[00:00:00] Speaker 00: Case number 14-5203, Watervale Marine Co. [00:00:05] Speaker 00: Ltd. [00:00:05] Speaker 00: as owner of the MV Aguirreos and Milianos at L Appellants, Mercator Line, Singapore PTE Ltd. [00:00:14] Speaker 00: as owner of the MV Grew Ray Prim at L versus United States Department of Homeland Security at L. Mr. Hartman for the appellants, Ms. [00:00:23] Speaker 00: Murphy for the appellees. [00:01:22] Speaker 03: Good morning. [00:01:23] Speaker 05: Good morning, your honor. [00:01:26] Speaker 05: Reserved four minutes for your pardon. [00:01:30] Speaker 05: May it please the court. [00:01:32] Speaker 05: My name is Barry Hartman, counsel for the appellants, along with me is Mr. Michael Chalice. [00:01:37] Speaker 05: Our presentation today has three parts, a brief statement of our issue and position, a very brief background for the Court's benefit if it needs it, and finally our argument. [00:01:45] Speaker 05: The case today revolves around the interpretation of section 19.08e of the Act to Prevent Pollution from Ships. [00:01:53] Speaker 05: That section authorizes the Coast Guard. [00:01:55] Speaker 06: Council, we've read your briefs, so let me go right to some of the questions that puzzled me. [00:02:02] Speaker 06: The bomb that would be presented in this [00:02:09] Speaker 06: would cover what? [00:02:12] Speaker 05: Penalties and fines. [00:02:14] Speaker 06: That would be a judge after a proceeding, right? [00:02:17] Speaker 06: Correct. [00:02:18] Speaker 06: It is not a bond that would ever be collected on unless the government were to prove its case against the carrier. [00:02:27] Speaker 06: Correct. [00:02:28] Speaker 06: So if the chip leaves and takes off, [00:02:40] Speaker 06: order to make the case, the bond is worthless. [00:02:43] Speaker 05: It's not necessary to have the ship to make the case. [00:02:46] Speaker 06: No, but let's assume it is. [00:02:47] Speaker 05: If it's necessary to have the ship, then the ship can be detained and not allowed to leave, period. [00:02:51] Speaker 06: All right. [00:02:52] Speaker 06: So the ship can be detained if there's a potential prosecution. [00:02:56] Speaker 06: Yes. [00:02:57] Speaker 06: Right. [00:02:58] Speaker 06: Now, suppose there's a potential prosecution. [00:03:01] Speaker 06: Is that handled by the U.S. [00:03:02] Speaker 06: Attorney's Office? [00:03:03] Speaker 05: Department of Justice, yes. [00:03:05] Speaker 05: Along with the Coast Guard. [00:03:06] Speaker 05: With the Coast Guard. [00:03:09] Speaker 06: Suppose you're in court in a preliminary proceeding. [00:03:15] Speaker 06: Could the court impose all of the conditions that were imposed in the bond in this case? [00:03:27] Speaker 06: No. [00:03:27] Speaker 06: Why not? [00:03:28] Speaker 05: Well, the conditions that we're talking about are not financial. [00:03:31] Speaker 05: They're non-financial. [00:03:32] Speaker 06: No, no, no. [00:03:32] Speaker 06: I'm talking about not the bond. [00:03:34] Speaker 06: I'm talking about whether the court [00:03:37] Speaker 05: One of the conditions, it was in the security agreement, requires that the company pay to house all the employees and pay essentially the cost of investigation. [00:03:47] Speaker 05: On the district judge? [00:03:48] Speaker 06: Yes. [00:03:48] Speaker 06: The government comes in and asks for these preliminary rulings so that we government can present our case. [00:03:57] Speaker 06: So we want a preliminary ruling by the judge, temporary orders, holding certain individuals here [00:04:06] Speaker 06: in so that they can testify. [00:04:10] Speaker 06: Yeah, the material witness warrant essentially. [00:04:12] Speaker 06: And the judge says, yes, okay. [00:04:14] Speaker 06: Yes, the judge can do that. [00:04:15] Speaker 06: Okay, the judge could impose all these conditions on his own. [00:04:18] Speaker 05: Pursuant to statute, there's a statute that governs that, correct. [00:04:21] Speaker 05: What statute? [00:04:22] Speaker 05: It's 18 USC, hold on one moment. [00:04:26] Speaker 06: Oh, but I won't divert you. [00:04:28] Speaker 05: It's in our agreement, 18 U.S.C. [00:04:30] Speaker 05: 3144. [00:04:31] Speaker 05: So the judge could impose all these conditions? [00:04:33] Speaker 05: If the government meets the standards, yes. [00:04:34] Speaker 06: Yes. [00:04:35] Speaker 05: Yes. [00:04:35] Speaker 06: So every one of these conditions could be imposed by the judge as part of the prosecution? [00:04:39] Speaker 06: Under statute, yes. [00:04:41] Speaker 06: Okay. [00:04:41] Speaker 06: Well... Yes. [00:04:43] Speaker 06: Now, then the government [00:04:58] Speaker 05: No, let me correct my statement because while the court could issue a material witness warrant and hold the witnesses, the government pays for it, not the company. [00:05:09] Speaker 05: Under this provision, the company pays the whole thing. [00:05:12] Speaker 06: Well, suppose there is a negotiation and you agree? [00:05:15] Speaker 05: A voluntary negotiation or involuntary? [00:05:18] Speaker 06: Well, the government's not going to release your ship. [00:05:23] Speaker 06: I mean, the government can hold the vote. [00:05:25] Speaker 05: The government could detain the vote indefinitely. [00:05:27] Speaker 05: That's right. [00:05:27] Speaker 06: Well, not indefinitely. [00:05:30] Speaker 06: There's a statute that provides that you have a cause of action if the government holds the vote unreasonably and wrong. [00:05:39] Speaker 03: Only for damages. [00:05:40] Speaker 06: The government could detain. [00:05:41] Speaker 06: So the government says, OK, we've got a case against you. [00:05:44] Speaker 06: We can detain you in order to make our case. [00:05:47] Speaker 06: But we will let you go if you meet all these conditions. [00:05:56] Speaker 05: Why not? [00:05:57] Speaker 05: The government doesn't have authority to make you agree to something that the government doesn't have. [00:06:00] Speaker 06: No, no, no. [00:06:00] Speaker 06: The government says, look, we're going to either detain you so that we can have all the witnesses and we have the vote here, or we can let you go. [00:06:10] Speaker 06: If we let you go, we'll let you go only upon these conditions. [00:06:13] Speaker 06: Again, I'm not doing this as part of the bond. [00:06:16] Speaker 06: You make a very interesting argument that a bond can't, you can't impose conditions on a bond. [00:06:21] Speaker 05: It's just a separate agreement between the parties. [00:06:22] Speaker 06: But I don't see any reason why the government can't extract [00:06:28] Speaker 05: Well, the question is whether the government can extort those conditions as part of the prosecution. [00:06:47] Speaker 06: We're not doing this as part of the bond. [00:06:48] Speaker 06: We're doing it as part of our right to retain the ship. [00:06:51] Speaker 05: The government can't get some of those conditions through a federal judge. [00:06:54] Speaker 05: It can't get a federal judge to force the defendant to pay, for example, transportation wages, housing. [00:07:04] Speaker 05: Why can't I? [00:07:05] Speaker 05: There's no statute that authorizes it. [00:07:07] Speaker 05: And the First Circuit case in [00:07:10] Speaker 05: Bevilacqua specifically notes that the government can't shift the cost of prosecution and investigation to a defendant. [00:07:20] Speaker 05: There are statutes that allow some of this to occur. [00:07:22] Speaker 04: Let me change Judge Silverman's hypothetical a little bit. [00:07:26] Speaker 04: What if it was the company that sought for that sort of agreement? [00:07:31] Speaker 04: I mean, you acknowledge that the Secretary can detain the vessel in port [00:07:36] Speaker 04: During the course of the investigation, what if the company said, well, we've got to get on with our shipment, so here's a $5 million bond, and we'll agree to, you know, leave folks in port for, you know, so there'll be material witnesses. [00:07:50] Speaker 04: What if that suggestion came from the company? [00:07:53] Speaker 04: Would the secretary have the authority to enter into that type of agreement? [00:07:56] Speaker 05: No. [00:07:56] Speaker 05: Why not? [00:07:57] Speaker 05: I don't believe this. [00:07:58] Speaker 05: The company could agree to do it on its own. [00:08:00] Speaker 05: I don't dispute that. [00:08:01] Speaker 05: I don't believe the government has the authority to enter into an agreement that's behind its statutory authority. [00:08:06] Speaker 05: And I can give you an example. [00:08:07] Speaker 06: You conceded that the government can hold the ship, right? [00:08:10] Speaker 05: The government can hold the ship. [00:08:11] Speaker 06: That's pretty expensive. [00:08:12] Speaker 06: Yes. [00:08:13] Speaker 06: That's going to cost you a fortune. [00:08:15] Speaker 06: The government, cannot the government say, okay, we'll let the ship go. [00:08:19] Speaker 06: Forget the bomb. [00:08:20] Speaker 06: We'll let the ship go if you meet these conditions. [00:08:23] Speaker 05: No. [00:08:24] Speaker 05: What if the government said, here's the condition, leave your firstborn here? [00:08:29] Speaker 01: Well, there's always constitutional constraints on what the government does. [00:08:32] Speaker 05: OK, what if the government said, here's the condition, forfeit all of your bank accounts around the world? [00:08:36] Speaker 05: It's just beyond your statutory authority, but it's not constitutional. [00:08:39] Speaker 05: Can they do that? [00:08:40] Speaker 05: I'm sorry, I should be asking. [00:08:41] Speaker 06: I like the firstborn better. [00:08:44] Speaker 06: I'll leave both of them on the table. [00:08:48] Speaker 06: Well, how about this? [00:08:49] Speaker 05: These are conditions relevant to the prosecution. [00:08:52] Speaker 05: If I may give the court an example of why the government can't enter in an agreement beyond its statutory authority. [00:08:58] Speaker 01: Can I just ask you this question just to channel a little bit? [00:09:02] Speaker 01: Let's just assume for argument purposes that there are certain conditions that the government can't impose, whether it's or can't agree to, because as Judge Griffith says, you could volunteer them, but because they're unconstitutional or ultra-various in some way. [00:09:16] Speaker 01: But is it your position that the government can't enter into an agreement that concerns any non-financial conditions? [00:09:24] Speaker 05: are not under this statute. [00:09:26] Speaker 05: There may well be other statutes the government could act under, but this particular agreement... Even on a voluntary basis. [00:09:31] Speaker 01: Judge Silverman's point is, take the bond out of the equation. [00:09:35] Speaker 01: All the government wants to do is to enter into an agreement with you that incorporates some non-financial conditions as the predicate for releasing the ship. [00:09:44] Speaker 01: You're saying no non-financial conditions, even on a voluntary basis... Under this statute. [00:09:58] Speaker 06: or a person in charge may be subject to a fine or civil penalty under this section, the Secretary of the Treasury, upon the request of the Secretary, and that's, of course, HHS, shall refuse to or revoke the clearance required by Section 60105. [00:10:13] Speaker 06: So the government can hold that ship as long as there's reasonable cause. [00:10:18] Speaker 05: Because this is the statute, yes. [00:10:19] Speaker 05: Okay. [00:10:20] Speaker 06: So the government says, I'm going to hold this ship forever. [00:10:24] Speaker 06: It's going to take eight months for a prosecution. [00:10:27] Speaker 06: That's fine. [00:10:28] Speaker 06: We'll let it go earlier, but only under these conditions. [00:10:32] Speaker 06: OK, you don't want to buy these conditions? [00:10:35] Speaker 06: Then you stay till three months. [00:10:36] Speaker 05: The government could well do that. [00:10:39] Speaker 05: And of course, there are other remedies available to have the vessel out. [00:10:41] Speaker 05: What remedies are available? [00:10:43] Speaker 05: Well, the government, after the fact that the detention was unreasonable, you could get some damages. [00:10:46] Speaker 05: Well, I know. [00:10:46] Speaker 05: You'd have to sue on that. [00:10:47] Speaker 05: But the government can't use that statute to, for example, say, keep the witnesses here. [00:10:51] Speaker 01: No, but just on the question of non-financial conditions, your position is non-financial conditions are out of bounds. [00:10:58] Speaker 01: And I guess it sounds like you're now thinking that even under this statute, at least there's some non-financial conditions that can be entered into as a precondition to letting the ship go. [00:11:08] Speaker 05: If I said that I misspoke you on that, I don't believe it. [00:11:10] Speaker 01: Okay, well, your reply brief says, the authority given to customs regarding granting vessels clearances in the permissive form, because there – this is on page 17 – because there can be other reasons, aside from the posting of satisfactory financial security, why customs clearance [00:11:25] Speaker 01: may still be withheld. [00:11:26] Speaker 05: That's Customs, not Coast Guard. [00:11:27] Speaker 01: Customs is part of the Department of Homeland Security. [00:11:30] Speaker 01: But they're... Let's assume, for present purposes, I don't care about the distinction between Customs and the Coast Guard. [00:11:35] Speaker 01: I know that you have an argument that says that that matters, but let's just assume I'm just talking about the Secretary, since that's what the statute says. [00:11:42] Speaker 01: So Customs, which is part under the Secretary's umbrella, you're saying can impose, can enter into an agreement that concerns non-financial conditions under this statute. [00:11:54] Speaker 05: Customs may have other authorities that aren't cited here to enter into non-financial conditions. [00:12:00] Speaker 05: They may have. [00:12:00] Speaker 05: I don't know what they are. [00:12:01] Speaker 05: Customs, for example, is the gatekeeper for 50 other agencies, including ATF, DEA. [00:12:06] Speaker 05: You know, if there's reasons under there. [00:12:07] Speaker 01: So the secretary that's referred to in this statute can enter into an agreement that concerns non-financial conditions? [00:12:15] Speaker 05: It may detain the vessel and do that, but not under the surety bond provision. [00:12:19] Speaker 05: Correct. [00:12:20] Speaker 05: There are two different provisions of the statute. [00:12:22] Speaker 05: I have a hard time not distinguishing them. [00:12:24] Speaker 05: One says the Secretary of Customs may grant clearance, and we haven't really debated what those conditions are. [00:12:31] Speaker 05: The other says upon the filing of a surety or bond satisfactory to the Coast Guard. [00:12:36] Speaker 05: We're only talking about a bond or surety satisfactory to the Coast Guard. [00:12:39] Speaker 05: The agreement itself says this agreement is entered in pursuant to that provision of the statute. [00:12:45] Speaker 05: That's what we're talking about, the exercise of that section of the statute. [00:12:48] Speaker 06: But we're actually broadening our consideration to ask whether, even if the last section of that statute, 1908, was not there, there was no provision whereby clearance may be granted upon the filing of a bond or other security satisfactory to the Secretary, whether the Secretary, either as part of a settlement of the [00:13:17] Speaker 06: contemplating litigation, or as a condition whereby it would allow the chip to leave, could impose certain conditions. [00:13:30] Speaker 05: If a statute defines that authority, then it could. [00:13:33] Speaker 06: If there's a statute that defines not... Well, I don't know why the statute itself [00:13:37] Speaker 06: doesn't implicitly suggest that. [00:13:39] Speaker 06: The secretary has a right to hold it, to hold the ship, if there's reasonable cause to believe there's a penalty. [00:13:47] Speaker 06: So why can't the secretary say, well, okay, well, I have the right to hold the ship and all the passengers, I mean all the crew, in here. [00:13:58] Speaker 06: But since I realize that'll cost the ship owner an awful lot, [00:14:04] Speaker 06: you go, but under these conditions. [00:14:07] Speaker 05: Well, again, the secretary doesn't have any authority to hold the crew. [00:14:11] Speaker 05: That section only relates to the ship, not the crew. [00:14:13] Speaker 06: Okay, that's a fair point. [00:14:15] Speaker 06: But what about the witnesses? [00:14:18] Speaker 05: Witnesses of the crew. [00:14:19] Speaker 05: What about material witnesses? [00:14:21] Speaker 05: The secretary does not have the authority to hold them unless the secretary goes to court and a court approves it. [00:14:27] Speaker 06: Okay, but if a court can approve that, then we can settle it in advance. [00:14:33] Speaker 06: Anything the court can approve, we could sell privately. [00:14:35] Speaker 05: A court cannot approve the payment of the wages for those assets. [00:14:38] Speaker 06: But anything the court could approve, we could sell, right? [00:14:41] Speaker 05: More than likely, yes, because there's authority. [00:14:43] Speaker 06: So therefore, you concede, you have to, that the government could say, OK, we'll let the ship go only upon conditions that the court could approve. [00:14:55] Speaker 05: If I choose not to fight those conditions, I can say, yes, I recognize you can go to court and get those conditions. [00:14:59] Speaker 06: OK, so that's enough to establish [00:15:04] Speaker 06: The government can insist on non-financial conditions. [00:15:09] Speaker 06: Not as part of the bond, but as part of its power to hold. [00:15:15] Speaker 05: With respect, Your Honor, the government's insistence in this example is not based on its power to hold. [00:15:20] Speaker 05: It's based on its ability to go to court and say, Judge, hold these people. [00:15:24] Speaker 05: But I can't make the company pay for them. [00:15:27] Speaker 05: Yet that's what they're requiring here. [00:15:29] Speaker 05: Hold them in place. [00:15:30] Speaker 05: We can always settle. [00:15:31] Speaker 06: on a matter that the court could impose. [00:15:34] Speaker 06: That's all I'm trying to say. [00:15:35] Speaker 05: A court cannot impose a payment of wages indefinitely. [00:15:38] Speaker 05: Well, no, no, no. [00:15:38] Speaker 05: A payment of wages may be... That's what we're talking about. [00:15:41] Speaker 04: It's millions of dollars. [00:15:42] Speaker 04: Why can't we see this case as you agreed to that? [00:15:45] Speaker 04: You were given an alternative. [00:15:47] Speaker 04: Keep the vessel in port during the pendency of the investigation, and you decided you didn't want to do that. [00:15:53] Speaker 04: The terms for releasing it were set forth in the security agreement. [00:15:57] Speaker 04: What's wrong with that? [00:15:58] Speaker 05: Because we didn't agree voluntarily. [00:15:59] Speaker 05: It was extorted, Your Honor. [00:16:01] Speaker 04: You could have kept the ship there. [00:16:04] Speaker 01: Yeah. [00:16:04] Speaker 01: How's that a choice? [00:16:05] Speaker 05: Because the cost of doing that would have put the company out of business and it never would have had a chance to challenge anything. [00:16:10] Speaker 01: But the statute presupposes that the government can retain the ship. [00:16:14] Speaker 01: We're only talking about an act of grace that allows you to take the ship. [00:16:17] Speaker 01: The statute presupposes that the government can take the ship. [00:16:20] Speaker 01: Under certain limited conditions. [00:16:21] Speaker 01: Your problems with the statute. [00:16:23] Speaker 05: We don't have any problems. [00:16:24] Speaker 05: The government first of all keeps the ship. [00:16:27] Speaker 05: In the real world, here's what happens. [00:16:28] Speaker 05: Ship comes in, government wants to investigate, holds that ship for a couple of weeks while it collects records, interviews people, takes computers, takes all of its evidence. [00:16:36] Speaker 05: Then it says, now that we have that, we want a bond to cover all the potential penalties. [00:16:40] Speaker 05: Give us the bond and you can go. [00:16:42] Speaker 05: But that's not what they did. [00:16:43] Speaker 05: Wait, the bond is an illusion. [00:16:45] Speaker 06: The bond is an illusion. [00:16:47] Speaker 05: Not at all. [00:16:47] Speaker 05: I'm sorry. [00:16:48] Speaker 06: Yes it is, because once you leave, and all the people have left, the government can't make its case. [00:16:54] Speaker 05: So they can't recover against the bond. [00:16:55] Speaker 05: With respect, Your Honor, it can, and here's why. [00:16:58] Speaker 05: And in this case, it's a classic example. [00:17:00] Speaker 05: They hold that vessel, and they come on board with 20 agents. [00:17:03] Speaker 05: In this case, it's a false record case. [00:17:07] Speaker 05: They take all the records. [00:17:08] Speaker 05: They take all the computers. [00:17:09] Speaker 05: They interview all these people. [00:17:11] Speaker 05: That's what they do. [00:17:12] Speaker 05: They get a lot of evidence ahead of time. [00:17:14] Speaker 05: Then they want people to stay indefinitely because they may want to interview them again. [00:17:17] Speaker 05: So you know what, company, you want to stay in business, you pay for those people to stay here until we decide they can go, which can be a year. [00:17:23] Speaker 05: It can be a year. [00:17:31] Speaker 05: of simply being a lot cheaper. [00:17:32] Speaker 05: In this case, the company had one ship that would be put out of business. [00:17:35] Speaker 05: And it could never challenge it. [00:17:37] Speaker 05: It could never challenge it. [00:17:38] Speaker 05: Whatever the government wanted to do, it could do it, and there would never be a chance to challenge it because you can't survive. [00:17:43] Speaker 05: And the Coast Guard, quite frankly, doesn't want that ship to sit in port and take a dock that belongs to take a port that belongs to somebody else. [00:17:50] Speaker 05: They want it gone, too. [00:17:51] Speaker 01: Yeah, they might well, and that's why Congress said that you can enter into these kinds of negotiations. [00:17:56] Speaker 01: That's what the statute presupposes, that it might well be in everybody's interest to allow the ship to leave. [00:18:02] Speaker 05: Right, but not under this provision of this statute that's at issue here. [00:18:07] Speaker 05: There may be other circumstances where the Coast Guard or Customs have the ability to engage in things. [00:18:11] Speaker 05: That's not what they did. [00:18:13] Speaker 05: They took out their ability to get a bond in order to guarantee a payment and turn it in to pay the cost of our investigation. [00:18:21] Speaker 05: That's what they turned it into. [00:18:22] Speaker 05: They cannot get that ahead of time. [00:18:24] Speaker 06: You have a very interesting [00:18:40] Speaker 06: the ability to impose those. [00:18:47] Speaker 05: But with respect, Your Honor, the security agreement starts with, pursuant to our power under 1908D to demand a bond, here are the terms of the bond. [00:18:55] Speaker 06: Maybe they have another statute. [00:18:56] Speaker 06: All you get out of that, in my view, is a remand. [00:19:00] Speaker 05: Your Honor, I would suggest that they don't have the authority because of the de novo review. [00:19:04] Speaker 05: If the court determines they don't have authority, the court can invalidate the security agreement or remand without order to invalidate the agreement. [00:19:10] Speaker 04: What happens then if we invalidate the security agreement? [00:19:12] Speaker 04: What's next? [00:19:13] Speaker 05: What's next? [00:19:14] Speaker 05: Yeah. [00:19:15] Speaker 05: The government, you know, our clients are still subject to potential criminal prosecution. [00:19:19] Speaker 04: The witnesses are all gone. [00:19:20] Speaker 04: Do they have to go back to the port? [00:19:22] Speaker 04: No, the witnesses are all gone. [00:19:23] Speaker 04: Why not? [00:19:23] Speaker 05: The government demanded a bond. [00:19:25] Speaker 05: We provided the bond. [00:19:26] Speaker 05: The bond was there. [00:19:27] Speaker 05: It's been used to pay some penalties. [00:19:28] Speaker 05: What do you mean it's used to pay some penalties? [00:19:31] Speaker 05: There were two entities that pled guilty. [00:19:33] Speaker 05: Oh, okay. [00:19:34] Speaker 05: Well, we still have one that's litigating, right? [00:19:38] Speaker 05: No, there's currently, the two owners have never been charged with anything, criminally or civilly. [00:19:44] Speaker 05: But they're offending. [00:19:48] Speaker 05: There's been no indictment brought against them. [00:19:49] Speaker 01: I thought your argument as to why they're standing is precisely that those cases remain possible. [00:19:54] Speaker 05: The investigation has not been closed. [00:19:55] Speaker 05: The statute of limitations is not run. [00:19:57] Speaker 05: They're still required under the agreement to do whatever the government wants. [00:20:00] Speaker 05: That's why I said it's still pending. [00:20:02] Speaker 05: Yes. [00:20:02] Speaker 05: Well, the investigation is pending. [00:20:03] Speaker 05: Correct. [00:20:04] Speaker 05: Correct. [00:20:06] Speaker 04: Great. [00:20:06] Speaker 04: We'll give you some time back. [00:20:08] Speaker 04: We'll hear from the government now. [00:20:16] Speaker 06: We're sort of confused. [00:20:29] Speaker 06: as just relying on the harsh part of 1908 before you even get to the security. [00:20:43] Speaker 06: And the notion that this is under view seems a little silly to me. [00:20:47] Speaker 02: Well, Your Honor, I'm sorry about that, but your case is, and in fact, Your Honor has authored several of them. [00:20:55] Speaker 02: Sorry? [00:20:55] Speaker 02: Suggests that the phrase satisfactory to the secretary confers great discretion on the secretary. [00:21:02] Speaker 06: I swear this has great discretion with respect to the amount of demand. [00:21:07] Speaker 02: Your Honor, I entirely disagree. [00:21:11] Speaker 02: I understand that's what the district court said. [00:21:13] Speaker 06: Suppose the secretary said. [00:21:15] Speaker 06: You can leave if you leave your oldest child. [00:21:19] Speaker 02: Your Honor, I suspect that would be an unconstitutional condition that there would be action. [00:21:23] Speaker 06: So it would be reviewable, right? [00:21:25] Speaker 02: But not in a direct action under the APA. [00:21:30] Speaker 02: It's not our position, Your Honor, that none of the conditions are ever reviewable in any form. [00:21:37] Speaker 02: There's the 1904-H action, there's actions based on potentially unconstitutional action, ultra-virus action. [00:21:44] Speaker 02: Our position is only that when Congress authorizes, everybody's already agreed, the Coast Guard can hold the vessel until the criminal proceedings are done. [00:21:53] Speaker 06: Suppose the bond in this case was $20 billion. [00:21:59] Speaker 02: Your Honor, the Coast Guard only asked to request a bond in the total amount of the fines. [00:22:04] Speaker 06: Suppose the bond in this case was $20 billion. [00:22:08] Speaker 02: $20 billion, okay. [00:22:10] Speaker 06: Reviewable. [00:22:12] Speaker 02: No, Your Honor. [00:22:12] Speaker 02: Well, possibly reviewable in a different action as an ultra-virus action by the Coast Guard, but not under the APA. [00:22:21] Speaker 04: Because of the language satisfactory to the Secretary? [00:22:24] Speaker 02: No, because I'm assuming that there's some type of action that you could bring to suggest that the Coast Guard was doing something it had no statutory authority to do, but not that it had [00:22:36] Speaker 02: in terms of APA review failed to satisfy the requirement, the only requirement, that the bond or surety be satisfactory to the Secretary. [00:22:45] Speaker 01: Why can't you set a $20 billion bond if the point is that you can hold the ship? [00:22:51] Speaker 01: So the greater power to hold the ship means a lesser power to impose conditions, at least conditions that are not unconstitutional because there's another source of law that takes in and says you can't do that. [00:23:00] Speaker 02: Yeah, and I suppose I'm making a kind of practical assumption in here that $20 billion bar exceeds the value of the ship. [00:23:08] Speaker 02: So I mean, in legal theory, I assume that the greater power does include the lesser, but I'm [00:23:17] Speaker 02: In my mind, I'm thinking that a $20 billion bond would be excessive. [00:23:23] Speaker 01: It does seem grossly excessive, but of course, for any legitimate purpose. [00:23:27] Speaker 01: But I guess it seems to me that if your argument is because the statute says satisfactory to the secretary, ergo, [00:23:33] Speaker 01: what is satisfactory to the Secretary is unreviewable because the Secretary, him or herself, gets to make that determination, then if the Secretary for some reason decides, not that I'm going to only give a surety or bond opportunity only to ships that are captained by females as opposed to males, because then you'd have an equal protection problem, but I'm just going to have a really, really exorbitant bond. [00:23:57] Speaker 02: Well, I do think that there might be an opportunity in a different type of action. [00:24:02] Speaker 02: I think that the $20 billion bond would be unreviewable in an APA action as to whether or not that was satisfactory to the Secretary. [00:24:12] Speaker 01: What is the action that allows for review? [00:24:15] Speaker 01: I think you could probably bring some kind of ex parte young action or something for actions that are unconstitutional. [00:24:19] Speaker 01: But for what about, what is ultra virus? [00:24:23] Speaker 06: It's APA. [00:24:26] Speaker 02: Not in this case. [00:24:28] Speaker 06: It's unlawful. [00:24:29] Speaker 02: Well, but in this case, if the claim was that the bond of surety was reviewable, if it's... Council, let me divert a bit. [00:24:38] Speaker 06: All three of us were interested, if I gathered what my colleagues were saying, that even if the last portion of 1908 were not in the statute, that the Secretary [00:24:55] Speaker 06: reasonable cause to believe that the ship owner may be subject to a fine or civil penalty. [00:25:03] Speaker 06: Fine being criminal. [00:25:06] Speaker 06: Why could you not, under that theory, without regard to the bond, [00:25:24] Speaker 06: do that without ever mentioning the bond. [00:25:27] Speaker 02: I think we absolutely can, Your Honor. [00:25:28] Speaker 06: But you didn't. [00:25:29] Speaker 06: So why didn't you say that in your brief? [00:25:32] Speaker 06: You're arguing that you can do this as part of the bond, trying to shoehorn it into the bond. [00:25:37] Speaker 04: Or in your security agreement. [00:25:39] Speaker 04: And in your security agreement, you say, this agreement in its entirety constitutes surety satisfactory to the Secretary of Homeland Security per 1908. [00:25:50] Speaker 02: Right, because we have statutory authority. [00:25:53] Speaker 04: And one of the things here is... But my point here is we've been all advancing the greater includes the lesser argument as a possible grounds for this. [00:26:03] Speaker 04: But that's not an argument you all have made. [00:26:06] Speaker 04: You've rested it entirely on the concept of surety. [00:26:10] Speaker 04: Why do you do that? [00:26:11] Speaker 04: There's other statutes. [00:26:12] Speaker 04: Section 1903 gives you authority to enforce the MARPOL protocol. [00:26:20] Speaker 04: That seems to be a far better basis for this. [00:26:22] Speaker 04: I'm just really puzzled by the legal theory, and obviously we run into a chennery problem with that. [00:26:27] Speaker 02: Your Honour, if there's something we've overlooked and the Coast Guard has a power that it could use in the alternative, nonetheless, [00:26:35] Speaker 02: Since Congress said, you can hold the vessel, or you can allow it to depart on terms of a bond or surety satisfactory to the Secretary, the Coast Guard understandably says, these are the conditions we want. [00:26:51] Speaker 01: I might be speaking just for myself here at this moment, because I'm not entirely unconvinced that you have the authority under the provision that you identified. [00:26:58] Speaker 01: But I guess, why isn't your argument that [00:27:02] Speaker 01: We might capture it in the scope of a surety agreement, but that's just a formality. [00:27:08] Speaker 01: If that's form over substance, we could have set up a separate piece of paper that had that agreement, too. [00:27:12] Speaker 01: We happened to put it in the context of a surety because we wanted to streamline the negotiation. [00:27:17] Speaker 01: But in concept, what this is is it's just a condition. [00:27:20] Speaker 01: We have the ability to hold the ship forever. [00:27:22] Speaker 01: We're imposing conditions. [00:27:23] Speaker 01: We're offering conditions, not imposing. [00:27:25] Speaker 01: We're offering conditions under which you can agree [00:27:29] Speaker 01: that gives us assurance, I'm gonna try to avoid using the word surety, it gives us assurances that we need in order to let the ship go. [00:27:35] Speaker 01: We're wrapping it all up into one tidy bow, under one tidy bow because it streamlines things, but that's what we're doing because we have the greater power to hold the ship forever. [00:27:44] Speaker 02: That's pretty much what's going on here. [00:27:46] Speaker 01: Now, if that's what's going on, then can I ask you this question about reviewability? [00:27:49] Speaker 01: Because it seems to me that before we get to the question of whether the Secretary's action is reviewable, we have to address the question of whether the Secretary's action is lawful. [00:28:00] Speaker 01: And so if the other side's argument is the law doesn't permit the offering of non-financial conditions at all, [00:28:09] Speaker 01: It seems to me your argument in response can't be, we have unreviewable authority. [00:28:15] Speaker 01: It's that A, yes it does, we can offer non-financial conditions. [00:28:20] Speaker 01: And then once we do that, the case is over because their legal challenge is gone. [00:28:25] Speaker 01: We don't even get to the question of reviewability as to that because we have to answer that predicate question before we can get to reviewability at all. [00:28:32] Speaker 02: Well, Your Honor, perhaps that's why the COSCA does it the way it is, because the assumption that everybody is making here is the basic assumption that accountants make, which is that you can't have a non-financial condition in a surety, which is simply not correct. [00:28:49] Speaker 02: And in our view, the notion that the secret... You're stupid. [00:28:53] Speaker 06: What about the proposition that you have that authority without regard to the surety of the bond? [00:28:58] Speaker 06: That's what we're proposing. [00:29:00] Speaker 02: I think that this question actually was more to the point of, you know, can we decide the reviewability and legality question? [00:29:11] Speaker 02: I think the question is for the purposes of whether it's reviewable. [00:29:16] Speaker 02: If bond or other sureties satisfactory to the secretary can legitimately include these non-financial conditions, then it is a pure reviewability question. [00:29:27] Speaker 01: But you've already built in the predicate because you're assuming that [00:29:32] Speaker 01: the statute allows for negotiation over non-financial conditions. [00:29:35] Speaker 01: I am, because... And then you're saying if you assume that, then the Secretary's decision is non-reviewable. [00:29:40] Speaker 01: And I guess my point is just that we have to first decide that the statute allows the parties to enter an agreement about non-financial conditions before we can get to it. [00:29:48] Speaker 02: Right, but Your Honor, the idea that there can be a surety that has no non-financial conditions is just a... it's... it's a miracle. [00:29:56] Speaker 02: The nothing... no bond says two million dollars. [00:30:01] Speaker 02: and a story. [00:30:02] Speaker 02: And there's all kinds of different bonds. [00:30:05] Speaker 02: There's performance bonds and maintenance bonds and bonds under ERISA. [00:30:09] Speaker 02: And here the only thing Congress said is it's a bond or surety satisfactory to the Secretary. [00:30:15] Speaker 01: I have to say, I found it surprising, I guess, in your brief that [00:30:18] Speaker 01: One of the most critical sentences in your brief was the point that sureties and bonds involve non-financial conditions. [00:30:24] Speaker 01: Right. [00:30:25] Speaker 01: And then there's not a citation after that. [00:30:27] Speaker 01: It's just a statement. [00:30:28] Speaker 01: Oh. [00:30:28] Speaker 01: Yes. [00:30:28] Speaker 01: And then it goes to the next... I wondered about that, too. [00:30:30] Speaker 01: And I wondered, I mean... Your Honor, I would be happy to write you a brief about a risk of bonds if it was, but... You could have just cited, you know, the world's leading authority on bonds or sureties or something, just to... Right. [00:30:42] Speaker 01: Because that statement is just made nakedly without... [00:30:45] Speaker 02: Even if the idea that there can be only financial conditions is just incorrect, like even here, as you all pointed out. [00:30:53] Speaker 04: How do you respond to the argument on legislative history, that we know the history of this phrase, we know where it came from, we know the treaty it came from, we know how Congress viewed it, and that argument is that it was all about financial assurances? [00:31:06] Speaker 02: Right, but you're honest that the financial assurance secures an obligation. [00:31:11] Speaker 02: And contrary to what opposing counsel says, it is not true. [00:31:15] Speaker 02: that without the assurances that the criminal prosecution can go forward. [00:31:21] Speaker 02: For example, things that we can only get through agreement and negotiation with the Basel interests [00:31:27] Speaker 02: jurisdiction of the criminal court. [00:31:29] Speaker 02: I don't think, Ed, once that vessel's gone and it's beyond the territorial waters. [00:31:33] Speaker 04: What about making the company pay for the crew as they stay in port for a year while the investigation goes forward? [00:31:41] Speaker 02: Those provisions are primarily for the protection of the seafarers. [00:31:46] Speaker 02: It's not to make the company pay. [00:31:49] Speaker 04: Is that a surety? [00:31:50] Speaker 04: A minute ago, you were talking about surety being part of the... It's part of the obligation [00:31:56] Speaker 02: that the money secures. [00:31:58] Speaker 01: And if you look at security agreements, they say the security agreement is to pay the fine and to... Well, is this the way to characterize your argument, then, that it seems to me that the way we're looking at it is, regardless of whether the particular language monitor of the surety involves or can incorporate non-financial conditions, there's authority within the clause generally to incorporate non-financial conditions. [00:32:19] Speaker 01: But let's just put that to a side, and let's just focus on these particular words. [00:32:23] Speaker 01: I take it your argument is, [00:32:25] Speaker 01: even if bond or other surety satisfactory to the secretary primarily connotes financial conditions, there's always a sliding scale because I might say it's $50 if there's no non-financial conditions. [00:32:37] Speaker 01: I might say it's $1,000 if there's no non-financial conditions. [00:32:41] Speaker 01: But I might say I can negotiate it down to $500 if there's a bunch of non-financial conditions that satisfy me. [00:32:46] Speaker 01: so that there's always, even when you're talking about financial conditions, you're necessarily talking about non-financial conditions, too, because the dollar value is always in flux, depending on what else you're going to agree to. [00:32:56] Speaker 01: So I'm offering you a mix of stuff. [00:32:57] Speaker 01: I could offer you $20 billion, which you could never do. [00:33:00] Speaker 01: Or I could say, I'll do $2 million if you give me all these assurances, which is still financial. [00:33:04] Speaker 01: It's just that you're... That's exactly right. [00:33:06] Speaker 02: And part of the point of this is that these are negotiated. [00:33:09] Speaker 02: I know there's this language about extortion, but there are negotiations. [00:33:14] Speaker 02: So for example... I want to ask you one question. [00:33:16] Speaker 06: Is it your position before this court that your entire case depends on the proposition that bond or other assurity can include non-financial conditions? [00:33:32] Speaker 06: And if we disagree with that, you lose. [00:33:37] Speaker 02: No, Your Honor. [00:33:39] Speaker 02: Not at all. [00:33:39] Speaker 02: For example, we have standing arguments. [00:33:42] Speaker 02: No, no, okay. [00:33:43] Speaker 06: Let's assume the standing of mootness. [00:33:46] Speaker 02: I do want to get to that, because there's some things I want to correct. [00:33:49] Speaker 06: Let's assume argument that there is standing and it's not moot, okay? [00:33:54] Speaker 06: All right. [00:33:56] Speaker 06: Is it your position, after listening to all this dialogue, [00:34:00] Speaker 06: that if we conclude that bond or other surety cannot include non-financial conditions, then you lose. [00:34:12] Speaker 02: No, Your Honor, because we would then defend the whole... The district court made the same conclusion that there could be a surety that had only financial conditions, which I think is where you're tending. [00:34:24] Speaker 06: And the court said none... Counsel, I misunderstood. [00:34:27] Speaker 06: What did you just say? [00:34:28] Speaker 02: I said our answer is no, even if you conclude with the district court that it can only include financial conditions, that there's still discretion for the secretary by the terms of may. [00:34:41] Speaker 02: The secretary has to hold the vessel pending the prosecution. [00:34:45] Speaker 02: The secretary may allow the vessel to depart. [00:34:49] Speaker 04: Upon filing a bond or other surety, are you saying that that may language [00:34:56] Speaker 04: Isn't tethered to the filing of a bond or other surety? [00:35:00] Speaker 02: No, but what you're suggesting... You're not saying that? [00:35:04] Speaker 02: It is tethered to it, Your Honor, but here's the real world with real ships on real collision, so what would happen would be... I want to know the government's understanding of the statute. [00:35:15] Speaker 04: Is there authority in this statute for the government to include non-financial conditions? [00:35:23] Speaker 04: And if there is, show me the language. [00:35:26] Speaker 02: Okay, well our first answer is yes. [00:35:29] Speaker 02: Now, show me the language. [00:35:32] Speaker 02: And my second answer is it's in May, because let's say that your Honours say the only thing that the government can decide is the amount of the bond, okay? [00:35:44] Speaker 02: All right, fine. [00:35:45] Speaker 06: Council, are you ignoring what both Judge Srinivasan and I have discussed? [00:35:51] Speaker 06: I really hope not, Your Honour. [00:35:53] Speaker 06: I really hope not, too. [00:36:00] Speaker 06: whether or not, without regard to the language involving bomb or other surety, the government would have the right to hold the ship and therefore it would have the right to propose to any ship owner these conditions in return for allowing the ship to go without regard to the bomb or surety. [00:36:23] Speaker 06: Correct. [00:36:24] Speaker 06: So then the answer to my question is, even if we concluded bomb [00:36:39] Speaker 06: for non-financial conditions in return for allowing the ship to leave? [00:36:43] Speaker 02: That would be very eloquently put, Your Honor, yes, that's correct. [00:36:47] Speaker 06: So you'd modify the position you've taken in the case to include that? [00:36:52] Speaker 02: To include that, yes, Your Honor, yes. [00:36:55] Speaker 06: Is it proper for us to consider that? [00:36:59] Speaker 02: Yes, Your Honor. [00:37:01] Speaker 06: On the appeal, or would we have to remand if we thought that was logical? [00:37:05] Speaker 02: I think you could consider it on appeal. [00:37:07] Speaker 02: It's a pure legal issue. [00:37:08] Speaker 02: We're on summary judgment. [00:37:10] Speaker 01: We're not reviewing an agency action. [00:37:12] Speaker 01: We're reviewing a district court decision. [00:37:14] Speaker 02: We're reviewing a district court decision. [00:37:17] Speaker 02: Yes, but I would just like to address the standing point because there are a few misconceptions. [00:37:26] Speaker 02: There are no ongoing criminal proceedings. [00:37:29] Speaker 02: There's a very good reason why the operator pleads guilty and agrees to pay the fines and not the [00:37:36] Speaker 02: The owner is almost always an under-capitalized shell company, as the Council said, that they just own this vessel. [00:37:45] Speaker 02: And so when the vessels come in and they've violated MARPOL, the most important thing for the government, solicitousness for the seafarers, but also making sure that there are not further MARPOL violations. [00:37:56] Speaker 01: So I get why the government, as a practical matter, is going to want to get the operator to plead guilty because they think that addresses the issue. [00:38:03] Speaker 01: But I still don't understand how that gives the owner assurance. [00:38:06] Speaker 01: The owner is still subject to the terms. [00:38:08] Speaker 01: Is there any document that tells the owner you're now completely off the hook, that you're not subject to these conditions anymore? [00:38:15] Speaker 02: Your Honor, the security agreements are intended, as Your Honor pointed out at the beginning of this, to make sure that there will be a prosecution. [00:38:24] Speaker 02: We don't have the ship, but we do have records that are authenticated. [00:38:28] Speaker 03: But could you still prosecute the owner? [00:38:30] Speaker 02: No, I don't believe so. [00:38:31] Speaker 02: Why not? [00:38:33] Speaker 02: Because we have the evidence that's been got. [00:38:36] Speaker 01: The security agreements... Is there a legal bar against prosecuting the owner? [00:38:40] Speaker 01: Maybe there's some practical [00:38:42] Speaker 01: Maybe the government doesn't want to. [00:38:44] Speaker 01: If I was the owner, I wouldn't, boy, I sure wouldn't be satisfied by the government telling me, believe me, I really, it's unlikely I'm going to come after you. [00:38:51] Speaker 02: Your Honor, the truth is it has to be more than speculative to amount to an injury. [00:38:57] Speaker 02: So I think Your Honor's can look and say... Then why are they part of the agreement at all? [00:39:01] Speaker 02: Sorry? [00:39:02] Speaker 01: Why are they part of the agreement at all? [00:39:04] Speaker 01: Why are they subject to the conditions at all? [00:39:05] Speaker 01: The government must have had some reason for subjecting the owners to the conditions. [00:39:09] Speaker 02: Well, perhaps at the time that the agreements were effective, there was some reason for that. [00:39:14] Speaker 02: But at this point, the money has been paid out, the fines have been paid, the compliance plan has even... So if you were the lawyer for the company, if you were the lawyer for the owners, would you tell them... [00:39:24] Speaker 01: Don't worry about it. [00:39:25] Speaker 01: There's no possibility of prosecution, even though... I would. [00:39:29] Speaker 02: I would say there's no jurisdiction. [00:39:31] Speaker 02: I would say there's, you know, the agreement's being completed. [00:39:34] Speaker 02: There's, you know, the evidence has been returned back. [00:39:38] Speaker 02: The witnesses are gone. [00:39:40] Speaker 02: There's no way for the government to make its criminal case. [00:39:43] Speaker 02: And I would just like to add... Has there been any fines imposed? [00:39:46] Speaker 02: Yes, Your Honour. [00:39:48] Speaker 06: How much? [00:39:48] Speaker 02: So in the Agios Milianos it was two million dollars and for the Stella Wind it was five hundred it was Three hundred thousand so they've got two hundred thousand back from that bond. [00:40:00] Speaker 02: I'm sorry And because in the Stella Wind case, what was the total amount? [00:40:06] Speaker 02: Two million for the Agios Milianos and three hundred thousand for the Stella Wind. [00:40:10] Speaker 06: And what was the amount of the bond? [00:40:12] Speaker 02: The Agios Milianos posted one point two five million and the Stella Wind posted half a million. [00:40:18] Speaker 06: So you don't have enough in the bond to cover the fines? [00:40:22] Speaker 02: I believe that the, well, and one there's too much in the bond and the other there wasn't enough, but I believe the fine was paid or if it wasn't, I'm not aware of that. [00:40:31] Speaker 01: Could the government just then just decide to disband the agreement vis-a-vis the owners? [00:40:37] Speaker 02: Well, the government paid the money back to the Stella Wynn people. [00:40:41] Speaker 01: No, but I'm just saying, if you really wanted to hammer home the point that there's no possibility that anything further could happen to the owners, why can't you just get rid of the agreement, vis-a-vis the owners? [00:40:51] Speaker 01: Why can't you just annul it? [00:40:52] Speaker 02: Well, Your Honor, in our view, there's nothing left of the agreement. [00:40:57] Speaker 01: Right. [00:40:57] Speaker 01: So why not annul it? [00:40:59] Speaker 01: So why not formally? [00:41:00] Speaker 01: It just seems to me if I'm the owner. [00:41:01] Speaker 02: I suppose we could. [00:41:02] Speaker 02: I mean, there's nothing like for us here for that. [00:41:07] Speaker 06: What about the argument of repetition? [00:41:11] Speaker 02: Well, Your Honor, it's not capable of repetition because of the Supreme Court cases that say you can't, if you're [00:41:20] Speaker 02: Complaints is about the way you're treated as a criminal defendant. [00:41:24] Speaker 02: You can't allege that you're going to appear and commit crimes again. [00:41:29] Speaker 02: So they would have to allege, and it would have to be more than speculative, that there would be reasonable cause to believe as their ships came into port that multiple violations had been committed. [00:41:40] Speaker 02: And the Supreme Court says, you just can't do that. [00:41:43] Speaker 02: That's not acceptable. [00:41:45] Speaker 02: And that seems fair and reasonable to us. [00:41:51] Speaker 06: If you want to challenge the criminal statute, there's also a law that says you don't have to violate it. [00:42:05] Speaker 02: Well, it's not just criminal, it's civil, too. [00:42:08] Speaker 02: Or civil. [00:42:09] Speaker 02: There's no allegation here that Marpol is unconstitutional. [00:42:13] Speaker 02: I'm sorry, ma'am. [00:42:13] Speaker 02: There's no allegation that Marpol is unconstitutional or that they want to do that. [00:42:18] Speaker 06: No, no, no. [00:42:19] Speaker 02: There's still civil liability, isn't there? [00:42:22] Speaker 02: Well, again, not with respect to these particular incidents. [00:42:27] Speaker 01: Why not? [00:42:28] Speaker 01: I don't understand what's stopping the government from going after the owners. [00:42:31] Speaker 01: Suppose the government comes across some more evidence that says, you know, actually there was more dumping than we thought. [00:42:39] Speaker 01: Why can't they go after the owners? [00:42:40] Speaker 01: I don't want to. [00:42:41] Speaker 02: I mean, that isn't jurisdiction, for one thing. [00:42:43] Speaker 01: I mean, the vessel would have to... But the agreement requires that they subject themselves to the jurisdiction. [00:42:47] Speaker 01: So you would have jurisdiction over the owners. [00:42:49] Speaker 02: Well, there's no... Because the agreement's still in effect. [00:42:53] Speaker 02: Your Honor, I suppose if we can, perhaps what we need to do, the Agios Similianos is not any longer in effect because that agreement actually says within the terms of the agreement, this agreement ends once the budget is passed. [00:43:06] Speaker 01: Right, so I think there's a debatable proposition as to whether the owner in that instance can be reasonably assured that the criminal case has ended or whatever the language of the agreement is. [00:43:14] Speaker 01: But if you put that case to one side, in the other case, there's no such provision in the agreement at all. [00:43:18] Speaker 02: There isn't. [00:43:19] Speaker 01: So the owner is still subject to an action. [00:43:22] Speaker 02: I think before we had this conversation, everybody was under the impression that there would be a set of incidents the government would prosecute if it's doing the criminal generally, not the civil. [00:43:34] Speaker 02: There would be an agreement, as I say, the main point is that one major point is the Marpole compliance plan. [00:43:41] Speaker 02: And, you know, the authenticity of the documents, the jurisdiction over the primal case, the witnesses, and for the crew members, the crew members aren't parties to the agreements, Your Honor, so they have their own ability. [00:43:57] Speaker 02: We try and make sure that they have representation either from [00:44:01] Speaker 02: lawyers that are not associated with vessel interests, and sometimes that's federal public defenders. [00:44:06] Speaker 02: But the critical part of these crew member provisions is not to have somebody else pay for it, but to make sure that the crew members have options. [00:44:15] Speaker 02: Because if they end up being material witnesses, so be it. [00:44:18] Speaker 02: But that's not necessarily a particularly pleasant thing for the crew member himself or herself. [00:44:24] Speaker 02: These are very important provisions, and the Coast Guard will negotiate on the money side to make sure that there is money available to take care of the crew members in a proper and appropriate way. [00:44:40] Speaker 04: Thank you very much. [00:44:40] Speaker 04: We'll give you back three minutes. [00:44:46] Speaker 05: Thank you, Your Honor. [00:44:46] Speaker 05: I'll try to only take two, if I can. [00:44:49] Speaker 05: We'll just make two or three points. [00:44:52] Speaker 05: I want the court to understand nothing about this interferes with the government's ability to prosecute. [00:44:57] Speaker 05: The statute of limitations has not run. [00:44:58] Speaker 05: And I would certainly contact my malpractice carrier if I said to an owner, well, there's a year left to go, but don't worry. [00:45:04] Speaker 05: Nothing's going to happen. [00:45:05] Speaker 05: The statute of limitations has not run as to either of the owners, nor has the statute run in civil as to anybody. [00:45:12] Speaker 05: So there is a possibility of prosecution. [00:45:14] Speaker 05: There's no question about that. [00:45:15] Speaker 05: But let's look to the most important thing, which is what your honor has asked me in the first place in what counsel for the government just addressed. [00:45:22] Speaker 05: There are a number of conditions in this that have been demanded. [00:45:27] Speaker 05: One is pay for everybody to be here. [00:45:29] Speaker 05: Yes, there's material witness provision that says the government can file with the court a motion in order to get people held as material witness, but they can't be forced to pay for it under any circumstances, nor can they be forced to pay for it at any time unless there's a condition of probation they agree to reimburse the government. [00:45:47] Speaker 05: They can't be forced to agree to pay that. [00:45:49] Speaker 05: Now, under the material witness provision, if you're detained as a material witness, you as an individual have the right to go into court and say, wait, it's been too long. [00:45:57] Speaker 05: But under this agreement, even though rights are preserved, here's what happens in the real world. [00:46:02] Speaker 05: The government, we agree we're going to hold somebody. [00:46:05] Speaker 05: The individual's lawyer says, I want the person to leave. [00:46:07] Speaker 05: The government said, we didn't file the material witness, Warren. [00:46:09] Speaker 05: You're here because the company agreed to keep you here. [00:46:11] Speaker 05: You can't do anything. [00:46:13] Speaker 05: So you have no rights in the real world. [00:46:16] Speaker 05: That's what's really happened. [00:46:17] Speaker 05: Isn't the single most important condition here that you agreed to the jurisdiction of the... We have agreed to the jurisdiction, which is in the agreement, which we don't dispute that we had agreed that that's a condition they can have for purposes of paying the fine. [00:46:30] Speaker 05: We're not challenging that particular condition. [00:46:32] Speaker 05: We're challenging things like... Well, that's a non-financial condition. [00:46:35] Speaker 01: I'm sorry? [00:46:36] Speaker 01: That's a non-financial condition. [00:46:37] Speaker 05: No, it's part of the surety bond. [00:46:39] Speaker 05: It's part of the actual bond you have to agree to the jurisdiction of the court in order for the bond to be collected on. [00:46:43] Speaker 01: Why it's not, I mean, I get that you're saying it's part of the surety, but why would you acquiesce in that? [00:46:48] Speaker 01: Because I thought your point was there can be no non-financial conditions and that is a non-financial condition. [00:46:52] Speaker 05: Outside the surety, but that's a standard, we don't disagree that's a standard condition in a surety bond in order to guarantee you can collect on the bond. [00:47:00] Speaker 01: So sureties can have non-financial conditions. [00:47:02] Speaker 05: The standard surety agreement that's used has that one provision in it. [00:47:07] Speaker 01: It has some non-financial conditions, but not a lot. [00:47:10] Speaker 01: I thought your point was more black and white, that surety means financial. [00:47:15] Speaker 01: Nothing non-financial fits within the compass. [00:47:17] Speaker 01: Once you say, actually the language surety encompasses non-financial conditions, it becomes a little more complicated to say, well, the government's limited to non-financial conditions that are standard non-financial conditions. [00:47:26] Speaker 01: I don't know what those are. [00:47:27] Speaker 01: Where do you find those? [00:47:28] Speaker 05: Because the jurisdictional issue is an inextricable issue that you can't levy on a bond if you don't have jurisdiction over the party. [00:47:35] Speaker 05: You can't do it. [00:47:36] Speaker 05: But that's not true. [00:47:37] Speaker 05: That's not true, I'm sorry. [00:47:40] Speaker 05: So it's okay to waive objections to both the impersonal and non-rem jurisdiction. [00:47:44] Speaker 05: For purposes of collecting on the penalty under the bond. [00:47:47] Speaker 04: Mr. Hartman, let me ask you. [00:47:48] Speaker 04: If we disagreed with you, [00:47:52] Speaker 04: that the Secretary doesn't have authority under 1908 to add non-financial conditions. [00:48:02] Speaker 04: If we came to that conclusion, I'm not saying we're there, but if we came to that conclusion, [00:48:09] Speaker 04: But we also thought that the authority that the Secretary had to detain a vessel included the lesser authority to condition the release of it. [00:48:20] Speaker 04: What do we do then? [00:48:21] Speaker 04: Because that's not an argument the government has made. [00:48:23] Speaker 04: What do we do then? [00:48:24] Speaker 04: Remand to the district court to brief this? [00:48:26] Speaker 04: Or does the government lose? [00:48:27] Speaker 05: I don't think it has to be read handed, because in this case, the only issue that was raised was their authority, and the only thing they asserted was their authority to do it under the surety bond provision. [00:48:37] Speaker 05: The agreement doesn't say, because we can detain this. [00:48:40] Speaker 01: I think opposing counsel makes a, the government counsel makes a pretty persuasive point, that the district court assumed that surety and bond was limited to financial, but the district court still ruled against you. [00:48:50] Speaker 01: So I don't understand why we need to remand, or why we need to do anything other than that firm. [00:48:56] Speaker 01: Because the niceties of the logic might be a little bit different. [00:49:00] Speaker 01: But it's true, I think, that if you read the district court's decision, the district court said bond assurity is limited to financial. [00:49:07] Speaker 01: But still, because of the word may, another part of the statute, there's discretion to impose or to negotiate over non-financial conditions. [00:49:13] Speaker 06: In other words, the district court's opinion [00:49:16] Speaker 06: It's different from the government's argument. [00:49:18] Speaker 06: Right. [00:49:18] Speaker 06: Yes, it is. [00:49:19] Speaker 06: Your Honor, can we? [00:49:20] Speaker 05: So we're reviewing the District Court's opinion. [00:49:25] Speaker 05: I mean, because this is a de novo review, I think you sit in reviewing the ultimate agency action, regardless of the District Court's opinion. [00:49:31] Speaker 05: I don't defer to that at all. [00:49:32] Speaker 05: It's a legal question of whether the District Court was right. [00:49:35] Speaker 05: And it's de novo review. [00:49:37] Speaker 05: It's as if, frankly, the District Court doesn't exist for purposes of your review, because it's de novo legal. [00:49:42] Speaker 05: But what I would suggest is that the reason why your example can't happen is you have to ignore the very regulations. [00:49:50] Speaker 05: I know you said it's just the Department of Homeland Security, but the fact is their regulations clearly distinguish between Customs and Coast Guard and who has what power. [00:49:58] Speaker 05: So you have to say, we don't care about their regulations. [00:50:01] Speaker 05: We don't care if the Customs issues has this authority and Coast Guard has this authority. [00:50:04] Speaker 01: It doesn't matter. [00:50:05] Speaker 01: But that's the regulation. [00:50:06] Speaker 01: Your argument is under the statute. [00:50:08] Speaker 01: under the statute and now the way the statute operates after all the reconfigurations of DHS and customs leaving treasury and coming into DHS and all that is that there's one secretary and that secretary is the same person who decides whether to grant, whether the bond assurity is satisfactory and then whether to grant the release. [00:50:26] Speaker 05: But under the regulations, it's not. [00:50:28] Speaker 05: Well, ultimately, the secretary has been delegated. [00:50:30] Speaker 05: And the regulations say exactly what we say. [00:50:33] Speaker 05: The bond is decided by the secretary. [00:50:34] Speaker 05: When the secretary decides the bond is satisfactory, then he notifies the port director, which is Customs. [00:50:40] Speaker 05: And Customs makes the decision. [00:50:42] Speaker 05: And if this had a record that said, Customs said you have to do these things, we'd be in a different situation. [00:50:47] Speaker 05: But that's not our case. [00:50:48] Speaker 05: That's not the record. [00:50:50] Speaker 05: One last thing, if I may. [00:50:51] Speaker 05: We talk about negotiations and money here and conditions here. [00:50:54] Speaker 05: If you examine the record, you will see in this case, and if you look at the Botteglieri case and the Florida case that were cited, there's no negotiations. [00:51:01] Speaker 05: You look at what they demanded. [00:51:02] Speaker 05: We wrote pages saying, don't demand this. [00:51:05] Speaker 05: No. [00:51:06] Speaker 05: No negotiation. [00:51:07] Speaker 05: We wrote pages to the area commandant, please change this. [00:51:11] Speaker 05: No. [00:51:12] Speaker 05: No discussion, no negotiations. [00:51:13] Speaker 05: We wrote to the commandant. [00:51:15] Speaker 05: No, no discussions, no negotiations. [00:51:17] Speaker 05: All of these non-financial terms that we go out and help them serve subpoenas, that we authenticate documents, that we pay the wages for employees, were not negotiable. [00:51:25] Speaker 05: They were not negotiated. [00:51:26] Speaker 05: And if the governor can find one scintilla of evidence in the record that says this was negotiated, I change my position. [00:51:32] Speaker 05: But they are not. [00:51:33] Speaker 05: They are demanded. [00:51:35] Speaker 05: If that wasn't the case, I wouldn't say it. [00:51:36] Speaker 05: They are demanding. [00:51:37] Speaker 05: Did you agree to them? [00:51:38] Speaker 05: We had to agree to them to stay in business. [00:51:40] Speaker 05: Did you agree? [00:51:41] Speaker 05: Yes or no? [00:51:41] Speaker 05: Under protest. [00:51:42] Speaker 05: Subject to reservation of right. [00:51:43] Speaker 05: Under protest we did, because otherwise we wouldn't have even had the chance to appeal this to the Coast Guard. [00:51:48] Speaker 05: Otherwise they would have held the ship. [00:51:50] Speaker 05: I'm sorry? [00:51:51] Speaker 01: Otherwise the ship would have been held. [00:51:53] Speaker 05: Possibly it would have been held. [00:51:54] Speaker 05: But holding the ship again has nothing to do with the conditions that they imposed. [00:51:59] Speaker 06: That's your position. [00:52:00] Speaker 05: I mean, factually, Your Honor, I don't believe it does. [00:52:03] Speaker 05: What does holding a ship have to do with serving a foreign subpoena? [00:52:06] Speaker 04: Thank you very much, Your Honor.