Diamond Servs. Corp. v. Curtin Mar. Corp.

99 F.4th 722

DIAMOND SERVICES CORPORATION, Plaintiff—Appellant, v. CURTIN MARITIME CORPORATION; Department of Homeland Security;National Vessel Documentation Center; United States Coast Guard;United States of America; Commandant Linda L. Fagan,United States Coast Guard; Port of Houston Authority, Defendants—Appellees.

No. 23-20118

United States Court of Appeals, Fifth Circuit

FILED April 17, 2024

Appeal from the United States District Court for the Southern District of Texas, USDC No. 4:22-CV-2117

Harry E. Morse (argued), Martin Stewart Bohman, Bohman Morse, L.L.C., New Orleans, LA, for Plaintiff-Appellant.

Jadd Fitzgerald Masso, Esq., Elizabeth Fitzgerald Griffin (argued), Clark Hill, P.L.C., Dallas, TX, John Kevin Spiller, Clark Hill, P.L.C., Houston, TX, for Defendant-Appellee Curtin Maritime Corporation.

Myra Farah Siddiqui (argued), Assistant U.S. Attorney, U.S. Attorney's Office, Southern District of Texas, Houston, TX, for Defendants-Appellees Department of Homeland Security, National Vessel Documentation Center, United States Coast Guard, United States of America, Commandant

Linda L. Fagan, United States Coast Guard.

Barbara DePena (argued), Todd William Mensing, Kelsi Stayart White, Ahmad Zavitsanos & Mensing, P.L.L.C., Houston, TX, for Defendant-Appellee Port of Houston Authority.

Before Richman, Chief Judge, and Haynes and Duncan, Circuit Judges.

Stuart Kyle Duncan, Circuit Judge:

Under federal law, vessels may dredge in United States waters only if they are "built in the United States." The agency tasked with making this determination is the United States Coast Guard. Curtin Maritime Corporation ("Curtin") sought the Coast Guard's ruling that its dredging barge, the DB AVALON ("AVALON"), could operate in United States waters, despite the fact that the vessel would incorporate foreign-made spuds and a crane. The Coast Guard ruled the AVALON would be considered United States-built. One of Curtin's competitors challenged that ruling as arbitrary and capricious. The district court deferred to the Coast Guard's reasonable interpretation of its own regulations, see Kisor v. Wilkie, 588 U.S. 558, 139 S. Ct. 2400, 2415, 204 L.Ed.2d 841 (2019); Auer v. Robbins, 519 U.S. 452, 117 S.Ct. 905, 137 L.Ed.2d 79 (1997), and granted the Coast Guard summary judgment. We AFFIRM.

I.

A.

Federal law imposes certain requirements before a vessel may dredge in the navigable waters of the United States. Among other things, a vessel must have "a certificate of documentation ["COD"] with a coastwise endorsement." 46 U.S.C. § 55109(a)(3).¹ CODs are issued by the National Vessel Documentation Center ("NVDC"), an arm of the Coast Guard. Only vessels "built" or "rebuilt" in the United States are eligible for a coastwise endorsement. Id. §§ 12112(a)(2)(A), 12132(b). A vessel is rebuilt in the United States "only if the entire rebuilding, including the construction of any major component of the hull or superstructure, was done in the United States." Id. § 12101(a).

Coast Guard regulations flesh out this statutory framework. The regulations consider a vessel built in the United States if (1) "[a]ll major components of its hull and superstructure are fabricated in the United States," and (2) "[t]he vessel is assembled entirely in the United States." 46 C.F.R. § 67.97(a), (b). Conversely, a vessel is "deemed rebuilt foreign" (hence, not built or rebuilt in the United States) when "any considerable part of its hull or superstructure is built upon or substantially altered outside of the United States." Id. § 67.177; see also id. § 67.177(a)-(g) (setting out "parameters" to determine whether a vessel is "rebuilt foreign"). The regulations define "hull" as "the shell, or outer casing, and internal structure below the main deck which provide both the flotation envelope and structural integrity of the vessel in its normal operations." Id. § 67.3. "Superstructure" is defined as "the main deck and any other structural part above the main deck." Ibid.

The Coast Guard uses two different tests to determine whether work done to a vessel's hull or superstructure qualifies it as rebuilt foreign. With respect to vessels of any hull construction, the "major component" test deems a vessel rebuilt foreign "when a major component of the hull or superstructure not built in the United States is added to the vessel." Id. § 67.177(a). The Coast Guard defines "major component" as a "new, separate and completely-constructed unit" weighing more than 1.5% of the vessel's steelweight. With respect to steel-or aluminum-hulled vessels only, the "considerable part" test considers the relative weight of the work done on the hull or superstructure. See id. § 67.177(b).²

B.

On September 10, 2019, Curtin applied to the Coast Guard for a preliminary determination that its dredging barge, the AVALON, would be eligible to operate in coastwise trade. See id. § 67.177(g) (establishing requirements for a "preliminary rebuilt determination"). The AVALON would be constructed of steel at a shipyard in the United States. Curtin's application explained, however, that the vessel's spuds³ and crane would be removed from a foreign vessel and installed after being shipped to the United States. The crane would be "bolted to the [AVALON's] hull, not welded, using a mounting ring," and the spuds would also be removable.

On September 24, 2019, the NVDC's Director issued a determination that the AVALON "would be considered built in the United States" under 46 C.F.R. § 67.97 and not "rebuilt foreign" under § 67.177. Because the crane and spuds would be removable, the AVALON would "remain a complete and intact vessel and [would] be fully capable of operating as a vessel without the spuds and crane." As a result, "the spuds and crane would be considered outfitting and not part of the hull or superstructure."⁴ Accordingly, the AVALON would be eligible for a coastwise endorsement.

In April 2021, Curtin contracted with Conrad Shipyard ("Conrad") in Amelia, Louisiana, to construct the AVALON's hull and superstructure. The AVALON's outfitting work was done in Morgan City, Louisiana. The vessel's control tower came from the CONTI, a United States supply vessel with a coastwise endorsement. The crane and spuds were acquired from a foreign-flagged crane barge, the SHINSO-300, and placed on the AVALON in Morgan City.

On July 27, 2022, the NVDC issued the AVALON a COD with a coastwise endorsement.

Around this time, the Port of Houston Authority ("the Port") solicited bids to expand the Houston Ship Channel. After receiving six bids from different contractors, the Port awarded the project to Curtin. Curtin's competitor, Diamond Services Corporation ("Diamond"), did not bid on the project, nor did it submit a protest objecting to the Port's awarding the project to Curtin.

C.

On June 28, 2022, Diamond sued Curtin, the Port, and several federal defendants (collectively, "the Federal Defendants").⁵ Seeking relief under the Administrative Procedure Act ("APA") and the Declaratory Judgment Act ("DJA"), Diamond asked the district court to declare that AVALON's COD was issued in violation of federal law; to enjoin Curtin from performing any jobs involving the AVALON in United States waters; and to enjoin the Port from awarding Curtin funds or work involving the AVALON.

Curtin and the Port moved to dismiss under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6), arguing, inter alia, that Diamond lacked standing and failed to state a claim. Diamond moved for summary judgment against Curtin, the Port, and the Federal Defendants. The Federal Defendants moved for summary judgment against Diamond.

A magistrate judge recommended that the district court deny Diamond's motion for summary judgment; grant Curtin and the Port's motions to dismiss for lack of standing; and grant the Federal Defendants' motion for summary judgment. See Diamond Servs. Corp. v. Curtin Mar. Corp., 2023 WL 2634508 (S.D. Tex. Mar. 6, 2023). Diamond timely objected, but the district court adopted the recommendations in full. See Diamond Servs. Corp. v. Curtin Mar. Corp., 2023 WL 2634046 (S.D. Tex. Mar. 22, 2023).

Diamond now appeals.

II.

We review de novo a Rule 12(b)(1) dismissal for lack of standing. Glen v. Am. Airlines, Inc., 7 F.4th 331, 334 (5th Cir. 2021). We also review the grant of summary judgment de novo, using the same standards as the district court. Paymentech, L.L.C. v. Landry's Inc., 60 F.4th 918, 924 (5th Cir. 2023); FED. R. CIV. P. 56(a).

III.

A.

We first consider standing. Diamond "has standing to sue if [its] injury is traceable to the defendant and a ruling would likely redress it." Clarke v. Commodity Futures Trading Comm'n, 74 F.4th 627, 639 (5th Cir. 2023) (citation omitted). Diamond does not argue it has standing to sue the Port and so has forfeited any argument that the district court erred in dismissing the Port on that ground. Rollins v. Home Depot USA, 8 F.4th 393, 397 (5th Cir. 2021). But Diamond does argue it has standing to sue Curtin as one of its "competitors." We disagree.

Diamond cites cases allowing plaintiffs to sue an agency or its officials under the APA on the ground that they wrongly "lift[ed] regulatory restrictions on their competitors or otherwise allow[ed] increased competition." Mendoza v. Perez, 754 F.3d 1002, 1011 (D.C. Cir. 2014) (quoting La. Energy & Power Auth. v. Fed. Energy Regul. Comm'n, 141 F.3d 364, 367 (D.C. Cir. 1998)); see also Wash. All. of Tech. Workers v. DHS, 50 F.4th 164, 176 (D.C. Cir. 2022); Adams v. Watson, 10 F.3d 915, 920-25 (1st Cir. 1993); Int'l Longshoremen's & Warehousemen's Union v. Meese, 891 F.2d 1374, 1379 (9th Cir. 1989). These cases show why Diamond has standing to sue the Federal Defendants, something no one contests. But they do not support Diamond's standing to sue its competitor, Curtin, under the APA. Diamond cites no authority for that proposition. "Standing to sue one defendant does not, on its own, confer standing to sue a different defendant." Daves v. Dallas...