Independent United States Tanker Owners Committee v. Dole

Brief Fact Summary. A repayment rule promulgated by the Secretary of Transportation (the Secretary) set up a repayment system for subsidies for the merchant marine fleet.

Synopsis of Rule of Law. “After [an] agency considers the comments presented by the participating parties, it ‘shall incorporate in the rules adopted a concise general statement of their basis and purpose.’” “Such a statement should indicate the major issues of policy that were raised in the proceedings, and explain why the agency decided to respond to these issues as it did, particularly in light of the statutory objectives that the rule must serve.”

Facts. In an attempt to aid the merchant marine fleet compete in foreign commerce, the Department of Transportation promulgated a rule that allowed tankers, built with federal subsidies, to participate in domestic operations if they agreed to repay the subsidy plus interest.

Issue. Whether a rule promulgated by the Secretary “exceed[ed] the Secretary’s statutory authority.” Whether the rule was “arbitrary and capricious.”

Held. Yes. The Court of Appeals for the District of Columbia Circuit (The Court) found that the Secretary had authority. No. The Court found that the Secretary’s statement of basis and purpose “fails to give an adequate account of how the payback rule serves [the] objectives [of the rule] and why alternative measure were rejected in light of them.” The “absence of any such discussion” led the Court to conclude that the Secretary’s action was “arbitrary and capricious.”

Discussion. “In order to defend [an] action, [an agency] must spell out in more detail how [its] decision to adopt this rule and reject alternative measures.”