[00:00:01] Speaker 01:
In this case, number 17-1144.

[00:00:57] Speaker 01:
Good morning.

[00:00:58] Speaker 00:
Good morning, Your Honor.

[00:00:59] Speaker 00:
May I please the Court?

[00:01:00] Speaker 00:
Mark Perry for Matson.

[00:01:03] Speaker 00:
I'd like to start, if I may, with the jurisdictional question, acknowledging the uncomfortable problem of coming to this Court as the petitioner when the jurisdiction is not entirely clear.

[00:01:15] Speaker 00:
We wish that it were, and we hope that this case, if nothing else, will clarify that.

[00:01:19] Speaker 00:
The Hobbs Act says that this court has exclusive jurisdiction over all rules, regulations, and final orders issued pursuant to Section 50501 and others.

[00:01:32] Speaker 00:
50501 is the citizenship provision of the Merchant Marine Act that carries through essentially all of Title 46.

[00:01:41] Speaker 00:
If you look at

[00:01:42] Speaker 00:
the MSP statute, the various defense and other subsidy statutes and so forth, 50501 is the recurring feature as it divides the world essentially into domestic trade which requires citizenship and foreign trade which does not and that's a basic structure of this statute.

[00:01:59] Speaker 00:
The question here, the jurisdictional question here, I think boils down to this.

[00:02:04] Speaker 00:
If the agency's order

[00:02:07] Speaker 00:
rests on citizenship, is that enough to invoke the Hobbs Act?

[00:02:13] Speaker 00:
And if it is, then this court has jurisdiction over this case because the eligibility awards here made citizenship determinations.

[00:02:20] Speaker 00:
That's undisputed.

[00:02:21] Speaker 01:
So let me ask you, both applications for these two replacement vessels ask the agency to grant the substitution pursuant to

[00:02:37] Speaker 01:
48 USC 53 105 F. Correct.

[00:02:43] Speaker 01:
So the agency grants it and it says we're granting it because you meet all the requirements.

[00:02:51] Speaker 01:
And one of the requirements is citizenship.

[00:02:54] Speaker 01:
But not, I'm not clear it's not an issue at all, but the applications were granted pursuant to

[00:03:05] Speaker 01:
Doesn't say this expressly, but the parties seeking approvals said proceed under 105F.

[00:03:15] Speaker 00:
And this is the statutory hopscotch, Your Honor.

[00:03:18] Speaker 00:
53105F is replacement vessels, which must be eligible under 53102B.

[00:03:24] Speaker 00:
53102B says one of the requirements is citizenship under 53102C.

[00:03:33] Speaker 00:
And 53102C defines citizenship as 50501 citizenship, statutory citizenship is called.

[00:03:39] Speaker 01:
So my only question is, under your reading, then the Hobbs Act listing really is no limitation whatsoever.

[00:03:49] Speaker 01:
And I'm not suggesting that you might have written a better statute in terms of

[00:03:54] Speaker 01:
not having this hopscotch both within the statute as well as within two different courts.

[00:04:00] Speaker 00:
So that's exactly right, Your Honor.

[00:04:02] Speaker 00:
And so the question is pursuant to, the Supreme Court just gave us some guidance on pursuant to in the Waters of the United States decision, said that the, that was a regulation case, whereas this is a decisional case, but I think that the analysis is the same.

[00:04:15] Speaker 00:
Did the decision of the agency rest on, was it made under, was it made pursuant to that statute?

[00:04:21] Speaker 00:
I think there's little question that the eligibility awards, the subsidy awards... What's the final order here?

[00:04:29] Speaker 00:
It's being challenged.

[00:04:30] Speaker 00:
The final order is the denial of the administrative appeal, which picks back up the eligibility orders.

[00:04:37] Speaker 00:
And the final agency action is all of them together.

[00:04:39] Speaker 00:
I thought it was the April 7th letter, right?

[00:04:41] Speaker 00:
Which is the denial of the administrative appeal.

[00:04:43] Speaker 02:
Yeah, and there they say it's lack standing.

[00:04:46] Speaker 02:
It was a standing issue.

[00:04:48] Speaker 00:
Correct.

[00:04:48] Speaker 02:
So that's what, isn't that the issue that you've appealed?

[00:04:52] Speaker 00:
No, Your Honor.

[00:04:53] Speaker 00:
We have not challenged the administrative standing.

[00:04:55] Speaker 00:
We do take the position that the administrative appeal was sufficient to bring us within the Hobbs Act period, because the agency says- Wait, wait a second.

[00:05:03] Speaker 02:
I mean, the reason you lost before the agency is they said you didn't have standing.

[00:05:09] Speaker 02:
Why isn't that an issue?

[00:05:13] Speaker 02:
That's what the final order was.

[00:05:17] Speaker 00:
Your Honor, Matson is not a party to the agency proceedings.

[00:05:20] Speaker 00:
This was an application by APL granted by the agency.

[00:05:24] Speaker 00:
We read the regulation 296.50 says you must exhaust your administrative remedies before you can go to court.

[00:05:32] Speaker 00:
The only procedural mechanism for exhausting administrative remedies in the MSP statute of regulations is the appeal provision.

[00:05:40] Speaker 00:
So we filed an appeal.

[00:05:41] Speaker 00:
The agency said, you can't file an appeal because you're not a contractor.

[00:05:45] Speaker 00:
Fine.

[00:05:46] Speaker 00:
Then what they're saying is there's no exhaustion requirement for

[00:05:49] Speaker 00:
non-contractors.

[00:05:51] Speaker 00:
But that's not what the regulation says.

[00:05:52] Speaker 00:
The regulation says you have to exhaust your administrative remedies, and of course the background rule is you have to exhaust your administrative remedies.

[00:05:57] Speaker 00:
So that action was sufficient to toll the Hobbs Act period for the final agency action, which is the award of the subsidies under the Stone v. INS case, and therefore what we are in the court challenging is the subsidy award

[00:06:11] Speaker 00:
They've said we donated administrative appeal, fine.

[00:06:13] Speaker 00:
We'll know that for the future.

[00:06:14] Speaker 00:
But in this case, I don't think we can be faulted, frankly, for having tried to exhaust the administrative remedies, given the regulation that said we had to.

[00:06:21] Speaker 04:
So the orders you're appealing are the two decisions awarding or authorizing the replacement.

[00:06:29] Speaker 00:
Correct, Your Honor.

[00:06:30] Speaker 04:
The final agency.

[00:06:31] Speaker 04:
October 2015 and December 2016.

[00:06:34] Speaker 04:
And they're brought up as part of this package.

[00:06:37] Speaker 00:
Through the administrative appeal.

[00:06:38] Speaker 00:
Because the final agency action is the award of subsidies.

[00:06:41] Speaker 00:
And they were rendered non-final by the administrative appeal under Stone.

[00:06:45] Speaker 00:
And then the final agency order under the Hobbs Act is the April appeal denial, which is why the 60 days kicks in and everything's timely.

[00:06:51] Speaker 00:
And then back to the jurisdictional point before I turn to the merits is, is it enough that those awards rest on citizenship, in which case this court has jurisdiction,

[00:07:00] Speaker 00:
Or is it required that the challenge be to citizenship, and we do not make a citizenship challenge, in which case the case goes to district court?

[00:07:07] Speaker 00:
And that's I take it to be the agency's decision.

[00:07:09] Speaker 04:
Well, again, the question seems to be when Congress says pursuant to one of the Hobbs Act, we look at the statutory authority of those exercised in making the decision.

[00:07:18] Speaker 04:
We don't look at the claims that are raised or the challenges that are made.

[00:07:21] Speaker 04:
So when it says pursuant two, does it mean every source of statutory authority exercised in the course of making the decision, which would include 50501 when they decided that issue, or does it mean

[00:07:39] Speaker 04:
what authority was asked for, the final action of approval, which was a 5300, whatever section, or is it both?

[00:07:49] Speaker 04:
Do we look at the core issues?

[00:07:53] Speaker 04:
I just don't, I don't know what we're supposed to look at, but the one thing is the argument seemed to be that if jurisdiction or citizenship were challenged, then of course it would be pursuant to 50501, but that seems to me exactly wrong.

[00:08:07] Speaker 04:
That focuses on parties claims.

[00:08:09] Speaker 04:
The question has, I get this, but I'm just trying to set up for you where I'm struggling with this.

[00:08:14] Speaker 04:
I'm going to lay it out for you.

[00:08:16] Speaker 04:
So how do we understand pursuant to

[00:08:19] Speaker 04:
Without looking at the party, what arguments parties are raising in court, is it we have to pick one or the other?

[00:08:25] Speaker 04:
Is it every authority exercised?

[00:08:28] Speaker 00:
Your Honor, I agree with you that the challenge shouldn't be determinative.

[00:08:32] Speaker 00:
I think that the Waters of the United States case, NAMM versus DOD, gives us some guidance, and it's at page 12 and 13 of the slip opinion and footnote 8 in particular, where the court says, essentially, it's not enough that the agency recites the stat.

[00:08:47] Speaker 00:
You know, the agency's rulemaking is always list a bunch of things.

[00:08:49] Speaker 00:
It's not enough that they're just listed in there.

[00:08:51] Speaker 00:
is that the decision must actually have rested on or be made under that provision, which I take to mean that that provision.

[00:08:58] Speaker 02:
And here it rested on standing.

[00:09:00] Speaker 02:
That's my point.

[00:09:01] Speaker 02:
It was issued pursuant to a determination of standing.

[00:09:04] Speaker 02:
And that's not one of the categories that gets you straight to the Court of Appeals.

[00:09:10] Speaker 00:
As to the appeal decision, Judge Griffith, absolutely.

[00:09:13] Speaker 00:
As to the award decisions, however, they did make a citizenship determination as a statutory prerequisite to the awards.

[00:09:20] Speaker 00:
And therefore, in that sense, they rested on.

[00:09:22] Speaker 00:
And that's the breadth question.

[00:09:23] Speaker 00:
And again, this is an open question.

[00:09:25] Speaker 00:
There's not been a lot of MSP litigation.

[00:09:27] Speaker 00:
And again, I acknowledge it's a little uncomfortable for me to stand here.

[00:09:30] Speaker 00:
It's the court's jurisdiction, not mine.

[00:09:32] Speaker 00:
It is exclusive jurisdiction, so we had to come here and make this request first.

[00:09:35] Speaker 00:
We have plenty of time to go to district court if we can.

[00:09:38] Speaker 00:
Judge Millett, I think

[00:09:39] Speaker 00:
The Supreme Court's decision suggests that if, in the most recent cases, that if the statutory provision that's listed is necessary to the agency's decision, that it's within the enumerated statute.

[00:09:51] Speaker 00:
That would tend to suggest that this court has jurisdiction.

[00:09:54] Speaker 00:
However,

[00:09:55] Speaker 00:
Supreme Court also said in the same decision that the presumption in favor of court of appeals jurisdiction doesn't apply when you have one of these enumerated statutes, which is what we have here.

[00:10:07] Speaker 00:
And so that sort of cuts in favor of the government.

[00:10:09] Speaker 00:
In other words, if this statute is literally ambiguous,

[00:10:13] Speaker 00:
then we would have said under Florida Power and Light that the tie goes to the Court of Appeals, and now the Supreme Court says the tie goes to the District Court.

[00:10:20] Speaker 00:
And that's, again, I think that's a little bit of a change in the law since we brought this case, but that is at issue here.

[00:10:28] Speaker 00:
I'm not sure I can add much more than.

[00:10:29] Speaker 04:
So I guess it sounds to me like you don't really care when we were the other, but I would assume that for since you're the one that came here in both our jurisdiction that you would have.

[00:10:41] Speaker 04:
You told me the one hand on the other hand.

[00:10:43] Speaker 04:
Now what is the best answer?

[00:10:44] Speaker 00:
So we think this court makes more sense because these are determinations that don't require an extensive factual record.

[00:10:51] Speaker 00:
They're made in the agency.

[00:10:53] Speaker 00:
Often there are speed determinations, right?

[00:10:56] Speaker 00:
This is a competitor situation where the subsidy every day is eating into my client's business.

[00:11:01] Speaker 00:
and it goes faster to come to this court.

[00:11:03] Speaker 00:
It makes sense, we think, that Congress, having made citizenship sort of the baseline requirement for many things in the Merchant Marine, the reason the Hobbs Act is written the way it is for Title 46 is basically to say, if it's a citizenship-type question, then it goes to the Court of Appeals.

[00:11:17] Speaker 00:
That is, an eligibility question or a participation question, rather than if it's an operational question, then it may be a district court situation.

[00:11:25] Speaker 00:
And that, I think, would make sense.

[00:11:27] Speaker 00:
So we think it would make sense to have Court of Appeals jurisdiction.

[00:11:30] Speaker 00:
We think the Hobbs Act can clearly be read that way.

[00:11:33] Speaker 00:
It would provide for a faster resolution, and that's why we came here.

[00:11:37] Speaker 04:
So I saw the Guam decision where they, I think, six times invoked 50501 as part of their decision, but the APL Guam, sorry.

[00:11:47] Speaker 04:
They did there.

[00:11:48] Speaker 04:
They did not, that I could find, invoke 50501.

[00:11:53] Speaker 04:
in the APL SIPAN decision because they were relying on citizenship, citizen trust there.

[00:11:59] Speaker 04:
So what I'm trying to figure out then, does that mean that the one where they exercised 505, actually on the face of it, exercised 50501 authority comes here and the one where they didn't?

[00:12:12] Speaker 04:
Because you don't always have to have 50501 citizenship.

[00:12:15] Speaker 00:
I would disagree with that, Your Honor.

[00:12:17] Speaker 00:
The agency always must make a determination on citizenship under 53102C.

[00:12:22] Speaker 00:
which then refers back to 50501.

[00:12:24] Speaker 00:
So there is a citizenship determination.

[00:12:26] Speaker 00:
The basis for citizenship in the two vessels because of their ownership and chartering structure is different, but the agency still makes a decision.

[00:12:33] Speaker 04:
53102C itself doesn't always require 50501 citizenship.

[00:12:36] Speaker 00:
That's correct.

[00:12:37] Speaker 00:
It requires a citizenship determination.

[00:12:38] Speaker 04:
All right.

[00:12:39] Speaker 04:
But that's not necessarily a 50501.

[00:12:40] Speaker 04:
50501 is a particular type of citizenship determination.

[00:12:44] Speaker 04:
So I don't understand your argument then because it can't be enough that they had to do

[00:12:49] Speaker 04:
find 53102C satisfied in one of its forms to exercise 50501.

[00:12:57] Speaker 00:
Fair enough.

[00:12:58] Speaker 00:
The agency must make a citizenship determination under 53102C, which... But they didn't do a 50501 in the Saipan case.

[00:13:05] Speaker 04:
Correct, Your Honor.

[00:13:06] Speaker 04:
So is there any... So on what authority would that one be?

[00:13:10] Speaker 04:
Well, Your Honor, I... Again... Your argument had been... No, no, no.

[00:13:13] Speaker 04:
Don't get me... The Hobbs Act is confusing.

[00:13:15] Speaker 04:
Your argument had been that they had to make a 50501 decision, which they did in the Guang case.

[00:13:21] Speaker 00:
They did in the Guang case.

[00:13:21] Speaker 04:
But they didn't in the Saipan one.

[00:13:23] Speaker 04:
So what is your argument as to the Saipan one?

[00:13:25] Speaker 00:
Well, we think they're both here because they made a citizenship determination.

[00:13:28] Speaker 00:
The Citizen Trust is still a statutory citizen that required a 50-501 determination because they also adopted in the Saipan decision their analysis from the previous.

[00:13:39] Speaker 00:
The ultimate holding company here is the same.

[00:13:40] Speaker 00:
The applicant is the same company.

[00:13:42] Speaker 00:
They have a different ownership structure because of the vessel, but they still have to make a citizenship determination.

[00:13:47] Speaker 04:
But a citizenship determination is not a 50-50-1.

[00:13:50] Speaker 04:
They had to have U.S.

[00:13:51] Speaker 04:
owners, but that could be an individual, and that's not a 50-50-1 decision.

[00:13:55] Speaker 00:
I agree with your Honor.

[00:13:57] Speaker 00:
So you could end up with this odd, bifurcated situation in that scenario.

[00:14:00] Speaker 04:
Which seems no better.

[00:14:01] Speaker 00:
Which doesn't seem helpful.

[00:14:03] Speaker 00:
On the merits, Your Honor, SIPAN, we would submit, knocks these vessels out of the program.

[00:14:13] Speaker 00:
The statute says that the vessels must be engaged exclusively in foreign trade or exclusively in foreign and domestic trade under a registry endorsement.

[00:14:24] Speaker 04:
SIPAN's not coming.

[00:14:25] Speaker 04:
I have some more background things going on here.

[00:14:29] Speaker 04:
First of all, how do these proceedings

[00:14:33] Speaker 04:
work when APL applied for these substitutions.

[00:14:40] Speaker 04:
You said you weren't a party.

[00:14:42] Speaker 04:
So is there public notice of these proceedings?

[00:14:47] Speaker 04:
Is the public allowed to participate in any way in these proceedings?

[00:14:51] Speaker 04:
How did you learn about the decisions?

[00:14:54] Speaker 00:
So this is not in the administrative record.

[00:14:56] Speaker 00:
My understanding is there's not a formal notice proceeding.

[00:14:59] Speaker 00:
There is

[00:15:01] Speaker 00:
industry chatter, if you will, and general understanding of what the relatively small number of large container ship operators are doing.

[00:15:11] Speaker 00:
Matson in these cases was became aware during at some point during the first application process and Was aware of the application only after the first application was granted Actually had knowledge of what mayor had intended to do here.

[00:15:26] Speaker 04:
These were the first time Did you get that knowledge from when they issued order?

[00:15:30] Speaker 04:
So is that a publicly available order?

[00:15:32] Speaker 00:
Correct your honor

[00:15:33] Speaker 00:
And this is the first time in the history of the program that Marat has ever granted a subsidy to vessels in the domestic trades.

[00:15:39] Speaker 00:
And so it came as a surprise.

[00:15:41] Speaker 04:
And then in the second application... Well, then why didn't you challenge that one in a timely manner?

[00:15:45] Speaker 00:
Well, Your Honor, they then had the second one pending.

[00:15:47] Speaker 00:
We did jump in and put in letters in the administrative process.

[00:15:52] Speaker 04:
So that may help you on the second one, which doesn't have 50501 in it.

[00:15:56] Speaker 04:
But as the first one that does have 505.01 in it, you didn't do anything for over a year.

[00:16:01] Speaker 00:
Well, the application and the second one referenced the first one.

[00:16:05] Speaker 00:
We challenged the entire operation.

[00:16:08] Speaker 00:
We said that the domestic trades were outside of it.

[00:16:10] Speaker 00:
Again, we weren't a party to the proceeding.

[00:16:13] Speaker 00:
Then, when that second award issue, we brought the administrative appeal as to both.

[00:16:17] Speaker 00:
The agency, while ruling on standing, did not say either one was untimely.

[00:16:21] Speaker 00:
And the agency's rationale continued to change.

[00:16:24] Speaker 00:
Remember, the first award says nothing about mixed domestic trade.

[00:16:27] Speaker 00:
It simply said worldwide services, never even acknowledged the problem of domestic trade.

[00:16:32] Speaker 00:
I think it was because Matson put in those letters during the second application process, brought the problem to the agency's attention, the agency's rationale then shifted, became mixed foreign and domestic trade under a registry endorsement.

[00:16:44] Speaker 00:
That's what we challenged under the regulation.

[00:16:47] Speaker 00:
And never has dealt with SIPAN, never has

[00:16:51] Speaker 00:
reconciled the operation on the SIPAN trade with the registry endorsement problem.

[00:17:00] Speaker 00:
The agency's argument in this court is that that statute, 53105A1A, goes only to the operating agreement and not to eligibility.

[00:17:09] Speaker 00:
But that's wrong, because 53102B, which says eligible vessels, says that the vessel has to provide transportation and foreign commerce.

[00:17:18] Speaker 00:
And the agency's regulation, 296.2, defines foreign commerce as exclusively foreign trade or exclusively foreign trade and domestic trade under a registry endorsement.

[00:17:30] Speaker 00:
It's identical word for word from 535105A1A.

[00:17:35] Speaker 00:
So that that is an eligibility requirement

[00:17:38] Speaker 00:
And the agency here simply failed to grapple with an important part of the problem.

[00:17:42] Speaker 00:
They have awarded subsidies to vessels in the domestic trades, not subject to a registry endorsement, not subject to any other statutory exception, and therefore not eligible for the program.

[00:17:52] Speaker 00:
That's the basic of the substantive challenge, should the court have jurisdiction to get them.

[00:17:56] Speaker 04:
What record does this merit create in making these decisions?

[00:18:00] Speaker 04:
Is it just the submissions of the

[00:18:04] Speaker 04:
of the applicant and then their decision because you said you're not a part you can send in letters but are they part of the record of this decision or are they just something the agency is getting?

[00:18:13] Speaker 00:
So what we have delivered to this court as the appendix in this appeal is the entire administrative record compiled by the agency and delivered to us on our request that is the publicly available documentation of this

[00:18:28] Speaker 00:
transaction.

[00:18:30] Speaker 00:
Perhaps my colleagues can tell you whether there were behind-the-scenes discussions or memos or anything else, but this is the publicly available record that a non-party competitor has access to.

[00:18:40] Speaker 00:
We are aware there are confidential materials, apparently, that have been either redacted or withheld.

[00:18:44] Speaker 00:
The parties agreed not to rely on them, but again, we don't know what they are.

[00:18:49] Speaker 01:
All right, let's hear counsel for respondents.

[00:19:06] Speaker 06:
Thank you, Your Honor.

[00:19:07] Speaker 06:
Case in Ross for the United States.

[00:19:09] Speaker 06:
As this court, excuse me, the Hobbs Act clearly provides this court with direct review of agency actions issued pursuant to certain enumerated statutes.

[00:19:21] Speaker 06:
The Maritime Administration decision here was not issued by reason of the authority of any of those statutes.

[00:19:27] Speaker 06:
Matson has challenged two vessel replacement applications issued pursuant to 46 section 153105,

[00:19:35] Speaker 06:
which was based on vessel eligibility determinations under Section 53102.

[00:19:40] Speaker 06:
As my colleague was explaining in his opening remarks, that statutory hopscotch only underlies why those decisions were not issued pursuant to Section 5051, which it is listed in the HOPPS Act.

[00:19:52] Speaker 04:
How do we, let's look at the decision on the Guam vote, okay?

[00:19:57] Speaker 04:
They cited 50501 six times in making

[00:20:01] Speaker 04:
Necessary determinations to eligibility.

[00:20:04] Speaker 04:
They were necessary.

[00:20:05] Speaker 04:
They weren't contested, but they were necessary.

[00:20:08] Speaker 04:
I'm not sure they're contested because there's no other party to these proceedings other than the person asking for it.

[00:20:14] Speaker 04:
But they made that.

[00:20:14] Speaker 04:
Six times they made that finding.

[00:20:17] Speaker 04:
So how do we know that this wasn't issued pursuant to 50501 as well as the MSP authority?

[00:20:26] Speaker 06:
Well, two responses, Your Honor.

[00:20:28] Speaker 06:
First is Judge Griffith's concern is which that the agency decision under review here is the letter issued in April 2017, which nowhere cites section 5051.

[00:20:39] Speaker 06:
And in Matson's administrative appeal, nowhere cited 5051, thus did not challenge.

[00:20:45] Speaker 04:
No, but you've got one decision.

[00:20:46] Speaker 04:
This wasn't where you had, this was the same decision-maker.

[00:20:49] Speaker 04:
This is one entity deciding this in Merritt.

[00:20:51] Speaker 04:
It wasn't like an ALJ and an aborted appeal.

[00:20:53] Speaker 04:
And so once you have that final decision under Stone versus INS, it brings up all the substantive orders as well.

[00:21:03] Speaker 04:
I mean, right?

[00:21:04] Speaker 04:
Isn't that a natural understanding of how this works in a situation like this when it's the same decision maker?

[00:21:10] Speaker 06:
But Matson didn't have the ability to bring in administrative appeal in the first instance, as the agency explained.

[00:21:15] Speaker 04:
Who cares?

[00:21:15] Speaker 04:
The question is whether they're authorized to come to this court.

[00:21:18] Speaker 04:
The agency can't say only one side of all these disputes can have an administrative appeal and therefore only one side, the contractor, the applicant.

[00:21:28] Speaker 04:
can ever go to court.

[00:21:30] Speaker 04:
Anyone else who disagrees with the contractor is foreclosed from going to court by our agency administrative regulation.

[00:21:37] Speaker 04:
You surely can't say that.

[00:21:39] Speaker 06:
The agency's position is that had Matson wished to bring a challenge to the October 2015 and December 2016 decisions, it simply could have brought a challenge under the Administrative Procedure Act in federal district court.

[00:21:51] Speaker 06:
There would have been no timeliness concern nor any of the waiver concerns.

[00:21:55] Speaker 04:
What if they wanted to challenge the citizenship determination too?

[00:21:58] Speaker 06:
were that the case, then this court would have discretion to exercise pendant appellate jurisdiction over those... No, no, but then he would have had to come here, correct?

[00:22:06] Speaker 04:
Madison would have had to come here.

[00:22:07] Speaker 04:
That's correct under the Hobbs Act.

[00:22:08] Speaker 04:
All right, so then it doesn't matter what your administrative appeal regulation says about who could appeal or not.

[00:22:14] Speaker 04:
Your answer was...

[00:22:14] Speaker 04:
If they wanted review, they didn't need to bother with the administrative exhaustion.

[00:22:18] Speaker 04:
They could have filed suit immediately and they had to come here.

[00:22:23] Speaker 06:
Under the Hobbs Act, that is correct.

[00:22:24] Speaker 04:
Why does their challenge matter?

[00:22:26] Speaker 04:
Why does that change the authority under which the agency made its decision?

[00:22:31] Speaker 06:
If the agency is evaluating the vessel operator's citizenship, and Matson were to bring a challenge to that, then the Hobbs Act vests this court with jurisdiction.

[00:22:39] Speaker 04:
No, no, the Hobbs Act doesn't care a whit about what challenges are brought by a party.

[00:22:46] Speaker 04:
That's a rising under jurisdiction, which looks at the claims presented.

[00:22:50] Speaker 04:
The Hobbs Act asks only, at the time the agency issued its decision,

[00:22:55] Speaker 04:
What statutory authority was it acting pursuant to?

[00:22:59] Speaker 04:
Now, the statutory authority it acts pursuant to can't turn on what challenges a party later brings in court, can it?

[00:23:08] Speaker 06:
No, Your Honor.

[00:23:08] Speaker 04:
Okay, so we have to look at what authority, I'm sorry, but we have to make sure we're agreed on it because I found this very confusing.

[00:23:14] Speaker 04:
We have to, the only question is what authority they acted under when they issued, and let's just start with the Guam decision.

[00:23:22] Speaker 04:
What statutory authority did they exercise?

[00:23:25] Speaker 04:
And if you read it, there's lots of the MSP, 53-101, et cetera, authority.

[00:23:32] Speaker 04:
That's the big decision.

[00:23:36] Speaker 04:
But there's six times they say they are a citizen under 50501.

[00:23:44] Speaker 04:
Does that mean that they were acting under both statutes at the time they entered their decision?

[00:23:50] Speaker 04:
They made their decision?

[00:23:52] Speaker 06:
So at the time that the agency was issued its October 2015 decision, it would have made a citizenship determination to determine the vessel's eligibility for the replacement applications.

[00:24:04] Speaker 06:
However, I keep saying October 2015 because the HOMS Act also provides, in 28 U.S.C.

[00:24:10] Speaker 06:
2344, that there's only a 60-day timeline for review.

[00:24:13] Speaker 04:
I would put aside all those issues.

[00:24:15] Speaker 04:
I just want to understand.

[00:24:17] Speaker 04:
So your position is,

[00:24:19] Speaker 04:
If they had filed a timely petition for review of the Guam decision, they would have skipped the administrative process, appeal process.

[00:24:30] Speaker 04:
and they would have within 60 days filed and they would have had to file here for that decision because it made 50501 decisions.

[00:24:38] Speaker 04:
Is that your position?

[00:24:39] Speaker 06:
The government's position is it should have been filed in district court under the administrative procedure act.

[00:24:43] Speaker 04:
Okay, but I thought you just told me they were supposed to come as to that decision just as into October 2015 when they were making a decision about citizenship.

[00:24:51] Speaker 04:
How would they challenge that?

[00:24:52] Speaker 06:
But the agency's decision as to citizenship was only one of the issues addressed.

[00:24:57] Speaker 06:
It would also be a question as to what the actual claims brought under the party challenging the agency's decision.

[00:25:03] Speaker 04:
I thought we agreed.

[00:25:06] Speaker 04:
This is where I think we're going a little bit of circles.

[00:25:08] Speaker 04:
I thought we agreed that for Hobbs Act jurisdiction,

[00:25:11] Speaker 04:
It doesn't matter what the party's challenges are.

[00:25:14] Speaker 04:
It matters only what statutory authority was being exercised by the agency when it made its, in this case, final order.

[00:25:21] Speaker 04:
Are we agreed on that?

[00:25:22] Speaker 06:
If the party is challenging the agency's exercise of that particular statutory authority, if Matson is not challenging... No, no, but where does the Hobbs Act say the jurisdiction depends on

[00:25:36] Speaker 04:
What's being challenged or what claims are raised?

[00:25:38] Speaker 04:
Where does it say that?

[00:25:39] Speaker 06:
It says it challenges orders, rules, or regulations of the Secretary of Transportation issued pursuant to.

[00:25:46] Speaker 04:
So the agency at the time it issued, made its decision in October 2015 had to be exercising some statutory authority, correct?

[00:25:56] Speaker 06:
Correct.

[00:25:57] Speaker 04:
And whatever statutory authority it was exercising doesn't depend on what someone might argue about later, does it?

[00:26:06] Speaker 06:
Not necessarily.

[00:26:07] Speaker 04:
That doesn't at all.

[00:26:09] Speaker 04:
Congress can enact a statute under the Commerce Clause and the Bankruptcy Clause, and that's what it's acting under, regardless of whether anyone later challenges the Commerce Clause authority.

[00:26:23] Speaker 04:
Correct.

[00:26:24] Speaker 04:
I thought you said, and this is where I may be wrong, that the Guam decision, in making that decision, they clearly exercised their power under the MSP program.

[00:26:41] Speaker 06:
Correct.

[00:26:41] Speaker 04:
They clearly did that.

[00:26:43] Speaker 04:
But they also made citizenship determinations under 50501, correct?

[00:26:48] Speaker 06:
Correct.

[00:26:48] Speaker 04:
So were they in doing an exercise in making those citizenship determinations under 50501?

[00:26:55] Speaker 04:
Were they exercising their statutory authority under 50501?

[00:26:59] Speaker 06:
Yes, but I will express that if the court were to decide that any agency decision issued pursuant to Section 50501 would give this court jurisdiction under the Hobbs Act, it would sweep incredibly broadly.

[00:27:13] Speaker 04:
As my colleague... It may or may not, but I'm just asking you.

[00:27:17] Speaker 04:
Okay, so if your view is, yes, they were exercising that, but we can't

[00:27:23] Speaker 04:
That doesn't count for Hobbs Act because then lots of things would be under the Hobbs Act?

[00:27:29] Speaker 06:
In addition to our threshold argument, they have not challenged the citizenship determinations at issue here.

[00:27:34] Speaker 04:
Please, I don't understand why you bring that up.

[00:27:37] Speaker 04:
Why does that matter?

[00:27:39] Speaker 04:
If they did, we would have to be in this court, is your position.

[00:27:42] Speaker 06:
Correct.

[00:27:43] Speaker 04:
Because suddenly that decision would be issued pursuant to 50501?

[00:27:48] Speaker 06:
Because they would be challenging a rule, order, or regulation.

[00:27:52] Speaker 04:
Which the Hobbs Act doesn't care about.

[00:27:54] Speaker 06:
Right.

[00:27:56] Speaker 06:
I apologize.

[00:27:58] Speaker 04:
I don't understand.

[00:27:59] Speaker 04:
I just don't understand why their challenge matters at all.

[00:28:03] Speaker 04:
And if you're agreed that that decision in 5050, the October 2015 decision was exercising both powers, the MSP power and the 50501 power, then why does the Hobbs Act mean

[00:28:20] Speaker 04:
How do we know we don't have authority under 50501 and supplemental jurisdiction over the MSP challenges?

[00:28:26] Speaker 06:
You would have discretion to exercise supplemental appellate jurisdiction over the additional challenges.

[00:28:34] Speaker 06:
Were they bringing a challenge under Section 50501?

[00:28:38] Speaker 04:
No, my theory is they made a decision pursuant to 50501 and we would exercise supplemental authority over the MSP decisions.

[00:28:46] Speaker 06:
That the agency is, is that?

[00:28:48] Speaker 06:
I'm sorry, I don't think I follow.

[00:28:50] Speaker 04:
No, that we, that would be our authority to address it.

[00:28:53] Speaker 06:
I suppose the government's position is that were a challenge brought to a citizenship determination, that would be a claim under Section 50501.

[00:29:01] Speaker 04:
Their claims are brought- But COBS Act doesn't require a claim under 50501.

[00:29:05] Speaker 04:
Correct.

[00:29:06] Speaker 04:
Does it?

[00:29:08] Speaker 06:
It requires challenging a decision issued pursuant to 50501.

[00:29:13] Speaker 04:
And we agreed that the October decision was issued, at least in part, pursuant to 50501.

[00:29:17] Speaker 06:
Correct.

[00:29:18] Speaker 04:
But the parties are... Did you say that's not enough for Hobzack jurisdiction?

[00:29:21] Speaker 04:
Correct.

[00:29:21] Speaker 04:
Because it has to both be issued pursuant to and challenged by the party.

[00:29:27] Speaker 06:
Correct.

[00:29:27] Speaker 04:
And indeed... And that's an A-tax jewelry, you know, the Hobzack.

[00:29:30] Speaker 06:
But the court should also note that if it were to read the Hobbs Act so broadly, that would be in significant tension with the Supreme Court's recent decision in National Association of Manufacturers v. Department of Defense.

[00:29:43] Speaker 06:
And there's also a purpose of reading of the Hobbs Act itself, which grants this court exclusive jurisdiction to review these orders.

[00:29:51] Speaker 06:
Now, citizenship determinations under Section 505.

[00:29:53] Speaker 06:
When you say these orders, what are you referring to in this case?

[00:29:57] Speaker 06:
The October 2015 and December 2016 orders, I believe.

[00:30:02] Speaker 06:
Those were orders?

[00:30:04] Speaker 05:
Yes.

[00:30:05] Speaker 05:
They weren't just final agency action?

[00:30:08] Speaker 05:
There's a distinction.

[00:30:09] Speaker 05:
The Hobbs Act talks about final orders.

[00:30:11] Speaker 05:
Correct.

[00:30:13] Speaker 05:
The agency would characterize those as orders.

[00:30:16] Speaker 04:
As final orders?

[00:30:18] Speaker 06:
Correct.

[00:30:19] Speaker 06:
The citizenship determinations appear throughout the United States Code in the China Trade Act for electric and hybrid vehicles, for exports of Alaskan North Slope oil.

[00:30:31] Speaker 04:
I get that's a great argument if there's ambiguity.

[00:30:35] Speaker 04:
I'm not sure you've identified ambiguity, but let me ask this another way, because you're worried about sweep, and I understand that argument.

[00:30:46] Speaker 04:
Mayor Adam slash DOT, ever make freestanding 50501 decisions?

[00:30:54] Speaker 04:
Or are they only made in the course of programs?

[00:30:57] Speaker 06:
They would normally be made for vessel operators.

[00:31:00] Speaker 06:
I'm not sure if they're made independently of a vessel application.

[00:31:04] Speaker 04:
Because you look at 50501, it's a definitional provision.

[00:31:06] Speaker 04:
That's all it is.

[00:31:08] Speaker 03:
Correct.

[00:31:08] Speaker 04:
It's a definition.

[00:31:10] Speaker 04:
And so I'm trying to figure out what on earth Congress thought

[00:31:14] Speaker 04:
would come under 50.

[00:31:16] Speaker 04:
I'm worried about the other.

[00:31:17] Speaker 04:
There's two bad problems here, going too broadly and writing 50501 out of the statute.

[00:31:24] Speaker 04:
Because if you look at 50501, like I said, it's just a definition.

[00:31:26] Speaker 04:
It has no operative provision.

[00:31:28] Speaker 04:
It doesn't provide a procedure for just asking for citizenship.

[00:31:32] Speaker 04:
I could find no case where anyone just said, hey, I'd like to be a citizen under 50501.

[00:31:39] Speaker 04:
It's always done.

[00:31:41] Speaker 04:
through other programs.

[00:31:42] Speaker 04:
Congress wrote that as a definition that was going to apply in other parts of the statute.

[00:31:48] Speaker 04:
So then what could it possibly have meant when it said agency act orders pursuant to 50501?

[00:31:55] Speaker 04:
There's never an order pursuant to a definition.

[00:31:58] Speaker 04:
It's always going to be applying that definition in another program, isn't it?

[00:32:01] Speaker 06:
But had Congress intended to sweep all of the agency's decisions under the maritime security program into Hobbs Act jurisdiction, it easily could have done so.

[00:32:10] Speaker 04:
But they aren't all in.

[00:32:11] Speaker 04:
It's only when there's 50-501 citizenship, as I think you've noted, there isn't in the Saipan case here.

[00:32:17] Speaker 04:
There's a lot of ways of getting, not a lot, there's enumerated ways of satisfying fact that you wanted to see

[00:32:25] Speaker 04:
They don't all require 50501 decisions, so I'm not sure it's quite as broad as you're suggesting.

[00:32:32] Speaker 04:
And you can't seem to give me an example of when there would ever be

[00:32:35] Speaker 04:
Hobbs Act jurisdiction under just 50501?

[00:32:39] Speaker 06:
I can't point to a specific example at this point, Your Honor.

[00:32:42] Speaker 06:
I'm happy to submit additional authority to the Court if they so request.

[00:32:45] Speaker 06:
But I would also suggest that the text of the Hobbs Act also sweeps in large sections of the US Code for this Court's jurisdiction by listing subtitles, chapters, parts, and subtitles or subchapters of Title 46.

[00:33:00] Speaker 06:
And in this case, Congress easily could have written

[00:33:03] Speaker 06:
Chapter 531 of Title 46 and would solve this question quite simply.

[00:33:08] Speaker 06:
Because it didn't do so, it must have limited review in this court to determinations strictly under 50501.

[00:33:15] Speaker 04:
Which are never made.

[00:33:16] Speaker 06:
Right, and now we're back to square one.

[00:33:19] Speaker 04:
So that's just, I mean, there is another statutory construction against reading something to sort of nullify a statutory provision.

[00:33:28] Speaker 04:
It has no meaning, it does no work.

[00:33:31] Speaker 04:
We have to worry about that, don't we?

[00:33:33] Speaker 06:
That's not true, Your Honor.

[00:33:34] Speaker 06:
Here, as I just expressed, Congress could have included many more statutory subsections in the Hobbs Act.

[00:33:40] Speaker 04:
No, I'm just asking about, does the 50501 do any work at all being there?

[00:33:46] Speaker 04:
Because it's very hard for a court to say, we have to exercise the jurisdiction assigned to us.

[00:33:53] Speaker 04:
And so I think it's somewhat troublesome for a court to read a jurisdictional provision in a way that says, pay no attention to that 505 of a one.

[00:34:00] Speaker 04:
Surely they didn't mean it.

[00:34:02] Speaker 04:
It doesn't do anything by itself.

[00:34:05] Speaker 04:
But if we actually exercise it when the agency invokes that authority, we'll have too much jurisdiction.

[00:34:14] Speaker 04:
Your concerns are very valid, but that seems to be a valid concern as well.

[00:34:18] Speaker 06:
As the district court held in Liberty Global, there would be a possibility to bring a challenge to a citizenship determination.

[00:34:25] Speaker 06:
And as that court held, that would appropriately be brought in the courts of appeals under the Hobbs Act.

[00:34:29] Speaker 04:
So that requires reading the Hobbs Act to turn on

[00:34:32] Speaker 04:
the claims brought by the petitioner, not the statutory authority exercised by the agency?

[00:34:39] Speaker 06:
In a way, yes.

[00:34:40] Speaker 04:
Not in a way, that's exactly what it turns on, correct?

[00:34:43] Speaker 06:
Yes.

[00:34:46] Speaker 06:
But I would also provide that there are additional hurdles to the petitioner's challenge in this case once the court decides that there is jurisdiction.

[00:34:55] Speaker 06:
Neither of the agency decisions that they purportedly challenge are timely under the Hobbs Act.

[00:35:00] Speaker 06:
And that timing requirement is jurisdictional and not subject to equitable tolling.

[00:35:04] Speaker 01:
So... They make the argument it's not clear whether they have to file an administrative appeal.

[00:35:14] Speaker 01:
So just like they say in their petition here, this is a protective petition.

[00:35:19] Speaker 01:
So they argue towing during the pendency of the administrative appeal.

[00:35:25] Speaker 06:
They could have done so, Your Honor, but did not.

[00:35:28] Speaker 01:
Could have done what?

[00:35:29] Speaker 06:
They could have filed a protective petition in this court while they had filed the administrative appeal, but did not do so.

[00:35:36] Speaker 06:
And as the Fifth and Tenth Circuits have both held.

[00:35:38] Speaker 01:
But then we would have had to decide whether or not

[00:35:41] Speaker 01:
it had to exhaust its administrative remedies, right?

[00:35:44] Speaker 06:
But has, the agency's position is that Matson was not required to, could not, excuse me, could not have sought administrative appeal and because that administrative procedure... Because it was not a contractor.

[00:35:56] Speaker 06:
Correct.

[00:35:57] Speaker 06:
As the agency's regulations clearly state.

[00:35:59] Speaker 06:
And because, as happens in this court regularly, protect... The regulations clearly say only contractors

[00:36:06] Speaker 06:
It says a contractor.

[00:36:09] Speaker 01:
A contractor.

[00:36:10] Speaker 01:
Correct.

[00:36:10] Speaker 01:
It could not be less ambiguous.

[00:36:12] Speaker 01:
Must file an administrative appeal before going to court.

[00:36:14] Speaker 06:
It says may file an administrative appeal, correct, Your Honor.

[00:36:17] Speaker 06:
Yes.

[00:36:18] Speaker 06:
And so because they had no ability to file an administrative appeal, they could not have told the Hobbs Act's timing requirements, which, again, this Court has held are jurisdictional.

[00:36:29] Speaker 06:
And as the Fifth and Tenth Circuits have held, even if there were equitable tolling under the Hobbs Act,

[00:36:34] Speaker 04:
Wait, wait, wait, wait.

[00:36:36] Speaker 04:
So I'm sorry.

[00:36:37] Speaker 04:
The exhaustion thing cannot be jurisdictional.

[00:36:40] Speaker 04:
Exhaustion is not jurisdictionalist to them.

[00:36:42] Speaker 06:
If Matson had not sought an administrative appeal, the government would not have argued that they had not exhausted their administrative remedies because they did not have any administrative remedies.

[00:36:52] Speaker 06:
So we could not have made an exhaustion argument.

[00:36:54] Speaker 06:
However, back to my original point is that... Or is it so bad for a party to go,

[00:37:00] Speaker 04:
It looks rather one-sided, but we're going to try first, because it's always best to let the agency have the first bite at this appellate exhaustion.

[00:37:10] Speaker 04:
It's better for the process all around.

[00:37:12] Speaker 04:
And we're concerned, because it wouldn't be heard of for the Justice Department if we went straight to court to suddenly start saying we were supposed to exhaust.

[00:37:20] Speaker 04:
So why isn't that a sound basis for tolling, as Judge Rogers said?

[00:37:25] Speaker 06:
Admittedly, that is perhaps a sound basis, but that problem only arises where the court to decide that there is Hobbs Act jurisdiction.

[00:37:33] Speaker 06:
Again, it's the government's position that a challenge should simply be brought in federal district court under the Administrative Procedure Act when none of these problems are at issue.

[00:37:41] Speaker 06:
Petitioners have not filed any sort of protective petition in district court.

[00:37:45] Speaker 06:
They assert that they would, but they have not done so throughout the pendency of this litigation.

[00:37:53] Speaker 04:
Actually, we do mean to challenge citizenship.

[00:37:57] Speaker 04:
then suddenly jurisdiction here would materialize, assuming we cried into that at this late date.

[00:38:02] Speaker 06:
You know, the court's precedent?

[00:38:03] Speaker 04:
It would materialize, correct, under your view.

[00:38:06] Speaker 06:
Well, assuming the court's precedent on forfeiture and waiver do not apply.

[00:38:09] Speaker 04:
Yeah, yeah, just assuming we cry.

[00:38:10] Speaker 04:
I'm just putting that aside, because I'm asking you a jurisdictional question.

[00:38:13] Speaker 04:
Then it would suddenly materialize.

[00:38:15] Speaker 06:
The court would have discretion whether to exercise pendant appellate jurisdiction over the remaining claims.

[00:38:21] Speaker 01:
So is part of the problem here that

[00:38:25] Speaker 01:
the nature of the proceedings are not your typical agency proceedings, so that if there is to be any challenge, you ought to go to the district court and work out all the details, the facts, et cetera, put in your evidence, as opposed to coming to the Court of Appeals, because we're gonna ask all these questions that we normally ask in administrative appeals, and your process is not set up

[00:38:55] Speaker 01:
has sort of an APA process.

[00:38:58] Speaker 06:
You're absolutely right, Judge Rogers.

[00:39:00] Speaker 06:
My colleague was asserting that perhaps jurisdictionally is best held in the courts of appeals where there is an administrative record.

[00:39:07] Speaker 06:
But at the same time, he then went on to question whether the administrative record in this case is actually complete.

[00:39:12] Speaker 04:
You can't mean that answer.

[00:39:13] Speaker 04:
You cannot mean that answer because if his petition said we challenge citizenship, you would agree that your procedure is perfectly fine to come straight to the court of appeals, correct?

[00:39:23] Speaker 06:
Correct.

[00:39:24] Speaker 04:
Well, then again, the procedure can't be good for one issue and not for enough, can it?

[00:39:29] Speaker 01:
I mean, maybe you went too far on that, but I don't know.

[00:39:32] Speaker 01:
But the point would be that if Madsen had argued neither of these vessels meets the requirements of citizenship, what would the agency have had to have done?

[00:39:46] Speaker 01:
I mean, Madsen just sends you a letter.

[00:39:50] Speaker 01:
You could just ignore it?

[00:39:52] Speaker 01:
Well, you're saying they don't have any right to administrative appeal because they're not a contractor.

[00:39:57] Speaker 01:
So the only thing, as I understood you to say, was they could go to the district court and they could challenge the subsidies on the grounds that they're being granted or awarded to vessels that do not meet the statutory requirements.

[00:40:12] Speaker 06:
Were it the case that a party had advised the agency of problems of its administrative proceedings, certainly the agency would investigate in good faith those allegations.

[00:40:23] Speaker 06:
As this court has regularly held, the agency is certainly entitled to a presumption of regularity on these sorts of issues.

[00:40:29] Speaker 01:
You say, of course the agency would have done this.

[00:40:32] Speaker 01:
Do its regulations give me that kind of assurance?

[00:40:38] Speaker 06:
It's possible for other parties other than the particular applicant in the proceeding to submit materials to the agency, and the agency would consider them, yes.

[00:40:48] Speaker 01:
The only way you'd know about it is by word of mouth.

[00:40:51] Speaker 06:
It depends on the specific circumstances.

[00:40:53] Speaker 01:
Well, I'm dealing with this case.

[00:40:55] Speaker 01:
It's very difficult to understand what happened here and who knew what when.

[00:41:00] Speaker 01:
But I gather from what counsel told us, there's an informal channel.

[00:41:07] Speaker 01:
so everybody knows what's going on.

[00:41:10] Speaker 01:
But that's not part of the formal agency process.

[00:41:13] Speaker 01:
Correct.

[00:41:14] Speaker 01:
So by the time it comes here, we're not sure what we have.

[00:41:18] Speaker 01:
And that's why you go to the district court first to work out all these things.

[00:41:21] Speaker 06:
That is another reason for that, yes, Judge Rogers.

[00:41:24] Speaker 01:
So if citizenship, if a letter had been sent to the agency saying one of these vessels should not be eligible,

[00:41:37] Speaker 01:
as a substitute or replacement because it's not a citizenship, then your representation is the agency would have addressed that and in its final order have set out the reasons it concluded that the vessel was qualified because it did have the requisite citizenship.

[00:41:57] Speaker 06:
I can't say conclusively the agency in its final record would address that particular argument made to it, but the agency would certainly have investigated in good faith whether those allegations were true because in this particular case, the agency is interested in the best operations of the maritime security program.

[00:42:15] Speaker 01:
I'm not suggesting bad faith or anything like that.

[00:42:19] Speaker 01:
I'm just trying to understand if I'm not a party to the proceedings and I write a letter

[00:42:27] Speaker 01:
I mean, I don't know what I'm entitled to.

[00:42:29] Speaker 01:
And you just told me I'm not entitled to take an administrative appeal because I'm not a contractor.

[00:42:34] Speaker 06:
But you would certainly be entitled to take an administrative procedures act challenge in federal district court.

[00:42:41] Speaker 01:
All right.

[00:42:41] Speaker 01:
Anything further?

[00:42:42] Speaker 06:
No, Your Honor.

[00:42:44] Speaker 06:
Thank you.

[00:42:45] Speaker 01:
Thank you.

[00:42:49] Speaker 01:
Intervenors?

[00:42:55] Speaker 01:
shed light.

[00:42:56] Speaker 01:
Sure.

[00:42:58] Speaker 07:
May it please the court, Brian Burgess for the APL interveners.

[00:43:01] Speaker 07:
I would like to talk at some point about the merits and particularly the Saipan issue since Mr. Perry referenced that, but since the court has been focused on jurisdiction and because I think our position might be slightly different from the government's, I'd like to start there.

[00:43:13] Speaker 07:
We think

[00:43:14] Speaker 07:
that this order was issued pursuant to 53-105F, the vessel replacement decision.

[00:43:20] Speaker 07:
We also think that it is not enough for a decision to the fact that it sort of references or implicates or in Mr. Perry's formulation rests on that there's a potential cross-reference to citizenship.

[00:43:32] Speaker 07:
And we think the structure of the Hobbs Act makes that pretty clear.

[00:43:36] Speaker 04:
If you look at the... I want to make sure I heard you just right.

[00:43:39] Speaker 04:
Sure.

[00:43:40] Speaker 04:
Even if a decision rests on 50501, that's not enough.

[00:43:43] Speaker 04:
Did you just say rests on?

[00:43:44] Speaker 07:
I said rests on in the sense that it is like one of the check marks that... Well, it's a required determination.

[00:43:51] Speaker 04:
Right, and I... It's statutorily required.

[00:43:53] Speaker 04:
Statutorily required, right, but it's not... You don't pass that, you don't check that box, you don't get...

[00:43:58] Speaker 04:
Assuming we didn't claim to meet any of the other requirements here, you don't get this certification.

[00:44:04] Speaker 07:
It is a prerequisite to necessary determination.

[00:44:06] Speaker 07:
That's right.

[00:44:07] Speaker 07:
But we don't think that that is the authority under which they're acting in granting or denying a vessel replacement decision.

[00:44:13] Speaker 07:
And the reason we think mere Croft's reference, the fact that it's one of the considerations that must be considered can't be enough.

[00:44:20] Speaker 07:
I think it's clear from the structure of the Hobbs Act, when you see the enumeration in the particular statutes that are referenced,

[00:44:26] Speaker 07:
For example, 56-101 and 56-102 are also provisions that have citizenship determinations embedded.

[00:44:34] Speaker 07:
There are provisions about restrictions on vessel transfer, and part of the decision there is a citizenship determination, so it would just be redundant.

[00:44:44] Speaker 04:
Sorry, is the citizenship determination there solely satisfied by a 50501 determination or can it be satisfied by other things?

[00:44:52] Speaker 07:
It's using, the statute uses citizenship, which 50501 provides the general definition that applies to the subchapter.

[00:45:00] Speaker 04:
No, no, 50501 provides a particularized definition of citizenship for certain types of entities,

[00:45:09] Speaker 04:
partnerships, corporations, these types of things, doesn't cover trusts, doesn't cover individuals.

[00:45:14] Speaker 04:
There's lots of ways to be citizens, as apparently from the Saipan case, that don't involve 50501.

[00:45:20] Speaker 04:
So if those other statutes may at times involve 50501, but many other times won't, then there's a perfectly sensible reason for Congress to list them, because it's sweeping all decisions in whatever the source of citizenship.

[00:45:34] Speaker 04:
Is that a fair reading?

[00:45:35] Speaker 07:
I take that point, I think there still would be an overwhelming amount of redundancy to sort of, to pivot to your honor's other question about what would 5501 be doing.

[00:45:44] Speaker 07:
I mean, we think one thing that would clearly be followed under it is if there were a regulation issued by the agency interpreting the scope of citizenship.

[00:45:53] Speaker 04:
Well, sure, but... Okay, that's all?

[00:45:55] Speaker 04:
Then they would just say regulations issue.

[00:45:57] Speaker 04:
But there's never a 50-50-1 decision by itself, is there?

[00:46:02] Speaker 07:
Not that I'm aware of, but the statute says all rules, regulations, or final orders applicable to a broad enumeration of categories.

[00:46:09] Speaker 07:
So we don't think it is exceptional or that it suggests that it's not doing any work.

[00:46:13] Speaker 07:
The fact that maybe only regulations would apply to this one, but other provisions would implicate rules.

[00:46:19] Speaker 07:
50502 is another instance in which there's not.

[00:46:23] Speaker 04:
If the agency did a regulation and then they applied that regulation in making the decision, would that decision be issued pursuant to 50501?

[00:46:31] Speaker 04:
If there was a regulation that was promulgated and they used that to make a decision about 50501 citizenship in another program.

[00:46:41] Speaker 07:
If that were the basis.

[00:46:42] Speaker 04:
That be a decision pursuant to the statutory authority under 50501?

[00:46:46] Speaker 07:
I think the answer is probably yes.

[00:46:48] Speaker 04:
Yeah, and so if they make a decision without a regulation just under the statute itself.

[00:46:53] Speaker 07:
Well, I think it's relevant here that the particular statute under which they're operating is a decision about vessel replacement.

[00:47:04] Speaker 07:
And there are criteria that need to be met.

[00:47:07] Speaker 07:
I think it would, among other things, would avoid the problem that Your Honor noted that there would be a distinction between review under the APL Guam and the APL Saipan, where only one of them implicates a citizenship determination under a 5501.

[00:47:21] Speaker 07:
If you read it more narrowly as what is the actual basis of the decision.

[00:47:23] Speaker 04:
Someone could ask for supplemental jurisdiction over the other one just to have a single, not to have to do dividing their cases or sometimes people just have different, you know, those were separate agency decisions and one agency decision goes one place because of the statutory authority that was exercised and another one goes another place because of the statutory authority that was exercised.

[00:47:43] Speaker 04:
That's exactly what the Hobbs Act is.

[00:47:44] Speaker 07:
Sure, we don't quibble with that, but we think a more sensible reading, and one that is certainly available under the language of the statute, would channel all decisions about vessel replacement applications to one place, rather than parties bifurcating under the accident of whether there is a citizenship determination underlying.

[00:48:02] Speaker 04:
That position would be the same, even if the only matter in dispute was 50501 citizenship.

[00:48:08] Speaker 07:
That's right.

[00:48:09] Speaker 07:
I mean, we agree with Your Honor's position that the jurisdiction shouldn't turn on what the particular argument that the party is raising.

[00:48:17] Speaker 07:
We know that there are other decisions, the decisions from the Third Circuit, the Canoco and the Eastern Look.

[00:48:23] Speaker 07:
global decision from the Eastern District of New York.

[00:48:27] Speaker 07:
As we read those decisions, they did sort of rely on the question of what is the party raising.

[00:48:32] Speaker 04:
Right, that doesn't mean it's textually right.

[00:48:34] Speaker 07:
No, that's right.

[00:48:35] Speaker 07:
I mean, we think if the court were persuaded by those decisions, they wouldn't apply here.

[00:48:38] Speaker 07:
They're easily distinguishable because it's not raised.

[00:48:40] Speaker 04:
But we also don't think that those are rightly decided and that the better... But just to be clear, then, your position is that if the only issue before the agency and the only thing they decide in granting MSB status

[00:48:53] Speaker 04:
is a hotly contested issue about satisfying 50501 citizenship.

[00:48:59] Speaker 04:
So the right answer is that Congress wanted that 50501 decision reviewed in district court.

[00:49:06] Speaker 07:
So your question is if that were the only issue contested?

[00:49:09] Speaker 07:
Because it's not possible.

[00:49:10] Speaker 04:
The only issue decided by the agency?

[00:49:11] Speaker 07:
Well, I don't think that's possible under the statute, because 53105F, then it cross-references.

[00:49:17] Speaker 04:
They check all the boxes, but nothing's contested before the agency or in court, either location.

[00:49:22] Speaker 04:
And maybe it matters what's contested before the agency as opposed to in court.

[00:49:27] Speaker 04:
Maybe that matters.

[00:49:29] Speaker 04:
If you actually had other parties to the proceedings.

[00:49:33] Speaker 04:
The only thing contested anywhere, everything else was box check, no dispute.

[00:49:38] Speaker 04:
So the only thing, the statute they spent all their time focused on, the statute they're construing in their decision is 50501.

[00:49:47] Speaker 04:
But it's to get you MSB status.

[00:49:51] Speaker 04:
Where would Congress want that 50501 determination by the agency to be reviewed?

[00:49:56] Speaker 07:
Our position is that it's going to be very unlikely that that is going to be the solution.

[00:49:59] Speaker 04:
Where would Congress want that 50501 decision to be reviewed?

[00:50:04] Speaker 07:
Our position is that it doesn't turn on what the party is arguing because... No, no, I'm talking about what the agency decided.

[00:50:11] Speaker 07:
Right.

[00:50:11] Speaker 07:
What the agency would have decided in that instance is that a vessel can be replaced pursuant to 53-105.

[00:50:15] Speaker 04:
Your answer is Congress would want that 50-501 decision reviewed in district court.

[00:50:21] Speaker 07:
That's correct.

[00:50:21] Speaker 07:
That's our position.

[00:50:22] Speaker 07:
We think both positions sort of have their peculiarities, but we think that is a much more

[00:50:28] Speaker 07:
sensible on the whole, reading that avoids a lot of the problems with the other side's position.

[00:50:32] Speaker 07:
It's a practical matter in a 53105F, where the issue is about vessel replacement, rather than usually a change in who the operator is and the contractor.

[00:50:43] Speaker 07:
Usually citizenship isn't going to be at issue.

[00:50:47] Speaker 07:
In these instances, a company has an existing operating agreement.

[00:50:51] Speaker 07:
It's already has to have satisfied all the citizenship requirements in order to do that.

[00:50:55] Speaker 07:
And it is simply asking, you know, we want to continue that operating agreement and replace it with another vessel.

[00:51:01] Speaker 07:
We have to show that the vessel meets all the requirements for eligibility for a vessel.

[00:51:06] Speaker 07:
But in the ordinary circumstance, one of those requirements, of course, is citizenship.

[00:51:09] Speaker 07:
But in the ordinary circumstance, it's not unusual that citizenship wasn't challenged here.

[00:51:14] Speaker 07:
It's going to be the mind run of cases that it won't be.

[00:51:16] Speaker 07:
So we think it would be odd for that to drive where jurisdiction lies.

[00:51:19] Speaker 04:
Can you hypothesize that you could have, if they issue a regulation interpreting 50501, that would be the basis for having a 50501 case if you wanted to challenge, right?

[00:51:31] Speaker 04:
Yes.

[00:51:31] Speaker 04:
Can people just challenge regulations without them actually being applied in a decision by the agency?

[00:51:38] Speaker 04:
How are you going to have standing?

[00:51:41] Speaker 07:
That's a fair question.

[00:51:43] Speaker 04:
All right, so there's just no 505-01 cases.

[00:51:46] Speaker 04:
Nobody can think of one.

[00:51:47] Speaker 07:
I mean, I think if it were a regulation being, I mean, I think my answer to your honor's question earlier is if it were a challenge to a regulation issued pursuant to that, that were then implicated, you know, it would have to, it might be a two-step process, but we think there, we don't think it's a null set in which such a claim could be brought.

[00:52:02] Speaker 04:
No, but that's going to be applied in making an MSP decision or one of these other programmatic decisions.

[00:52:08] Speaker 04:
So it'll be part of,

[00:52:09] Speaker 04:
that programmatic decision, and if that programmatic decision isn't listed in the Hobbs Act, I don't know why you would say the challenge of the regulation can bring everything up to the Court of Appeals, but the application of the statute itself cannot.

[00:52:24] Speaker 07:
I don't have an answer in terms of a particular instance in which that has been challenged as sort of a freestanding basis.

[00:52:29] Speaker 07:
We do think there's at least a theoretic possibility for there to be a regulation that's issued under it that could be challenged.

[00:52:38] Speaker 01:
Yeah, I have a question regarding the letter that your client received October 27.

[00:52:50] Speaker 01:
It says, in view of the notations, findings, and determinations above, approved the transfer of the agreement to maritime pursuant to CITES's regulation 296.30 J.

[00:53:08] Speaker 01:
And then it says secure.

[00:53:09] Speaker 01:
And then it goes on.

[00:53:11] Speaker 01:
And then at the end it says, indicate your acceptance of the actions.

[00:53:18] Speaker 01:
I'm at A46 now.

[00:53:19] Speaker 07:
Okay, thank you.

[00:53:21] Speaker 01:
And it shows that somebody on behalf of your client signed it.

[00:53:30] Speaker 01:
What does that mean practically?

[00:53:33] Speaker 01:
What I heard from the agency was these letters are treated as orders.

[00:53:41] Speaker 03:
That's right.

[00:53:41] Speaker 01:
But is this all your client gets?

[00:53:45] Speaker 01:
It gets a letter, and then if the client says, I agree with everything in the letter, that's as good as gold.

[00:53:54] Speaker 01:
You can substitute the vessel.

[00:53:57] Speaker 01:
Or is there nothing further?

[00:53:59] Speaker 07:
That's my understanding, Your Honor, that that is the final order under appeal.

[00:54:02] Speaker 07:
I mean, there was, of course, also on the record, the recommendations and the sort of whole process that led to it, but that is the sort of culmination of the order issued by the agency.

[00:54:11] Speaker 07:
And there's a robust process that includes the Secretary of the Defense Department, Anne Marad, that sort of culminates in this decision, but that is the actual order that is then

[00:54:22] Speaker 07:
provides our ability to transfer the vessel and continue in the program.

[00:54:27] Speaker 01:
So if you went to district court, this is the, quote, order you would be challenging?

[00:54:33] Speaker 07:
Well, we would be defending it.

[00:54:35] Speaker 01:
No, no, no, I'm sorry.

[00:54:36] Speaker 07:
That one would challenge.

[00:54:37] Speaker 07:
That one would challenge, yes, we agree with that.

[00:54:42] Speaker 01:
an undated signature.

[00:54:44] Speaker 01:
It's interesting.

[00:54:46] Speaker 01:
No idea what's going on here.

[00:54:48] Speaker 01:
All right.

[00:54:48] Speaker 01:
Thank you.

[00:54:48] Speaker 07:
If I could briefly talk about the merits and the side panacea because that was the one merits position that Mr. Perry raised.

[00:54:57] Speaker 07:
I think

[00:54:58] Speaker 07:
There are two important things I want to get put on the table.

[00:55:01] Speaker 07:
One is that we think it is clear under the statute and the agency's regulations that an eligibility determination, whether a vessel is eligible and whether it is engaged in foreign commerce, is quite distinct from the question of whether it has followed the requirements that are imposed under 53105A for an operating agreement.

[00:55:19] Speaker 07:
And there's several features of the statute that make that clear.

[00:55:22] Speaker 07:
For example, the penalty for not being in compliance with 53105A under the operating agreement

[00:55:28] Speaker 07:
It's not rescission from the program.

[00:55:30] Speaker 07:
It's not that you're kicked out.

[00:55:31] Speaker 04:
It's that there are pro rata reductions What if their position was all along you were never planning?

[00:55:35] Speaker 04:
To just do makes foreign trade you were never planning that and the statute requires it to be just then you were planning all along

[00:55:46] Speaker 04:
to do some forbidden trade under the statute.

[00:55:50] Speaker 04:
Maybe you suck up the penalty or the loss of percentage of funds.

[00:55:55] Speaker 04:
But you were planning all along, and so you weren't eligible.

[00:56:00] Speaker 04:
Would that be a different answer?

[00:56:02] Speaker 07:
No, I mean, I want to... No, so you'd still be eligible.

[00:56:05] Speaker 07:
All that eligibility requires is that for this particular provision is that you engage in some foreign commerce.

[00:56:10] Speaker 04:
The question of whether you might be engaged in... No, the statute says that if you get this MSP status, it has to be exclusively foreign commerce.

[00:56:19] Speaker 04:
You shall not do coast-wise trade.

[00:56:21] Speaker 07:
That is what the conditions that are under the operating agreement apply.

[00:56:24] Speaker 04:
We note, by the way, that... So your view is that you're eligible for this even if you were to put into the record a letter that says, by the way,

[00:56:34] Speaker 04:
We have no intention of complying with that exclusivity provision that we know is going to come in the agreement.

[00:56:42] Speaker 04:
But you should still find us eligible and that the agency would go, okay, you're eligible?

[00:56:46] Speaker 07:
We agree with the first part, but not the second part of that.

[00:56:48] Speaker 07:
I mean, the agency has discretion not to agree to a transfer of vessel or not to award an operating agreement.

[00:56:56] Speaker 04:
Why?

[00:56:56] Speaker 04:
You say we meet all the eligibility requirements under the statute.

[00:56:59] Speaker 07:
Because they are allowed to make a judgment about whether this is going to be in the interest of the United States and in the interest of the military and the extent to which it is actively engaged in foreign commerce is going to be germane to that.

[00:57:09] Speaker 07:
I mean, it's worth noting, again, because this is a replacement decision, the agency has deep experience with APL, which has been a participant in this program for well over a decade, has nine vessels.

[00:57:19] Speaker 04:
It also seems to have a procedure that it doesn't give people notice about and doesn't let people come in and be parties, too.

[00:57:24] Speaker 04:
So it's getting

[00:57:26] Speaker 04:
your side of the story.

[00:57:28] Speaker 07:
Well, it's getting our side in the sense that it is aware of our service.

[00:57:31] Speaker 04:
That's all it's getting.

[00:57:33] Speaker 07:
Sure, but it is aware of our service and that we are engaged in worldwide transit and that we explain to them.

[00:57:39] Speaker 04:
But isn't it a bit much to assume that the eligibility application, which is written by the person that wants the entity that wants MSP status, is going to say anything other than we're eligible?

[00:57:51] Speaker 07:
Well, but we do say things other than that.

[00:57:53] Speaker 07:
I mean, this is at page A6 of the record.

[00:57:56] Speaker 07:
We clearly lay out the service that we're going to provide.

[00:57:58] Speaker 07:
We indicate that this is going to be part of our role.

[00:58:01] Speaker 04:
No, my hypothetical was... Sure.

[00:58:03] Speaker 04:
Well, one, I guess you would say that doesn't matter.

[00:58:05] Speaker 04:
You don't need to do that.

[00:58:06] Speaker 04:
It's not part of eligibility.

[00:58:08] Speaker 04:
But it wouldn't matter if all along your intention was to not comply with the exclusivity provision.

[00:58:15] Speaker 07:
So a few things.

[00:58:17] Speaker 07:
One, that is our position that to establish foreign commerce you have to show some foreign commerce.

[00:58:22] Speaker 07:
You don't have to establish for eligibility that you engage exclusively in foreign commerce.

[00:58:25] Speaker 07:
I think it would be a very odd thing for an operator to do to indicate that

[00:58:30] Speaker 07:
to hide the ball in that respect, given that at the very next stage, they're gonna have to be part of an operating agreement and that they're gonna have to certify annually under 53106B that they are in fact in compliance with.

[00:58:44] Speaker 04:
No, with percentage compliance, as you've said in your interview.

[00:58:47] Speaker 04:
Right, 322 days is a rather significant percentage, and so I don't think the sort of... No, no, but 322 just to be eligible, and then you can go on for 322 days and you just lose some of your money.

[00:59:01] Speaker 07:
So that's right with a few qualifications.

[00:59:04] Speaker 07:
One, in less than 180 days, you get kicked out of the program entirely.

[00:59:08] Speaker 07:
Also, this is a separate procedure.

[00:59:10] Speaker 04:
It's a big delta between 180 and 30.

[00:59:12] Speaker 07:
Sure, but the government also has the ability under 53104C to rescind a contract if they believe that an operator is a material breach.

[00:59:21] Speaker 01:
We are so far beyond.

[00:59:23] Speaker 01:
what's in the briefs before us, much less the record we have.

[00:59:30] Speaker 07:
Could I just make one final point about SIPAN?

[00:59:34] Speaker 07:
I think it's important to note that on any sort of interpretation, the vast majority of our trade with SIPAN is just indisputably permissible because it is

[00:59:43] Speaker 07:
Their whole argument, it turns on the scope of the covenant, and so there's a dispute about that, but that is only going to implicate our carriage of U.S.

[00:59:51] Speaker 07:
cargo from the mainland U.S.

[00:59:53] Speaker 07:
to Saipan.

[00:59:54] Speaker 07:
We also engage in a tremendous amount of service between Saipan and foreign countries, between Saipan and Guam, and that is clearly authorized under a registry endorsement based on the Coast Guard's regulation, which we cite in our brief, and they have not challenged.

[01:00:07] Speaker 07:
Thank you.

[01:00:08] Speaker 01:
All right, Council for Petitioner.

[01:00:15] Speaker 01:
If I may make three very quick points.

[01:00:19] Speaker 00:
Judge Millett, on the Saipan decision in 50501, it was approved at A100 under 53102C2, which is the citizen trust provision.

[01:00:30] Speaker 00:
The citizen trust must charter the boat to a U.S.

[01:00:32] Speaker 00:
documentation citizen

[01:00:34] Speaker 00:
the directors and management of which must be 50501 citizens.

[01:00:39] Speaker 00:
So Section C2 also requires a 50501 determination.

[01:00:43] Speaker 00:
It's not expressed in the statement, but it's expressed in the statute that 50501 is required for a citizen trust charter.

[01:00:51] Speaker 00:
All of the revisions, in fact, other than the defense contractor, which is a special exception for the Army or the Navy, require 50501 citizenship.

[01:00:59] Speaker 00:
Judge Rogers, you asked my colleague about exhaustion from the Justice Department, and he said that the exhaustion requirement doesn't apply to contractors.

[01:01:07] Speaker 00:
That's not what the regulation says.

[01:01:08] Speaker 00:
296.50 has two sentences.

[01:01:11] Speaker 00:
One refers to appeals.

[01:01:13] Speaker 00:
It does start any contractor.

[01:01:15] Speaker 00:
And then it has a second sentence at the end, and it says, such appeal, that is the previous appeal, is a prerequisite to administrative exhaustion.

[01:01:23] Speaker 00:
not limited to contractors, and we submit that that presupposes that administrative exhaustion is required, as this court is familiar, it almost always is required, and somebody would act at their peril to go to court without exhausting and trying to exhaust, as we did.

[01:01:36] Speaker 00:
And finally, on this side pan point, the statute says exclusive.

[01:01:41] Speaker 00:
exclusively in the foreign trade or exclusively in the mixed foreign and domestic trade under a registry endorsement, and it is in the regulation 296.2, which neither one of my colleagues even mentioned, that is picked up expressly in 53102B, the eligibility requirement.

[01:01:59] Speaker 00:
So it's no answer to say this is operational.

[01:02:02] Speaker 00:
Judge Millett, the way it works is when the vessel goes into the program, it must be exclusively in the foreign trade.

[01:02:09] Speaker 00:
If somewhere down the road, these are 10-year agreements, because of weather or operating exigencies or contingencies, it might drop below that for operationally for 320 days, they can get a deduct.

[01:02:21] Speaker 00:
But on the date of admission, it has to be exclusive.

[01:02:23] Speaker 00:
And these are the only vessels in the history of this program that have ever operated in the domestic trades.

[01:02:28] Speaker 00:
This is a rare exception that the agency did not document and did not follow the statutory requirements.

[01:02:34] Speaker 01:
All right.

[01:02:34] Speaker 01:
Thank you.

[01:02:35] Speaker 01:
Thank you.

[01:02:36] Speaker 01:
We will take the case under advisement.