, 60

– 61. MARAD is the agency responsible for the administration of the Maritime Security Program, including the approval of applications to replace vessels operating under MSP agreements with Secretary of Transportation. See 49 C.F.R. § 1.93(a).
B . M aritime S ecurity P rogram (MSP) In the Maritime Security Act of 1996, Pub . L. No. 104

- 239, 110 Stat. 3118, Congress provided for the establishment by “the Secretary of Transportation, in consultation with the4

Secretary of Defense” of “a fleet of active, commercially viable, militarily us eful, 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 Maritime Security Fleet “consist [s] of privately owned, United States

- documented vessels for which there are in effect operating agreements .” Id. Pursuant to this authority, t he Secretary establish ed the Maritime Security Program , s ee 46 U.S.C. § § 53101

– 53111 , and delegated its administration to the Maritime Adminis trat or, who heads MARAD

. See 49 C.F.R. § 1.93(a). C ontractors must enter into “operating agreements” with MARAD that cover vessels subject to the Program

. See 46 C.F.R. § 296.2 (defining “MSP [o] perating [a] greement” as “the assistance agreement between a Contractor and MARAD that provides for MSP payments”)

. Operating agreements are “effective only for 1 fiscal year ” but are “renewable.” 46 U.S.C. § 53104(a). The Secretary makes fixed payments to the contractors under the operating a greements. See 46 U.S.C. § 53106(a)(1)(A) ( setting the annual payment for each vessel for fiscal years 2018, 2019, and 2020
at $5,000,000). “A vessel is eligible to be included in the [ Maritime Security ] Flee t if,” among other things, it “is operated

. . . in providing transportation in foreign commerce.” 46 U.S.C. § 53102(b)(2). Before the passage of the National Defense Authorization Act for Fiscal Year 2018 (“NDAA”), Pub. L. No. 115

- 91 (2017), 131 Stat. 123 (codified at 46 U.S.C. § 35105(a)(2)), ano ther section of the statute, 46 U.S.C. § 53105(a) , provide d that “ [a] n operating agreement under this chapter shall require that

. . . the vessel

. . . shall be operated exclusively in foreign commerce or in mixed foreign commerce and domestic trade allowe d under a registry endorsement issued under [§] 121 1 1 of [the] title ; and

. . . shall not otherwise be operated in coastwise trade.” 4 6 U.S.C. § 53105 (a)

. “ [R] egistry endorsements” are available for5

vessels that meet certain eligibility conditions

. See id. § 12111(a) (citing id. § 12103 (listing eligibility requirements)). “A vessel for which a registry endorsement is issued may engage in foreign trade or trade with Guam, American Sam oa, Wake, Midway, or Kingman Reef , ” i d. § 12111(b) , which are all unincorporated territories of the United States

. The statute also provides a mechanism for replacing vessels subject to MSP agreements with new vessels. Under 46 U.S.C. § 53105(f), “[a] c ontractor may replace a vessel under an operating agreement with another vessel that is eligible to be included in the Fleet under section 53102(b), if the Secretary, in conjunction with the Secretary of Defense, approves the replacement of the vessel.” T he statute further specifies that, “[a]s a condition of receiving payment

. . . for a fiscal year for a vessel , the contractor for the vessel shall certify

. . . that the vessel has been and will be operated in accordance with paragraph (1) and (2) of [§] 53105(a)

. . . for at least 320 days in the fiscal year.” 46 U.S.C. § 53106(b). It further provides that the Secretary shall make a pro rata reduction in payment for each day less than 320 in a fiscal year that the vessel [covered by an operating agreem ent] is not operated in accordance with paragraph (1) and (2) of [§] 53105(a), as otherwise applicable with respect to such vessel, with days during which the vessel is drydocked or undergoing survey, inspection, or repair considered to be days on which th e vessel is operated. 46 U.S.C. § 53106 (d)(3)

. Finally, the statute requires the Secretary to terminate an operating agreement “[i]f the contractor

. . . materially fails to comply with the terms of the agreement , ” i d. § 53104(c) (1)

. B efore taking that action, however , the Secretary must “notify the contractor and provide a reasonable opportunity to comply with the operating agreement,” and the contractor must “fail[] to achieve such compliance.” Id.6

C . MARAD’s Approvals of APL Vessels
In Janua ry 2005, the Secretary entered into nine agreements with APL, permitting nine APL vessels to operate as part of the MSP. AR 60

– 61. Nearly ten years later, in December 2014, APL applied to MARAD for authorization to replace two of those vessels. AR 4

– 5. In January 2015 MARAD preliminarily approved the two unspecified replacement vessels , “provided they meet all MSP eligibility requirements

. ” AR 13

– 14. 1. APL G uam On August 27, 2015, APL informed MARAD that it had found a replacement vessel

— the
New Dynamic , later renamed the APL G uam

— that would operate between Guam and the United States mainland. AR 15

– 24. On September 11, 2015, MARAD informed APL that the N ew Dynamic qualified “for inclusion in t he [ MSP ]

. ” AR 4 3

. On September 16, 2015, APL sough t MARAD’s formal approval to replace the APL C yprine , which had operated under MSP

o perating a greement No. MA /MSP

- 5 4 , with the N ew Dynamic . AR 46

– 49. On October 15, 2015, MARAD ’s Associate Administrator for Strategic Sealift sent a memorandum to the
MARA D Administrator recommending that MARAD approve the substitution. AR 60

– 80.
MARAD ’s Secretary notified AP L on October 22, 2015 that the Administrator ha d determined that the N ew Dynamic was “suitable as a replacement for the container ship APL C [yprine]

. . . under

. . . [the] [o] perating [a] greement” and approved “amendment of the [a] greement to provide for transfer of the [a] greement and replacement of the Existing Vessel with the Replacement Vessel

. ” AR 8 1

. The A pproval O rder further explained that the replacement vessel’s owner was a ‘citizen of the United States within the meaning of 46 U.S.C. § 50501.” AR 83. It also determined that the replacement vessel would “operat[e] in

. . . established world

-7

wide services” and would “provid e transportation in foreign commerce pursuant to the requirement of 46 U.S.C. § 53102(b)(2).” Id.
2

. APL S aipan On August 24, 2016, APL sought MARAD’s approval to replace a s econd vessel. AR 116 , 121 . On October 11, 2016, APL informed MARAD that it specifically proposed to replace the APL Agate with the E lisa Delmas , later renamed the APL Saipan . AR 120

– 30 , 196 . On November 9, 2016, MARAD advised APL that the substitution of a “smaller vessel” for the APL
A gate “would be acceptable . . . provided the [replacement] vessel meets all MSP eligibility requirements,” AR 139

– 40, and six days later it notified APL that the E lisa D elmas met “the requirements of 46 U.S.C. § 53102(b) and 46 C.F.R. § 296.11 and was therefore, a vessel eligible for inclusion in the MSP,” AR 141. On December 9, 2016, MARAD ’s Associate Administrator for Strategic Sealift sent a memorandum to the Administrator r ecommending that the MARAD
approve the proposed replacement. AR 160

– 78. Matson, which learned through non

administrativ e channels of this pending replacement application, sought to prevent approval by submitting two letters to MARAD, one on December 12 and another on December 15, 2016, arguing that the vessel’s inclusion in the program was precluded by its contemplated service to
Guam . AR 17 9

– 80, AR 183

– 88. Even before the Associate Administrator sent the December 9 memorandum to the Administrator, Senator Mazie Hirono of Hawaii also sent a letter to the Administrator express ing her “concerns about . . . APL[ ’ s]” request, AR 143

– 44 , and APL responded to that letter, AR 147

– 54. According to Senator Hirono, “[t]he MSP program . . . was not intended to permit . . . subsidized M SP vessels to compete against other U.S.

- flag vessels operating in domestic trades like the Guam trade.” AR 143. The December 9 memorandum,8

which all agree sets forth the agency’s reasoning for purposes of this case, Hrg. Tr. (Rough at 4

– 5, 32) , offered the follow ing analysis of the question posed in Senator Hirono’s letter: 46 U.S.C. § 53102(b)(2), further clarified by 46 U.S.C. § 53105(a)(1)(A), requires that an eligible vessel be operated exclusively in the foreign commerce or in mixed foreign commerce and domes tic trade allowed under a registry endorsement issued under section 12111 of title 46, United States Code. Under 46 U.S.C. § 12111, a registry endorsement entitles a U.S. operator to engage in foreign trade or domestic trade with Guam, American Samoa, Wak e, Midway or Kingman Reef. APL will time charter the Replacement Vessel . . . for operation in its established worldwide service, with mixed foreign commerce and domestic commerce and domestic trade to Guam provided in accordance with the Replacement Vess el’s registry endorsement. Accordingly, it has been determined that the Replacement Vessel will provide transportation in foreign commerce, thereby meeting the requirements of 46 U.S.C. § 53102(b)(2). AR 163. T he memorandum addressed the vessel’s servic e to Guam but not Saipan, despite the fact that APL had informed the agency that the “vessel is subject to the . . . application would be operated . . . in APL’s existing U.S.

- flag service of Guam and Saipan via Korea,” AR 116 (emphasis added)

. Saipan is a part of the Commonwealth of the Northern Mariana Islands, which is a territory of the United States. See Saipan, Encyclopaedia Brittanica , https://www.britannica.com/place/Saipan (last accessed May 29, 2020) ; Dkt. 21

- 1 at 14; Dkt. 20
at 9. MARAD’s Sec retary notified APL on December 20, 2016 that the Administrator had “approve[d] replacement of the . . . APL A [gate] . . . under the [MSP operating agreement] with the . . . E [lisa] D [elmas] ” and had “approve[d] amendment of the [a] greement to replace the Existing Vessel with the Replacement Vessel.” AR 196; see also Matson Navigation Co. , 895 F.3d at 802 (citing 2016 Approval Order at 1

– 2)

. The A pproval O rder explained that APL “will time charter the Replacement Vessel . . . for operation in APL’s established world

- wide service, with mixed foreign commerce and domestic trade to Guam provided in accordance with the Replacement Vessel’s registry endorsement” and that, as result, the Administr ator “found that9

the Replacement Vessel will provide transportation in foreign commerce or in mixed foreign commerce and domestic trade allowed under a registry endorsement issued under 46 U.S.C. § 12111 , pursuant to the requirement of 46 U.S.C. §§ 53102(b )(2) and 53105(a)(1)(A). AR 196

– 97.
D . Procedural History On February 17, 2017, Matson filed an administrative appeal of MARAD’s approval of the r eplacement of the two vessels, AR 201

– 70, and on March 17, 2017 it amended its appeal , AR 271

– 376

. The appe al focused principally on whether APL’s service to Guam precluded approval of the replacements because, in Matson’s view, the statute only permits vessels engaged exclusively in foreign or mixed foreign and domestic trade to participate in the MSP, and bec ause Guam is part of the United States, APL’s service between Guam and the coastal United States rendered the vessels ineligible. See AR 272 (“The issue presented in this amended appeal is whether assistance payments awarded to support U.S.

- flag vessels o perating in the international trades under the Maritime Security Program

. . . can be used to subsidize vessels operating in Guam, a domestic trade.”). On April 7, 2017, MARAD rejected Matson’s appeal

. AR 404

– 06. MARAD determined that the company lacked standing to bring such an appeal because it was not a contractor operating vessels under the MSP. AR 404. MARAD nevertheless addressed the merits of Matson’s appeal and concluded that the replacements were proper under the statute. AR 404

– 05. MARAD wrote that “the relevant language of the MSA could not be clearer regarding APL’s ability to operate in the Guam trade:” the statute “provides in relevant part that MSP vessels . . . ‘shall be operated exclusively in foreign commerce or in mixe d commerce and domestic trade allowed under a registry of endorsement issued under section 12111,’” id. (quoting 46 U.S.C. § 54105(a)(1)(A), and “Section 12111” provides that10

“‘[a] vessel for which a registry of endorsement is issued may engage in foreign trade or trade with Guam, American Samoa, Wake, Midway, or Kingman Reef , ’” id. (quoting 46 U.S.C. § 12111). MARAD concluded that, “by incorporating Section 12111 into the MSA, Congress clearly and unambiguously established that trade with Guam under a re gistry endorsement, as provided in section 53102(a)(1)(A), is allowed under the MSP.” Id. at 405. On June 2017, Matson sought review of (1) “ MARAD’s 2017 Appeal Decision, as well as its (2) 2015 and (3) 2016 Approval Orders” before the D.C. Circuit

. See Matson Navigation Co. v. U.S. Dep’t of Transp. , 895 F.3d 799 , 803 (D.C. Cir. 2018)

. That court dismissed the entire case for lack of jurisdiction under the Hobbs Act, 28 U.S.C. § 2342(3)(A) , but its reasoning differed for each of the three challenges. Se e Matson Navigation Co. , 895 F.3d at 804

– 06. With respect MARAD’s 2017 Appeal Decision, the court held that Matson had forfeited any challenge to MARAD’s determination that the company lacked administrative standing and, to the extent MARAD reached the me rits, that the court lacked Hobbs Act jurisdiction over the agency’s decision. Id . at 806. With re spect to the 2015 approval, the D.C. Circuit rested its holding on Matson’s failure to file a timely petition for review

— “[i]ts petition for review was not filed until

. . . long after the jurisdictional 60

- day period in the Hobbs Act

. . . had run

. ” Id. at 804

– 05. Finally, with respect to MARAD’s 2016 A pproval O rder , the D.C. Circuit held t hat the O rder did “not trigger Hobbs A ct jurisdiction” because, “[i]n contrast to the 2015 Approval Order,
MARAD did not explicitly invoke section 50501” of title 46 “in reaching its eligibility determination , ” and it is that section that triggers Hobbs Act jurisdiction. Id. at 805. On Nove mber 27, 2018, Plaintiff file d its APA complaint against the Department of Transportation and the Maritime Administration before this Court . Dkt. 1. Plaintiff does not challenge “MARAD’s decision denying Matson’s administrative appeal.” Dkt. 20 at 36.11

Instead, it challenges only the agency’s approvals of the replacement vessel requests. Id. at 44 ; Dkt. 1 at 1 (Compl. ¶ 1) (“This action arises from MARAD’s approval of two vessel replacement requests.”)

. APL timely moved to intervene as a defendant, Dkt . 12, and the Court granted that motion, Minute Order (Feb. 6, 2019). Matson then moved for summary judgment, Dkt. 20; APL

cross - moved for summary judgment, Dkt. 21; and MARAD filed a partial motion to dismiss for lack of jurisdiction and cross

- motion for summary judgment, Dkt. 24. On April 17, 2020, the Court ordered Plaintiff and MARAD to submit further briefing on whether it had jurisdiction to review the 2015 eligibility determination concerning the APL G uam . Minute Order (Apr. 17, 2020). It asked the parties to answer the following question: If the Court were to conclude that the 2015 order approving APL Guam as a replacement was issued pursuant to section 50501 because of its explicit reliance on that section and was also issued pursuant to section 53105(f), do the courts of appeals have exclusive jurisdiction or concurrent jurisd iction with the district courts to review that order? Id. The parties then simultaneously exchanged briefs on the jurisdictional issue. Dkt. 33; Dkt. 34. The Court heard oral argument on the pending motions on May 21, 2020

. Minute Entry (May 21, 2020)

. II. LEGAL STANDARD Courts must set aside agency actions that are “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A). “[A] reviewing court must ensure that the agency ‘examine[d] the relevant data and articulate[d] a satisfactory explanation for its action including a rational connection between the facts found and the choice made.’” Cumberland Pharm. Inc. v. FDA , 981 F. Supp. 2d 38, 48 (D.D.C. 2013) (quoting Motor Vehicle Mfrs. Ass’n v. State Far m Mut. Auto. Ins. Co. , 463 U.S. 29, 43 (1983)). “[A]gency actions will [also] be set aside if they are contrary to law

— if, in other words, they are not12

‘authorized by the statutory text.’” Fisher v. Pension Benefit Guaranty Corp. , 151 F. Supp. 3d 159 , 16 5 (D.D.C. 2016) (quoting Gonzales v. Oregon , 546 U.S. 243, 255 (2006)). The APA’s “requirement that agency action not be arbitrary and capricious includes a requirement that the agency adequately explain its result.” Snohomish Cty

. , Wash

. v. Surface Transp. Bd. , 954 F.3d 290, 301 (D.C. Cir. 2020) (quoting Jost v. Surface Transp. Bd ., 194 F.3d 79, 8 5 (D.C. Cir. 1999)). This requires that the agency “articulate the reasoning behind its decision with sufficient clarity to enable petitioners and th[e] court to understand the basis for its decision.” Id. (quoting
Jost , 194 F.3d at 88). An agency action is also arbitrary and capricious i f i t “entirely failed to consider an important aspect of the problem” it contemplated. State Farm , 463 U.S. at 43. Finally, u nder the Chenery doctrine , the Court must judge the propriety of [an agency] action solely [based on] the grounds invoked by the agency. If those grounds are inadequate or improper, the court is powerless to affirm the administrative actio n by substituting what it considers to be a more adequate or proper basis. SEC v. Chenery , 332 U.S. 194, 196 (1947) ; see also Byers v. Comm’r of Internal Revenue Serv. , 740 F.3d 668, 680 (D.C. Cir. 2014) (discussing Chenery doctrine). III. ANALYSIS A. Jurisdiction The Court begin s its analysis , as it must, with jurisdiction

. See Steel Co. v. Citizens for a
Better Envmt

. , 523 U.S. 83 , 101

– 02 (1998). The Court considers first whether Plaintiff has Article III standing and second whether the Hobbs Act precludes this Court from considering
P laintiff’s c hallenge to the 2015 Approval Order

. 1

. Article III Standing
A plaintiff bears the burden of demo nstrating that it has Article III standing. This requires demonstrating (1) that it has suffered an “injury in fact” that is “actual or imminent,”13

and (2) “fairly

. . . trace[able] to the challenged action of the defendant,” and (3) that it is “likely,

as opposed to merely speculative, that [its] injury will be redressed by a favorable decision.” Lujan v. Defenders of Wildlife , 504 U.S. 555, 560 (1992) (citations and quotations omitted)

. Here, Matson asserts that it has competitor standing because the “G overnment [has] take[n] a step that benefits [its] rival and therefore injures [it] economically.” Dkt. 20 at 41 (quoting Sherley v. Sebelius , 610 F.3d 69, 72 (D.C. Cir. 2010 )). It argues that it has “adduced substantial evidence that it competed directly with APL in the Guam and Saipan trade,” and that APL’s “unlawfully earned governmental benefit” under the MSP has “injured [it] economically.” Id. Defendants do not challe nge Plaintiff’s Article III standing. Based on a review of the evidence Matson has proffered , AR 94; AR 300; Dkt. 20

- 1 at 3

– 4 (Def. SMF ¶¶ 6

– 14); Dkt. 20

- 2 at 2

– 3 (Wine Aff. ¶¶ 10

– 17) , and the governing law, the Court agrees that Matson has Article III
st anding under the “doctrine of competitor standing.” Sherley , 610 F.3d at 72.
2

. Exclusive Jurisdiction in the Courts of Appeals under the Hobbs Act
MARAD move s to dismiss in part for lack of statutory jurisdiction

. The agency argu e s that the 2015 Appr oval Order was issued , at least in part, pursuant to 46 U.S.C. § 5050 1 and that the Hobbs Act , accordingly, provides for exclusive jurisdiction to review that O rder in the c ourt s of a ppea ls . Dkt. 24

- 1 at 16

– 18 ; Dkt. 23 at 16

– 18

. Matson responds that the 2015 Approval Order was not issued pursuant to § 50501 because that provision does not provide the Secretary with any authority to act ; rather, § 50501 merely sets the requirements for U.S. citizenship

. See Dkt. 34. The Court concludes that MARAD has the better argument and that this Court lacks statutory jurisdiction to review the 2015 Approval Order for the APL G uam .14

“[U]nless a statute provides otherwise, [parties] seeking review of agency action go first to district court rather t han to a court of appeals.” Int’l Bhd. Of Teamsters v. Pe ñ a , 17 F.3d 1478, 1481 (D.C. Cir. 1994). Th e Hobbs Act , however, provides that the courts of appeals have 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

. . . the Secretary of Transportation issued pursuant to section 50501, 50502, 56101

– 56104, or 57109 of title 46 or pursuant to part B or C of subtitle IV, subchapter III of chapter 313, or chapter 315 of title 49. 28 U.S.C. § 2342(3)(A). “[P] etitions for review under the Hobbs Act ,” moreover, “ must be filed ‘within 60 days’ of the ‘entry’ of the agency’s final order.” Matson Navigation Co. , 895 F.3d at 803 (quoting 28 U.S.C. § 2344). Here, Matson seeks review of MARAD’s 2015 Approval Order for the APL G uam . Th e parties agree that the 2015 d etermination was made pursuant to 46 U.S.C. § 53105(f), which provides that “[a] contractor may replace a vessel under an operating agreement with another vessel that is eligible to be included in the Fleet under [§] 53102(b)

. . . .” But the cross refere nce to § 53102(b) ’ s eligibility requirements may in some cases implicate a Hobbs Act triggering section

— § 50501

— because one element of vessel eligibility is “meet[ing] the requirements of paragraphs (1), (2), (3), or (4) of subsection (c),” 46 U.S.C. § 531 02(b)(1), and paragraph (c)(1) requires that the vessel is “owned and operated by one or more persons that are citizens of the United States under [§] 50501,” id. § 53102(c)(1). This is such a case. “ I n its 2015 order approving APL G [uam] as a replacemen t, MARAD found the vessel was owned by a citizen of the United States ‘within the meaning of 46 U.S.C. § 50501,’ thus satisfying the owner’s eligibility requirements in 46 U.S.C. § 35102(c)(2).” Matson Navigation Co. , 895 F.3d at 804 (quoting AR 83). “Th en, in view of all its findings, MARAD ‘determined’ that APL15

Guam ‘meets the requirements of 46 U.S.C. § 53105(f) regarding replacement vessels.” Id. (quoting AR 84).
T he Court must , accordingly, determine (1) whether MARAD’s reliance on § 50501 in making the citizenship sub

- determination of its overall eligibility determination means that the 2015 Approval Order w as “issued pursuant to section 50501,” 28 U.S.C. § 2342(3)(A) , and, if so, (2) whether the court s o f appeals ha ve exclusive jurisdiction to review the entirety of MARAD’s eligibility determination , even though § 50501 was just one statutory provision pursuant to which MARAD made that determination , or whether , instead, this Court has jurisdiction to rev iew those questions posed by MARAD’s determination that do not implicate § 50501

.
a . Issuance of Eligibility Determination Pursuant to § 50501 The D.C. Circuit has already hinted at the answer to t he first question , and this Court will follow that lead

. 1 Although the court held that it lacked Hobbs Act jurisdiction to review the 201 6 Approval Order because “MARAD never explicitly invoked section 50501 in reaching its eligibility determination in 2016,” the court took care to “contrast” the 2016 and 2015 Approval Orders. Matson Navigation Co. , 895 F.3d at 805. U nlike the 2016 Approval Order, MARAD did expressly rely on § 50501 in rendering the 2015 Approval Order. Id . at 804. For this reason, the D.C. Circuit did not premise its decision declining to review the 2015 Approval Order on the same rationale that it applied to the 2016 Approval Order. Instead, the court observed that

1 S ince the D.C. C ircuit held that it lacked jurisdiction and Matson refiled its challenge in this Court, the parties have swapped views regarding in which court, district or circuit, jurisdiction lies. See Matson Navigation Co. , 895 F.3d at 804 (“Matson contends, however, [the D.C. Circuit] has jurisdiction because MARAD’s ‘decisions involve regulations and programs that are “interrelated” with citizenship determinations’ in 46 U.S.C. § 50501.” (citing [Matson’s] Br. 26

– 27)); Dkt. 25 at 11

– 12 (criticizing Defendant MARAD f or abandoning its earlier “position that the challenge had to be brought in district court”).16

“MARAD’s ‘explicit reliance’ on section 50501 [in the 2015 Approval Order] could provide [the] court with jurisdiction under the Hobbs Act over the 2015 approval.” Id. To be sure, the
court ultimately premised its decision on other grounds

— Matson’s appeal was, in any event, untimely under the Hobbs Act

— but the court’s reasoning suggests that the 2015 Approval Order was, in fact, subject to the Hobbs Act. Significantly, the D.C. Circuit cited to International Brotherhood of Teamsters v. Pe ñ a , 17 F.3d 1478 (D.C. Cir. 1994) (“ IBT ”). 895 F.3d at 804. As IBT explained, where an agency decision “explicit[ly] reli[es]” on a both a statute for which the a court of appeals would have exclusive jurisdiction to review the decision and on a statute for which the default rule of district court review would apply, the court of appeals has jurisdiction over the entire petition for review. 17 F.3d at 148 2

. Matson ’s contrasting of the 2015 A pproval Or der , which explicitly relied on § 50501, and the 2016 Approval Order , which did not, further supports this view. 895 F.3d at 806. “ [I] mplicit[]” reliance on § 50501 alone “does not interpret [§] 50501 citizenship , ” and “[a]bsent explicit reference or its functional equivalent

. . . to a statute listed in the Hobbs Act, the court [of appeals] would expand its exclusive jurisdiction beyond that which Congress intended.” Id. But if an order, like the 2015 Approval Order, makes exp licit reference to § 50501 , that is enough to trigger Hobbs Act jurisdiction over the entire order.
Matson argues that National Association of Manufacturers v. Department of Defense (“ NAM ”) , 138 S. Ct. 617 (2018) counsels a different result. Dkt. 25 at 12

– 14. In NAM , the plaintiffs challenged the Environmental Protection Agency’s (“EPA”) promulgation of a rule defining the phrase “waters of the United States.” 138 S. Ct. at 624. The Supr eme Court considered whether the rule was properly challenged in the courts of appeals, examining a

“ provision of the Clean Water Act, 33 U.S.C. § 1369(b)(1), that enumerated seven categories of17

agency actions that must be challenged directly in the courts of appeals, including certain limitations issued under 33 U.S.C. § 1311. ” Matson , 895 F.3d at 804 (citing NAM , 138 S. Ct. at 626). The Supreme Court concluded that the courts of appeals did not have jurisdiction over the challenge in part because the ru le was not “a limitation promulgated or approved ‘under [§] 1311.’” NAM , 138 S. Ct. at 629

– 30 (quoting 22 U.S.C. § 1369(b)(1)(E)). In reaching this conclusion, t he Court “acknowledged that the word ‘under’ is a ‘chameleon’ that ‘must draw its meaning fro m its context.’” Id. at 630 (quoting Kucana v. Holder , 558 U.S. 233, 245 (2010)).
But with respect to the provision at issue in that case

— 22 U.S.C. § 1369(b)(1)(E)

— the Court was persuaded that “a limitation promulgated or approved under [§] 1311” was “most naturally read to mean that the effluent limitation or other limitation must be appro ved or promulgated ‘pursuant to’ or ‘by reason of the authority of’ § 1311 .” Id. (citations omitted) (emphasis added)

. The Court recognized that § 1311 “generally bans the discharge of pollutants into navigable waters absent a permit” but held that § 131 1 did not “direct or authorize the EPA to define a statutory phrase”

— “waters of the United States”

— that appeared “elsewhere in the Act” and that, in any event, the EPA promulgated the rule under a different provision of the Act. Id.
Matson argues that, under the reasoning of the NAM decision , the 2015 A pproval Order was made only “pursuant to” § 53101(f), which grants the Secretary authority to approve replacement vessels , and not “pursuant to § 50501, which sets forth the requirements for citizenship un der the statute. Dkt. 25 at 12

– 14. The Court is unpersuaded . First, the Court notes that the term “pursuant to” is also a “‘chameleon’ that ‘must draw its meaning from its context.’”
NAM , 138 S. Ct. at 630 (quoting Kucana , 558 U.S. at 245). The Hobbs Act provides for exclusive appellate jurisdiction in cases challenging agency decisions made “pursuant to [§] 50501.” 28 U.S.C. § 2342(3)(A). To give that statutory text meaning, as the Court must, see18

Mac’s Shell Serv., Inc. v. Shell Oil Prods. Co

. , 559 U.S. 175, 188 (2010) , there must exist some agency decisions that are made “pursuant to” § 50501, which

— as Matson observes

— merely s ets forth the requirements for being “deemed to be” a “citizen of the United States ” for purposes of the merchant marines. 46 U.S.C. § 50501. As a result, the Hobbs Act’s reference to rules or orders issued “pursuant to § 50501” can have meaning only if agency action taken “pursuant to § 50501 ” includes rules or orders that do not “dire ct,” “authorize,” or “approve[]” some action that is compelled or authorized by § 50501 itself

. NAM , 138 S. Ct. at 630. This understanding comports with the defin ition of “pursuant to” as including “in conformity with” or “according to.” “Pursuant to.” Merriam

- Webster.com Dictionary , Merriam

- Webster, https://www.merriam

- webster.com/dictionary/pursuant%20to , (last a ccessed May 29 , 2020 )

. The 2015 approval decision was made “pursuant to” § 50501 in that it was explicitly made “in conformity with” or “according to” the citizenship requirements set forth by that provision.
See Matson Navigation Co. , 895 F.3d at 802 (citing AR 8 3).

b

. Excl usivity of Court of Appe a ls’ Jurisdiction In this case, the 2105 Approval Order explicitly referenced § 50501 and other statutory provisions not listed in the Hobbs Act. This, then, raises the question whether the district courts have concurrent jurisdiction to review those portions of a multiple

- authority agency order that
turn on s tatutory provisions not listed in the Hobbs Act. MARAD argues that D.C. Circuit precedent, out

- of

- circuit precedent, and “underlying legal princip [les] ” all support the conclusion that “the courts of appeals have exclusive jurisdiction to review agency de terminations made in multiple

- authority cases.” Dkt. 33 a t 5, 12. Matson, in turn, argues that because “this Court indisputably has jurisdiction over the challenge to the 2016 [O] rder [pertaining to the APL S aipan ], it can and should resolve the substant ially identical challenge to the 2015 [O] rder at the19

same time.” Dkt. 34 at 5. The Court concludes that the courts of appeals have exclusive jurisdiction to review the entirety of this type of multiple

- authority order and, accordingly, that it lacks juri sdiction to review MARAD’s 2015 Approval Order authorizing the substitution of the
APL G uam for the existing MSP vessel

. The D.C. Circuit has not expressly answered the question presented . In IBT , for example, the court dealt with a multiple

- authority o rder but did not have occasion to decide the question whether its “jurisdiction [was] concurrent [with the district court’s] or exclusive” because the petitioner in that case brought its challenge in the court of appeals. 17 F.3d at 1482. S everal D.C. Ci rcuit decisions, however, a long with out

- of

- circuit precedents, support the conclusion that the courts of appeals have exclusive jurisdiction to review multiple

- authority orders

. I n IBT , the D.C. Circuit cited the Seventh Circuit’s decision in Suburban O’ Hare Commission v. Dole , 787 F.2d 186 (7th Cir.) , with approval

. IBT , 17 F.3d at 1482. In Suburban O’Hare , the Seventh Circuit considered whether it had exclusive jurisdiction over a challenge to a Federal Aviation Administration decision comprised of four distinct orders, three of which were issued pursuant to Chapter 20, which was subject to direct and exclusive appellate review . 787 F.2d at 192. The fourth order was issued on the authority of C hapter 31, which was not subject to direct and exclusive appellate review. Id. The Seventh Circuit observed that [ w ] hen an agency decision has two distinct bases, one of which provides for exclusive jurisdiction in the courts of appeals, the entire deci sion is reviewable exclusively in the appellate court.

. . . The separation of Chapter 20 claims from Chapter 31 claims in this case could only be effectuated through bifurcated proceedings. But the purpose of having agency decisions reviewed by courts o f appeals is to avoid duplicative factfinding. I f there is any ambiguity as to whether jurisdiction lies with a district court or with a court of appeals we must resolve that ambiguity in favor of review by a court of appeals. If a decision of an adminis trative agency is based, in substantial part, on a statutory provision providing for exclusive review by a court of appeals, then the entire proceeding must be reviewed by a court of appeals.20

Id. at 192

– 93 . The Seventh Circuit noted that it “need not r each the question of what constitutes ‘substantial part’ where, as [t] here, three of the four orders in question were issued under” the provision that required exclusive appellate review. Id. at 193 . In Sutton v. U.S. Dep’t of Transp. , 38 F. 3d 621 (2d Ci r. 1994), the Second Circuit took a slightly different approach, conclud ing that the court of appeals had exclusive jurisdiction where the determination made based on the exclusive

- appellate

-

jurisdiction triggering statute “was a necessary predicate” to th e challenged decision. Id. at 625.
In Shell Oil Company v. Federal Energy Regulatory Commission , 47 F.3d 1186 (D.C. Cir. 1995), decided the year after IBT , the D.C. Circuit considered “whether [ it ] should retain jurisdiction over ” a petition for review that was initially (and properly) brought in the district court and then transferred to the D.C. Circuit “due its close relationship with” a separate petition then pending before th at court and subject to its exclusive jurisdiction. Id. at 1190

– 91, 1194. Although the case s “involve[d] separate petitioners seeking review of two distinct rulings in a single declaratory order , ” the D.C. Circuit applied Suburban O’Hare ’s “ principle ” that “where an agency order arising from a common fac tual background and addressing a common question of law relies on two statutory bases that give rise to separate paths for judicial review, the entire order should be reviewed in a comprehensive and coherent fashion, and that review should take place in th e court of appeals.” Id. at 1195. In support of its decision to retain jurisdiction over the transferred petition , the D.C. Circuit noted that “a district court offers no advantages over a court of appeals with respect to on

- the

- record review of complete d administrative proceedings, while a bifurcated approach might lead to confusion and unnecessary duplication.” Id. ; see also City of Rochester v. Bond , 603 F.2d 927, 936 (D.C. Cir. 1979 ) (“The policy behind having a special review procedure in the first place similarly disfavors bifurcating jurisdiction over21

various substantive grounds between district court and the court of appeals.”). F inally, in Media Access Project v. FCC the D.C. Circuit explained that “[g]enerally, when jurisdiction to review admin istrative determinations is vested in the courts of appeals these specific, exclusive jurisdiction provisions preempt district court jurisdiction over related issues under other statutes.” 883 F.2d 1063, 1066

– 69 (D.C. Cir. 1989) (quoting Connors v. Amax Coal Co. , 858 F.2d 1226, 1231 (7th Cir. 1988))

. Because MARAD’s citizenship determination under § 50501 was “a necessary predicate to” the challenged determination that the APL G uam was eligible to participate in the MSP as a replacement vessel , the courts of appeals have exclusive jurisdiction to review the entire determination

. Sutton , 38 F.3d at 625. It is of no import that the parties do not dispute the citizenship determination that provide s the foundation for Hobbs Act jurisdiction because “t he exclusivity

. . . of statutory review [does not] depend on the substantive infirmity alleged

. ” City of Rochester , 603 F.2d at 936; Creed v. Nat’l Transp. Safety Bd. , 758 F. Supp. 2d 1, 5 (D.D.C. 2010) (“[T]he specific substantive ground alleged is irre levant to the application of the special statutory review provision.” (citing City of Rochester , 603 F.2d at 936

– 37 ). To bifurcate review and for this Court to assert jurisdiction over Matson’s challenge to th ose aspects of the eligibility determination t hat do not implicate § 50501 would contravene the D.C. Circuit’s guidance that “entire order[s]” resting on multiple authorities providing for direct review in distinct forums “should be reviewed in a comprehensive and coherent fashion [] and [that] that re view should take place in the court of appeals.” Shell Oil , 47 F.3d at 1195; see also City of Rochester , 603 F.2d at 936 (“The policy behind having a special review procedure in the first place similarly disfavors bifurcating jurisdiction over various substantive grounds between district court and the court of appeals. The likelihood of duplication and inc onsistency would exist in either case. ” ).22

T he Hobbs Act provides that “[t]he court of appeals

. . . has exclusive jurisdiction
to

. . . determine the validity of

. . . all

. . . final orders of

. . . the Secretary of Transportation issued pursuant to sec tion 50501.” 28 U.S.C. § 2342(3)(A). Giving the text is plain meaning, this grants the courts of appeals exclusive jurisdiction over the entirety of “final orders ” and not merely those “portions of final orders” that implicate § 50501. See Dkt. 33 at 7. The Court therefore concludes that it lacks jurisdiction to consider Matson’s challenge to MARAD’s 2015 Approval Order authorizing the substitution of t he APL G uam for the existing MSP vessel. 2 Because all agree that the Court has jurisdiction to revie w MARAD’s 2016 Approval Order respecting the APL S aipan , and because the Court agrees, the remainder of this opinion will consider whether that decision withstands APA scrutiny. B. Statutory and Regulatory Regime Governing MSP Eligibility
T he heart of the dispute , as framed by the parties, comes down to “ a discrete question of statutory interpretation

— whether a vessel must be operated exclusively in foreign commerce or in mixed foreign commerce and domestic trade allowed under a registry endorsement issued under 46 U.S.C. § 12111 to be eligible for inclusion in the [MSP].” Dkt. 26 at 8. Or, put differently, the question is whether the Secretary may authorize a contractor to replace an existing MSP vessel with a new vessel that operates in foreign t rade (or in mixed foreign and domestic trade allowed under a registry endorsement) but does not do so “exclusively.” As explained below, the answer to this question is no t obvious; it is not clear that MARAD answered it; and, if MARAD did, the answer it g ave is too opaque to permit judicial review. The

2 At oral argument, Matson chose not to address jurisdiction but, rather, focused entirely on the 2016 Approval Order, which all agree is subject to review in this Court.23

Court must, accordingly, remand the matter to MARAD to answer the statutory question in the first instance and to set forth is reasoning

. Matson argues that MARAD’s approval of the APL S aipan as a replaceme nt vessel was contrary to law because t he vessel was “ineligible to participate in the MSP because [it] operate [s] in trade between Saipan and the continental United States, which is domestic trade not conducted pursuant to a registry endorsement.” Dkt. 2 0 at 24 ; see also AR 301, 371; AR 373

. In Matson’s view, the statute limits participation in the MSP F leet to vessels that engage exclusively in foreign trade or in mixed foreign trade and domestic trade conducted pursuant to a registry endorsement and, a ccordingly, precludes the Secretary from approv ing any replacement vessel that operates

— even in part

— in domestic trade not permitted under a § 12111 registry endorsement

. Dkt. 20 at 24. According to Matson, this construction of the statute is confirmed b y the governing regulations, which require that replacement vessels operate in “foreign commerce” and then define “foreign commerce” to include “a cargo freight service

. . . operated exclusively in the foreign trade or in mixed foreign and domestic trade allowed under a registry endorsement under 46 U.S.C. 12111. ” 46 C.F.R. § 296.2 (emphasis added) ; Dkt. 20 at 14. That rule makes sense, Matson continues, because MSP vessels receive what is, in essence, a subsidy, and a government subsidy to vessels engaged , even in part , in certain types of domestic trade would unfairly disadvantage other vessels engaged in that trade. Dkt. 20 at 12, 28

. This perspective differs markedly from the interpretation of the statute that MARAD and APL proffer in th eir briefs. They acknowledge that MSP operating agreements must require that MSP vessels operate “exclusively in the foreign commerce or . . . in mixed foreign commerce and domestic trade allowed under a registry endorsement,” 46 U.S.C. § 53105(a)(1)(A), but they assert that the Secretary is authorized to approve a replacement vessel so long as the new vessel24

“is eligible to be included in the Fleet under section 53102(b),” id. at § 53105(f), and that provision requires only that the vessel operate in “for eign trade,” id. § 53102(b)(2), not that it do so “exclusively

. ” Dkt. 21

- 1 at 27

– 28. The contractual exclusivity requirement under the operating agreement is given meaning, according to MARAD and APL, by the statutory provisions that require the Secretar y to terminate an operating agreement if the contractor (after receiving notice of a material breach) “fails to achieve . . . compliance,” id . § 53104(c), and that reduce the contractor’s right to payment on a pro rata basis “for each day less than 320 in a fiscal year that the vessel is not operated in accordance with” the exclusive foreign trade requirement, id. § 53106(d)(3). Dkt. 21

- 1 at 18; Dkt. 24

- 1 at 23

. MARAD and APL further note that the statute requires that a contractor merely certify that it has operated the vessel in accordance with the exclusivity requirement “for at least 320 days in the fiscal year.” Dkt. 21

- 1 at 32 (quoting 46 U.S.C. § 53105(b) ) (emphasis omitted) ; Dkt. 24

- 1 at 37 . Finally, APL

— but not MARAD

— contends that the APL S aipan operates under a registry endorsement issued under 46 U.S.C. §
12111 and that a Coast Guard regulation interpreting that statute permits its service t o Saipan. Dkt. 21

- 1 at 29

– 40. MARAD, for its part, takes no position on this last argument. Hrg. Tr. (Rough at 75

– 76). The statutory text does clearly resolve the question. On the one hand, MARAD and APL are correct that the specific provision at issue here, 46 U.S.C. § 53105(f), grants the Secretary authority to allow a cont r actor to “replace a vess el under an operating agreement with another vessel that is eligible to be included in the Fleet under section 53102(b),” and 46 U.S.C. § 53012(b) provides only that “the vessel is operated . . . in providing transportation in foreign commerce”

— not that it operate “exclusively in foreign commerce.” But that reading of the statute arguably ignores another statutory provision that directs the Secretary, “as a condition of25

including any vessel in the Fleet,” to require the contractor “enter into an operating agreement with the Secretary,” id. § 53103(a), which, in turn, must require that the vessel “be operated exclusively in the foreign commerce or . . . in mixed foreign commerce and domestic trade allowed under a registry endorsement under section 1 2111,” id . § 53105(a)(1)(A). Faced with the difficulty of explaining the statutory command that the operating agreement require that the vessel operate exclusively in foreign commerce (or in mixed foreign and domestic commerce under a § 12111 registry endorsement) , MARAD and APL suggest that the requirement is not as categorical as it might seem. In support of this argument , they note that the statute do es not require the contractor to certify categorical compliance; it requires only a certification that the vesse l has been and will be “ operated in accordance with [the limitations on domestic trade in] section 53105(a)(1) for at least 320 days in the fiscal year.” Dkt. 21

- 1 at 32

– 33 (quoting 46 U.S.C. § 53106(b) ) (emphasis omitted) . This means, according to MARAD and APL, that 46 U.S.C. § 53105(a)(1)(A) should be read to require that the contractor, in effect, commit only to operate the vessel in foreign commerce (or in mixed foreign and domestic commerce under a § 12111 registry endorsement) for at least 320 days a year. Dkt. 21

- 1 at 32

– 33. A failure to meet the contractual undertaking for more than 45 days of the year does not constitute a breach but, rather, merely results in a pro rata reduction in the MSP payment. Dkt.
21

- 1 at 32

– 33 (citing 46 U.S.C. § 5310 6(d)(3) ) . Unsurprisingly, Matson disagrees and notes that the 320

- day provisions say nothing about domestic trade; rather, in Matson’s view, the leeway is intended to cover circumstances such as when a vessel is in dock and not engaged in any kind of trad e. Dkt. 20 at 38 (noting that a vessel might call a domestic port “due to emergency, weather, exigent circumstances or some other reason not foreseen at the time of the operating agreement”).26

The parties’ disagreement about the meaning of the governing MARAD regulations is equally confounding. According to Matson, the regulations unambiguously support its position that a replacement vessel must operate exclusively in foreign commerce or in mixed foreign and domestic commerce covered by a registry endor sement

. Dkt. 20 at 14. As Matson explains, the regulations provide that a vessel is eligible to be included in an MSP o perating a greement if , among other things, t he vessel is “ operated . . . in foreign commerce.” Id. (quoting 46 C.F.R. § 296.11(a)(2) ) . The regulations then define “ [ f ] oreign [ c ] ommerce” to mean “a cargo freight service . . . operated exclusively in the foreign trade or in mixed foreign and domesti c trade allowed under a registry endorsement under 46 U.S.C. [§] 12111. ” 3 Id

. (quoting 46 C.F.R. § 296.2 ) (emphasis in brief ) . In other words, according to Matson, the regulations provide that “a

3 This version of the regulation took effect on December 1, 2017. 82 Fed. Reg. 56895, 56897 (Dec. 1, 2017). The regulatory definition of “[f]oreign [c]ommerce” effective during the period in which the challenged eligibility determination wa s made does not differ in material respects: (1) For any vessel other than a liquid or a dry bulk carrier, a cargo freight service, including direct and relay service, operated exclusively in the foreign trade or in mixed foreign and domestic trade all owed under a registry endorsement under section 12105 of title 46, United States Code, where the origination point or the destination point of any cargo carried is the United States, regardless of whether the vessel provides direct service between the Unit ed States and a foreign country, or commerce or trade between foreign countries; and (2) For liquid and dry bulk cargo carrying services, includes trading between ports in the United States and foreign ports or trading between foreign ports in accordance with normal commercial bulk shipping practices in such manner as will permit United States

- documented vessels to freely compete with foreign

flag bulk carrying vessels in their operation or in competing for charters. 46 C.F.R. § 296.2 (2016 version) (emp hasis added). Section 12105, referenced in that definition, is now codified at 46 U.S.C. § 12111(b).27

vessel is eligible” to participate in the MSP only if it operates exclusively in foreign commerce (or in mixed foreign and domestic com merce under a § 12111 registry endorsement). To this, MARAD and APL respond that a regulation cannot change the meaning of a statute, and the statute defines “foreign commerce” to mean “commerce or trade between the United States, its territories or posse ssions, or the District of Columbia and a foreign country” and “commerce or trade between foreign countries.” 46 U.S.C. § 53101( 4) ; Dkt. 24

- 1 at 10, 26. They correctly note that the regulations define an “[e]ligible vessel” to mean “a vessel that meets th e requirements of § 53102(b),” 46 C.F.R. § 296.2, that is, the statutory provision that lacks the express “exclusivity” requirement. Dkt. 24

- 1 at 26. MARAD further argues that Matson’s reading of the regulations would render other regulatory text “ nonsen sical

. ” Dkt. 28 at 22

– 25. In particular, if “eligible vessel” is read to mean a vessel operating exclusively in foreign commerce, the regulation governing MSP operating agreements would require that a “vessel operating exclusively in foreign commerce or in mixed foreign and domestic commerce under a” § 12111 registry endorsement must “[b]e operated exclusively in foreign commerce or in mixed foreign commerce and domestic trade under a” § 12111 registry endorsement. 46 C.F.R. 296.31(d). APL adds a further twist to the analysis , as to which MARAD takes no position. In its view, the APL S aipan satisfies even the more demanding exclusivity requirement of 46 U.S.C. § 53105(a)(1)(A) because it operates exclusively “in mixed foreign commerce a nd domestic trade allowed under a registry endorsement issued under section 12111 .” Dkt. 21

- 1 at 29

– 40. As APL acknowledges, Dkt. 21

- 1 at 20, 46 U.S.C. § 12111(b) authorizes trade “with Guam, American Samoa, Wake, Midway, or Kingman Reef” and does not me ntion Saipan. But, in APL’s view, that is not a problem because a Coast Guard regulation , 46 C.F.R. § 67.17(a),28

provides that “[a] registry endorsement entitles a vessel to employment in the foreign trade; trade with Guam, American Samoa, Wake, Midway, o r Kingman Reef; and any other employment which a coastwise, or fishery endorsement is not required.” Dkt. 21

- 1 at 42. “A coastwise endorsement,” APL continues, “is only required for a vessel to engage in ‘coastwise’ trade within the meaning of Jones Act, ” 46 U.S.C. § 12112, which , APL asserts, the APL S aipan ’s service to Saipan is not

. Dkt. 22

- 1 at 42. In Matson’s view, in contrast , the Coast Guard regulation is inapposite , and all that matters is what the relevant statute says : it refers to a registry endorsement under § 12111 , and § 12111 refers to Guam but not Saipan. Dkt. 25 at 36. The problem with all of this back and forth is that bears no relation to anything contained in MARAD’s 2 01 6 Approval Order or its supporting memorandum. When a court reviews the decision of an administrative agency, it “must judge the propriety of such action solely by the grounds invoked by the agency.” Chenery Corp. , 332 U.S. at 196. The Court cannot “supply [its] own justifications for an order nor uphold an order based on [the agency’s ] post hoc rationalization.” Nat’l Fuel Gas Supply Corp. v. FERC , 468 F.3d 831, 839 (D.C. Cir. 2006). To be sure, the agency’s reasoning need not be pel l ucid , see Casino Airlines, Inc. v. Nat’l Transp. Safety Bd. , 439 F.3d 715 , 717 (D.C. Cir. 2006) (quoting Williams Gas Processing

- Gulf Coast Co., L.P. v. FERC , 373 F.3d 1335, 1345 (D.C. Cir. 2004)), and c ourts will uphold an agency’s decision “[a]s long as ‘the agency’s path may reasonably be discerned.’” Id. (quoting Bowman
Tr ansp., Inc. v. Ark.

- Best Freight Sys., Inc. , 419 U.S. 281 , 285

– 86 (19 74 )). Moreover, “ [w]hen an agency relies on multiple grounds for its decision, some of which are invalid, [courts] may nonetheless sustain the decision as long as one is valid and ‘ the a gency would clearly have acted on that ground even if the other were unavailable. ’ ” Id. (quoting Mail Order Ass’n of Am. v. U.S. Postal Serv. , 2 F.3d 408, 434 (D.C. Cir. 1993) (internal quote quoting Syracuse Peace Council v.29

FCC , 867 F.2d 654, 657 (D.C. Cir. 1989) ). But where an “agency has entirely failed to consider an important aspect of the problem ,” State Farm , 463 U.S. at 43, or has failed to explain its decision with sufficient clarity to enable the parties and the “court to understand the basis f or its decision,” Snohomish Cnty

. , Washington , 954 F.3d at 301 (quoting Jost , 194 F.3d at 88), the decision runs afoul of the APA. As counsel for MARAD acknowledged at oral argument, the need to address issues of central importance to a decision applies even in a proceeding, like this one, in which the plaintiff was not a full participant, the matter was decided by order as opposed to regulation, and the issue raised in the litigation was not squarely presented to the agency. Hrg. Tr. (Rough at 53) (agreeing that Matson faced no exhaustion requirement because there was “not any formal mechanism for participation by non[

- ]contracting p arties in the process” and therefore “that [Matson was] not obligated to raise the Saipan issue in the regulatory process”). Put differently, administrative exhaustion is not required in a case, like this one, in which the plaintiff had no right to partic ipate in the administrative proceeding and did not have access to all relevant administrative filings. Measured against these standards, MARAD’s 201 6 Approval Order fails to satisfy basi c APA requirements. To start, it is far from clear that the agency decided the matter on the grounds that MARAD now presses. Thus, while MARAD now argues that 46 U.S.C. § 53105(f) merely requires that the replacement vessel operate in foreign commerce, as provided in 46 U.S.C. § 53102(b)(2)

— and not that it operate “exclu sively” in foreign commerce or mixed foreign and domestic commerce under a registry endorsement , as specified in 46 U.S.C. § 53105(a)(1)(A)

— the memorandum that supports the 2016 Approval Order posited that “ 46 U.S.C. § 53102(b)(2), [as] further clarified b y 46 U.S.C. § 53105(a)(1)(A) [,] requires that an30

eligible vessel be operated exclusively in the foreign commerce or in mixed foreign commerce and domestic trade allowed under a registry endorsement issued under section 12111 .” AR 163. The memorandum then goes on to explain that the replacement vessel was eligible because it operated “with mixed foreign commerce and domestic trade to Guam provided in accordance with the . . . [v]essel’s registry endorsement.” Id. Following this same reasoning, the Decemb er 20, 2016 Approval Order explained that the replacement vessel would operate “with mixed foreign commerce and domestic commerce to Guam provided in according with the . . . [v]essel’s registry endorsement” and that, accordingly, the “[v]essel will provid e transportation in foreign commerce or in mixed foreign commerce and domestic trade allowed under registry endorsement issued under 46 U.S.C. § 12111, pursuant to the requirement of 46 U.S.C. §§ 53102(b)(2) and 53105(a)(1)(A).” AR 196

– 97. Nowhere in an y of MARAD’s exposition is there any suggestion that a replacement vessel need operate in foreign commerce only in part or that § 53105(f) can be read in isolation, without considering § 53105(a)(1)(A)’s exclusivity requirement. To the contrary, both the memorandum and Approval Order cite to § 53105(a)(1)(A) ; the memorandum posits that § 53015(a)(1)(A) “clarif[ies]” the meaning of § 53102(b ); and both the memorandum and Approval Order expressly consider whether the vessel’s registry endorsement under § 121 11 is sufficient to permit the proposed trade with Guam. Yet, if MARAD’s current reading of the
statute was correct, that analysis would have been unnecessary ; i t would have been enough to conclude that the vessel was engaged

— in part

— in foreign commerce and to leave for another day whether some pro rata reduction in the statutory payment amount might be necessary , s ee 46 U.S.C. § 53106.31

Likewise, the memorandum and Approval Order say nothing about the vessel’s routes to and from Saipan. Nor is obvious that the reasoning MARAD adopted with respect to the Guam routes answers this question. APL now argues that essentially the same analysis applies, but neither the memorandum nor the Approval Order wrestled with that potentially dispositive questi on and, even to this day, MARAD has taken no position on that question. Even under APL’s theory, moreover, the analysis applicable to Saipan is not the same as the analysis the agency articulated with respect to Guam . 46 U.S.C. § 53105(a)(1)(A) permits v essels operating in mixed foreign commerce and domestic trade “allowed under a registry endorsement issued under section 12111” to participate in an MSP agreement, and 46 U.S.C. § 12111, in turn, applies to vessels engaged in “trade with Guam, American S a m oa, Wake, Midway, or Kingman Reef.” APL adds Saipan to this list only by invoking a Coast Guard regulation. Regardless of whether that position has any merit

— and the Court expresses no view on that question

— Chenery precludes the Court from upholding MARA D’s Approval Order on this alternativ e theory , 332 U.S. at 196, which the agency neither considered nor even embraces today

. Ultimately, it appears that the agency did not address whether its A pproval O rder can be squared with the APL Saipan’s trade with Saipan. The existing record, moreover, does not disclose whether this was simply an oversight or whether MARAD had good reason for authorizing the replacement notwithstanding the vessel’s trade with Saipa n. The question, though, was as central to the age ncy’s conclusion as was the question whether the vessel’s trade with Guam was disqualifying

. See AR 163 (Approval Order discussing the APL Saipan’s service to Guam). A s things currently stand, t he Court cannot “ reasonably

. . . discern [] ” the basis, if a ny, for MARAD’s approval of a replacement vessel that serves Saipan and the coastal United States. Bowman Transp., Inc. , 419 U.S. at 285

– 86

.32

T he parties’ dispute , moreover, touches on issues of great importance to the MSP. The ir arguments pose the question whether an operating agreement to engage “exclusively” in foreign commerce (or mixed foreign commerce and domestic trade under a § 12111 registry endorsement) means what is says, or whether “exclusively” should be read, in light of other provisions of the statute, to mean at least 320 days a year. See 46 U.S.C. § 53106. The ir arguments also raise the question whether the Secretary may approve the replacement of a vessel under 46 U.S.C. § 53105(f), even if the contractor is unable to execute or to perform under the required operating agreement. And APL raises the question whether § 12111

— as incorporated in § 53105(a)(1)(A)

— should be read, in light of a Coast Guard regulat ion, to include trade with Saipan, even though § 12111 itself includes no reference to Saipan. None of these important issues, however, is addressed in the agency ’s decision

. The Court, accordingly, can conclude only that MARAD (1) “fail[ ed ] to consider an important aspect of the problem , ” State Farm , 463 U.S. at 43, (2) based its decision on different grounds than those now pressed by the agency and the intervenor, Chenery , 332 U.S. at 196, or (3) failed to “articulate the reasoning behind its decision with sufficient clarity to enable

. . . this [C]ourt to understand the basis for its decision , ” Snohomish Cty

. , Wash

. , 954 F.3d at 301 (quoting Jost , 194 F.3d at 88) . In any event , the decision cannot withstand APA scrutiny. C. Vacatur upon Remand This leaves the question of remedy. Matson urges the Court to vacate the 2016 Approval Order. Hr g . Tr. (Rough at 21

– 25)

. A lthough they did not brief the issue, MARAD and APL urged the Court at oral argument to remand the matter wi thout vacatur. Hrg. Tr. (Rough at 56

– 58, 60

– 61).33

“When a court conc ludes that agency action is unlawful, ‘the practice of the court is ordinarily to vacate the rule.’” Stewart v. Azar , 313 F. Supp. 3d 237, 272 (D.D.C. 2018) (quoting Ill. Pub. Telecomms . Ass’n v. FCC , 123 F.3d 693, 693 (D.C. Cir. 1997)). “[A]lthough vacatur is the normal remedy, [courts] sometimes decline to vacate an agency’s action.” Id. at 273 (quoting Allina Health Servs. v. Sebelius , 746 F.3d 1102, 1110 (D.C. Cir. 2014)). “ Whethe r a court should vacate an unreasonable agency action on remand, or not, depends on: (1) ‘ the seriousness of the order ’ s deficiencies (and thus the extent of doubt whether the agency chose correctly) ’ and (2) ‘ the disruptive consequences of an interim chan ge that may itself be changed. ’” Air Transport Ass’n of Am., Inc. v. U.S. Dep’t of Agriculture , 317 F. Supp. 3d 385, 390 (D.D.C. 2018) (quoting Allied

- Signal, Inc. v. U.S. Nuclear Regulatory Comm’n , 988 F.2d 146, 150

– 51 (D.C. Cir. 1993)). Here, these f

actors are in dispute. MARAD and APL argue that remand will simply allow MARAD more clearly to explain the basis for its decision, and APL contends that the decision, in any event, it likely to be sustained based on its alternative theory. Matson disagrees,
argu ing that the 2016 Approval Order is unavoidably flawed and tha t the MSP has never countenanced the inclusion of vessels engaged in “domestic” trade not performed pursuant to a registry agreement; in their view the APL Saipan’s service to Sai pan is prohibited

. APL represented at oral argument , moreover, that the APL S aipan is currently engaged in transporting goods for the Department of Defense and argued that vacatur could implicate military readiness. Hrg. Tr. (Rough at 60

– 61). Although c ounsel from M atson did not dispute that factual assertion, he suggested that any military cargo might be transported on other vessels or that the APL Saipan might continue to operate without receiving payment under the MSP

. Id. (Rough at 23, 84)34

Although the Court is sympathetic to Matson’s desire to bring this long

- pending matter to a close, in light of the effect vacatur might have on military readiness, the Court will permit the parties to submit additional evidence and briefing on whether the Court sho uld remand the matter with or without vacatur. MARAD and APL may submit any further evidence and briefing (not to exceed seven pages) on or before June 5 , 2020, and Matson may file any responsive evidence and briefing (not to exceed seven pages) on or bef ore June 1 2 , 2020. CONCLUSION For the foregoing reasons, the Court will GRANT in part and DENY in part Plaintiff’s motion for summary judgment; DENY Intervenor APL ’s and Defendant MARAD’s cross motion s for summary judgment ; and GRANT Defendant MARAD’s motion to dismiss for lack of jurisdiction. A separate order will issue.

/s/ Randolph D. Moss RANDOLPH D. MOSS United States District Judge

Date: June 12 , 2020