Coast Guard Decisions Can Skirt Court Review

(CN) - Federal judges cannot review bond decisions that the U.S. Coast Guard sets on foreign ships accused of violating maritime law, the 4th Circuit ruled.

The Antonis G. Pappadakis is a Greek cargo carrier that arrived at the Port of Virginia's Norfolk terminal in April 2013 with an inoperable oily water separator.

Without a working separator, oily bilge water was being discharged overboard in violation of U.S. anti-pollution laws.

The Coast Guard forbade the ship from leaving port unless it posted a $2.5 million bond, but the Pappadakis said it could not pay that amount and filed an emergency petition in federal court, claiming that the government was asking an unreasonable bond.

A federal judge encouraged the parties to reach an agreement on the price of the bond, and they ultimately agreed to a $1.5 million bond, but the Coast Guard Headquarters in Washington, D.C., rejected the settlement.

Agency counsel told the U.S. District Court that the Coast Guard "firmly refuses to accept less than the $2.5 million bond it had previously offered."

The lower court then ruled that the government overstepped its authority by demanding an excessive bond and insisting on certain nonmonetary conditions. It set forth new bond conditions requiring the ship's owner to post a $1.5 million bond and provide for six crew members to remain in Virginia until they can be deposed.

A three-judge panel of the 4th Circuit awarded the government an emergency stay in May 2013.

Issuing a full opinion Monday, the Richmond, Va.-based federal appeals court cited a lack of jurisdiction under the Administrative Procedure Act to review Coast Guard decisions.

"Because the action that occurred in this case is explicitly committed to the discretion of the Coast Guard pursuant to APPS [Act to Prevent Pollution from Ships], we conclude that this matter was unreviewable, and thus, the district court lacked subject matter jurisdiction," Judge Stephanie Thacker wrote for the panel.

Under Supreme Court precedent, courts cannot review agency decisions when "agency action is committed to agency discretion by law," the court found.

The law gives the Coast Guard the discretion to "deny bond altogether, and it can dictate the terms of any bond that it may accept," Thacker wrote.

"There are no specific guidelines as to when clearance should or should not be granted in APPS, and Congress did not 'outline (even in the broadest brushstrokes) the parameters for what form or amount a bond or other surety should take,'" Thacker added. "The reasonableness of the Coast Guard's decision cannot be determined pro forma in a vacuum, but only in the context of the standards intended by Congress."

The Pappadakis attempted to present its case as constitutional violation of due process, but "this attempt at bypassing the reviewability exception in § 701(a)(2) falls flat," the court found.

Thacker remanded the case for dismissal for lack of jurisdiction.

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