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Shipbuilders Council of Am. v. U.S. Coast Guard

ELR Citation: 39 ELR 20198
Nos. Nos. 08-1546, 01702, (4th Cir., 08/21/2009)

The Fourth Circuit reversed a lower court decision rejecting the U.S. Coast Guard's interpretation of its own regulations concerning the installation of double hulls on oil tankers overseas. Under U.S. law, a vessel becomes ineligible to participate in the coastwise trade if significant work is performed on the vessel in a foreign shipyard. In this case, the Coast Guard determined that because work performed in China on the inner hull of an oil tanker, the Seabulk Trader, did not constitute a separable major component of the ship, it was not considered "rebuilt foreign" and, thus, was entitled to retain its coastwise endorsement. The language of the applicable regulation does not, in itself, provide clear guidance on how to determine which test should be used to determine whether the work is "rebuilt foreign." Here, the Coast Guard's interpretation offers a holistic vision of the regulation that gives effect to each of its provisions, and its interpretation comports with the plain language of the regulatory and statutory schemes. The interpretation is long-standing, has been consistently applied in the same manner, and comports with the congressional intent of the governing statute. The Coast Guard was therefore entitled to deference.