UNITED STATES COURT OF APPEALS
FOR THE DC CIRCUIT
SEA LAND SVC INC
v.
DOT
* * *
No. 93-1846a
March 13, 1998
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Before: WILLIAMS and ROGERS, Circuit Judges and BUCKLEY, Senior Circuit Judge.Opinion for the Court filed by Circuit Judge WILLIAMS.
WILLIAMS, Circuit Judge: In 1993 the United States Mari- time Administration ("MarAd") issued two orders (the "modi- fication orders") deleting from several of its own previous orders a clause that it had become convinced was legally
invalid. In No. 93-1846 Sea-Land Service, Inc. ("Sea-Land") appealed from the modification orders. In the course of that appeal it became apparent to the court that its resolution turned in part on a question within the primary jurisdiction of, and then pending before, the Federal Maritime Commis- sion ("FMC"); accordingly we stayed our proceedings pend- ing the FMC's decision. That decision, appealed by both sides, is now before us in No. 97-1083 and consolidated cases. We uphold a portion of the FMC decision and do not reach the other portion. For reasons that will become apparent, our ruling on the FMC decision completely undermines Mar- Ad's modification orders, which we accordingly vacate. With the modification orders removed from the picture, the earlier MarAd orders resume their full original effectiveness.
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Sea-Land is an ocean common carrier, transporting con- tainerized freight, and a U.S. citizen within the meaning of certain maritime legislation, namely 46 U.S.C. app. Sec. 808(c)(1). In 1988 Sea-Land acquired twelve large contain- erships that had been built for and operated by United States Lines, Inc. until its bankruptcy in 1986. Sea-Land's pur- chase was made in conjunction with a Cooperative Working Agreement with two foreign carriers, P&O Containers (TFL) Limited and Nedlloyd Lijnen P.V. Under the Agreement, Sea-Land agreed to charter two of the ships to the foreign carriers for a period of time, and to charter and cross-charter space with the foreign carriers on all twelve ships. Article 5(i) of the Agreement, the source of this litigation, prohibited the foreign carriers from carrying on Sea-Land's vessels cargo that was reserved to U.S.-flag vessels under the cargo preference laws of the United States.1
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1 The Cargo Preference Acts require the Department of Defense to use U.S.-flag vessels for ocean transport of military supplies and to transport at least fifty percent of all other Department cargo on
Ocean common carriers are regulated by the Shipping Act of 1916, 46 U.S.C. app. Sec. Sec. 801-842, administered by MarAd, and the Shipping Act of 1984, 46 U.S.C. app. Sec. Sec. 1701-1720, administered by the FMC. Cooperative working agreements among ocean common carriers must be filed with the FMC, which must reject agreements not meeting certain formal and substantive requirements. See 46 U.S.C. app. Sec. Sec. 1704, 1705(b). If not rejected, an agreement becomes effective shortly after its filing. See id. Sec. 1705(c). If the FMC at any time determines that an agreement is "likely, by a reduction in competition, to produce an unreasonable reduction in trans- portation service or an unreasonable increase in transporta- tion cost," it may seek an injunction against its operation. Id. Sec. 1705(g). The 1984 Act exempts these agreements from the antitrust laws, but prohibits certain anti-competitive conduct. See id. Sec. Sec. 1706, 1709.
If a cooperative working agreement provides for the char- ter of U.S.-flag ships to foreign carriers, it must also be filed with MarAd for its approval of the charter arrangements. See 46 U.S.C. app. Sec. 808(c). Under Sec. 41 of the 1916 Act MarAd is to approve charter agreements "either absolutely or upon such conditions as the Secretary of Transportation prescribes." 46 U.S.C. app. Sec. 839.
Sea-Land accordingly submitted its agreement to both agencies in early 1988. The Military Sealift Command ("Sealift Command"), the branch of the Navy Department responsible for procuring transportation of military cargo, opposed Article 5(i) of the Agreement before both agencies on the grounds that it would "unreasonably restrict competition" and raise the costs of such transportation. Despite the Sealift Command's objections, MarAd issued charter orders approving the agreements. Indeed, the orders, in their Con-
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such vessels if carriage is available at "fair and reasonable rates." See 10 U.S.C. Sec. 2631(a); 46 U.S.C. app. Sec. 1241(b)(1).
dition 4, required the parties to adhere to cargo-preference limitations identical to those of Article 5(i).
The Sealift Command's attempt to persuade the FMC to pursue an injunction proved equally unavailing. The FMC noted that Article 5(i) "raised issues under the 1984 Act," but correspondence with MarAd apparently satisfied it that Mar- Ad, in imposing Condition 4, saw its orders as "an expression of the laws and policies of the United States." This being so, the FMC advised the Sealift Command, "this agency has no authority to directly overturn an action by MarAd taken under sections 9 and 41 of the 1916 Act on any ground; such a result must be sought by [Sealift Command] in some other forum." The FMC decided to defer any decision on an investigation-a preliminary step to requesting an injunc- tion-in order to allow the Sealift Command to pursue its challenges elsewhere.
On February 16, 1990 the Sealift Command filed a com- plaint against Sea-Land with the FMC, alleging that Article 5(i) violated, inter alia, Sec. 10(c)(6) of the 1984 Act, 46 U.S.C. app. Sec. 1709(c)(6). That section bars carriers from
allocat[ing] shippers among specific carriers that are parties to the agreement or prohibit[ing] a carrier that is a party to the agreement from soliciting cargo from a particular shipper, except as otherwise required by the law of the United States or the importing or exporting country, or as agreed to by a shipper in a service contract.
46 U.S.C. app. Sec. 1709(c)(6) (emphasis added). The Sealift Command's complaint alleged that Article 5(i) constituted a proscribed "allocation." Sea-Land responded with a motion to dismiss, based in part on a contention that the agreements were not "allocations," and in part on the proposition that they fell within Sec. 10(c)(6)'s exception because MarAd's char- ter orders constituted "law of the United States" and, by incorporating the restrictive condition, "required" the cargo- preference arrangement.
The Sealift Command had also petitioned MarAd to recon- sider its approval of the charter orders. MarAd denied this petition while the FMC proceeding was under way. The Sealift Command then notified the administrative law judge presiding over the FMC proceedings that it was making a "recommendation to proper higher authority for further ac- tion on the MarAd denial," and the ALJ stayed the FMC proceeding to await the result. The "higher authority" turned out to be the Department of Defense (Sealift Com- mand's parent Department). That Department, accurately viewing the matter as a legal dispute between two executive branch agencies, itself and the Department of Transportation (MarAd's parent), asked the Justice Department's Office of Legal Counsel ("OLC") for a resolution. The Sealift Com- mand argued to OLC that MarAd had exceeded its authority in imposing Condition 4 as part of its charter orders.
On October 19, 1993 OLC issued a memorandum answering the agencies' claims. First, it found that Article 5(i) of the Cooperative Working Agreement was an allocation under Sec. 10(c)(6) of the 1984 Act. It was therefore unlawful unless Sec. 10(c)(6)'s exception for allocations "required by the law of the United States" applied. And the exception could not apply, thought OLC, because MarAd had no legal authority to validate an illegal act. As a result, MarAd on December 3, 1993 sent orders to Sea-Land modifying each of the charter orders by removing the restrictive Condition 4. Sea-Land promptly sought judicial review of MarAd's modifications here, arguing in part that the restrictive clause did not constitute an allocation of shippers within the meaning of Section 10(c)(6), and that even if it did, it was legitimized by the original MarAd orders, which counted as "law of the United States" under the "except" clause. Just after oral argument of the case here, MarAd stayed its modification orders until 20 days after our resolution of the case.
That resolution did not follow with the customary speed. After oral argument we issued an order on our own initiative staying our proceedings pending a decision by the FMC on
the Sealift Command's complaint against Sea-Land. The
validity of the MarAd charter conditions depended at least in part on their status under Sec. 10(c)(6), which was, we said, a question within the primary jurisdiction of the FMC.
The FMC proceeding, of course, had itself been stayed pending our decision, so the matching stays created the risk of an Alphonse and Gaston standstill. In fact, however, the ALJ promptly lifted the stay in the FMC proceeding. Ameri- can President Lines, Ltd. ("APL"), a carrier with interests akin to Sea-Land's, was allowed to intervene to present legal arguments. After initial decisions by the ALJ, the FMC issued its report and order on December 10, 1996. The FMC agreed with OLC that Article 5(i) did constitute an allocation within the meaning of Sec. 10(c)(6). But, disagreeing with OLC, the FMC also found that valid MarAd orders were "law of the United States," so that the arrangements in question fell within the exception, at least potentially. Whether these MarAd orders were valid depended on whether they were "within the scope of the authority delegated by Congress to [MarAd]."
This last issue, the FMC said, was beyond its jurisdiction, and already before this Court in No. 93-1846. Presuming the MarAd orders valid in the absence of any judicial decision to the contrary, the FMC found no violation of Sec. 10(c)(6) and dismissed the Sealift Command's complaint, without prejudice to reinstitution of the proceeding following our decision in No. 93-1846. The Sealift Command, Sea-Land, and APL all appealed; we consolidated the petitions as No. 97-1083 et al.
With the ball once more in this court, we ordered supple- mental briefing in No. 93-1846, limited to the question of whether MarAd was "authorized by Congress to issue charter orders which contain the military cargo restriction at issue in this case." We thus have before us the appeals from both agencies.
In No. 97-1083, we affirm the FMC's decision as to the operation of the "except" clause: valid MarAd orders are "law of the United States"; therefore, if valid, the orders here trigger Sec. 10(c)(6)'s exception and shield Article 5(i) from its prohibitions. In No. 93-1846, we reject the Sealift Com- mand's (and the United States's) attack on MarAd's authority to issue the orders-namely, their contention that the orders violate Sec. 10(c)(6) itself. As that supposed invalidity was MarAd's sole ground for modifying its original orders impos- ing Condition 4, we vacate the modification orders, thus reviving the original orders in full.
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On the question of whether MarAd orders constitute "law of the United States" for purposes of Sec. 10(c)(6)'s "except" clause, the contending parties before us are the FMC and the Sealift Command, the Command having appealed from the FMC decision. Sea-Land and APL-beneficiaries of the original MarAd orders (or parallel ones) and now caught in the crossfire between MarAd and the Sealift Command-have intervened in support of the FMC's view that the orders are "law."
The Sealift Command starts with the argument that the FMC did not decide the question we asked it to decide, so that we should decide it for ourselves without any deference to the FMC. This idea depends on a confusion of the issues-oddly, a confusion that the FMC order was at pains to dispel. The order separated the application of the "except" clause into two distinct issues. First was the law question: whether valid MarAd orders count as "law of the United States" for the purposes of the "except clause." Second was the question of whether these particular orders were valid MarAd orders, i.e., whether they were within the agency's
authority. These inquiries are clearly distinct. If, for exam- ple, the Securities and Exchange Commission ("SEC") had issued the charter orders in question, a court could readily find that while valid SEC orders have the force of law, those particular ones were ultra vires and invalid. The FMC did
decide the first question, and that is the one before us on review in No. 97-1083.
We thus turn to the merits of the FMC decision on whether a MarAd order is "law of the United States" within the meaning of Sec. 10(c)(6). This is, of course, a question of statutory interpretation. But whether MarAd should have the authority to exempt carriers from the Sec. 10(c)(6) prohibi- tions is a policy question, one requiring a balancing of the
pro-competitive interests behind Sec. 10(c)(6) and the rival de- mands of other policies, such as the promotion of the Ameri- can merchant marine, entrusted to maritime agencies like MarAd. (Here the policies conflict to the extent that the cargo preference provisions, aimed at protecting the U.S. merchant marine by fencing off certain kinds of foreign competition, may raise the cost of U.S. military shipments.) It is precisely in answering questions of this sort that the expertise and political accountability of administrative agen- cies command judicial deference. See Chevron v. National Resources Defense Council, Inc., 467 U.S. 837, 844-45 (1984); Health Ins. Ass'n of America v. Shalala, 23 F.3d 412, 416 (D.C. Cir. 1994).
We have in fact recognized that the FMC's interpretations of the 1984 Act are entitled to Chevron deference. See Chemical Manufacturers Ass'n v. FMC, 900 F.2d 311, 314 (D.C. Cir. 1990). Such deference comes into play, of course, only as a consequence of statutory ambiguity, and then only if the reviewing court finds an implicit delegation of authority to the agency. See Chevron, 467 U.S. at 842-844. The second condition is not questioned; as to the first, while the plain meaning of Sec. 10(c)(6) may tilt too powerfully against the Sealift Command to justify the label "ambiguous," that is a defect that does not help the Command.
Violation of a condition imposed by a MarAd order under Sec. 41 is a criminal act punishable by fine or imprisonment. See 46 U.S.C. app. Sec. 839. The Sealift Command concedes
that agency orders bearing criminal sanctions for violation generally qualify as law. It argues, however, that the "ex- cept" clause was intended to exempt only the cargo prefer-
ence laws of the United States and other countries. Had Congress intended to include administrative orders, the Sea- lift Command claims, it would have done so explicitly. The Sealift Command then offers a raft of supportive theories, arguing that the specific prohibitions of Sec. 10(c)(6) should take precedence over any general MarAd mandate to foster the merchant marine; that Congress could not have intended to allow administrative agencies to provide exemptions from Sec. 10(c)(6); and that a "liberal interpretation" of the "except" clause would undermine the general purpose of Sec. 10.
The first argument is sufficiently answered by the observa- tion that had Congress intended to exempt only cargo prefer- ence laws, it could well have done that explicitly. The plain meaning of a statute is (at least for starters) the one pro- duced by reading its words to have the meaning they do in most contexts, and in most contexts, "law" includes an admin- istrative command backed by a criminal sanction. See, e.g., Chrysler Corp. v. Brown, 441 U.S. 281, 295 (1979) (substan- tive agency regulations have "force and effect of law"); Sing- er v. United States, 323 U.S. 338, 345-46 (1945) (regulations backed by criminal sanctions are law); General Motors Corp. v. Abrams, 897 F.2d 34, 39 (2d Cir. 1990) (regulations and orders have force of law); Black's Law Dictionary 884 (6th ed. 1990) ("That which must be obeyed and followed by citizens subject to sanctions or legal consequences is a law."); see also, e.g., Fidelity Federal Savings & Loan Ass'n v. De La Cuesta, 458 U.S. 141, 153 (1982) (federal regulations count as law for Supremacy Clause). The Sealift Command tells us that the FMC's position is in this context "extraordinary" and "contrary to common sense," but does not explain why. Under the FMC's reading, Sec. 10(c)(6) allows some federal agencies to create exceptions to the section's otherwise un- conditional prohibitions. Here that means that agencies charged with promoting federal maritime policies can tailor
the application of Sec. 10(c)(6) to the needs of those policies. We fail to see how such a mechanism is either extraordinary or wanting in common sense.
The Sealift Command notes that Sec. 10(c)(6) limits its excep- tion to requirements of "the law of the United States or the importing or exporting country" and would have us infer an intent to limit the exception to cargo preference laws. Of course the import/export reference does suggest the subject matter of the laws Congress had in mind, but Condition 4 of the MarAd charter approvals addresses that subject matter: 2 it is an administrative order demanding a certain cargo preference. But the limitation to exporting or importing countries says nothing about the form of legal mandate, i.e., whether the term includes administrative as well as direct statutory edicts.
Needless to say, the Sealift Command pursues the usual quest for support in the legislative history of Sec. 10(c)(6). The quest is even more than usually unavailing and requires no comment.
If "law of the United States" is in this context ambiguous, we think the FMC's reading of the term to encompass the MarAd charter orders handily meets Chevron's requirement of reasonableness.
* * *
We now turn to the residue of No. 93-1846, which indirect- ly poses the issue of whether MarAd acted within the scope of its delegated authority in issuing the original charter orders. In this phase of the case, Sea-Land, joined by intervenor APL, staunchly defends the original orders and thus contin-
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2 Congress may well have thought that since its language allowed exceptions to be created only by laws requiring an "allocation," such laws would necessarily deal with cargo preferences. We do not reach the issue of whether there is any independent subject-matter prerequisite.
ues the attack on the modification orders; the United States and Department of Transportation (MarAd's parent Depart- ment) defend the modification orders and thus, necessarily, attack the validity of the original orders. As a general matter, MarAd rested its original imposition of Condition 4 on Sec. 41 of the 1916 Act, which empowers the agency to approve charter agreements "either absolutely or upon such condi- tions as the Secretary of Transportation prescribes." 46 U.S.C. app. Sec. 839.
In No. 93-1846, it will be recalled, Sea-Land challenged MarAd's 1993 modification orders, which MarAd had justi- fied exclusively by reference to OLC's theory that its original charter orders imposing Condition 4 were invalid under Sec. 10(c)(6). If OLC's theory is wrong, the modification orders lack a necessary foundation, and the original orders must be reinstated. The FMC, to be sure, in denying relief to the Sealift Command, noted that application of Sec. 10(c)(6)'s excep- tion depended on the validity of the original charter orders; but we do not think that observation miraculously expanded the set of issues properly raised in No. 93-1846, giving MarAd and the Sealift Command license to raise other possi- ble attacks on the original orders. Thus, although MarAd's authority under Sec. 41 of the 1916 Act is obviously limited-it cannot, for example, condition its approval on payment of a fee, see Clapp v. United States, 117 F. Supp. 576, 581 (Ct. Cl. 1954)-we confine ourselves to the single attack on the origi- nal orders that was put before us in No. 93-1846.
The United States re-asserts OLC's conclusion that "[w]ith- out specific authorization, either in its own organic statute or in the other statute at issue, an agency lacks authority to require private parties to violate a federal statute." This is quite true, see Maislin Indus., U.S. v. Primary Steel, Inc., 497 U.S. 116, 134-35 (1990), but irrelevant. Given the "ex- cept" clause and our earlier conclusion that valid MarAd orders are law for purposes of Sec. 10(c)(6), MarAd was not requiring a violation of Sec. 10(c)(6) so long as it was acting within its statutory authority. It was issuing orders that
under Sec. 10(c)(6) had the effect of triggering an exception to that section's otherwise broad prohibition; Sec. 10(c)(6) cannot itself invalidate those triggering orders.
MarAd's belief that the original orders ran afoul of Sec. 10(c)(6) was thus incorrect. And as this erroneous belief was the sole basis for the modification of the orders, the modificat
Footnotes
United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued November 12, 1997 Decided March 13, 1998
No. 93-1846
SEA-LAND SERVICE, INC., PETITIONER
v.
DEPARTMENT OF TRANSPORTATION, ET AL., RESPONDENTS
No. 97-1083
SEA-LAND SERVICE, INC., PETITIONER
v.
FEDERAL MARITIME COMMISSION AND UNITED STATES OF AMERICA, RESPONDENTS
AMERICAN PRESIDENT LINES, LTD., INTERVENOR
Consolidated with
Nos. 97-1084, 97-1085
On Petition for Review of Orders of the Federal Maritime Administration
John M. Nannes argued the cause for petitioner. With him on the briefs were Richard L. Brusca, Robert S. Zucker- man, James P. Moore and Gary A. MacDonald.
Steve Frank, Attorney, U.S. Department of Justice, argued the cause for respondent, Department of Navy, Military Sealift Command. With him on the briefs were Frank W. Hunger, Assistant Attorney General, Robert V. Zener, and Barbara C. Biddle.
Carol J. Neustadt, Attorney, Federal Maritime Commis- sion, argued the cause and filed the brief for respondent, Federal Maritime Commission.
Robert T. Basseches and John Townshend Rich were on the briefs for amicus curiae American President Lines, Ltd.
Before: WILLIAMS and ROGERS, Circuit Judges and BUCKLEY, Senior Circuit Judge.
Opinion for the Court filed by Circuit Judge WILLIAMS.
WILLIAMS, Circuit Judge: In 1993 the United States Mari- time Administration ("MarAd") issued two orders (the "modi- fication orders") deleting from several of its own previous orders a clause that it had become convinced was legally
invalid. In No. 93-1846 Sea-Land Service, Inc. ("Sea-Land") appealed from the modification orders. In the course of that appeal it became apparent to the court that its resolution turned in part on a question within the primary jurisdiction of, and then pending before, the Federal Maritime Commis- sion ("FMC"); accordingly we stayed our proceedings pend- ing the FMC's decision. That decision, appealed by both sides, is now before us in No. 97-1083 and consolidated cases. We uphold a portion of the FMC decision and do not reach the other portion. For reasons that will become apparent, our ruling on the FMC decision completely undermines Mar- Ad's modification orders, which we accordingly vacate. With the modification orders removed from the picture, the earlier MarAd orders resume their full original effectiveness.
* * *
Sea-Land is an ocean common carrier, transporting con- tainerized freight, and a U.S. citizen within the meaning of certain maritime legislation, namely 46 U.S.C. app. Sec. 808(c)(1). In 1988 Sea-Land acquired twelve large contain- erships that had been built for and operated by United States Lines, Inc. until its bankruptcy in 1986. Sea-Land's pur- chase was made in conjunction with a Cooperative Working Agreement with two foreign carriers, P&O Containers (TFL) Limited and Nedlloyd Lijnen P.V. Under the Agreement, Sea-Land agreed to charter two of the ships to the foreign carriers for a period of time, and to charter and cross-charter space with the foreign carriers on all twelve ships. Article 5(i) of the Agreement, the source of this litigation, prohibited the foreign carriers from carrying on Sea-Land's vessels cargo that was reserved to U.S.-flag vessels under the cargo preference laws of the United States.1
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1 The Cargo Preference Acts require the Department of Defense to use U.S.-flag vessels for ocean transport of military supplies and to transport at least fifty percent of all other Department cargo on
Ocean common carriers are regulated by the Shipping Act of 1916, 46 U.S.C. app. Sec. Sec. 801-842, administered by MarAd, and the Shipping Act of 1984, 46 U.S.C. app. Sec. Sec. 1701-1720, administered by the FMC. Cooperative working agreements among ocean common carriers must be filed with the FMC, which must reject agreements not meeting certain formal and substantive requirements. See 46 U.S.C. app. Sec. Sec. 1704, 1705(b). If not rejected, an agreement becomes effective shortly after its filing. See id. Sec. 1705(c). If the FMC at any time determines that an agreement is "likely, by a reduction in competition, to produce an unreasonable reduction in trans- portation service or an unreasonable increase in transporta- tion cost," it may seek an injunction against its operation. Id. Sec. 1705(g). The 1984 Act exempts these agreements from the antitrust laws, but prohibits certain anti-competitive conduct. See id. Sec. Sec. 1706, 1709.
If a cooperative working agreement provides for the char- ter of U.S.-flag ships to foreign carriers, it must also be filed with MarAd for its approval of the charter arrangements. See 46 U.S.C. app. Sec. 808(c). Under Sec. 41 of the 1916 Act MarAd is to approve charter agreements "either absolutely or upon such conditions as the Secretary of Transportation prescribes." 46 U.S.C. app. Sec. 839.
Sea-Land accordingly submitted its agreement to both agencies in early 1988. The Military Sealift Command ("Sealift Command"), the branch of the Navy Department responsible for procuring transportation of military cargo, opposed Article 5(i) of the Agreement before both agencies on the grounds that it would "unreasonably restrict competition" and raise the costs of such transportation. Despite the Sealift Command's objections, MarAd issued charter orders approving the agreements. Indeed, the orders, in their Con-
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such vessels if carriage is available at "fair and reasonable rates." See 10 U.S.C. Sec. 2631(a); 46 U.S.C. app. Sec. 1241(b)(1).
dition 4, required the parties to adhere to cargo-preference limitations identical to those of Article 5(i).
The Sealift Command's attempt to persuade the FMC to pursue an injunction proved equally unavailing. The FMC noted that Article 5(i) "raised issues under the 1984 Act," but correspondence with MarAd apparently satisfied it that Mar- Ad, in imposing Condition 4, saw its orders as "an expression of the laws and policies of the United States." This being so, the FMC advised the Sealift Command, "this agency has no authority to directly overturn an action by MarAd taken under sections 9 and 41 of the 1916 Act on any ground; such a result must be sought by [Sealift Command] in some other forum." The FMC decided to defer any decision on an investigation-a preliminary step to requesting an injunc- tion-in order to allow the Sealift Command to pursue its challenges elsewhere.
On February 16, 1990 the Sealift Command filed a com- plaint against Sea-Land with the FMC, alleging that Article 5(i) violated, inter alia, Sec. 10(c)(6) of the 1984 Act, 46 U.S.C. app. Sec. 1709(c)(6). That section bars carriers from
allocat[ing] shippers among specific carriers that are parties to the agreement or prohibit[ing] a carrier that is a party to the agreement from soliciting cargo from a particular shipper, except as otherwise required by the law of the United States or the importing or exporting country, or as agreed to by a shipper in a service contract.
46 U.S.C. app. Sec. 1709(c)(6) (emphasis added). The Sealift Command's complaint alleged that Article 5(i) constituted a proscribed "allocation." Sea-Land responded with a motion to dismiss, based in part on a contention that the agreements were not "allocations," and in part on the proposition that they fell within Sec. 10(c)(6)'s exception because MarAd's char- ter orders constituted "law of the United States" and, by incorporating the restrictive condition, "required" the cargo- preference arrangement.
The Sealift Command had also petitioned MarAd to recon- sider its approval of the charter orders. MarAd denied this petition while the FMC proceeding was under way. The Sealift Command then notified the administrative law judge presiding over the FMC proceedings that it was making a "recommendation to proper higher authority for further ac- tion on the MarAd denial," and the ALJ stayed the FMC proceeding to await the result. The "higher authority" turned out to be the Department of Defense (Sealift Com- mand's parent Department). That Department, accurately viewing the matter as a legal dispute between two executive branch agencies, itself and the Department of Transportation (MarAd's parent), asked the Justice Department's Office of Legal Counsel ("OLC") for a resolution. The Sealift Com- mand argued to OLC that MarAd had exceeded its authority in imposing Condition 4 as part of its charter orders.
On October 19, 1993 OLC issued a memorandum answering the agencies' claims. First, it found that Article 5(i) of the Cooperative Working Agreement was an allocation under Sec. 10(c)(6) of the 1984 Act. It was therefore unlawful unless Sec. 10(c)(6)'s exception for allocations "required by the law of the United States" applied. And the exception could not apply, thought OLC, because MarAd had no legal authority to validate an illegal act. As a result, MarAd on December 3, 1993 sent orders to Sea-Land modifying each of the charter orders by removing the restrictive Condition 4. Sea-Land promptly sought judicial review of MarAd's modifications here, arguing in part that the restrictive clause did not constitute an allocation of shippers within the meaning of Section 10(c)(6), and that even if it did, it was legitimized by the original MarAd orders, which counted as "law of the United States" under the "except" clause. Just after oral argument of the case here, MarAd stayed its modification orders until 20 days after our resolution of the case.
That resolution did not follow with the customary speed. After oral argument we issued an order on our own initiative staying our proceedings pending a decision by the FMC on the Sealift Command's complaint against Sea-Land. The
validity of the MarAd charter conditions depended at least in part on their status under Sec. 10(c)(6), which was, we said, a question within the primary jurisdiction of the FMC.
The FMC proceeding, of course, had itself been stayed pending our decision, so the matching stays created the risk of an Alphonse and Gaston standstill. In fact, however, the ALJ promptly lifted the stay in the FMC proceeding. Ameri- can President Lines, Ltd. ("APL"), a carrier with interests akin to Sea-Land's, was allowed to intervene to present legal arguments. After initial decisions by the ALJ, the FMC issued its report and order on December 10, 1996. The FMC agreed with OLC that Article 5(i) did constitute an allocation within the meaning of Sec. 10(c)(6). But, disagreeing with OLC, the FMC also found that valid MarAd orders were "law of the United States," so that the arrangements in question fell within the exception, at least potentially. Whether these MarAd orders were valid depended on whether they were "within the scope of the authority delegated by Congress to [MarAd]."
This last issue, the FMC said, was beyond its jurisdiction, and already before this Court in No. 93-1846. Presuming the MarAd orders valid in the absence of any judicial decision to the contrary, the FMC found no violation of Sec. 10(c)(6) and dismissed the Sealift Command's complaint, without prejudice to reinstitution of the proceeding following our decision in No. 93-1846. The Sealift Command, Sea-Land, and APL all appealed; we consolidated the petitions as No. 97-1083 et al.
With the ball once more in this court, we ordered supple-
mental briefing in No. 93-1846, limited to the question of whether MarAd was "authorized by Congress to issue charter orders which contain the military cargo restriction at issue in this case." We thus have before us the appeals from both agencies.
In No. 97-1083, we affirm the FMC's decision as to the operation of the "except" clause: valid MarAd orders are "law of the United States"; therefore, if valid, the orders here trigger Sec. 10(c)(6)'s exception and shield Article 5(i) from its prohibitions. In No. 93-1846, we reject the Sealift Com- mand's (and the United States's) attack on MarAd's authority to issue the orders-namely, their contention that the orders violate Sec. 10(c)(6) itself. As that supposed invalidity was MarAd's sole ground for modifying its original orders impos- ing Condition 4, we vacate the modification orders, thus reviving the original orders in full.
* * *
On the question of whether MarAd orders constitute "law of the United States" for purposes of Sec. 10(c)(6)'s "except" clause, the contending parties before us are the FMC and the Sealift Command, the Command having appealed from the FMC decision. Sea-Land and APL-beneficiaries of the original MarAd orders (or parallel ones) and now caught in the crossfire between MarAd and the Sealift Command-have intervened in support of the FMC's view that the orders are "law."
The Sealift Command starts with the argument that the FMC did not decide the question we asked it to decide, so that we should decide it for ourselves without any deference to the FMC. This idea depends on a confusion of the issues-oddly, a confusion that the FMC order was at pains to dispel. The order separated the application of the "except"
clause into two distinct issues. First was the law question: whether valid MarAd orders count as "law of the United States" for the purposes of the "except clause." Second was the question of whether these particular orders were valid MarAd orders, i.e., whether they were within the agency's authority. These inquiries are clearly distinct. If, for exam- ple, the Securities and Exchange Commission ("SEC") had issued the charter orders in question, a court could readily find that while valid SEC orders have the force of law, those particular ones were ultra vires and invalid. The FMC did
decide the first question, and that is the one before us on review in No. 97-1083.
We thus turn to the merits of the FMC decision on whether a MarAd order is "law of the United States" within the meaning of Sec. 10(c)(6). This is, of course, a question of statutory interpretation. But whether MarAd should have the authority to exempt carriers from the Sec. 10(c)(6) prohibi- tions is a policy question, one requiring a balancing of the pro-competitive interests behind Sec. 10(c)(6) and the rival de- mands of other policies, such as the promotion of the Ameri- can merchant marine, entrusted to maritime agencies like MarAd. (Here the policies conflict to the extent that the cargo preference provisions, aimed at protecting the U.S. merchant marine by fencing off certain kinds of foreign competition, may raise the cost of U.S. military shipments.) It is precisely in answering questions of this sort that the expertise and political accountability of administrative agen- cies command judicial deference. See Chevron v. National Resources Defense Council, Inc., 467 U.S. 837, 844-45 (1984); Health Ins. Ass'n of America v. Shalala, 23 F.3d 412, 416 (D.C. Cir. 1994).
We have in fact recognized that the FMC's interpretations of the 1984 Act are entitled to Chevron deference. See Chemical Manufacturers Ass'n v. FMC, 900 F.2d 311, 314 (D.C. Cir. 1990). Such deference comes into play, of course, only as a consequence of statutory ambiguity, and then only if the reviewing court finds an implicit delegation of authority to the agency. See Chevron, 467 U.S. at 842-844. The second condition is not questioned; as to the first, while the plain meaning of Sec. 10(c)(6) may tilt too powerfully against the Sealift Command to justify the label "ambiguous," that is a defect that does not help the Command.
Violation of a condition imposed by a MarAd order under Sec. 41 is a criminal act punishable by fine or imprisonment. See 46 U.S.C. app. Sec. 839. The Sealift Command concedes
that agency orders bearing criminal sanctions for violation generally qualify as law. It argues, however, that the "ex- cept" clause was intended to exempt only the cargo prefer- ence laws of the United States and other countries. Had Congress intended to include administrative orders, the Sea- lift Command claims, it would have done so explicitly. The Sealift Command then offers a raft of supportive theories, arguing that the specific prohibitions of Sec. 10(c)(6) should take precedence over any general MarAd mandate to foster the merchant marine; that Congress could not have intended to allow administrative agencies to provide exemptions from Sec. 10(c)(6); and that a "liberal interpretation" of the "except" clause would undermine the general purpose of Sec. 10.
The first argument is sufficiently answered by the observa- tion that had Congress intended to exempt only cargo prefer- ence laws, it could well have done that explicitly. The plain meaning of a statute is (at least for starters) the one pro- duced by reading its words to have the meaning they do in most contexts, and in most contexts, "law" includes an admin- istrative command backed by a criminal sanction. See, e.g., Chrysler Corp. v. Brown, 441 U.S. 281, 295 (1979) (substan- tive agency regulations have "force and effect of law"); Sing- er v. United States, 323 U.S. 338, 345-46 (1945) (regulations backed by criminal sanctions are law); General Motors Corp. v. Abrams, 897 F.2d 34, 39 (2d Cir. 1990) (regulations and orders have force of law); Black's Law Dictionary 884 (6th ed. 1990) ("That which must be obeyed and followed by citizens subject to sanctions or legal consequences is a law."); see also, e.g., Fidelity Federal Savings & Loan Ass'n v. De La Cuesta, 458 U.S. 141, 153 (1982) (federal regulations count as law for Supremacy Clause). The Sealift Command tells us that the FMC's position is in this context "extraordinary" and "contrary to common sense," but does not explain why. Under the FMC's reading, Sec. 10(c)(6) allows some federal agencies to create exceptions to the section's otherwise un- conditional prohibitions. Here that means that agencies charged with promoting federal maritime policies can tailor
the application of Sec. 10(c)(6) to the needs of those policies. We fail to see how such a mechanism is either extraordinary or wanting in common sense.
The Sealift Command notes that Sec. 10(c)(6) limits its excep- tion to requirements of "the law of the United States or the importing or exporting country" and would have us infer an intent to limit the exception to cargo preference laws. Of course the import/export reference does suggest the subject matter of the laws Congress had in mind, but Condition 4 of the MarAd charter approvals addresses that subject matter: 2 it is an administrative order demanding a certain cargo preference. But the limitation to exporting or importing countries says nothing about the form of legal mandate, i.e., whether the term includes administrative as well as direct statutory edicts.
Needless to say, the Sealift Command pursues the usual
quest for support in the legislative history of Sec. 10(c)(6). The quest is even more than usually unavailing and requires no comment.
If "law of the United States" is in this context ambiguous, we think the FMC's reading of the term to encompass the MarAd charter orders handily meets Chevron's requirement of reasonableness.
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We now turn to the residue of No. 93-1846, which indirect- ly poses the issue of whether MarAd acted within the scope of its delegated authority in issuing the original charter orders. In this phase of the case, Sea-Land, joined by intervenor APL, staunchly defends the original orders and thus contin-
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2 Congress may well have thought that since its language allowed exceptions to be created only by laws requiring an "allocation," such laws would necessarily deal with cargo preferences. We do not reach the issue of whether there is any independent subject-matter prerequisite.
ues the attack on the modification orders; the United States and Department of Transportation (MarAd's parent Depart- ment) defend the modification orders and thus, necessarily, attack the validity of the original orders. As a general matter, MarAd rested its original imposition of Condition 4 on Sec. 41 of the 1916 Act, which empowers the agency to approve charter agreements "either absolutely or upon such condi- tions as the Secretary of Transportation prescribes." 46 U.S.C. app. Sec. 839.
In No. 93-1846, it will be recalled, Sea-Land challenged MarAd's 1993 modification orders, which MarAd had justi- fied exclusively by reference to OLC's theory that its original charter orders imposing Condition 4 were invalid under Sec. 10(c)(6). If OLC's theory is wrong, the modification orders lack a necessary foundation, and the original orders must be reinstated. The FMC, to be sure, in denying relief to the Sealift Command, noted that application of Sec. 10(c)(6)'s excep- tion depended on the validity of the original charter orders; but we do not think that observation miraculously expanded the set of issues properly raised in No. 93-1846, giving MarAd and the Sealift Command license to raise other possi- ble attacks on the original orders. Thus, although MarAd's authority under Sec. 41 of the 1916 Act is obviously limited-it cannot, for example, condition its approval on payment of a fee, see Clapp v. United States, 117 F. Supp. 576, 581 (Ct. Cl. 1954)-we confine ourselves to the single attack on the origi- nal orders that was put before us in No. 93-1846.
The United States re-asserts OLC's conclusion that "[w]ith- out specific authorization, either in its own organic statute or in the other statute at issue, an agency lacks authority to require private parties to violate a federal statute." This is quite true, see Maislin Indus., U.S. v. Primary Steel, Inc., 497 U.S. 116, 134-35 (1990), but irrelevant. Given the "ex- cept" clause and our earlier conclusion that valid MarAd orders are law for purposes of Sec. 10(c)(6), MarAd was not requiring a violation of Sec. 10(c)(6) so long as it was acting within its statutory authority. It was issuing orders that
under Sec. 10(c)(6) had the effect of triggering an exception to that section's otherwise broad prohibition; Sec. 10(c)(6) cannot itself invalidate those triggering orders.
MarAd's belief that the original orders ran afoul of Sec. 10(c)(6) was thus incorrect. And as this erroneous belief was the sole basis for the modification of the orders, the modificat
Footnotes
CASE STATISTICSCASES: 497 U.S. 116; 467 U.S. 837; 458 U.S. 141; 441 U.S. 281; 323 U.S. 338; 23 F.3d 412; 900 F.2d 311; 897 F.2d 34; 117 F. Supp. 576;
STATUTES: 10 U.S.C. Sec. 2631;
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