Blackwater Diving, LLC v. United States, Dep't of Homeland Sec.

SECTION “B” (3)

ORDER AND REASONS

Before the Court are cross motions for summary judgment filed by plaintiff, Blackwater Diving, L.L.C., and defendant, the United States of America Department of Homeland Security (Rec. Docs. 15, 17). The parties have filed responses and replies (Rec. Docs. 16, 20, 23, 26). After careful consideration of the cross motions, responses, replies, competent summary judgment evidence, record, and applicable law, IT IS ORDERED that the government's cross motion for summary judgment (Rec. Doc. 15) is GRANTED and plaintiff's cross motion for summary judgment (Rec. Doc. 17) is DENIED.

I. FACTS AND PROCEDURAL HISTORY

Plaintiff, Blackwater Diving, L.L.C., seeks judicial review under the Administrative Procedure Act (APA) for a $231, 625.00 civil penalty assessed by the United States Coast Guard (“Coast Guard”). Blackwater Diving, L.L.C. is a Louisiana corporation that was the owner and operator of two diving vessels, the Black Diver II and the Black Diver III, during the relevant time

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period of this suit. Rec. Doc. 1 at 1. Both the Black Diver II and the Black Diver III were subject to inspection under 46 U.S.C. § 3301, which requires them to maintain a current Certificate of Inspection (“COI”) and a load line certificate. Rec. Doc. 15-1 at 4. Maintaining a valid COI and load line certificate requires an annual survey within three months before or after the certificate's anniversary date. Rec. Doc. 15-2 at 1.

On July 8, 2016, Blackwater Diving entered into a contract with JAB Energy Solutions II, LLC (“JAB”) to complete work on abandoned pipelines in the Gulf of Mexico. Id. at 2. The scope of work necessitated two vessels and was anticipated to take ninety days to complete. Rec. Doc. 9-3 at 22. However, Black Diver II's load line certificate expired on August 10, 2016 and its COI expired on August 11, 2016. Rec. Doc. 15-2 at 2. Similarly, Black Diver III's load line certificate expired on September 21, 2016 and its COI expired on September 19, 2016. Id. Starting on July 14, 2016, Blackwater Diving operated both Black Diver II and III for the JAB project without making any arrangements for vessel inspections. Rec. Doc. 15-1 at 5; Rec. Doc. 15-2 at 2. It continued operating both vessels past the expiration dates of the vessels' COIs and load line certificates. Rec. Doc. 15-2 at 2-3. When the Coast Guard

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realized Blackwater Diving was operating both vessels without valid certificates, it ordered Black Diver II and III back to shore on October 4, 2016 and October 5, 2016, respectively. Id. at 2. Black Diver II returned to port on October 5, 2016 and Black Diver III did so on October 17, 2016. Id.

On February 14, 2017, Blackwater Diving received a Preliminary Assessment Letter, which contained notice that the Coast Guard Hearing Officer was considering a civil penalty of $336, 484.00 for operating Black Diver II and III without valid inspection certificates. Rec. Doc. 9-3 at 193. After receiving notice, Blackwater Diving elected to have a hearing on the matter. See Id. at 130. An informal hearing took place on June 6, 2017, in accordance with 33 C.F.R. Subpart 1.07. Id. at 64; see also Rec. Doc. 15-1 at 5. After reviewing the evidence, the Hearing Officer assessed a civil penalty of $242, 500.00 in the Final Assessment Letter dated November 7, 2017. Rec. Doc. 9-3 at 30-36.

Blackwater Diving appealed this assessment to the United States Coast Guard Commandant. Id. at 11-12. On August 28, 2020, the Commandant issued its final agency action, reducing the Hearing Officer's civil penalty assessment to $231, 625.00. Id. at 1, 7. The Commandant found that the hearing officer had slightly miscalculated the days that Blackwater Diving operated

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its vessels beyond their certificates' expiration and that Blackwater Diving should only be responsible for 33 days of violations because that was the number of days noticed in the Preliminary Assessment Letter. Rec. Doc. 15-2 at 3.

On September 23, 2020, Blackwater Diving filed its complaint seeking judicial review of the Commandant's final assessment of civil penalties. Rec. Doc. 1. On May 5, 2021, the United States Department of Homeland Security, filed its Cross Motion for Summary Judgment on behalf of the Coast Guard. Rec. Doc. 15. Blackwater Diving filed its own cross motion for summary judgment on June 23, 2021. Rec. Doc. 17.

II. LAW AND ANALYSIS

A. Summary Judgment Standard of Review over Final Agency Decisions

Typically, summary judgment is appropriate when, viewed in the light most favorable to the non-moving party, “the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (quoting Fed.R.Civ.P. 56(c)). However, where a motion for summary judgment requires the Court to review an administrative agency's decision, the administrative record provides the complete factual predicate for the Court's review.

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See Luminant Generation Co. LLC v. U.S. EPA, 714 F.3d 841, 850 (5th Cir. 2013) (quoting Camp v. Pitts, 411 U.S. 138, 142 (1973)). In reviewing this record, the Court must decide whether the agency acted appropriately given the standard of review set forth by the Administrative Procedure Act (APA), not whether material facts are disputed. See Willingham v. Dep't of Labor, 475 F.Supp.2d 607, 611 (N.D. Tex. 2007) (citing Castillo v. Army & Air Force Exch. Serv., 849 F.2d 199, 202-03 (5th Cir. 1988)). An agency's legal conclusions are reviewed de novo, but the court's overall review is “highly deferential to the administrative agency whose final decision is being reviewed.” Buffalo Marine Services Inc. v. United States, 663 F.3d 750, 753-54 (5th Cir.2011). Although the Court does not apply the usual standard of review under Rule 56 of the Federal Rules of Civil Procedure, summary judgment is still an appropriate procedure for resolving a challenge to a federal agency's administrative decision. Town of Abita Springs v. U.S. Army Corps of Eng'rs, 153 F.Supp.3d 894, 903 (E.D. La. 2015).

B. The Administrative Procedure Act

Section 706(2)(A) of the APA compels courts to set aside agency action found to be “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law.” 5 U.S.C. § 706(A)(2); see also Harris v. United States, 19 F.3d 1090, 1096 (5th Cir. 1994). This standard is “highly deferential.” Knapp v. U.S. Dep't of Agric., 296 F.3d 445, 453 (5th Cir. 2015). It

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concentrates on “whether an agency articulated a rational connection between the facts found and the decision made.” Pension Benefit Guar. Corp. v. Wilson N. Jones Mem'l Hosp., 374 F.3d 362, 366 (5th Cir. 2004). In other words, the reviewing court must determine whether the agency action was based upon consideration of the appropriate factors. Id. at 367. The Court may uphold a decision of less than ideal clarity so long as it is not arbitrary or capricious. See Knapp, 296 F.3d at 453; Tex. Clinical Labs, Inc. v. Sebelius, 612 F.3d 771, 775 (5th Cir. 2010).

C. The Coast Guard Considered the “Ability to Pay” Factor

Violating statutes or associated regulations concerning COIs or load line certificates subjects a vessel owner/operator to liability to the United States for civil penalties. See 46 U.S.C. §§ 3318, 5116; Rec. Doc. 15-1 at 4. In assessing a civil penalty, the Coast Guard “shall consider the nature, circumstances, extent, and gravity of the prohibited acts committed and, with respect to the violator, the degree of culpability, any history of prior offenses, ability to pay, and other matters that justice requires.” 46 U.S.C. § 2107(a).

Of the factors required for consideration under 46 U.S.C. § 2107(a), the only factor that plaintiff contends the Coast Guard did not address is the “ability to pay” factor. See Rec. Doc. 16 at 2. However, the Court finds that the Coast Guard did consider this factor in both the Final Assessment Letter and the

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Commandant's final agency action. Indeed, plaintiff even admits as so. In its opposition to defendant's cross motion for summary judgment, plaintiff...