Under the Act to Prevent Pollution from Ships (APPS), 33 U.S.C. §§ 1901 et seq, the U.S. Coast Guard is authorized to board and inspect ships docked in U.S. ports to investigate potential violations of the International Convention for the Prevention of Pollution from Ships (MARPOL) as implemented by the APPS.

In the event a violation is suspected, the Coast Guard may order the

U.S. Customs and Border Patrol Protection to withhold customs clearance to foreign-flagged vessels. If a violation has occurred, there can be both criminal and civil liability. Pursuant to 33 U.S.C. § 1908(e), the U.S. Coast Guard has broad authority and discretion to impose both financial and non-financial conditions for the release of a foreign-flagged vessel the agency has detained at a United States port due to suspected violations of federal and international environmental law. Courts, so far, have declined to review the measures and the conditions posed by the Coast Guard.

In the Watervale Marine Co. v. U.S. Department of Homeland Security [i], as conditions of the vessel's release following alleged APPS violations, the Coast Guard required of the shipowners that:

  • listed crewmembers remain within the jurisdiction pending the investigation;
  • wages, housing, and transportation costs, along with a per diem are paid for those crew members that remain in the jurisdiction;
  • the crew is encouraged to cooperate with the government's criminal investigation;
  • employment of the crew members that remain in the jurisdiction is maintained;
  • repatriation of crew members once they leave the United States is arranged;
  • the crew members' passports are held for safekeeping with the obligation to notify the government if any crew member requests return of his passport;
  • they stipulate to the authenticity of documents and items seized from the vessel ;
  • help is provided to the government in serving subpoenas on foreign crew members located outside of the United States; objections to both in personam and in rem jurisdiction are waived, and
  • an appearance in federal district court is entered.

After the Coast Guard ordered Customs to withhold the vessels, the vessel interests executed the security agreements and posted bond as required by the Coast Guard. Once the Vessels had been released, and failing the administrative appeals against the Coast Guard's decision, the vessel interests commenced legal action in the U.S. District Court for the District of Columbia.

The vessel interests' demand for relief was grounded on the Coast Guard lack of statutory authority to require non-financial conditions prior to the release of the vessel. The vessel interests argued the wording of 33 U.S.C. § 1908(e) which states: "clearance may be granted upon the filing of a bond or other surety satisfactory to the Secretary" only allowed the Coast Guard to require the posting of a bond, but prevented her from demanding compliance with further conditions.

The District Court, however, observed that the statutory language allows, but does not mandate the Coast Guard to release the vessels, and that the posting of a bond by the shipowners is a condition necessary, but not sufficient to obtain release. Furthermore, the Court acknowledged that Congress gave "absolutely no guidance" as to how the agency should exercise her discretion and that therefore a Court would not have sufficient standards to perform a review. Combining those two factors led the Court to determine that the matter of whether, and at what conditions, vessels detained for APPS violations should be released is "committed to agency discretion by law" and therefore not subject to judicial review.

Watervale represents the that the most recent effort by ship owners to challenge the discretion of the Coast Guard with respect to alleged violations of APPS. What makes Watervale different from prior attempts is that the vessel interests were not contesting the legitimacy of the bond request, nor its entity. Instead, the vessel interests had already submitted security for the financial portion, and only sought review of the non-financial conditions.To put Watervale in context, previously, in Bottiglieri Shipping v. U.S[ii]., the Coast Guard denied clearance for a foreign flag vessel to depart the Port of Mobile (AL) since there was reasonable cause to suspect an APPS violation. As a consequence, the vessel remained in Port pending investigation, with losses on the order of $15.000 a day in lost hire plus port charges.The vessel sought clearance through the posting of a bond or security as allowed by 33 U.S.C. § 1908(e). Despite lengthy negotiations, the Coast Guard only agreed to a marginal reduction of the original security demand and continued to disagree about the arrangements for the crew. As such, the vessel interests petitioned the United States District Court for the Southern District of Alabama to obtain judicial relief.

While the District Court found that the Coast Guard's refusal to further engage in negotiations constituted a "final agency action" as required by the APA in 5 U.S.C. § 704, the Court declined jurisdiction because "federal courts lack jurisdiction over administrative action where ... agency action is committed to agency discretion by law". In detail, the District Court found that where a statute gives no meaningful standard against which to judge the agency's exercise of discretion, a judicial review is not possible.

In particular, the District Court found that 33 U.S.C. § 1908 only states that "clearance may be granted upon the filing of bond or other surety satisfactory to the Secretary", without providing parameters to limit the "enormously broad" discretion of the Coast Guard. By recognizing that the Coast Guard enjoys "virtually unfettered latitude" in deciding whether to or not to grant clearance, and if so, what bond or surety would be considered satisfactory, the District Court declined jurisdiction.

In short, the language of APPS allows the Coast Guard broad authority and discretion to demand non-financial conditions in security agreements.