1 District Judge of the Northern District of Ohio, sitting by

designation.

1 United States Court of Appeals,

Fifth Circuit.

Nos. 96-20582, 96-60154.

KIRBY CORPORATION, Plaintiff-Appellant,

v.

Federico F. PEÑA, Secretary of Transportation; Albert J.

Herberger, Admiral, Defendants-Appellees,

Hvide Van Ommer I Hvide Van Ommeren Tankers I LLC; Hvide Van

Ommer II Hvide Van Ommeren Tankers II LLC; Hvide Van Ommer III

Hvide Van Ommeren Tankers III LLC; Hvide Van Ommer IV Hvide Van

O mmeren Tankers IV LLC; Hvide Van Ommer V Hvide Van Ommeren

Tankers V LLC, Intervenor Defendants-Appellees.

KIRBY CORPORATION, Petitioner,

v.

UNITED STATES of America; United States Department of

Transportation, Maritime Administration, Respondents,

Hvide Van Ommeren Tankers, I LLC; Hvide Van Ommeren Tankers, II

LLC ; Hvide Van Ommeren Tankers, III LLC; Hvide Van Ommeren

Tankers, IV LLC; Hvide Van Ommeren Tankers, V LLC, Intervenors.

April 9, 1997.

Appeal from the United States Distric t Court for the Southern

District of Texas.

Petition for Review of the Decision of the United States Department

of Transportation, Maritime Administration.

Before DAVIS and DUHÉ, Circuit Judges, and DOWD 1 , District Judge.

DUHÉ, Circuit Judge:

Petitioner-Appellant Kirby Corporation challenges a Maritime

Administration decision granting Title XI shipbuilding loan

guarantees to Intervenor-Respondents Hvide Van Ommeren Tankers,2

LLC. Kirby appeals the district court's order dismissing its suit

for lack of jurisdiction, and also petitions this Court for direct

review. We affirm the district court's decision and dismiss the

petition.

BACKGROUND

I. FACTS

Title XI of the Merchant Marine Act of 1936, as amended, 46

U.S.C.App. §§ 1271-1280a, governs a federal loan guarantee program

administered by the Maritime Administration ("MarAd") and designed

to facilitate private investment in the construction of vessels and

to revitalize the American merchant marine. Under the current

statutory scheme, a shipowner finances vessel construction in the

privat e market by issuing bonds or other indebtedness backed by

federal guarantees supported by the full faith and credit of the

United States. 46 U.S.C.App. §§ 1274(a), 1273(d). To protect its

financial interests i n the program, the federal government—after

a pproving a loan guarantee for a prospective vessel—acquires a

security interest in the vessel. 46 U.S.C.App. § 1273(b). If the

vessel owner subsequently defaults on the loan, the government may

either cure the default and assume the loan obligation or pay the

entire principal and interest due, 46 U.S.C.App. § 1275, and then

foreclose on its security interest in the vessel. 46 U.S.C.App. §

1275(c).

To qualify for a loan guarantee, a prospec tive vessel owner

must meet certain requirements sp ecified by Title XI and the

accompanying MarAd regulations, see 46 U.S.C.App. § 1274(d)(1); 463

C.F.R. 298.10-298.14, including the requirement that a vessel owner

be a United States citizen, which the regulations define by

reference to section 2 of the Shipping Act of 1916, 46 U.S.C.App.

§ 802. See 46 C.F.R. 298.10. Pursuant to this definition, MarAd

must find that each prospective vessel is at least 75% owned and

controlled by United States citizens before guaranteeing a loan.

In May 19 95, the Hvide Van Ommeren tanker companies

(collectiv ely, "Hvide") applied for Title XI loan guarantees to

build five tankers to be used in the domestic coastwise trade.

Upon learning of Hvide's application, Kirby Corporation ("Kirby"),

a Houston-based company that owns and operates ocean-going tankers

in the domestic coastwise trade, registered objections to the

issuance of such guarantees with MarAd. Although MarAd has no

formal administrative or adjudicative process by which it considers

the comments of t hird parties, it nonetheless agreed to receive

Kirby's comments and objections. Apparently not persuaded by

Kirby's position, in February 1996, MarAd issued a "letter

commitment" to guarantee appr oximately $216 million in financing

for the Hvide tanker construction. In issuing this commitment,

MarAd concluded that Hvide met, inter alia, Title XI's citizenship

requirements. In March 1996, MarAd and Hvide closed the guarantee

transaction, and a $216 million guaranteed bond offering was sold

in the private market.

II. PROCEDURAL HISTORY

In January 1996—b efore MarAd issued a letter commitment to

Hvide—Kirby sought a declaratory judgment and temporary restraining4

order in the United States District Court for the District of

Columbia. Kirby asked the district court to prohibit MarAd from

issuing the co mmitment to Hvide until the court could determine

whether MarAd's decision to issue a Title XI loan guarantee was

subject to judicial review. The district court denied Kirby's

request for injunctive relief, reasoning that Kirby had not

established that it was likely to succeed on the merits because 46

U.S.C.App. § 1273(e) precluded judicial revie w. Shortly

thereafter, Kirby volunta rily dismissed the District of Columbia

suit.

On February 23, 1996, Kirby filed another complaint, this time

in the United States District Court for the Southern District of

Texas, challenging the Hvide loan guarantees under the

Administrative Procedure Act, 5 U.S.C. § 701 et seq. Kirby argued

that MarAd's decision to issue the letter commitment was arbitrary,

capricious, an abuse of discretion, and contrary to law because the

Hvide tanker construction project was not economically so und and

because the Hvide companies did not m eet the citizenship

requirements. The district court, however, concluded that

Congress, pursuant to § 1273(e), had foreclosed all judicial review

of Title XI loan guarantee decisions. It therefore dismissed the

suit for lack of subject matter jurisdiction. Kirby appeals that

decision.

While the complaint in the Southern District of Texas was

pending, Kirby also filed a petition for direct review in this

Court. This petition alleges jurisdiction under the Hobbs Act, 285

U.S.C. § 2341 et seq., and seeks a judgment reversing MarAd's

citizenship decision.

We consolidated the district court appeal with the Hobbs Act

petition.

ANALYSIS

I. PRECLUSION OF JUDICIAL REVIEW

T he Administrative Procedure Act ("APA") confers a ca use of

action upon persons "adversely affected or aggrieved by agency

action within the meaning of a relevant statute." 5 U.S.C. § 702.

Kirby, as a putative competitor of Hvide, contends that it was

adversely affected when MarAd issued Title XI loan guarantees for

the building of Hvide's vessels. It maintains that the Hvide

limited liability companies are not United States citizens eligible

to participate in the coastwise trade. It thus asks this Court to

set aside MarAd's loan guarantee decision as contrary to law. S ee

5 U.S.C. § 706(2)(A).

The APA, however, withdraws the cause of action if a statute

precludes judic ial review or if agency action is committed to

agency discretion by law. 5 U.S.C. § 701(a). Because we believe

that both the text of § 1273(e) and the purpose of Title XI, as

evidenced by its legislative history, indicate that § 1273(e)

precludes judicial review, we affirm the district court's dismissal

of Kirby's suit and dismiss Kirby's petition for review.

A. The Presumption Favoring Judicial Review

There is a "strong presumption" that Congress intends there

to be judicial review of administrative agency action, see Bowen v.6

Michigan Academy of Family Physicians, 476 U.S. 667, 670, 106 S.Ct.

2133, 2135, 90 L.Ed.2d 623 (1986), and the government bears a

"heavy burden" when arguing that Congress meant to prohibit all

judicial review. S ee Dunlop v. Bacho wski, 421 U.S. 560, 567, 95

S.Ct. 1851, 1857, 44 L.Ed.2d 377 (1975). Indeed, "only upon a

showing of "c lear and convincing evidence' of a contrary

legislative inten t should the courts restrict access to judicial

review." Abbott Labs. v. Gardn er, 387 U.S. 136, 141, 87 S.Ct.

1507, 1511, 18 L.Ed.2d 681 (1967).

Nevertheless, the presumption favoring judicial review, "like

all presumptions used in interpreting statutes, may be overcome by

specific language or s pecific legislative history that is a

reliable indicator of congressional inten t." B lock v. Community

Nutrition Inst., 467 U.S. 340, 349, 104 S.Ct. 2450, 2455, 81

L.Ed.2d 270 (1984). The presumption may also be overcome "by

inferences of intent drawn from the statutory scheme as a whole."

Bowen, 476 U.S. at 673 n. 4, 106 S.Ct. at 2137 n. 4. Further, the

Supreme Court has "never applied the "clear and convincing

e vidence' standard" in a "strict evidentiary sense." B lock, 467

U.S. at 350, 104 S.Ct. at 2456. Instead, the Court "has found the

standard met, and the presumption favoring judicial review

overcome, whenever the congressional intent t o preclude judicial

review is "fairly discernible' in the statutory scheme." I d. at

351, 104 S.Ct. at 2456 (quoting Association of Data Processing

Serv. Orgs., Inc. v. Camp, 397 U.S. 150, 157, 90 S.Ct. 827, 832, 25

L.Ed.2d 184 (1970)).7

Thus, to determine whether § 1273(e) precludes judicial

review, we look to the express language of that subsection, as well

as the structure of Title XI and its legislative history. S ee id.

at 345, 104 S.Ct. at 2453-54.

B. The Text of § 1273(e)

Section 1273(e) of Title XI provides, in pertinent part:

Any guarantee, or commitment to guarantee, ma de by the

Secretary under this subchapter shall be conclusive evidence

of the eligibility of the obligations for such guarantee, and

the validity of any guarantee, or commitment to guarantee, so

made shall be incontestable.

46 U.S.C.App. § 1273(e). The Government (and Hvide) argue that

this subsection precl udes all judicial review. Kirby asserts,

however, that § 1273(e) bars only the government, as the issuer of

the loan guarantees, from disavowing liability for validly entered

loan commitme nts; i .e., Kirby contends that once the government

commits to guaranteeing a loan, § 1273(e) divests it of certain

defenses in a suit to enforce the loan guarantee.

Kirby presents two textual arguments in support of its

position. First, it maintains that the plain language of § 1273(e)

d oes not expressly preclude judicial review because that section

does not mention jurisdiction, courts, or judicial review. In

light of the well-known presumption favoring review of agency

action, Kirby insists that when Congress truly wishes to preclude

judicial review, it expresses its intent in clear and unequivocal

terms. S ee Lindahl v. Office of Personnel Management, 470 U.S.

768, 779-80, 105 S.Ct. 1620, 1627, 84 L.Ed.2d 674 (1985) ("[W]hen

Congress intends to bar judicial review altogether, it typically2 By way of contrast, Kirby cites to statutes con taining

provisions that explicitly bar judicial review. S ee, e.g., 38

U.S.C. § 511(a) (regarding veteran's benefits: "[T]he decision of

the Secretary as to any such question shall be final and conclusive

and may not be reviewed by any ot her official or by any court,

whether by an action in the nature of mandamus or otherwise.").

8 employs language far more unambiguous and comprehensive than that

set forth in [the relevant statute]."); D art v. United States, 848

F.2d 217, 221 (D.C.Cir.1988) ("If the wo rding of a preclusion

clause is less than absolute, the pre sumption of judicial review

also favors a particular category of plaintiffs' claims."). 2 That

Congress did not mention judicial review in § 1273(e) , Kirby

maintains, is strong textual evidence that Congress did not intend

to insulate MarAd's decisionmaking from judicial review. Moreover,

Kirby contends that even when the plain language of a statute does

appear to preclude ju dicial review, courts have found that only

some types of judicial review are barred. S ee, e.g., Lindahl, 470

U.S. at 771, 800, 105 S.Ct. at 1623, 1638 (holding that the

relevant statute barred review of factual determinations but

permitted review for alleged errors of law and procedure).

Kirby also maintains that § 1273(e), given its legal meaning,

bars only the government, as the issuer of the loan guarantees,

from revoking its loan guarantee commitments. Kirby derives this

interpretation by analogy to "incontestability" provisions found in

insurance contracts containing language similar to that found in §

1273(e). When construed as part of an insurance contract, an

incontestability clause precludes insurers, after a given period of

time, from invoking certain defenses to a suit on the policy by the9

insured. S ee 1A John A. Appleman & Jean Appleman, Insura nce Law

and Practice § 311, at 306 (1981); s ee also Black's Law Dictionary

766 (6th ed.1990). Further, Title XI was initially a government

loan insurance program when Congress first enacted and amended the

predecessor to § 1273(e). Completing the analogy, Kirby thus

maintains that the incontestability clause found in § 1273(e) was

designed to bar only the government, as the insurer of the

shipbuilding loans, from revoking its insurance commitment.

Therefore, it was not designed, Kirby con tends, to address

third-party challenges to loan guarantee decisions such as the one

Kirby has brought.

It is true that when Congress wishes to preclude judicial

review, it usually says so in clear and unequivocal terms.

Further, the incontestability provision found in § 1273(e) is so

similar to those provisions found in insurance contracts that

Congress may have adopted such a provision with insurance-related

incontestability clauses in mind, especially because Title XI began

as a government insurance program. Nevertheless, we are

unpersuaded by Kirby's textual argument.

First, the plain language of the statute evinces Congress's

intent to preclude judicial review. In its customary legal usage,

"conclusive evidence" means "[t]hat which is incontrovertible,

either because th e law does not permit it to be contradicted, or

because it is so strong and convincing as to overbear all proof to

the contrary...." Black's Law Dictionary 290 (6th ed.1990).

F urther, in addition to its meaning in connection with insura nce10

policies, "incontestable" means that which is "not subject to being

disputed, called into question, or controverted." Webster's Third

New International Dictionary 1145 (unabr i dged ed.1981). That

Congress may have patterned § 1273(e) after a clause typically

found in insurance contra cts that prevents insurers from

disclaiming liability does not mean ipso facto that C ongress

intended to pre vent o nly the government, as the insurer of

shipbuilding loans, from disavowing such commitments. Nowhere does

the plain language of § 1273(e) suggest that loan guarantees are

incontestable only when challenged by the government.

We are also not persuaded by Kirby's citation to Lindahl or

other such cases holding that language appearing to bar judicial

review precludes only certain categories of agency determinations.

Those cases merely illustrate the presumption of reviewability, and

their holdings were based not only upon the text of the relevant

statute, but also upo n congressional intent as determined by the

statutory schemes and legislative histories. See, e.g., Lindahl,

470 U.S. at 781-88, 105 S.Ct. at 1628-32 (analyzing extensively the

p ertinent statutory scheme and legislative history); B owen, 476

U.S. at 674-80, 106 S.Ct. at 2137-41 (same); B lock, 467 U.S. at

341-43, 3 46-48, 104 S.Ct. at 2450-53, 2454-55 (same). Following

the analysis employed by the Supreme Court in these cases, we

conclude that § 1273(e) of Title XI precludes third-party

challenges to MarAd's loan guarantee decisions. This determination

is premised upon the plai n language of § 1273(e), as well as the

legislative history and purpose of Title XI, to which we now turn.11

C. The Legislative History and Structure of Title XI

Title XI of the Merchant Marine Act of 1936 was originally

enacted into law in 1938 as a ship mortgage insurance program and

was intended "to encourage the private sector to provide loans to

the shipping industry at low risk during the Depression." S.Rep.

No. 98-652 (1984), reprinted in 1984 U.S.C.C. A.N. 5426, 5426-27;

see also H.R.Rep. No. 8 3-1042 (1953), r eprinted in 1953

U.S.C.C.A.N. 2433, 2434. During the program's first fifteen years,

however, Title XI proved relat i vely ineffective in attracting

private capital for shipbuilding. See H.R.Rep. No. 83-1042,

reprinted in 1953 U.S.C.C.A.N. 2433, 2434.

With its original goal—that of attracting private investment

to the shipbuilding industry—still in mind, Congress reacted to

private industry's sluggish response by ame nding the statute in

1953 and again in 1954. S ee H.R.Rep. No. 83-1042, reprinted in

1953 U.S.C.C.A.N. 2433; H.R.Rep. No. 83-2450 (1954), r eprinted in

1954 U.S.C.C. A.N. 4011; s ee also S.Rep. No. 92-1137 (1972),

reprinted in 1972 U.S.C.C.A.N. 3851, 3864 (noting that only twelve

transactions were entered into during the period from1938 to

1953). Changes to Title XI were necessary because private

investment had "been reluctan t to undertake to any appreciable

extent the risks of lending money secured by ship mortgages"

because "of the inherent uncertainties in the business of operating

ships." H.R.Rep. No. 83-2450, r eprinted in 1954 U.S.C.C.A.N. 4011,

4012. Congress thus sought to reduce the risks of lending money to

potential shipbuilders, and one way it did so was by enacting the12

predecessor to § 1273(e).

Kirby agrees, as it must, that Congre ss intended to secure

private financ ing for shipbuilding in part by strengthening the

MarAd's loan insurance commitment from post hoc challenge. Kirby

argues, however, that a closer reading of the legislative history

supports its view that § 1273(e) serves to bar only the government

from disclaiming its commitments. To this end, Kirby notes that

the adopti on of the predecessor to § 1273(e) was sparked by the

refusal of the Comptrolle r General to honor government subsidies

for the construction of three passenger liners, the United States,

the C onstitution, and the Independence, on the grounds tha t the

companies building those liners had overcharged the government.

See George Horne, Commerce Department Drive Is On To Review U.S.

Merchant Mari ne, N.Y. Times, June 8, 1953, at 51; George Horne,

Ship Men Are Hopeful Congress Will End Subsidy Uncertainties, N.Y.

Times, Mar. 29, 1954, at 39. The Comptroller General's actions

"badly shattered" confidence among shipbuilders regarding

government subsidies, and ensured that "no line [would] build and

no bank [would] put money into" the building of merchant marine

vessels. U.S. Shipbuilding: Rough Weather Ahead, Newsweek, Mar.

1, 1954, at 64. Upon review of the legislative history and

contemporary news accounts, we agree with Kir by that the

predecessor to § 1273(e) was enacted in response to the Comptroller

General's actions in tying up MarAd's shipbuilding subsidies.

Despite our agreement with Kirby regarding the impetus behind

the passage of § 1273(e), we nevertheless differ with the13

conclusion that Kirby draws from this history, viz., that because

the provision was enacted in response to the Comptroller General's

actions, it was designed to estop only the government, as the

issuer of loan insurance, from disclaiming its comm itments, and

thus does not have any effect upon third-party challenges to the

loan guarantees such as the instant litigation.

The legislative history highlights our disagreement with Kirby

in three different ways. First, the statutory development of §

1273(e), as seen by the textual changes to that subsection,

illumina t es Congress's intent to make MarAd's loan guarantees

certain and also to preclude challenge from third parties as well

as from the government. Second, the legislative history and

structure of Title XI in general and statements of the witnesses

who testified before the various legislative committees and

subcommittees considering the proposed amendments also reflect the

intent of Congress and industry participants to make the loan

commitments absolutely immune from ch a llenge. Third, Kirby's

argument that § 1273(e) bars only the government from invalidating

MarAd's loan guarantees is weakened by a logical flaw: the

legislative h istory shows not that Congress intended to prevent

MarAd itself from backing out of its loan commitments (for such a

situation would directly correspond to Kirby's insurance analogy)

but that Congress was interested in preventing third parties, be it

the Comptroller General or putative competitors, from invalidating

MarAd's commitment.

1. The Textual Development of § 1273(e)14

First, we turn to the statutory development of § 1273(e). As

originally enacted in 1953, that subsection provided:

Any con tract or commitment of insurance entered into by the

Secretary of Commerce under this title shall be final and

conclusive and shall not be subject to avoidance by any

officer, emp loyee, or agent o f the United States, except in

case of fraud, duress, or mutual mistake of fact.

Pub.L. No. 83-288, § 3, 67 Stat. 627 (1953) (emphasis added). The

plain language of the 1953 provision , as evidence of Congress's

intent, is relatively clear. It shows that Congress was most

concerned that officers of the United States would attempt to avoid

insurance commitments entered into by the Secretary of Commerce.

In 1954, however, this provision was significantly broadened:

Any contract or commit ment of insurance entered into by the

Secretary of Commerce under the provisions of this title shall

not be terminated, canceled, or otherwise rev oked for any

reason, except as provided in section 1105 of this title, and

shall be conclusive evidence th at the mortgage or loan

complies fully with the provisions of this title and of the

approval of the principal amount, interest rate, and all other

terms of the mortgage or loan and of the mortgagor or borrower

and of the mortgagee or lender; any contract or commitment of

insurance so entered into shall be incontestable from the date

as of which such contract or co mmitment is entered into,

except for fraud, duress, or mutual mistake of fact.

Pub.L. No. 83-781, § 5, 68 Stat. 1267, 1274-75 (1954) (emphasis

added). By widening the scope of this provision, the 1954

amendment reflects Congress's intent to preclude all challenges to

MarAd's loan commitments. First, Congress replaced the 1953

phrase, "not subject to avoidance by ... the United States," with

much more comprehensive language in 1954: "any contract or

commitment of insurance so entered into shall be incontestable."

We cannot help but conclude that Congress, by deleting the

reference to the United States and substituting the more general3 The exception permits cancellation of the insurance contract

when the borrower defaults and the Secretary of Commerce elects to

pay off the outstanding principal and interest. S ee Pub.L. No. 83-

781, § 5, 68 Stat. 1272-73 (amending section 1105(a) of the

Merchant Marine Act of 1936).

4 Quoting selectively from the legislative history, Kirby

insists that the 1954 amendment was not intended to substantively

change the meaning of § 1273(e). S ee Private Financing of New Ship

Construction: Hearings on S. 3219 Before a Subcomm. of the Comm.

on Interstate and Foreign Commerce, 83d Cong. 132 (1954) ("This

amendment, except the change which pr ovides for terminating the

insurance contract for special reasons, is not intended to change

the substance of this subsection, but is intended to clarify it.").

This quote, however, is not found in the Senate or House Committee

Rep orts; instead, it is a quote from a letter written by marine

industry officials regarding the pr oposed amendments. While we

consider the views of private industry in analyzing the legislative

history, we are not willing to give inordinate weight to a single

statement and do not believe that a single phrase from an industry

official can abrogate inferences drawn from amendments to the text

of § 1273(e).

15 word, "incontestable," intended to prevent any party, and not just

the United States, from contesting the loan guarantees.

Second, Congress's intent to broaden the scope of § 1273(e)

can be gleaned from another 1954 amendment to that provision, which

added the following language: "Any contract or commitment of

insurance

... shall not be terminated, canceled, or otherwise

revoked for any reason, except as provided in section 1105 of this

title." Pub.L. No. 83-781, § 5, 68 Stat. 1274-75 (1954) (emphasis

added). 3 The phrase, "any reason," is very broad, and it must be

given its logical meaning; it necessarily includes "any" challenge

to loan commitments, even those brought by third parties. 4

The 1972 amendments to § 1273(e) also reflect Congress's

intent to immunize Title XI loan guarantees from challenge. That

provision, as amended in 1972, provided:16

Any guarantee, or commitment to guarant ee, made by the

Secretary of Commerce under this title shall be conclusive

evi dence of the eligibility of the obligations for such

guarantee, and the validity of any guarantee, or commitment to

guarantee, so made shall be incontestable.

Pub.L. No. 92-507, § 3, 86 Stat. 910 (1972). The most important

amendment was the elimination of the language t hat allowed

challenges to MarAd's loan guarantees when su ch commitments were

marred by fraud, duress, or mutual mistake. By removing this

exception, Congress indicated that it intended to immunize

completely the loan guarantees from challenge, despite the presence

of fraud, duress, or mutual mistake. Viewed in conjunction with

the 1954 amendment to § 1273(e), Congress's intent is plain: it

sough t to preclude MarAd's loan commitments from all challengers

and in all instances.

2. The Structure and History of Title XI

Second, we look to the stru cture and legislative history of

Title XI. It is clear from the Senate and House Committee Reports

accompanying the 1953 and 1954 amendments to Title XI that the

purpose of the Act is to encourage private investment in the

building of ships by abating the risk to lenders of a vessel

owner's defau lt. S ee, e.g., H.R.Rep. No. 83-2450, reprinted in

1954 U.S.C.C.A.N. 4011, 4012; H.R.Rep. No. 83-1042, reprinted in

1953 U.S.C.C.A.N. 2433, 2434. In furtherance of this goal,

Congress took steps to ensure that government loan insurance would

always be honored by enacting the incontestability pr ovision

currently found in § 1273(e) into law. Kirby's reading of this

provision is untenable because such an interpretation would allow17

a third party to challenge—and de lay or even invalidate—loan

guarantees in the same manner as did the Comptroller General in the

1950s. It is difficult to believe that it could have been

Congress's intent to prevent challenges by the Comptroller General

but to allow challenges by third-party competitors. From the point

of view of an investor, it makes little difference if the guarantee

is invalidated by the government or by a federal court in response

to a third-party complaint. A loan guarantee that could be

overturned at the behest of a competitor is not the low-risk

investment contemplated by Congress. Instead, as the Government

notes, it is a half-way measure that would offer little solace to

investors and would certainly not assuage investor confidence that

was shaken by the actions of the Comptroller General in the early

1950s. Congress recognized that there was a crisis arising from

the quickly-approaching obsolescence of the American merchant

fleet, and it thus took the admittedly drastic action of insulating

MarAd's loan guarantee determinations from review.

Further, the industry participants in the congressional

hearings also believed that the 1954 amendments—and in particular,

the predecessor to § 1273(e)—would ha ve the effect of precluding

all challenges to the loan insurance contracts. The fact that the

industry officials and legislators may have been primarily

influenced by the actions of the Comptroller General does not mean

that Congress intended to preclude challenges by the government

only. Indeed, the industry representatives made it clear that

finality of the loan insurance was paramount, and that investment18

was unlikely to occur without elimination of all uncertainty caused

by the potential for subsequent litigation and invalidation of such

insurance. As Mr. Rudolph S. Hecht, chairman of the board of the

Mississippi Shipping Co., noted:

... the investor can be induced to put his mone y into this

kind of financing, which he has never done heretofore. But if

you leave any uncertainly [sic] as to the finality of this

thing, once the money is put out, then this bill will not

work. The investors will not put up their money because that

is the uncertainly [sic] that no investor will take,

especially in the shipping industry, which is a feast and

famine industry, as you well know.

Hearings on H.R. 86 37, 83d Cong. 21 (1954). This concern was

amplified by Jerome S. Katzin, of Kuhn, Loeb & Co:

If there is the slightest doubt over the firmness of the

Government's obligation on these insured mortgages, these

securities cannot be sold at anything approac hing the terms

anticipated. We must assume that the Congress intends, and

the language of the statute will clearly provide, for a firm

Government obligation which is clear, definite, and

unalterable.

Id. at 67. The situation created by Kirby's challenge to MarAd's

loan guarante es is exactly the situation the shipping industry

sou ght to prevent: a challenge to the certainty of the loan

guarantees. That members of the shipping industry made such

statements in response to the Comptroller General's challenge to

earlier government subsidies is ultimately not persuasive. The

investors and shipping industry offic ials were aware of a known

risk, and they sought to prevent its reoccurrence. It is illogical

to think that they would have allowed a similar, but perhaps

unknown, risk resulting in the sa me consequences, v iz., the

invalidation of government loan obligations.

T he 1972 amendments also support our belief that § 1273( e),5 Although the loan insurance/guarantee program—with some

version of § 1273(e)—has been in effect for over 40 years, Kirby

points us to no case in which a court has assumed jurisdiction to

consider the validity of MarAd's loan commitment decision.

19 when viewed in conjunction with the overall scheme of Title XI,

precludes judicial review. Congress understood that some private

investors had not participated in Title XI's program because of the

com plexities involved in receiving loan insurance, and it thus

amended Title XI from a loan insurance program to a loan guarantee

program. S ee Pub.L. No. 92-507, § 3, 86 Stat. 910 (1972) (codified

as amended at 46 U.S.C.App. § 1273(a)). The fact that Title XI is

no longer a l oan insurance program cuts against Kirby's

insurance-derived definition of the language found in § 1273(e).

The 1972 amendments also included provisions requiring the

government—and not the lender—to take a security interest in the

vessel as collateral in the event of default. See Pub.L. No. 92-

507, § 3, 86 Stat. 910 (1972) (codified as amended at 46 U.S.C.App.

§§ 1273(b), 1275); s ee also S.Rep. No. 92-1137, reprinted in 1972

U.S.C.C.A.N. 3851 , 3853, 3858, 3861; 46 U.S.C.App. §§ 1273(b),

1275. As such, private investors have no protection against a

vessel owner's default except for the government's guarantee. If

these guarantees could be invalidated i n a subsequent judicial

proceeding, then investors—who have no security interest in the

vessel—would be left completely unprotected by Title XI. This

result would be at odds with the express intent of Congress. 5

As the foregoing recitation of the legislative history has

demonstrated, the overarching purpose of Title XI is to attract6 It is true, as Kirby notes, that it is not Congress's intent

to secure financing for any prospective ves sel. The regulations

require the vessel owners to be United States citizens, and the Act

commands MarAd to evaluate the economic soundness of a particular

project. These requirements were amplified by the 1984 amendments

to Title XI, which were prompted by numerous defaul ts due to the

"economic depression of the maritime industry." S.Rep. No. 98-652,

reprinted in 1984 U.S.C.C.A.N. 5426, 5427. The 1984 amendments set

forth "much stricter criteria for approving loan applications," and

require the Secretary of Transportation, inter alia, to evaluate a

loan applicant's economic soundness and the n eed for the

prospective equipment in the particular trade. Id., reprinted in

1984 U.S.C.C.A.N. 5426, 5426, 5428.

7 In 1993, Cong ress deleted the citizenship requirement of

Title XI, although MarAd's regulations stil l maintain such a

requirement. This amendment will be discussed in greater detail

when our focus turns to whether we have jurisdiction pursuant to

the doctrine set forth in L eedom v. Kyne, 358 U.S. 184, 79 S. Ct.

180, 3 L.Ed.2d 210 (1958).

20 private inves tment for the construction of vessels. 6 Congress

sought to achieve this goal b y minimizing the risk of default to

those investors, and the incontestability provision t hat was

adopted in 1953 an d amended in 1954 and 1972 accords with the

purpose of Title XI, for it ensures that MarAd's decision to issue

loan guarantees is insulated from challenge, thereby further

minimizing the risk to investors. 7

3. The Insurance Analogy

Finally, Kirby's insurance-derived meanin g of § 1273(e) is

deeply flawed. When viewing the text of § 1273(e) without studying

the legislative history, Kirby's argument appears somewhat logical:

incontestability clauses are found in insurance contracts; they do

prevent insurers, after a certain period of time, from rescinding

a policy or denying a claim based upon, inter alia, a

misrepresentation by an insured; the provision found in § 1273(e)21

is similar to typical incontestability provisions found in

insurance contracts; Title XI began as a government loan insurance

program; and thus the incontestability provision is meant to bar

only the government from rescinding its insurance obligations under

Title XI. The problem with this argument is that the legislative

history confirms that Congress was not specifically concerned with

preventing MarAd, as the government agency that issued the loan

insurance, from rescinding its commitments. It was not MarAd, the

issuer of the loan insurance, that attempted to disclaim its loan

commitments in the early 1950s; instead it was the Comptroller

General, a legislative official and a non-party to the loan

insurance commitment, who attempted to invalidate MarAd's

obligation. In other words, the actions of the Comptroller General

were the actions of a third party attempting to undo an agreement

between MarAd and various shipbuilding companies. Kirby's lawsuit

is a third-party challenge in much the same way. The fact that

both the Comptroller General and the Maritime Administrat ion are

part of the federal government is not enlightening. What is

instructive is that the Comptroller Gen eral, a non-party to the

loan-insurance transaction, attempted to undo such a commitment.

Or to put it another way: if we were to agree that Kirby could

challenge MarAd's loan guarantee and if we did set aside the loan

transaction as Kirby requests, our action in doing so would be

closely analogous to the Comptroller General's actions. Congress8 We are also unmoved by Kirby's contention that clauses

similar to that found in § 1273(e) contained in other federal

statutes were held to preclude only the government from disavowing

its insurance commitments. See First Interstate Bank of Billings

v. United States, 61 F.3d 876 (Fed.Cir.1995); H icks v. United

States, 65 F.2d 517 (4th Cir.1933); C arman v. Richardson, 357

F.Supp. 1148 (D.Vt.1973); J ay F. Zook, Inc. v. Brownstein, 237

F.Supp. 800 (N.D.Ohio 1965); N euhard v. United States, 83 F.Supp.

911 (M.D.Pa.1949). Four of these cases concerned suits brought

against the government to enforce an insurance contract, and they

dealt with the government's efforts to avoid the contract despite

the incontestability provision. The question whether a party other

than the government could cha llenge the insurance commitment was

not even at issue in any of those four cases. Further, the

incontestability clause in each was not absolute like the one found

in § 1273(e), and each allowed the government to challenge the

insurance when there was fraud on the part of the insured. S ee

First Interstate Bank, 61 F.3d at 877; H icks, 65 F.2d at 519; J ay

F. Zook, Inc., 237 F.Supp. at 806; N euhard, 83 F.Supp. at 912.

The fact that these cases analyzed the incontestability provisions

in terms of the governme nt's right to back out of its insurance

commitments does not mean that incontestability provisi ons are applicable only as to the government.

In the fifth case, the district cou rt did find

j urisdiction over a third-party suit brought to block t h e

issuance of federal loan guarantees under the Hill-Burton Act.

Carman, 357 F.Supp. at 1159. In making such a determination,

however, the court did not refer to or discuss the

incontestability provision of that Act.

22 sought to prevent this from reoccurring. 8

In conclusion, we are convinced that it was Congress's clear

and convincing intent to preclude all challenges to Title XI loan

guarantees. This resolution is based not only upon the text of §

1273(e), but also upon the structure of Title XI and upon the

legislative history of the Act in general and § 1273(e) in

particular.

II. THE LEEDOM v. KYNE EXCEPTION

Although § 1273(e) of Title XI is a statutory bar to judicial

review, there is an implicit but narrow exception that permits23

judicial intervention—even when the relevant statutory language

precludes jurisdiction—when an agency exceeds the s cope of its

d elegated authority or violates a clear statutory mandate. S ee,

e.g., Hanauer v. Reich, 82 F.3d 1304, 1307 (4th Cir.1996). This

exception finds its roots in Leedom v. Kyne, 358 U.S. 184, 79 S.Ct.

180, 3 L.Ed.2d 210 (1958).

I n K yne, the National Labor Relations Board undisputably

violated a statutory prohibition against placing professional

employees into a collective bargaining group with non-professional

employees. The president of a labor organization brought suit to

set aside the Board's action, but the Board contended that a

provi sion of the National Labor Relations Act ("NLRA") impliedly

precluded judicial review. In considering the issue, the Supreme

Court asked r hetorically whether the law, "apart from the review

provisions of the

... [NLRA]," affords a judicial remedy. K yne,

358 U.S. at 188, 79 S.Ct. at 183 (internal quotations omitted).

Answering its own question, the Court stated, "We think the answer

surely must be yes. This suit is not one to "review,' in the sense

o f that term as used in the [NLRA], a decision of the Board made

within its jurisdiction. Rather it is one to strike down an order

of the Board made in excess of its delegated powers and contrary to

a specific prohibition in the [NLRA]." Id.

The Courts of Appeals hav e only rarely exercised their

jurisdiction under Kyne, and have limited Kyne 's app lication to

situations in which an agency has exceeded its delegated powers or

"on its face" violated a statute. S ee, e.g., Dart v. United24

States, 848 F.2d 217, 222 (D.C.Cir.1988); R ussell v. National

Mediation Bd., 714 F.2d 1332, 1340 (5th Cir.1983) (stating that the

Kyne standard is "narrow and rarely successfully invoked"), cert.

denied, 467 U.S. 1204, 104 S.Ct. 2385, 81 L.Ed.2d 344 (1984);

McClendon v. Jackson Tele vision, Inc., 603 F.2d 1174, 1177 (5th

Cir.1979) (noting that to invoke the Kyne test, the error must be

"of a summa or magna quality as contraposed to decisions which are

simply cum error" (internal quo tations omitted)). Indeed, the

Supreme Court has also applied the Kyne exception only in limited

instances. S ee, e.g., Oestereich v. Selective Serv. Sys. Local Bd.

No. 11, 393 U.S. 233, 237-38, 89 S.Ct. 414, 416, 21 L.Ed.2d 402

(1968) ("We deal with conduct of a local [Selective Service] Board

that is basically lawless.... The case we decide today involves a

clear departure by the Board from its statutory mandate."). As the

Dart court noted, the exception allowing review of facial

violations must remain narrow, and "agency action alle gedly "in

excess of authority' must not simply involve a dispute over

statutory interpretation or c hallenged findings of fact." D art,

848 F.2d at 231. In short, judicial review is proper under the

rule set forth in Kyne, despite there being a statutory provision

prohibiting such review, because the agency's challenged action is

so contrary to the terms of the relevant statute that it

necessitates judicial review independent of the review provisions

of the relevant statute. S ee Kyne, 358 U.S. at 188, 79 S.Ct. at

183-84.

There are two independent reasons why the Kyne doctrine is25

inapplicable to Kirby's challenge . First, in 1993, Congress

eliminated Title XI's provision requiring that prospective vessels

be owned by United States citizens, see Pub.L. No. 103-160, §

1356(3)(A), 107 Stat. 1813 (codified at 46 U.S.C.App. §

1274(a)(1 )), although this requirement is still found in MarAd's

regulations. See 46 C.F.R. 298.10. MarAd therefore continues to

impose stricter requirements on the issuance of loan guarantees

than are required by law, and thus it cannot be said that MarAd

violated Title XI, on the grounds that Hvide is not a United States

citizen, by awarding such guarantees to Hvide.

Second, even if Title XI's citizenship requirement were still

in place, Kirby's challenge under Kyne would fail. Its assertion

that MarAd's decision to guarante e Hvide's loans is one that

"facially" violates Title XI or is in excess of its delegated

powers is not supported by Kyne, the case law interpreting it, or

the facts and circumstances of the instant case. The record

establishes that MarAd reviewed affidavits regarding the

citizenship of board members, executive officers, and controlling

stockholders, a nd analyzed numerous corporate documents. Only

after completing this investigation did MarAd find that the Hvide

limited liability companies satisfied the citizenship requirements.

Kirby challenge of MarAd's factual determinat ions is exactly the

sort not encompas sed by the K yne rule; Kirby seeks to review an

ordinary determination by MarAd, whereas the Kyne standard is to be

used for extraordinary situations. Kirby's disagreement with

MarAd's factual determination presents a situation opposite f rom9 Nor are we persuaded that Color ado State Bank v. United

States, 18 Cl.Ct. 611 (1989), aff'd without op., 904 F.2d 45

(Fed.Cir.1990), supports the contention that MarAd's action is

reviewable under the Kyne exception. Kirby cites this case as an

example of a situation in which an incontestability clause did not

prevent a federal court from declaring a government loan guarantee

void. We do not disagree with the general proposition that an

incontestability provision, such as the one found in § 1273(e),

would not bar judicial review if an agency "facially" violated a

statute or acted outside of its delegated authority. C olorado

State Bank is distinguishable, however, because in that case, agency action constituted error of such magnitude as to reach the

narrow exception set forth in Kyne. In Colorado State Bank,

although there was no fraud or misreprese ntation, the loan

guarantee process "made a farce of compliance with law and the

procedures that had been promulgated to protect the interest of the

United States." I d. at 6 30. Even if MarAd erred in its factual

findings, its decision-making process culminating in its decision

to guarantee Hvide's loans did not make a farce of the applicable

law and procedures.

26 that foreseen in Dart. See 848 F.2d at 222-23, 231 (noting that a

court should not assume jurisdiction under Kyne when there is a

dispute over the factua l findings only). Were Kirby's

interpretation of Kyne and its progeny correct, every alleged

competitor of a company r eceiving shipbuilding guarantees could

challenge MarAd's factual determinations despite the finality

language of § 1273(e). 9

III. THE CITIZENSHIP DETERMINATION

Finally, Kirby argues that ev en if § 1273(e) precludes

judicial review of MarAd's decision to issue a loan guarantee under

Title XI, this Court must still a ddress the independent question

whether MarAd's subsidiary citizenship determination is reviewable.

As noted previously, MarAd's regula tions define citizenship by

reference to section 2 of the Shipping Act of 1916, 46 U.S.C.App.

§ 8 02. Under the Hobbs Act, the "court of appeals ... has27

exclusive jurisdiction to enjoin, set aside, suspend (in whole or

in part), or to determine the validity of" a final order of the

Secretary of Transportation issued pursuant to, inter alia, section

2 of the Shipping Act of 1916. See 28 U.S.C. § 2342.

Although the Hobbs Act purports to give this Court

jurisdiction to review citizenship determinations made pursuant to

section 2 of the Shipping Act of 1916, it does not trump 46

U.S.C.App. § 1273(e), Title XI's more specifi c provision

prohibiting judicial review. It is a well known canon of statutory

construction that a specific stat utory provision governs the

general. S ee Morales v. Trans World Airlines, Inc., 504 U.S. 374,

384, 112 S.Ct. 2031, 2037, 119 L.Ed.2d 157 (1992). The Hobbs Act

provides, as a general matter, that the courts of appeals are the

proper fora for challenges to, inter alia, orders issued pursuant

to section 2 of the Shipping Act of 1916. Section 1273(e) of Title

XI, however, makes it clear that Congress intended to preclude

judicial review of loan guarantee decisions. Because the

citizenship determination is so closely bound up with the loan

g uarantee decision, we conclude that it was Congress's intent to

preclude judicial review for such a determination as well.

CONCLUSION

The Supreme Court has cautioned that " "judicial review of a

final agency action by an aggrieved person will not be cut off

unless there is persuasive reason to believe that such was the

purpose of Congress.' " B owen, 476 U.S. at 670, 106 S.Ct. at 2135

(quoting Abbott Labs., 387 U.S. at 140, 87 S.Ct. at 1511). As the28

foregoing analysis has shown, the text of 46 U.S.C.App. § 1273(e),

the structure of Title XI, and the legislative history of the Act

all evi nce Congress's intent to preclude judicial review of

decisions by MarAd to issue loan guarantees pursuant to Title XI of

the Merchant Marine Act of 1936.

Based on our analysis, we AFFIRM the district court's decision

dismissing for lack of jurisdiction and we DISMISS the petition for

direct review.