Menkes v. U.S. Department of Homeland Security

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued October 22, 2010 Decided March 8, 2011

No. 09-5372

RICHARD J. MENKES,

APPELLANT

v.

U.S. DEPARTMENT OF HOMELAND SECURITY, ET AL.,

APPELLEES

Appeal from the United States District Court

for the District of Columbia

(No. 1:04-cv-01456)

Jonathan G. Axelrod argued the cause and filed the briefs

for appellant. Edward M. Gleason Jr. entered an appearance.

Alan Burch, Assistant U.S. Attorney, argued the cause for

appellees. With him on the brief were Ronald C. Machen Jr.,

U.S. Attorney, and R. Craig Lawrence, Assistant U.S. Attorney.

Claire Whitaker, Assistant U.S. Attorney, entered an

appearance.

Before: GINSBURG and BROWN, Circuit Judges, and

EDWARDS, Senior Circuit Judge.

2

Opinion for the Court filed by Senior Circuit Judge

EDWARDS.

Opinion filed by Circuit Judge BROWN dissenting in part.

EDWARDS, Senior Circuit Judge: The Great Lakes Pilotage

Act (“GLPA”) sets forth certain requirements for persons who

serve as pilots of vessels sailing on the waters of the Great

Lakes. Under the statute, the United States Coast Guard (“Coast

Guard” or “agency”) is afforded discretion to “authorize the

formation of a pool by a voluntary association of United States

registered pilots to provide for efficient dispatching of vessels

and rendering of pilotage services.” 46 U.S.C. § 9304(a).

Pursuant to this statutory authority, the Coast Guard has

promulgated regulations that provide for the formation of pools

in three Great Lakes districts. 46 C.F.R. § 401.300. Under the

applicable regulations, “[w]hen pilotage service is not provided

by the association authorized under 46 U.S.C. 9304 because of

a physical or economic inability to do so, . . . the Director [of

Great Lakes Pilotage of the Coast Guard] may order any U.S.

registered pilot to provide pilotage service.” Id. § 401.720(b).

Appellant Richard Menkes was a member of the St.

Lawrence Seaway Pilots’ Association (“SLSPA” or

“Association”) – the only voluntary association designated by

the Coast Guard to provide pilotage service in the district

encompassing the St. Lawrence River and Lake Ontario.

Menkes resigned from the SLSPA in 2000 and then requested

the Coast Guard to dispatch him as an unaffiliated, independent

pilot on the St. Lawrence River. In March 2001, Menkes was so

assigned pursuant to § 401.720(b). In late 2003, the Coast

Guard determined that Menkes’s appointment as an independent

pilot would “naturally expire” at the conclusion of the 2003

navigation season. The agency indicated that it would continue

to monitor the SLSPA to determine whether the services of an

independent pilot would be required during the 2004 season.

3

However, Menkes was never reassigned to serve on the St.

Lawrence River in 2004.

In August 2004, Menkes filed suit against the United States

Department of Homeland Security, the Coast Guard, and the

Assistant Commandant of the Coast Guard (collectively “the

Government”), challenging the Coast Guard’s determination to

terminate his appointment as an unaffiliated, independent pilot.

Menkes claimed that the Government’s action violated the

Administrative Procedure Act (“APA”), as well as his First

Amendment and Fifth Amendment rights. The District Court

granted the Government’s motion to dismiss. Menkes v. Dep’t

of Homeland Sec. (“Menkes I”), 402 F. Supp. 2d 204 (D.D.C.

2005). On appeal, we reversed and remanded the case. Menkes

v. Dep’t of Homeland Sec. (“Menkes II”), 486 F.3d 1307 (D.C.

Cir. 2007). The District Court then remanded the case to the

Coast Guard for further consideration.

After further review, the Coast Guard held that, under the

statute and applicable regulations, a “voluntary association”

under 46 U.S.C. § 9304 refers to a group of people “joined

together for a certain purpose, and not a legal entity distinct

from the persons who are members.” See Agency Decision on

Remand in the Appendix to this opinion. The Coast Guard held

further that a certified voluntary association is not required to

“dispatch every registered, licensed and qualified pilot who

desires to provide pilotage services.” Id. In other words, pilots

who are not members of a designated voluntary association do

not share in its responsibilities or privileges. The Coast Guard

also determined that Menkes had no right to serve as an

independent pilot during the 2004 navigation season, because,

as of December 2003, the SLSPA appeared to have a sufficient

number of pilots to provide pilotage service for the upcoming

season.

Menkes again sought relief in the District Court. After

reviewing cross-motions for summary judgment, the District

4

Court rejected Menkes’s claims and granted judgment to the

Government. Menkes v. Dep’t of Homeland Sec. (“Menkes III”),

662 F. Supp. 2d 62 (D.D.C. 2009). On Menkes’s APA claim,

the District Court held that the Coast Guard reasonably

concluded that Menkes’s term of service as an independent pilot

expired in 2003, and that Menkes had no entitlement to

reassignment in 2004. The District Court also held that issue

preclusion barred Menkes’s First Amendment claim because the

Second Circuit had ruled against Menkes on the same issue in a

suit against the SLSPA. Menkes v. SLSPA (“SLSPA”), 269 F.

App’x 54 (2d Cir. 2008). Finally, the District Court rejected

Menkes’s Fifth Amendment due process claim because he failed

to demonstrate a viable property interest in an appointment to

serve as a pilot in a specific area. Menkes timely appealed.

We affirm the judgment of the District Court. First, we

hold that the Coast Guard’s interpretation of the term “voluntary

association” in 46 U.S.C. § 9304 easily survives review under

Chevron Step Two. See Chevron U.S.A. Inc. v. Natural Res.

Def. Council, Inc., 467 U.S. 837, 843-44 (1984) (holding that,

once a court determines that Congress either explicitly or

implicitly delegated to an agency the authority to fill a gap in its

authorizing statute, the court must accept the agency’s position

if it is based on a “permissible” interpretation of the statute).

Second, we agree with the District Court that Menkes’s First

Amendment claim appears to be precluded by the Second

Circuit’s judgment. In any event, the claim fails on the merits.

Third, we hold that the Coast Guard did not act arbitrarily and

capriciously in determining that Menkes’s dispatch as an

independent pilot expired after the 2003 navigation season.

Fourth, we reject Menkes’s Fifth Amendment due process claim,

because Menkes had no constitutionally protected entitlement to

continued dispatch by the Coast Guard. Finally, we hold that

the District Court did not abuse its discretion in denying

Menkes’s request for extra-record discovery.

5

I. BACKGROUND

A. Statutory and Regulatory Background

In 1960, Congress passed the GLPA in order “to establish

pilotage requirements for oceangoing vessels in their navigation

of U.S. waters of the Great Lakes and St. Lawrence River and to

provide a basis for a regulated pilotage system to meet those

requirements.” H.R. REP. NO. 86-1666, at 1 (1960), reprinted in

1960 U.S.C.C.A.N. 2481, 2481. The statute, as amended,

requires both U.S. and foreign vessels in these waters to “engage

a United States or Canadian registered pilot for the route being

navigated,” 46 U.S.C. § 9302, and requires the Coast Guard to

prescribe “standards of competency” that each applicant must

meet in order to become a United States registered pilot, id. §

9303. Most pertinent to this appeal, it provides that:

(a) The Secretary may authorize the formation of a pool by

a voluntary association of United States registered

pilots to provide for efficient dispatching of vessels

and rendering of pilotage services.

(b) For pilotage pools, the Secretary may –

(1) limit the number of the pools;

(2) prescribe regulations for their operation and

administration;

(3) prescribe a uniform system of accounts;

(4) perform audits and inspections; and

(5) require coordination on a reciprocal basis with

similar pool arrangements authorized by the

appropriate agency of Canada.

Id. § 9304.

The Coast Guard has promulgated several regulations

pursuant to the GLPA. Two of these regulations are particularly

6

important here: one, 46 C.F.R. § 401.300, authorizes voluntary

associations of U.S. registered pilots to establish pools in three

districts of the U.S. waters of the Great Lakes; the other, 46

C.F.R. § 401.720(b), provides that “[w]hen pilotage service is

not provided by the association authorized under 46 U.S.C. 9304

because of a physical or economic inability to do so, . . . the

Director [of Great Lakes Pilotage of the Coast Guard] may order

any U.S. registered pilot to provide pilotage service.” Only

District One – which covers portions of the St. Lawrence River

and Lake Ontario – is at issue in this case. Id. § 401.300(a)(1);

see also Decl. of Paul M. Wasserman ¶¶ 10-11 (May 28, 2008),

reprinted in Joint Appendix (“J.A.”) 455-56.

District One is comprised of two areas: the waters in Area

1, which include portions of the St. Lawrence River, and the

waters in Area 2, which include Lake Ontario. Decl. of Paul M.

Wasserman ¶¶ 10-11 (May 28, 2008), J.A. 455-56. A single

pilot can be qualified to navigate vessels in both areas, although

Area 2 pilots must be qualified to navigate a vessel both into a

port and from “pilot boat to pilot boat,” i.e., a vessel that is only

passing through Lake Ontario. Id. ¶ 17, J.A. 459.

B. Procedural Background

At all times relevant to this litigation, the SLSPA was the

only pilotage pool authorized by the Coast Guard in District

One. In order to become a member of the SLSPA, a pilot must

be recommended by the voting members of the SLSPA and

purchase one share (worth approximately $60,000) of Seaway

Pilots Inc., the corporate entity through which the SLSPA

purchases pilot boats and other property. Menkes was a member

of the SLSPA until 2000, at which point he tendered his equity

stake in Seaway Pilots Inc. and resigned from the Association.

Following his resignation from the SLSPA, Menkes informed

the Coast Guard that “I am still a U.S. Registered Pilot . . .[, and]

I maintain my right to be dispatched.” Letter from Richard J.

7

Menkes to Frank J. Flyntz, Director, Great Lakes Pilotage (July

24, 2000), reprinted in J.A. 138.

The Director of Great Lakes Pilotage of the Coast Guard,

Frank J. Flyntz, dispatched Menkes as an independent pilot for

the 2001 navigation season. Flyntz explained his actions as

follows:

Captain Menkes will remain in District [One] as a U.S.

registered pilot and be available for dispatch whether or not

he belongs to a pilotage pool. A pilotage pool is a

voluntary association of registered pilots. 46 U.S.C.

§ 9304. There is no mandatory requirement in statute or

regulation that requires Great Lakes registered pilots to

belong to a pool in order to provide pilotage service.

Captain Menkes’ resignation from the SLSPA does not

prevent him from being dispatched nor does it provide any

basis for the Coast Guard to deny him the opportunity to

continue to earn his livelihood as a U.S. registered pilot.

Captain Menkes has a vested property right in his certificate

of registration that the Coast Guard cannot revoke simply

because he does not belong to a pilotage pool. . . .

Furthermore, as I stated in my letter to the SLSPA dated

February 26, 2001, there is a serious need for qualified

pilots in District [One] and, as I previously determined, the

SLSPA has not physically provided adequate pilotage

service in accordance with 46 C.F.R. § 401.720(b).

Letter from F.J. Flyntz, Director, Great Lakes Pilotage to Roger

Paulus, President, SLSPA at 1 (Mar. 7, 2001) (emphasis in

original), reprinted in J.A. 131. The SLSPA appealed Flyntz’s

determination. The disputed decision was upheld, albeit on

different grounds, by J.P. High, the Coast Guard’s Director of

Waterways Management. High concluded that, “[a]s the

Director may order any U.S. Registered Pilot to provide pilotage

service in situations such as those found by the Director to

currently exist, I find that the Director’s order to Captain

8

Menkes was a valid exercise of his authority [under 46 C.F.R.

§ 401.720(b)].” Letter from J.P. High, Director of Waterways

Mgmt., to Mark Ruge, Preston, Gates, Ellis & Rouvelas, Meeds

LLP at 3 (May 22, 2001) (emphasis in original), reprinted in

J.A. 127.

Menkes served as an independent pilot in Area 1 of District

One during the 2001, 2002, and 2003 navigation seasons. Each

season runs from the end of March until the end of December.

In August 2003, the SLSPA wrote then-Acting Director of the

Office of Great Lakes Pilotage of the Coast Guard, Paul

Wasserman, insisting that the Association was fully able to

provide all necessary pilotage service in District One. Letter

from SLSPA to Paul Wasserman, Acting Director, Office of

Great Lakes Pilotage (Aug. 20, 2003), reprinted in J.A. 97.

Wasserman disagreed in part and renewed the Coast Guard’s

determination that the SLSPA was unable to provide adequate

pilotage service through the end of the 2003 navigation season.

However, Wasserman stated that, at the end of the 2003 season

“[this] determination, and Captain Menkes’ appointment as an

independent pilot, will naturally expire.” Letter from Paul M.

Wasserman, Director, Great Lakes Pilotage to Roger Paulus &

Richard Menkes at 2 (Dec. 29, 2003), reprinted in J.A. 77.

Wasserman added that he would “continue to monitor the status

of the SLSPA after the 2003 navigation season to determine

whether the services of any independent pilots will be required

for the 2004 navigation season.” Id. In a subsequent letter

responding to Menkes’s claim “that [his] status as an

independent pilot in District One [was] a permanent

circumstance,” Wasserman made it clear that “[Menkes’s] status

as an independent pilot has been predicated on a determination

by my office that an extraordinary circumstance exists, which I

have not made for any future navigation seasons.” Letter from

Paul M. Wasserman, Director, Great Lakes Pilotage to Richard

Menkes at 1 (Jan. 22, 2004), reprinted in J.A. 73.

9

Menkes’s appeal of Wasserman’s decision was rejected by

T.J. Gilmour, the Assistant Commandant for Marine Safety.

Gilmour found that Flyntz’s 2001 decision to dispatch Menkes

was based on [Flyntz’s] determination that the SLSPA

could not physically provide adequate pilotage service and

there was a serious need for additional qualified pilots in

District One. Captain Menkes’ continued service as an

independent pilot was, and is, contingent upon that

extraordinary circumstance remaining in effect.

Letter from T.H. Gilmour, Real Admiral, U.S. Coast Guard to

Edward M. Gleason, Beins, Axelrod, Kraft, Gleason & Gibson,

P.C. (“Gilmour Letter”) at 1 (Apr. 12, 2004) (emphasis added),

reprinted in J.A. 68. Gilmour added that “Captain Menkes is

free to apply to the SLSPA for membership in that association.”

Id. at 2, J.A. 69.

In August 2004, Menkes filed suit in the District Court

against the Government, alleging that the Coast Guard violated

his First Amendment associational rights, his Fifth Amendment

due process rights, and the APA in determining that his

appointment as an independent pilot in District One had expired.

He sought injunctive relief, cease-and-desist orders, and such

other relief as appropriate. The District Court granted the

Government’s motion to dismiss Menkes’s claims under FED. R.

CIV. P. 12(b)(1) and 12(b)(6). Menkes I, 402 F. Supp. 2d 204

(D.D.C. 2005). The court held that the Coast Guard’s actions

were “committed to agency discretion by law,” and,

accordingly, not reviewable under the APA. Id. at 207-09. In

addition, the District Court dismissed Menkes’s First

Amendment claim on the ground that the Coast Guard had not

required Menkes to join the SLSPA as a condition of

employment, id. at 209-10, and it dismissed his Fifth

Amendment claim on the ground that neither the statute nor the

applicable regulations created “an entitlement to the

10

authorization of working as an independent pilot in a district

with an approved pilotage pool,” id. at 210.

On appeal, we reversed the District Court’s judgment and

vacated the decision of the Coast Guard. We first concluded

that the Coast Guard’s determination was reviewable under the

APA. Menkes II, 486 F.3d at 1312-13. We declined, however,

to address Menkes’s statutory claim, because the Coast Guard

had yet to offer an explicit interpretation of the statute or the

applicable regulations. We explained that

[i]t is not appropriate for us to decide appellant’s statutory

argument – that giving a preference to the Association

conflicts with the controlling statute’s use of “voluntary

association” – at this time. We cannot pass comfortably on

that question because we do not have a forthright agency

interpretation of the statute. Paradoxically, the government

argues that we should give deference to its interpretation

under Chevron U.S.A., Inc. v. Natural Resources Defense

Council, Inc., 467 U.S. 837 (1984). But putting aside the

question raised by United States v. Mead Corp., 533 U.S.

218 (2001) – whether an interpretation advanced only in an

informal adjudication is entitled to deference – in this case

we do not have an explicit agency interpretation of either

the statute or the regulation to evaluate. To be sure, section

401.720(b) could be read to imply a preference for the

Association. The Wasserman and Gilmour letters could

also be read to suggest as much. But an implication is not

an agency interpretation, and we are disinclined to tease

out, from the welter of correspondence in this case, an

interpretation the agency itself has failed to offer. The

statutory question is potentially a difficult one. The Coast

Guard must come to grips with the meaning of the statute,

and, particularly, the meaning of the term “voluntary

association.” An agency interpretation is not only

11

necessary to meet appellant’s administrative law challenge,

it is also essential . . . to meet his constitutional claims.

Id. at 1313-14 (footnote omitted).

We likewise declined to evaluate Menkes’s argument that

the agency acted arbitrarily and capriciously in denying him an

appointment for the 2004 navigation season, noting that “the

Coast Guard has offered no explanation regarding the changed

conditions from the 2003 to 2004 navigation season, and on

remand it will be obliged to do so.” Id. (footnote omitted). The

case was remanded “to the district court with instructions to

remand the APA claim to the Coast Guard for further

proceedings.” Id. at 1315. The District Court was instructed to

“retain jurisdiction over appellant’s constitutional claims, but

hold them in abeyance pending the Coast Guard’s response to

the remand.” Id.

On remand, the agency “invite[d] Mr. Menkes to submit

any evidence or arguments he would like the Coast Guard to

consider.” Letter from Paul M. Wasserman, Director, Great

Lakes Pilotage to Jonathan G. Axelrod, Benis[sic], Axelrod &

Kraft, P.C. at 1 (Aug. 9, 2007), reprinted in J.A. 317. Menkes’s

counsel wrote the agency and contended that: (1) a Coast

Guard-designated “voluntary association” is required to dispatch

willing, registered pilots regardless of whether they are members

of the association; (2) the Coast Guard erred in determining that

Menkes’s status as an independent pilot expired at the

conclusion of the 2003 navigation season; and (3) the Coast

Guard never found that the SLSPA could provide adequate

pilotage service for the 2004 navigation season. Letter from

Jonathan G. Axelrod to Paul M. Wasserman, Director, Great

Lakes Pilotage (Oct. 9, 2007), reprinted in J.A. 336-47.

In an exhaustive decision, the Coast Guard addressed the

issues raised by this court in Menkes II and by Menkes’s counsel

in his submission on remand. In this decision, the Coast Guard

12

set forth in detail the agency’s interpretation of “voluntary

association” under 46 U.S.C. § 9304, explained the rights and

responsibilities of such associations under the statute and agency

regulations, and clarified the rights of unaffiliated, independent

pilots. The principal judgments made by the Coast Guard are as

follows:

• The statutes governing Great Lakes pilotage and the

implementing Coast Guard regulations do not require

certificated pilots’ associations to dispatch every registered,

licensed, and qualified pilot who desires to provide pilotage

services.

• Certificated pilots’ associations are primarily responsible

for providing adequate pilotage services, and that includes

deciding whether or not to dispatch non-member pilots.

• Only when a certificated pilots’ association is not providing

adequate pilotage service would the Director deviate from

the policy of placing primary responsibility for providing

pilotage service with the certificated pilots’ association and

intervene to ensure that adequate pilotage service is

provided or notify vessels that a pilot is not available. This

is a longstanding policy based in part on the Coast Guard’s

interpretation of the Great Lakes pilotage regulations,

dating at least back to about 1975.

• The Coast Guard does not interpret the phrase “voluntary

association” found in 46 U.S.C. § 9304, and in the Coast

Guard’s implementing regulations, to mean that a

certificated pilots’ association must dispatch every

registered, licensed, and qualified pilot who desires to

provide pilotage service. Any such language in Flyntz’s

letter was never an authoritative statement of the agency’s

interpretation of the phrase “voluntary association.”

• Since Congress has not provided a specific meaning or

definition for the phrase “voluntary association,” the Coast

13

Guard may interpret the phrase to give it a meaning that is

reasonable and consistent with the purpose of 46 U.S.C.

§ 9304 and 46 U.S.C. Chapter 93 as a whole.

• An association is a collection of persons joined together for

a certain object, and an unincorporated association is not a

legal entity distinct from the persons who are members.

Membership in a voluntary unincorporated association is

generally held to be a privilege which may be accorded or

withheld, and not a right which can be gained

independently and then enforced. Congress used the phrase

“voluntary association” to mean only a collection of

persons joined together for a certain purpose, and not a

legal entity distinct from the persons who are members.

The Coast Guard considers this to be a reasonable

interpretation of the phrase as it is used in 46 U.S.C.

§ 9304, and this meaning is consistent with the purpose of

that provision and 46 U.S.C. Chapter 93 as a whole.

• If Congress had intended 46 U.S.C. § 9304 to have the

meaning that Menkes asserts, it would have used the word

“voluntary” with “pool” to indicate that the pool should be

open to anyone wanting to provide pilotage service;

although, even in that case, the intent of the phrase would

not be plain. But, as it is, Congress used the phrase

“voluntary association.” Interpreting the word voluntary to

mean that the association should be open to anyone wanting

to provide pilotage service is not plain from the statutory

language, and such an interpretation would do Menkes no

good, because he specifically does not want to join the

SLSPA.

• With respect to pilots’ associations, and Great Lakes pilots’

associations in particular, in the more than forty years since

the GLPA was enacted, persons wanting to join a pilots’

association apply to become a member and the pilots’

association admits those it chooses to accept and who can

14

meet the requirements to become a registered, licensed, and

qualified pilot.

• Congress intended to regulate pilotage on the Great Lakes

and intended to give the Coast Guard authority to delegate

to certificated pilots’ associations the operation of pilotage

pools “to provide for efficient dispatching of vessels and

rendering of pilotage services.” 46 U.S.C. § 9304. It is the

Coast Guard’s view that this should include allowing the

certificated pilots’ associations to decide if they will

dispatch non-member pilots. Of course, the certificated

pilots’ associations’ power to operate pilotage pools is

always subject to the Director’s authority to register Great

Lakes pilots, in accordance with 46 C.F.R. Part 401,

Subpart B; to set pilotage rates with target compensation

based on an assumed reasonable number of pilots to provide

adequate pilotage service, in accordance with 46 C.F.R.

Part 404; and to generally oversee the provision of pilotage

services in accordance with 46 U.S.C. Chapter 93 and 46

C.F.R. Chapter III.

• The agency’s authorized delegation of primary

responsibility for the operation of pilotage pools to

certificated pilots’ associations is in the public interest.

• The Coast Guard has no interest in whether Menkes joins

the SLSPA or any other pilots’ association. That is a matter

entirely up to him and to the pilots’ association if he wants

to apply for membership.

This material is drawn from the Agency Decision on Remand

from the Court of Appeals for the District of Columbia and the

District Court for the District of Columbia in the Case of

Richard J. Menkes v. Dep’t of Homeland Sec., et al. (June 2,

2008) (“Agency Decision on Remand”) at 8-16, reprinted in J.A.

286-94. [Because it is not otherwise easily accessible online or

15

elsewhere, a substantial portion of the Agency Decision on

Remand is reprinted in the Appendix to this opinion.]

The agency also addressed the need for pilots in Area 2

during the 2004 navigation season. Relying on a declaration by

Wasserman, the Coast Guard found that

at the end of the 2003 navigation season, even allowing for

a modest increase in bridge hours [the hours a pilot is

aboard a vessel providing basic pilotage service] in the

2004 navigation season, there was no reason for Mr.

Wasserman to believe that more than four pilots would be

needed for the 2004 navigation season in Area 2.

Considering that the SLSPA expected to have four pilots

available for service in Area 2, it did not appear that there

would be a great need for Area 1 pilots to work in Area 2

and that the SLSPA could provide adequate pilotage service

without Mr. Menkes being ordered to provide pilotage

service [in Area 1].

Agency Decision on Remand at 33-34, J.A. 311-12; see also

Decl. of Paul M. Wasserman (May 28, 2008), J.A. 451-61

(explaining basis for Wasserman’s decision to allow Menkes’s

appointment as independent pilot to expire).

The parties returned to the District Court, where both

Menkes and the Government filed new cross-motions for

summary judgment. The District Court denied Menkes’s motion

and granted the Government’s. Menkes III, 662 F. Supp. 2d 62

(D.D.C. 2009). It first rejected Menkes’s argument that he

should be allowed to conduct extra-record discovery, holding

that Menkes failed to make a sufficient showing that the Coast

Guard acted in bad faith. Id. at 69-70 & n.5. Second, the court

found the Coast Guard’s interpretation of the term “voluntary

association” both reasonable and consistent with the agency’s

actions. Id. at 70. Third, the court found that, despite

Wasserman’s and Gilmour’s use of the term “extraordinary

16

circumstance” in their 2003 and 2004 letters, the Coast Guard

did not apply an improper standard in determining that the

SLSPA likely would have an adequate number of pilots

available for the 2004 navigation season. See id. at 71. Finally,

the court found that it was unreasonable for Menkes to believe

that Flyntz’s 2001 letter gave him a permanent right to dispatch

as an unaffiliated, independent pilot. Id. at 71-73.

The District Court also found for the Government with

respect to Menkes’s constitutional claims. The court held that

Menkes’s First Amendment claim was precluded by the Second

Circuit’s decision in SLSPA, in which that court rejected

Menkes’s First Amendment claim against the SLSPA. Id. at 73.

The District Court also held that Menkes’s due process claim

under the Fifth Amendment failed because Menkes did not have

a protected property interest in serving as a pilot in a specific

area of the Great Lakes. Id. at 73-74.

Menkes appeals from the District Court’s ruling that the

Coast Guard’s interpretation of the term “voluntary association”

was consistent with 46 U.S.C. § 9304. He also appeals from the

District Court’s disposition of his remaining APA and

constitutional claims.

II. Analysis

A. Standard of Review

Our review of the District Court’s grant of summary

judgment, including its legal determinations regarding Menkes’s

First Amendment and due process claims, is de novo. See

Howmet Corp. v. EPA, 614 F.3d 544, 549 (D.C. Cir. 2010). We

review the District Court’s denial of Menkes’s request for

additional discovery for an abuse of discretion. United States v.

Deloitte LLP, 610 F.3d 129, 134 (D.C. Cir. 2010). Within that

abuse of discretion standard, however, we review whether the

District Court applied the correct legal standard de novo. Id.

Menkes’s claim that the Coast Guard’s interpretation of

17

“voluntary association” in 46 U.S.C. § 9304 is at odds with the

statute is reviewed under the two-part test enunciated by the

Supreme Court in Chevron. See Chevron, 467 U.S. at 843-44.

As for Menkes’s assertion that the Coast Guard violated the

APA in its decisionmaking,

the arbitrary and capricious standard governs review of all

proceedings that are subject to challenge under the APA.

See Consumers Union of U.S., Inc. v. FTC, 801 F.2d 417,

422 (D.C. Cir. 1986). Thus, if an action is subject to review

under the APA, it does not matter whether it is a formal or

informal adjudication or a formal or informal rulemaking

proceeding – all are subject to arbitrary and capricious

review under [5 U.S.C.] § 706(2)(A).

HARRY T. EDWARDS & LINDA A. ELLIOTT, FEDERAL

STANDARDS OF REVIEW–REVIEW OF DISTRICT COURT

DECISIONS AND AGENCY ACTIONS 167 (2007) (emphasis in

original).

Normally, an agency [action] would be arbitrary and

capricious if the agency has relied on factors which

Congress has not intended it to consider, entirely failed to

consider an important aspect of the problem, offered an

explanation for its decision that runs counter to the evidence

before the agency, or is so implausible that it could not be

ascribed to a difference in view or the product of agency

expertise.

Motor Vehicle Mfrs. Ass’n of the U.S., Inc. v. State Farm Mut.

Auto. Ins. Co., 463 U.S. 29, 43 (1983).

B. Statutory Interpretation of “Voluntary Association”

Menkes does not claim that the Coast Guard violated the

APA when it issued the Agency Decision on Remand without

first engaging in notice-and-comment rulemaking. And for

good reason. The Supreme Court has made it clear that “the fact

18

that [an] Agency . . . reache[s an] interpretation through means

less formal than ‘notice and comment’ rulemaking does not

automatically deprive that interpretation of the judicial

deference otherwise its due.” Barnhart v. Walton, 535 U.S. 212,

221 (2002) (citation omitted). Menkes’s sole objection here is

that the Coast Guard’s interpretation of the term “voluntary

association” in 46 U.S.C. § 9304 is manifestly at odds with the

terms of the GLPA and thus arbitrary and capricious under the

APA.

In addressing Menkes’s claim, we must first determine

whether the agency’s interpretation of the statute – including its

construction of “voluntary association” and its explanation of an

association’s responsibilities vis-à-vis the Coast Guard and

independent pilots – deserves Chevron deference. Menkes does

not contest the applicability of Chevron. Appellant’s Br. at 16

(“Chevron . . . controls the Court’s review of an administrative

agency decision.”). Nevertheless, in light of the concerns raised

by the court in Menkes II, 486 F.3d at 1313-14, we are

constrained to address the degree of deference due, if any, to the

Coast Guard’s construction and application of the statute.

Under Chevron, if a

court determines Congress has not directly addressed the

precise question at issue, the court does not simply

impose its own construction on the statute, as would be

necessary in the absence of an administrative

interpretation. Rather, if the statute is silent or

ambiguous with respect to the specific issue, the

question for the court is whether the agency’s answer is

based on a permissible construction of the statute.

The power of an administrative agency to

administer a congressionally created . . . program

necessarily requires the formulation of policy and the

making of rules to fill any gap left, implicitly or

19

explicitly, by Congress. If Congress has explicitly left

a gap for the agency to fill, there is an express delegation

of authority to the agency to elucidate a specific

provision of the statute by regulation. Such legislative

regulations are given controlling weight unless they are

arbitrary, capricious, or manifestly contrary to the

statute. Sometimes the legislative delegation to an

agency on a particular question is implicit rather than

explicit. In such a case, a court may not substitute its

own construction of a statutory provision for a

reasonable interpretation made by the administrator of

an agency.

Chevron, 467 U.S. at 843-44 (ellipsis in original) (footnotes and

quotation omitted). The statute at issue here states that

(a) The Secretary may authorize the formation of a pool by

a voluntary association of United States registered

pilots to provide for efficient dispatching of vessels

and rendering of pilotage services.

(b) For pilotage pools, the Secretary may–

(1) limit the number of the pools;

(2) prescribe regulations for their operation and

administration;

(3) prescribe a uniform system of accounts;

(4) perform audits and inspections; and

(5) require coordination on a reciprocal basis with

similar pool arrangements authorized by the

appropriate agency of Canada.

46 U.S.C. § 9304. The statute does not directly address the

precise questions at issue in this case. However, there is no

doubt that the statute provides an “express delegation of

20

authority to the agency to elucidate” the terms of § 9304. It is

also clear that the Coast Guard acted pursuant to this

congressionally delegated authority in adopting regulations

governing pilotage on the Great Lakes and in amplifying its

interpretation of the statute in its Agency Decision on Remand.

Therefore, the Secretary’s regulations and the Agency Decision

on Remand are “legislative regulations [that must be] given

controlling weight unless they are arbitrary, capricious, or

manifestly contrary to the statute.”

It does not matter that the Agency Decision on Remand – in

which the Coast Guard amplified its position on the meaning of

“voluntary associations” and explained the rights of unaffiliated,

independent pilots – is a judgment rendered in an adjudication

rather than in a rulemaking procedure.

The Supreme Court has explained that [Chevron] Step Two

deference . . . comes into play when an agency has acted

within the area in which Congress has authorized it to act,

and the action at issue was taken pursuant to

congressionally delegated authority to make law and with

the intent on the part of the agency to act with the force of

law. [United States v. Mead Corp., 533 U.S. 218, 226-27

(2001)]. As Mead explains, “[i]t is fair to assume generally

that Congress contemplates administrative action with the

effect of law when it provides for a relatively formal

administrative procedure tending to foster the fairness and

deliberation that should underlie a pronouncement of such

force.” Id. at 230. The absence of rulemaking or

adjudicatory procedures is not dispositive, however, for the

Court has “sometimes found reasons for Chevron deference

even when no such administrative formality was required

and none was afforded.” Id. at 231.

HARRY T. EDWARDS & LINDA A. ELLIOTT, FEDERAL

STANDARDS OF REVIEW–REVIEW OF DISTRICT COURT

DECISIONS AND AGENCY ACTIONS 152 (2007).

21

Menkes’s arguments fall far short of showing that the Coast

Guard’s interpretation of 46 U.S.C. § 9304 is manifestly

contrary to the statute or otherwise arbitrary and capricious.

First, the Coast Guard was acting pursuant to an express

delegation from Congress. The GLPA specifically allows the

Coast Guard to “authorize the formation of a pool by a voluntary

association of United States registered pilots.” 46 U.S.C.

§ 9304. And the statutory mandate gives the Coast Guard the

explicit authority to set parameters for voluntary associations.

See id. § 9304(b).

Second, the Coast Guard’s Agency Decision on Remand

addresses interstitial questions, see Walton, 535 U.S. at 222, that

are bound up with the administration of the Coast Guard’s

scheme of regulating pilotage on the Great Lakes. If the Coast

Guard had adopted Menkes’s proposal that independent pilots

must be dispatched on equal terms with members of voluntary

associations, this could have incentivized other member pilots

– like Menkes – to resign their association membership because

they could receive the benefit of being dispatched without the

burden of paying for an equity stake in a voluntary association.

See Letter from Richard J. Menkes to Paul M. Wasserman,

Acting Director of Great Lakes Pilotage (July 8, 2003),

reprinted in J.A. 98 (explaining Menkes’s position that “[i]f five

pilots are called for in the rates, I would be entitled to one fifth

of all U.S. dispatches; if the number of pilots called for is six,

then I would get one sixth of all U.S. dispatches, and so on”).

This could have impacted myriad aspects of the regulatory

scheme, 46 C.F.R. § 401.300 et seq., including the Coast

Guard’s discretion to “determine[ ] that a pool is necessary for

the efficient dispatching of vessels and the providing of pilotage

services in the area concerned,” id. § 401.320(a). After all, if an

association had to dispatch every willing, non-member

registered pilot, this could affect the Coast Guard’s calculus of

whether the formation of a pool in a particular district would be

efficient. In sum, the potential ramifications of the agency’s

22

decision confirm that these are precisely the sort of complex,

interstitial questions that the Coast Guard deserves deference to

address. See Mylan Labs., Inc. v. Thompson, 389 F.3d 1272,

1280 (D.C. Cir. 2004) (according Chevron deference to FDA

letter due to “complexity of the statutory regime under which the

FDA operates, the FDA’s expertise [and] the careful craft of the

scheme it devised to reconcile the various statutory provisions”).

Furthermore, the Coast Guard’s interpretation, as clarified

in the Agency Decision On Remand, reflects a longstanding

agency policy. The Coast Guard explained that the policy dates

back to around 1975, Agency Decision on Remand at 9, J.A.

287, and Menkes has provided no evidence to the contrary. In

fact, in a letter sent by Menkes in 1978, he acknowledged that

[i]t is my understanding that the Great Lakes Pilotage

System allowed only licensed pilots who were members of

the designated pilot association . . . to operate vessels unless

an appropriate waiver has been obtained for such pilotage.

Even waivers, to the best of my knowledge, do not allow

pilots who were former members of the association without

any affiliation, to pilot vessels in the Great Lakes System.

Letter from Richard J. Menkes to George R. Skuggen, Director,

Great Lakes Pilotage Staff (Mar. 27, 1978), reprinted in J.A.

144. Although, as noted above, F.J. Flyntz arguably voiced a

different view in his 2001 letter authorizing Menkes to be

dispatched, Flyntz’s determination was appealed by the SLSPA.

On appeal, Flyntz’s disputed decision was modified by his

superior, J.P. High, the Coast Guard’s Director of Waterways

Management, who upheld the decision solely on the ground that

Menkes could be dispatched because the SLSPA was not

providing adequate pilotage service. See Letter from J.P. High,

Director of Waterways Mgmt., to Mark Ruge, Preston, Gates,

Ellis & Rouvelas, Meeds LLP at 2-3 (May 22, 2001), J.A. 126-

27. High did not adopt Flyntz’s interpretation of the GLPA.

23

Because High’s construction of the statute displaced Flyntz’s, it

is evident that Flyntz’s interpretation was never controlling.

It is highly significant here that the agency’s “interpretation

is one of long standing.” Walton, 535 U.S. at 221. And it does

not matter that the Coast Guard “reached its interpretation

through means less formal than ‘notice and comment’

rulemaking,” id., especially when Menkes has not challenged

the method used by the agency to amplify its regulations.

Benkelman Tel. Co. v. FCC, 220 F.3d 601, 607 n.10 (D.C. Cir.

2000) (finding argument that agency violated APA by failing to

utilize notice-and-comment rulemaking waived).

Surely, the Coast Guard’s enunciation of the aforecited

statutory interpretations and rules has the “force of law,” Mead,

533 U.S. at 232, especially given the instruction from this court

to the agency to “come to grips with the meaning of the statute.”

Menkes II, 486 F.3d at 1314. The court’s remand order did not

instruct the agency to conduct notice-and-comment rulemaking

or a formal adjudication, nor did Menkes request either

procedure. In these circumstances, we think it is clear under

Mead and Walton that Chevron applies. And not only does the

deferential Chevron framework apply to the Coast Guard’s

interpretation of 46 U.S.C. § 9304, but, to the extent that the

Coast Guard’s Agency Decision on Remand reflects the agency’s

interpretation of its own regulations – here, 46 C.F.R §§

401.300, 401.720(b) – it deserves even greater deference. See

Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 512 (1994);

see also Chase Bank USA, N.A. v. McCoy, 131 S.Ct. 871, 880-82

(2011) (deferring to agency’s interpretation of its own

regulation, advanced in legal brief, because “the interpretation

. . . is consistent with the regulatory text”).

Applying the Chevron framework, we conclude that the

Coast Guard’s policy is easily upheld. Chevron Step One

requires that we “examine[] the statute de novo in order to

determine ‘whether Congress has directly spoken to the precise

24

question at issue.’” Eagle Broad. Grp., Ltd. v. FCC, 563 F.3d

543, 550 (D.C. Cir. 2009) (quoting Chevron, 467 U.S. at 842).

It is not clear from the text of 46 U.S.C. § 9304 whether a

voluntary association can decide to dispatch only its members,

for the term “voluntary association” is undefined. Nor are there

any hints in the GLPA’s limited legislative history as to how

Congress wished to resolve this question. See H.R. REP. NO. 86-

1666 (1960), reprinted in 1960 U.S.C.C.A.N. 2481. Congress

thus did not definitively answer the question at issue. Menkes’s

argument that an association cannot be “voluntary” if

membership is a necessary precondition for employment is a

non-sequitur.

Moving on to Chevron Step Two, we are obliged to defer to

the agency’s interpretation if it is “based on a permissible

construction of the statute.” Chevron, 467 U.S. at 843; see also

NetCoalition v. SEC, 615 F.3d 525, 533 (D.C. Cir. 2010) (noting

that “we accept the agency’s interpretation of the statute as long

as it is reasonable”). The Coast Guard contends that its position

is in furtherance of the public interest because

it removes the Director [of Great Lakes Pilotage] from day

to day involvement in the operation of the pilotage pools

and allows him to focus on oversight of the Great Lakes

pilotage operations. It also allows the pilots’ associations

that traditionally have brought organization and efficiency

to the provision of pilotage service to apply their expertise

to the operation of the pool. And it promotes the

availability of the necessary infrastructure for safe and

efficient pilotage – such as pilot boats, and office functions

including billing. It promotes retention of pilots, by giving

the pilots in the association some control over decisions that

will affect the financial health of the pilots, the pilots’

association and other entities that may provide

infrastructure support to the pilots.

25

Agency Decision on Remand at 15, J.A. 293. These

justifications are reasonable, and Menkes does not question

them.

In sum, we have no trouble concluding that the Coast

Guard’s interpretations of the statute and its implementing

regulations are neither manifestly contrary to the statute nor

arbitrary and capricious.

C. First Amendment

Menkes also argues that the Coast Guard violated his First

Amendment right of association by requiring him to become a

member of the SLSPA in order to be dispatched as a pilot in

District One. It appears that this claim is precluded because the

Second Circuit decided this issue against Menkes in SLSPA, a

case in which Menkes brought suit against the SLSPA alleging,

inter alia, that the SLSPA violated Menkes’s First Amendment

right of association.

This case involves defensive, non-mutual issue preclusion,

because the Government – the party seeking to invoke

preclusion – was not a party to the Second Circuit action. Issue

preclusion applies “[w]hen an issue of fact or law is actually

litigated and determined by a valid and final judgment, and the

determination is essential to the judgment.” RESTATEMENT

(SECOND) OF JUDGMENTS § 27 (1982). Preclusion also must “not

work a basic unfairness to the party bound by the first

determination.” Yamaha Corp. of Am. v. United States, 961

F.2d 245, 254 (D.C. Cir. 1992). In addition, “issue preclusion

does not require mutuality of parties.” Gov’t of Rwanda v.

Johnson, 409 F.3d 368, 374 (D.C. Cir. 2005) (citing Blonder-

Tongue Labs., Inc. v. Univ. of Ill. Found., 402 U.S. 313 (1971)).

The First Amendment issue pressed by Menkes here is

identical to the one decided by the Second Circuit: whether

requiring membership in the SLSPA as a condition of being

dispatched by the Association as a District One pilot violated

26

Menkes’s First Amendment rights. See Menkes v. SLSPA, No.

06-CV-339, 2007 WL 167715 at *10 (N.D.N.Y. Jan. 18, 2007)

(citing Menkes’s complaint). The Second Circuit decided this

issue against Menkes on the merits, citing the Supreme Court’s

decision in Keller v. State Bar of California, 496 U.S. 1, 8

(1990), to support the proposition that “the government can

compel an individual to join a professional association as a

condition of employment.” SLSPA, 269 F. App’x at 56.

Because the Second Circuit’s disposition of Menkes’s First

Amendment claim was final and essential to the Second

Circuit’s judgment dismissing his complaint, and neither in his

briefs nor at oral argument did Menkes provide a plausible

explanation as to why preclusion would be unfair, preclusion is

appropriate.

Even if Menkes’s First Amendment claim were not

precluded, it would fail on the merits. Menkes argues that

Abood v. Detroit Board of Education, 431 U.S. 209 (1977),

prevents the government from enabling a private association to

require membership as a condition of employment. Abood, in

fact, refutes Menkes’s argument. In Abood, the Court upheld a

Michigan statute that permitted a union and a local government

employer to enter into an “agency shop” agreement, whereby

non-union members had to pay the union the equivalent of union

dues as a condition of employment. The Court noted that “[t]o

compel employees financially to support their collective-

bargaining representative has an impact upon their First

Amendment interests.” Id. at 222. Nonetheless, it found the

“agency shop” agreement constitutionally justified by

Congress’s assessment of the important contribution of these

types of arrangements to the system of labor relations. Id. It

follows from Abood that here, even if the Coast Guard’s

interpretation of the term “voluntary association” in 46 U.S.C.

§ 9304 does impinge on Menkes’s First Amendment rights, any

such interference is justified by the government’s interest in

regulating pilotage on the Great Lakes.

27

The legislative history of the GLPA indicates the factors at

issue in regulating Great Lakes pilotage – including the need for

maritime safety, the need for coordination between the United

States and Canada, and Congress’s push for the equitable

participation of American nationals in Great Lakes pilotage.

H.R. REP. NO. 86-1666, at 3-4 (1960), reprinted in 1960

U.S.C.C.A.N. 2481, 2483-84. By giving voluntary associations

the discretion to dispatch members, the Coast Guard is acting in

furtherance of these legitimate interests. See Agency Decision

on Remand at 15, J.A. 293 (explaining why the Coast Guard’s

policy is in the public interest). These interests are sufficient to

satisfy Abood. See also Keller, 496 U.S. at 13-14 (holding that

“compelled association” of state bar was justified by the “State’s

interest in regulating the legal profession and improving the

quality of legal services”); Ry. Emps.’ Dep’t, Am. Fed. of Labor

v. Hanson, 351 U.S. 225, 238 (1956) (holding that provision of

Railway Labor Act permitting a “union shop” clause, whereby

every employee is obliged to pay union dues, did not violate

First Amendment).

Menkes has not raised, and we need not address, whether a

Coast Guard-designated pilots’ association could arbitrarily

reject an applicant for membership in that association, or

whether an association could refuse to dispatch a registered non-

member willing to pay all costs of membership, including the

equity stake, and assume all responsibilities shared by

association members. Here, although Menkes was willing to

reimburse the SLSPA for expenses that the Association incurred

on his behalf, he did not offer to purchase the equity stake,

worth approximately $60,000, that members are required to

purchase. Reply Br. at 9. Although Menkes cursorily alleges

the SLSPA “engages in legislative and lobbying activities,”

Appellant’s Br. at 4, he does not allege that the SLSPA used, or

threatened to use, any of his funds for political or ideological

activities unrelated to pilotage, which could run afoul of Abood,

431 U.S. at 236. See also Int’l Ass’n of Machinists v. Street, 367

28

U.S. 740 (1961) (construing Railway Labor Act to avoid

constitutional question of whether union could spend

employee’s dues for political causes that employee opposes).

Finally, Menkes’s reliance on NLRB v. General Motors

Corp., 373 U.S. 734 (1963), and Local 357, International

Brotherhood of Teamsters v. NLRB, 365 U.S. 667 (1961), is

entirely misplaced. These cases involved the legality of an

agency shop agreement and a hiring hall arrangement under the

National Labor Relations Act. Neither decision addressed the

First Amendment.

D. The Coast Guard’s Decision That Menkes’s Appointment

as an Independent Pilot Expired After the 2003 Season

Menkes proffers a hodgepodge of arguments for why the

Coast Guard’s decision not to dispatch him as an independent

pilot during the 2004 season was arbitrary and capricious in

violation of the APA, 5 U.S.C. § 706(2)(A). None of these

arguments carry the day.

1. Wasserman’s Declaration

Menkes first focuses on the statement in Wasserman’s

declaration, which was offered to supplement the administrative

record pursuant to our remand in Menkes II, that

[i]n letters dated November 5, 2003, and December 15,

2003, and in informal communications that continued

through March of 2004, the SLSPA . . . convinced me that

the pilots’ association really would be able to resolve the

attrition issue in Area 2 and have an adequate number of

pilots there during the 2004 navigation season.

Decl. of Paul M. Wasserman ¶ 16 (May 28, 2008), reprinted in

J.A. 459. Menkes contends that the SLSPA’s November 5 and

December 15 letters do not support a conclusion that the SLSPA

had cured its performance problems with respect to Area 2. We

disagree. The letters clearly provide support for the view that

29

the SLSPA had not been responsible for the problem of pilot

attrition in Area 2. To the extent that the attrition problem was

attributable to the Association, the December 15 letter notes the

Association’s “recent recruitment and training successes” and

sets forth proposed modifications to the pay structure for pilots-

in-training intended to forestall discontent of new members.

Letter from Roger S. Paulus, President, to Paul M. Wasserman,

Acting Director, Great Lakes Pilotage at 2 (Dec. 15, 2003),

reprinted in J.A. 82. In light of these letters, it was reasonable

for Wasserman to conclude that the Association deserved a

chance to provide adequate pilotage service for the 2004 season.

Menkes also argues that the Coast Guard’s decision was

arbitrary and capricious, because Wasserman’s reliance on

“informal communications” does not reveal either the facts upon

which he relied or his sources of information. While it is true

that the record does not contain a log of each communication

between the SLSPA and Wasserman in 2003, Wasserman’s

declaration does provide a detailed explanation of the reasons

justifying Wasserman’s belief that the SLSPA likely would be

able to provide adequate pilotage service in the 2004 season.

Wasserman concluded that no more than six pilots would be

necessary to provide adequate pilotage service in Area 1 and that

the SLSPA had seven of its own pilots qualified for the area,

making Menkes’s services unnecessary. Decl. of Paul M.

Wasserman ¶¶ 13-19 (May 28, 2008), J.A. 457-61. Menkes

offers nothing to suggest that these calculations were in error or

a fabrication.

Reading Wasserman’s reference to “informal

communications” in context, it is evident that the informal

communications provided factual support for the information

and calculations that led Wasserman to conclude that the SLSPA

could dispatch a sufficient number of its own pilots to provide

adequate pilotage service in 2004. E.g., id. ¶ 17, J.A. 460 (“[B]y

the end of December, 2003, the SLSPA had verbally requested,

30

and I had verbally approved, authority to open a pilot selection

process to hire additional [Area 2] pilots in time for the 2004

season.”). In fact, Menkes himself wrote the Coast Guard

complaining of a surplus of pilots during the 2003 navigation

season. Letter from Richard J. Menkes to Paul M. Wasserman,

Acting Director of Great Lakes Pilotage (July 8, 2003),

reprinted in J.A. 98 (“At the present time [the SLSPA]

employ[s] too many pilots for the amount of traffic using the

Seaway, and this year is proving to be one of the slowest

navigation seasons on record.”).

At bottom, Menkes argues that the Coast Guard’s decision

is arbitrary and capricious because it fails to record each of the

agency’s informal communications with the SLSPA. We

decline to adopt such a rigid rule. See Menkes II, 486 F.3d at

1314 (“[T]his was an informal adjudication, and it is common

for the record to be spare in such cases.”); see also Bowman

Transp., Inc. v. Ark.-Best Freight Sys., Inc., 419 U.S. 281, 286

(1974) (“[W]e will uphold a decision of less than ideal clarity if

the agency’s path may reasonably be discerned.”). Here, it is

clear that Wasserman had communicated with the SLSPA in

2003 and, as a result, became convinced of the merits of the

Association’s plan to provide adequate pilotage service for all of

District One during the 2004 season. Wasserman explained the

basis of his decision through his on-the-record declaration, and

that explanation is sufficient to survive arbitrary-and-capricious

review.

Menkes also argues that Wasserman could not have written

his December 29, 2003 letter terminating Menkes’s appointment

based on communications “that continued through March of

2004,” Decl. of Paul M. Wasserman ¶ 16 (May 28, 2008), J.A.

459. Although that is obviously true, the mere fact that

Wasserman continued to communicate with the SLSPA in early

2004 about this issue does not indicate that Wasserman had no

rational basis for his December 2003 decision to let Menkes’s

31

appointment expire. Indeed, Wasserman’s behavior was

consistent with the statement in his December 2003 letter to

Menkes and the SLSPA that he would “continue to monitor the

status of the SLSPA after the 2003 navigation season to

determine whether the services of any independent pilots will be

required for the 2004 navigation season.” Letter from Paul M.

Wasserman, Director, Great Lakes Pilotage to Roger Paulus &

Richard Menkes at 2 (Dec. 29, 2003), J.A. 77.

Menkes also contends that Wasserman’s declaration is an

impermissible post hoc rationalization for the Coast Guard’s

action. This argument is meritless. Wasserman’s declaration

was presented in response to this court’s direction to the Coast

Guard to offer an “explanation regarding the changed conditions

from the 2003 to 2004 navigation season” on remand. Menkes

II, 486 F.3d at 1314. “Needless to say, if it is appropriate for a

court to remand for further explanation, it is incumbent upon the

court to consider that explanation when it arrives.” Alpharma,

Inc. v. Leavitt, 460 F.3d 1, 6 (D.C. Cir. 2006). As we noted in

Local 814, International Brotherhood of Teamsters v. NLRB,

546 F.2d 989, 992 (D.C. Cir. 1976) (per curiam):

The “post hoc rationalization” rule is not a time barrier

which freezes an agency’s exercise of its judgment after an

initial decision has been made and bars it from further

articulation of its reasoning. It is a rule directed at

reviewing courts which forbids judges to uphold agency

action on the basis of rationales offered by anyone other

than the proper decisionmakers.

Because Wasserman is a “proper decisionmaker,” his

declaration – which explains why the agency allowed Menkes’s

appointment to lapse in 2003 – is not an impermissible post hoc

rationalization.

32

2. “Extraordinary Circumstance” Standard

Menkes goes on to argue that the Coast Guard’s position

that unaffiliated, independent pilots could only be dispatched in

the event of an “extraordinary circumstance” is a stricter

standard than the regulatory requirement of a “physical or

economic inability to [provide service],” 46 C.F.R.

§ 401.720(b), and that the Coast Guard originally used the

“extraordinary circumstance” standard to allow Menkes’s

appointment as an independent pilot to expire. This issue was

highlighted in Menkes II. We noted that Wasserman’s use of the

phrase “extraordinary circumstances” in his January 22, 2004

letter “seems to be an unexplained, stricter threshold for the

appointment of nonmember pilots than the regulation’s text

contemplates.” 486 F.3d at 1314. In its decision on remand,

however, the Coast Guard clarified that “[t]he phrase

‘extraordinary circumstance’ was only used as a way to describe

the inability of the pilots’ association to provide pilotage

service.” Agency Decision on Remand at 22, J.A. 300. The

viability of the Coast Guard’s explanation is confirmed by

Gilmour’s 2004 letter denying Menkes’s appeal, which made

clear that the “extraordinary circumstance” to which Wasserman

had referred in his December 2003 letter was the “determination

that the SLSPA could not physically provide adequate pilotage

service and there was a serious need for additional qualified

pilots in District One.” Gilmour Letter at 1, J.A. 68.

Consequently, contrary to Menkes’s claims, the Coast Guard did

not “repudiate[ ] its position,” Appellant’s Br. at 22, and did not

act arbitrarily and capriciously in straying from the standard set

forth in 46 C.F.R. § 401.720(b).

3. Specific Comparisons

Finally, Menkes argues that the Coast Guard did not comply

with this court’s instruction in Menkes II to provide “specific

comparisons” explaining why the Coast Guard’s view of the

33

adequacy of the supply of pilots changed in 2004. Menkes II,

486 F.3d at 1314 n.6. This claim also has no merit.

In his declaration, Wasserman explained that

[b]y December 22, 2003, at the end of the navigation

season, there was one pilot remaining in Area 2 who was

qualified to take vessels into the major ports on the Lake

and there was one new pilot who would, shortly following

the beginning of the 2004 season, be able to take vessels

pilot boat to pilot boat. In addition, by the end of

December, 2003, the SLSPA had verbally requested, and I

had verbally approved, authority to open a pilot selection

process to hire additional Lake pilots in time for the 2004

season.

Id. ¶ 17, J.A. 459-60. We can find no infirmity in the agency’s

explanation, and Menkes offers nothing to convince us that the

Coast Guard failed to comply with the court’s mandate in

Menkes II.

E. Fifth Amendment

Menkes argues that the Coast Guard violated his Fifth

Amendment due process right to a hearing when it decided that

his appointment as an unaffiliated, independent pilot had

expired. We find no merit in this claim.

A person cannot have a protected entitlement “if

government officials may grant or deny [the benefit] in their

discretion.” Town of Castle Rock v. Gonzales, 545 U.S. 748,

756 (2005). 46 C.F.R. § 401.720(b) permits the Coast Guard to

order an unaffiliated, independent pilot to provide pilotage

service if a designated voluntary association cannot provide such

service due to a “physical or economic inability to do so.” This

is a discretionary standard, and whether the SLSPA is able to

provide adequate pilotage service is wholly out of Menkes’s

control. See Glatt v. Chicago Park Dist., 87 F.3d 190 (7th Cir.

34

1996) (holding that yacht owner did not have entitlement to

particular slip in harbor, when Marine Director could change

assigned slip on grounds of “efficiency” or to address other

circumstances). Although Menkes benefitted from SLSPA’s

inability to provide adequate pilotage service from 2001 through

2003, that, by itself, did not create a constitutionally protected

right to continued dispatch absent a “legitimate claim of

entitlement,” Bd. of Regents v. Roth, 408 U.S. 564, 577 (1972).

Menkes’s contention that Flyntz’s 2001 letter bolstered his

entitlement to continued dispatch is simply mistaken. As the

District Court pointed out:

Flyntz’s statements did not represent Coast Guard policy.

Furthermore, even assuming Flyntz’s statements were

authoritative, the statement at best created a property

interest in Menkes’s certificate of registration [as a United

States pilot], not in his continued appointment. The Coast

Guard’s decision only affects his ability to be dispatched in

a specific area of the Great Lakes. It has no effect on his

certificate of registration. Thus, even if Menkes has a

property interest in his certificate of registration, he does

not have a property interest in in [sic] serving as a pilot in

a specific area.

Menkes III, 662 F. Supp. 2d at 74 (emphasis in original).

Even if Menkes did have a protected entitlement in being

dispatched as an independent pilot, he received all the process

that he was due under the Fifth Amendment. See Mathews v.

Eldridge, 424 U.S. 319, 334 (1976). Menkes had multiple

opportunities to be heard by the Coast Guard on the issues that

he has raised. For example, in January 2004, after Wasserman

made his initial determination, Menkes appealed to Gilmour and

explained why he believed that Wasserman had erred. Letter

from Edward M. Gleason to Thomas Gilmour, Assistant

Commander for Marine Safety (Jan. 28, 2004), reprinted in J.A.

35

52-54. Then, in 2007, after this court instructed the District

Court to remand Menkes’s APA claims to the Coast Guard, the

Coast Guard specifically “invite[d] Mr. Menkes to submit any

evidence or arguments he would like the Coast Guard to

consider.” Letter from Paul M. Wasserman, Director, Great

Lakes Pilotage to Jonathan G. Axelrod, Benis[sic], Axelrod &

Kraft, P.C. at 1 (Aug. 9, 2007), J.A. 317. Menkes made such a

submission to the agency, to which the Coast Guard directly

responded. Agency Decision on Remand at 35-37, J.A. 313-15.

Thus, even if Menkes’s alleged right to dispatch was

safeguarded by procedural due process rights, he received all the

process that he was due because he had ample opportunity to

apprise the Coast Guard of his views. See Dr Pepper/Seven-Up

Cos. v. FTC, 991 F.2d 859, 863 (D.C. Cir. 1993) (“Assuming,

arguendo, that [appellant] had a constitutionally protected

interest at stake, we would nonetheless conclude that it was

adequately protected by the informal procedures provided.”); see

also Commercial Drapery Contractors, Inc. v. United States,

133 F.3d 1, 6-7 (D.C. Cir. 1998) (notice and informal hearing

sufficient to satisfy due process).

F. Request for Extra-Record Discovery

Finally, Menkes argues that the District Court erroneously

denied his request to take discovery pertaining to Wasserman’s

“informal communications” with the SLSPA. We disagree. The

District Court applied the proper legal standard and did not

abuse its discretion in denying Menkes’s request. In agency

cases, limited extra-record discovery is only appropriate “when

there has been a strong showing of bad faith or improper

behavior or when the record is so bare that it prevents effective

judicial review.” Baptist Mem’l Hosp.-Golden Triangle v.

Sebelius, 566 F.3d 226, 230 (D.C. Cir. 2009) (quoting

Commercial Drapery, 133 F.3d at 7). We can find no reason to

question the District Court’s determination that Menkes “failed

36

to make a sufficient showing the agency acted in bad faith.”

Menkes III, 662 F. Supp. 2d at 69.

III. CONCLUSION

For the reasons indicated in the foregoing opinion, the

judgment of the District Court is affirmed.

37

APPENDIX

excerpts from

Agency Decision on Remand

June 2, 2008

....

The Coast Guard agrees with Mr. Menkes that certificated

pilots’ associations may dispatch non-member pilots and that

such pilots’ associations have in fact done so. However, the

Coast Guard does not agree that the statutes governing Great

Lakes pilotage or the implementing Coast Guard regulations

require certificated pilots’ associations to dispatch every

registered, licensed and qualified pilot who desires to provide

pilotage services. It is the Coast Guard’s position that

certificated pilots’ associations are primarily responsible for

providing adequate pilotage services, and that includes deciding

whether or not to dispatch non-member pilots. . . . [O]nly when

a certificated pilots’ association is not providing adequate

pilotage service would the Director deviate from the policy of

placing primary responsibility for providing pilotage service

with the certificated pilots’ association and intervene to ensure

that adequate pilotage service is provided or notify vessels that

a pilot is not available. This is a longstanding policy based in

part on the Coast Guard’s interpretation of the Great Lakes

Pilotage regulations, dating at least back to about 1975.

....

The Coast Guard’s authority to authorize certificated pilots’

associations is found in 46 U.S.C. § 9304, which states: “The

Secretary may authorize the formation of a pool by a voluntary

association of United States registered pilots to provide for

efficient dispatching of vessels and rendering of pilotage

services.” Coast Guard regulations implementing that provision

are found in 46 C.F.R. Part 401, Subpart C. The regulations

38

contain qualifications and requirements for formation of a pool

by a certificated pilots’ association, at 46 C.F.R. § 401.320,

including, among other requirements, that the pilots’ association

agree to provide pilots to vessels on a first-come, first served

basis. Significantly, that regulation does not require the pilotage

association to agree to dispatch or admit to the pool every

registered, licensed and qualified pilot who desires to provide

pilotage service.

The regulations also provide at 46 C.F.R. § 401.340 for the

dispatching of non-member pilots. The regulation states in part:

“[f]acilities and service of the pool may be denied to any U.S.

Registered Pilot who fails or refuses to execute [authorizations

relating to billing for services and compliance with work rules,

among other things]. While the regulation specifically grants

the pilots’ association authority to deny the facilities and

services of the pool to pilots refusing to agree to important terms

for participation in the pool, it does not explicitly address

whether a pilots’ association must otherwise make the facilities

and services of the pool available to non-member pilots. The

Coast Guard does not interpret this provision as requiring the

provision of the facilities and services of the pool to every pilot

willing to make the required authorizations or to require the

pilots’ association to dispatch every such pilot.

The Coast Guard also does not interpret the phrase

“voluntary association” found in 46 U.S.C. § 9304, and in the

Coast Guard’s implementing regulations to mean that a

certificated pilots’ association must dispatch every registered,

licensed and qualified pilot who desires to provide pilotage

service. Mr. Flyntz’s letter of March 7, 2001, J.A. 120-21, to

Captain Paulus of the SLSPA contains language emphasizing

the word “voluntary” in 46 U.S.C. § 9304 and suggesting that

the SLSPA and the Coast Guard had to allow Mr. Menkes to

continue providing pilotage service after he left the SLSPA.

....

39

It is the Coast Guard’s position that any such language in

Mr. Flyntz’s letter was never an authoritative statement of the

agency’s interpretation of the phrase “voluntary association.”

Moreover, even if it was, it was an aberration from the Coast

Guard’s consistent position in more than forty years of

regulating Great Lakes pilotage, and it was quickly superseded

by the final agency action of Mr. High, in his letter dated May

22, 2001, J.A. 114-16, following the SLSPA’s appeal of Mr.

Flyntz’s letter. Mr. High’s letter did not endorse Mr. Flyntz’s

novel interpretation of the phrase “voluntary association,”

instead basing the denial of the SLSPA’s appeal on the authority

of the Director to order a pilot to provide pilotage service in

accordance with 46 C.F.R. § 401.720(b).

....

As a matter of statutory interpretation, it seems that if

Congress had intended 46 U.S.C. § 9304 to have the meaning

that Mr. Menkes asserts, it would have used the word

“voluntary” with “pool” to indicate that the pool should be open

to anyone wanting to provide pilotage service although, even in

that case, the intent of the phrase would not be plain. But as it

is, Congress used the phrase “voluntary association.”

Interpreting the word voluntary to mean that the association

should be open to anyone wanting to provide pilotage service is

again not plain from the statutory language, and such an

interpretation would do Mr. Menkes no good, because he

specifically does not want to join the SLSPA.

Since Congress has not provided a specific meaning or

definition for the phrase “voluntary association,” the Coast

Guard may interpret the phrase and give it a meaning that is

reasonable and consistent with the purpose of 46 U.S.C. § 9304

and 46 U.S.C. Chapter 93 as a whole. Naturally, we start with

the plain meaning to the extent one can be ascertained.

American Jurisprudence 2d, Volume 6, has a Title called

“Associations and Clubs.” Section 1 of that title defines kinds

40

of associations. It explains that an association is a collection of

persons joined together for a certain object, and that any

unincorporated association is not a legal entity distinct from the

persons who are members. 6 Am Jur 2d, Associations and Clubs

§1. This section goes on to say:

The term ‘voluntary’ is frequently used in connection with

the term ‘association’ or ‘society,’ and some principles of

law are confined, in their operation, to ‘voluntary’

organizations. In this connection, the term means simply

that the organization is one in which one may seek, or be

accepted into, membership in the organization as a matter

of choice.

6 Am Jur 2d, Associations of Clubs §1.

With respect to pilots’ associations, and Great Lakes pilots’

associations in particular, in the more than forty years since the

Great Lakes Pilotage Act of 1960 was enacted, persons wanting

to join a pilots’ association apply to become a member and the

pilots’ association admits those it chooses to accept and who can

meet the requirements to become a registered, licensed and

qualified pilot.

With repsect to membership of voluntary associations,

American Jurisprudence states:

Membership in a voluntary unincorporated association

is generally held to be a privilege which may be accorded

or withheld, and not a right which can be gained

independently and then enforced.

6 Am Jur 2d, Association and Clubs § 18.

It is the Coast Guard’s position that Congress used the

phrase “voluntary association” only in the sense suggested by

the above mentioned language from American Jurisprudence 2d

– i.e., a collection of persons joined together for a certain

purpose, and not a legal entity distinct from the persons who are

41

members. The Coast Guard considers this to be a reasonable

interpretation of the phrase as it is used in 46 U.S.C. § 9304, and

that this meaning is consistent with the purpose of that provision

and 46 U.S.C. Chapter 93 as a whole.

....

With respect to Great Lakes pilotage, the Coast Guard

understands that Congress intended to regulate pilotage on the

Great Lakes and intended to give the Coast Guard authority to

delegate to certificated pilots’ associations the operation of

pilotage pools “to provide for efficient dispatching of vessels

and rendering of pilotage services.” 46 U.S.C. § 9304. It is the

Coast Guard’s view that this should include allowing the

certificated pilots’ associations to decide if they will dispatch

non-member pilots. Of course, the certificated pilots’

associations’ power to operate pilotage pools is always subject

to the Director’s authority to register Great Lakes pilots, in

accordance with 46 C.F.R. Part 401, Subpart B; to set pilotage

rates with target compensation based on an assumed reasonable

number of pilots to provide adequate pilotage service, in

accordance with 46 C.F.R. Part 404; and, to generally oversee

the provision of pilotage services, in accordance with 46 U.S.C.

Chapter 93 and 46 C.F.R. Chapter III.

....

The Coast Guard has determined that Congress intended to

allow the agency to delegate primary responsibility for the

operation of pilotage pools to certificated pilots’ associations,

and that delegating that responsibility is in the public interest.

That responsibility includes deciding whether or not to dispatch

non-member pilots. Delegating responsibility to the certificated

pilots’ associations is in the public interest because it removes

the Director from day to day involvement in the operation of the

pilotage pools and allows him to focus on oversight of the Great

Lakes pilotage operations. It also allows the pilots’ associations

42

that traditionally have brought organization and efficiency to the

provision of pilotage service to apply their expertise to the

operation of the pool. And it promotes the availability of the

necessary infrastructure for safe and efficient pilotage – such as

pilot boats, and office functions including billing. It promotes

retention of pilots, by giving the pilots in the association some

control over decisions that will affect the financial health of the

pilots, the pilots’ association and other entities that may provide

infrastructure support to the pilots.

....

Finally, to be very clear, the Coast Guard has no interest in

whether Mr. Menkes joins the SLSPA or any other pilots’

association. That is a matter entirely up to him and to the pilots’

association if he wants to apply for membership. Additionally,

it is not the position of the Coast Guard that Mr. Menkes must

join a pilots’ association if he wants to provide pilotage service.

The Coast Guard agrees with Mr. Menkes that under the

applicable statutes and regulations the certificated pilots’

associations may dispatch non-member pilots who are

registered, licensed and qualified to provide pilotage service.

However, the Coast Guard does not agree that the certificated

pilots’ associations have to dispatch non-member pilots. The

certificated pilots’ associations are primarily responsible for

operation of the pilotage pool, and they may decide whether or

not to dispatch non-member pilots.

Agency Decision on Remand from the Court of Appeals for the

District of Columbia and the District Court for the District of

Columbia in the Case of Richard J. Menkes v. Dep’t of

Homeland Sec., et al. (June 2, 2008) at 8-16, reprinted in J.A.

286-94.

BROWN, Circuit Judge, dissenting in part:

This is not an easy case. The court recognized as much

before our initial remand, acknowledging “[t]he statutory

question is potentially a difficult one,” and urging the Coast

Guard to provide a “forthright agency interpretation.”

Menkes v. Dep’t of Homeland Sec. (“Menkes II”), 486 F.3d

1307, 1313–14 (D.C. Cir. 2007). The Coast Guard did not

heed our advice. The process the Coast Guard instituted on

remand, as well as the agency’s proffered interpretation of the

relevant statute and/or its own regulations still provides little

light for those lost at sea.

Neither the Coast Guard’s Agency Decision on Remand

nor the court’s opinion identifies precisely what is being

interpreted: the statute, the Great Lakes Pilotage Act

(“GLPA”), or the agency regulations. The Agency Decision

on Remand focuses on the Coast Guard’s regulations, 46

C.F.R. §§ 401.320 and 401.340. But at the same time, the

Agency Decision on Remand purports to define the term

“voluntary association”—a phrase that appears only in the

statute. The court’s opinion, by comparison, suggests the

question is one of “statutory interpretation” and that “we are

constrained to address . . . the Coast Guard’s construction and

application of the statute.” Maj. Op. 17. Yet the court

focuses on the Coast Guard’s regulations and their animating

policies—not the statute—when justifying the deference it

gives and the reasonableness of the agency’s “statutory”

construction. Maj. Op. 21, 23.

Different interpretive processes implicate different levels

of deference, and ultimately this case is about deference—

whether it is owed, and if so, how it would be applied.

Whether the Coast Guard is interpreting the statute or its own

regulations, however, its interpretation stems from an

informal adjudication. As a result, the path to deference is not

as simple as the court makes it seem. If this is an agency

2

regulation case, our precedent requires notice and comment

when modifying an interpretation of an agency regulation—a

process the Coast Guard did not institute on remand. If this is

a statutory interpretation case, the minimum safeguards

required by the Administrative Procedures Act (“APA”) are

necessary—procedures the Coast Guard also did not

implement on remand. Either way, the agency is not entitled

to the reflexive and uncritical sort of deference the court gives

here.

At bottom, the Coast Guard argues allowing the SLSPA

to compel membership and screen pilots before dispatching

them to work on the Great Lakes is consistent with the term

“voluntary.” Even assuming deference is owed, this statutory

gloss—framed as an interpretation of the agency’s own

regulations or as an interpretation of the statute itself—seems

both dubious and pernicious. Therefore, I dissent.1

I

Although an agency is “entitled to significant deference

in interpreting its own regulation—perhaps even more than an

agency gets in interpreting a statute under Chevron”—it is

unlikely we would defer to an unreasonable agency

interpretation of an ambiguous regulation. Kidd Commc’ns v.

FCC, 427 F.3d 1, 4 (D.C. Cir. 2005); see Paralyzed Veterans

of Am. v. D.C. Arena, L.P.,117 F.3d 579, 584 (D.C. Cir. 1997)

(citing Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 512

(1994)); see also HARRY T. EDWARDS & LINDA A. ELLIOTT,

FEDERAL COURTS STANDARDS OF REVIEW: APPELLATE COURT

REVIEW OF DISTRICT COURT DECISIONS AND AGENCY

ACTIONS 165 (2007). An agency may tweak its interpretation

either through general rulemaking or by adjudication. See

1

I dissent only from the court’s resolution of Menkes’s APA claim.

3

SEC v. Chenery Corp., 332 U.S. 194, 202–03 (1947). But,

once an agency gives its regulation a definitive interpretation,

“‘it can only change that interpretation as it would formally

modify the regulation itself: through the process of notice and

comment rulemaking.’” Alaska Prof’l Hunters Ass’n v. FAA,

177 F.3d 1030, 1034 (D.C. Cir. 1999) (quoting Paralyzed

Veterans, 117 F.3d at 586). An agency has less flexibility in

“changing its interpretation of its regulations than in altering

its construction of a statute” because the APA defines

“rulemaking” to include “not only the agency’s process of

formulating a rule, but also the agency’s process of modifying

a rule.” Id. (citing 5 U.S.C. § 551(5)).

The Coast Guard’s first interpretive effort was put

forward by Director Flyntz in the 2001 informal adjudication

that set the present controversy in motion. See Chenery, 332

U.S. at 202 (stating an agency may promulgate regulatory

“rules” by “individual order,” i.e. in an informal

adjudication). We summarized Mr. Flyntz’ position in

Menkes II: “Flyntz stated that ‘Captain Menkes will continue

to serve as a pilot on the St. Lawrence River tour-de-role,’

and that he would ‘be available for dispatch whether or not he

belongs to a pilotage pool.’” 486 F.3d at 1309 (quoting Letter

from F.J. Flyntz, Director, Great Lakes Pilotage to Roger

Paulus, President, SLSPA at 1 (Mar. 7, 2001) [hereinafter

Flyntz March Letter], reprinted in J.A. 131). Flyntz

emphasized that “‘[a] pilotage pool is a voluntary association

of registered pilots,’ (citing 46 U.S.C. § 9304), and that

‘[t]here is no mandatory requirement in statute or regulation

that requires Great Lakes registered pilots to belong to a pool

in order to provide pilotage service.’” Id. (alterations in

original). Flyntz specifically noted: “resignation from the

Association does not . . . provide any basis for the Coast

Guard to deny him the opportunity to continue to earn his

4

livelihood as a U.S. registered pilot.” Id. (alteration in

original).2

Yet in 2003, Paul Wasserman, the newly appointed

Director, presented a different view. See Letter from Paul M.

Wasserman, Director, Great Lakes Pilotage to Roger Paulus

& Richard Menkes at 2 (Dec. 29, 2003) [hereinafter

Wasserman December Letter], reprinted in J.A. 76. Mr.

Wasserman (and Commandant Gilmour who affirmed

Wasserman’s informal adjudication when the SLSPA

challenged it) read § 401.720(b) as creating a preference for

the Association so long as the Association has the physical

and economic ability to meet demand. Id. Further, Gilmour

noted in 2004 that “Captain Menkes is free to apply to the

[Association] for membership in that association. He is also

free to apply to other pilotage associations within the Great

Lakes since he will have a valid license and a valid certificate

of registration as a U.S. registered pilot on the Great Lakes.”

Letter from T.H. Gilmour, Real Admiral, U.S. Coast Guard to

Edward M. Gleason, Beins, Axelrod, Kraft, Gleason &

Gibson, P.C. at 2 (Apr. 2004) [hereinafter Gilmour April

Letter], reprinted in J.A. 68. In other words, Menkes would

have to apply to the Association to “continue to earn his

2

The court argues J.P. High’s regulatory interpretation “displaced

Flyntz’s.” Maj. Op. 23. But High affirmed Flyntz’s decision,

although he did so on alternate grounds. See Letter from J.P. High,

Director of Waterways Mgmt., to Mark Ruge, Preston, Gates,

Ellis & Rouvelas, Meeds LLP at 2–3 (May 22, 2001), J.A. 126-

27. High did not expressly reject Flyntz’s interpretation or even

implicitly suggest it was not the agency’s governing regulatory

reading. Id. The fact remains, the Coast Guard’s regulatory

interpretation is far from “long standing.” Maj. Op. 23. The

Agency Decision on Remand cites no previous agency decision

articulating its interpretation. Nor does the Coast Guard point the

court to such authority on appeal.

5

livelihood as a U.S. registered pilot.” Flyntz March Letter,

supra page 3.

On remand, the Coast Guard “view[ed] Mr. Menkes’s

challenge to be a matter that is governed entirely by 46 C.F.R.

§ 401.720(b).” Agency Decision on Remand at 7, J.A. 285.

In so doing, the agency specifically disavowed Mr. Flyntz’

regulatory interpretation, arguing it was “never an

authoritative statement,” but rather, “an aberration.” Id. at

10–11, J.A. 288–89 (finding Flyntz’s statements “more

consistent with exercising the authority granted in 46 C.F.R.

§ 401.720(b) than it is with an interpretation of 46 U.S.C.

§ 9304”). The Agency Decision on Remand thus adopted Mr.

Wasserman’s interpretation. But this leaves the Coast Guard

with a problem the court’s opinion never acknowledges: there

have been two informal adjudications interpreting the

agency’s regulations, and they are contradictory.

If Wasserman’s interpretation of the Coast Guard

regulations is definitive, so is Flyntz’s. Both men held the

same position in the agency—Director of the St. Lawrence

Seaway District. And, both made a decision about the same

controversy—Captain Menkes’s ability to work as an

independent pilot. The fact that the Agency Decision on

Remand validated Wasserman’s view does not resolve the

underlying contradiction. Nor does it transform Wasserman’s

interpretation into one of greater authoritative worth than

Flyntz’s. Under this court’s precedents, a definitive

interpretation can only be changed through rulemaking. See

Paralyzed Veterans, 117 F.3d at 586; EDWARDS & ELLIOTT,

supra page 2. Furthermore, even had the Coast Guard

followed appropriate procedures, deference will not save a

regulatory interpretation that is plainly erroneous or

inconsistent with the agency’s enabling statute. See

Paralyzed Veterans, 117 F.3d at 584 (“It is certainly not open

6

to an agency to promulgate mush and then give it concrete

form only through subsequent less formal ‘interpretations.’”);

Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467

U.S. 837, 844 (1984) (stating regulations cannot be

“manifestly contrary” to their enabling statute); see also

EDWARDS & ELLIOTT, supra page 2, at 163 (citing Stinson v.

United States, 508 U.S. 36, 45 (1993)). If, as seems likely,

the Coast Guard actually means to interpret the statute, there

are other problems.

II

“Not every agency interpretation of a statute is

appropriately analyzed under Chevron.” Ala. Educ. Ass’n v.

Chao, 455 F.3d 386, 392 (D.C. Cir. 2006) (Ginsburg, J.)

Chevron deference is afforded those interpretations having the

“force of law.” United States v. Mead Corp., 533 U.S. 218,

229–30 (2001). It does not apply to an agency’s litigation

position, which provides a post hoc rationalization. See

Bowen v. Georgetown Univ. Hospital, 488 U.S. 204, 212

(1988); Landmark Legal Found. v. IRS, 267 F.3d 1132, 1135–

36 (D.C. Cir. 2001). Nor does Chevron govern an agency

declaration unaccompanied by those procedural safeguards

ensuring proper administrative practice. See Mount Royal

Joint Venture v. Kempthorne, 477 F.3d 745, 754 (D.C. Cir.

2007) (citing Mead, 533 U.S. at 235; Skidmore v. Swift & Co.,

323 U.S. 134, 140 (1944)); see also Christensen v. Harris

County, 529 U.S. 576, 587 (2000) (“[I]nterpretations

contained in policy statements . . . which lack the force of

law . . . do not warrant Chevron-style deference.”); NLRB v.

United Food & Commercial Workers Union Local 23, 484

U.S. 112, 123 (1987) (finding Chevron deference appropriate

when regulations are “promulgated pursuant to congressional

authority”). “Otherwise the Administrative Procedure Act,

which specifies how delegated power is to be exercised,

7

would be a dead letter.” Krzalic v. Republic Title Co., 314

F.3d 875, 882 (7th Cir. 2000) (Easterbrook, J., concurring).

In Menkes II, the Coast Guard “did not have a forthright

agency interpretation of the statute.” Menkes II, 486 F.3d at

1313. In fact, the Flyntz and Wasserman letters presented

contradictory positions. As a result of this disparity, the

Menkes II court instructed the Coast Guard to “come to grips

with the meaning of the statute, and particularly, the meaning

of the term ‘voluntary association.’” Menkes II, 486 F.3d at

1314.

Assuming the Agency Decision on Remand represents the

Coast Guard’s definitive interpretation of the GLPA, the

hallmarks of “fair and considered” judgment are absent. As

previously noted, the Coast Guard did not conduct notice-and-

comment rulemaking before promulgating its Agency

Decision on Remand. Nor did the Agency reach its

interpretive conclusion after formal adjudication. The

procedures the agency employed on remand did not even

meet the minimum procedural requirements contemplated for

“informal adjudication” in the APA, such as the consideration

of “evidence contradicting [the agency’s] position.” See Butte

County, Cal. v. Hogen, 613 F.3d 190, 194–196 (D.C. Cir.

2010) (discussing, in part, procedural safeguards set up by

§ 706 review); Safe Extensions, Inc. v. FAA, 509 F.3d 593,

604 (D.C. Cir. 2007) (stating informal adjudication may

consist of evidence outside the administrative record).

The agency controlled the process and the record on

remand. After initially inviting Menkes to submit additional

documents, see Letter from Paul M. Wasserman, Director,

Great Lakes Pilotage to Jonathan Axelrod at 1 (Sep. 20, 2007)

[hereinafter Wasserman September Letter], reprinted in J.A.

333, the agency expressed concerns with Menkes’s

8

submissions, noting they contained unauthorized employee

affidavits and interposing claims of privilege that were never

subjected to court review, see Letter from Paul M.

Wasserman, Director, Great Lakes Pilotage to Jonathan

Axelrod at 1–2 (Oct. 18, 2007) [hereinafter Wasserman

October Letter], reprinted in J.A. 421; see also Agency

Decision on Remand at 35–37, J.A. 313–315. The agency

said it would not consider evidence “improperly provided,”

not “relevant or necessary for the Coast Guard’s decision.”

Wasserman October Letter, supra page 7, or outside the

administrative record, Wasserman September Letter, supra

page 7. But when the Coast Guard finally released the

Agency Decision on Remand, it relied heavily on information

outside the administrative record, notably a self-serving

declaration by Paul M. Wasserman and informal

communications between Wasserman and the SLSPA.

Agency Decision on Remand at 3, J.A. 281. Pertinent here,

the agency excluded evidence suggesting the agency began

setting its policies only after conferring with SLSPA lawyers

in a deliberate attempt to better accommodate the Association.

See Lawler Aff. ¶ 5, reprinted in J.A. 349; Flyntz Aff. ¶ 9g,

reprinted in J.A. 412 (suggesting political and lobbying

pressure changed Coast Guard procedures and personnel).

More than contradict certain statements in Wasserman’s

affidavit, Menkes’s excluded evidence suggests his ouster was

a predetermined act intended to curry favor with the

Association, not the byproduct of a fair consideration of

competing arguments. According to the agency, Menkes’s

proffered evidence was simply irrelevant. Agency Decision

on Remand 36, J.A. 314. But determining relevancy ab initio

is an all but impossible task unless the desired end is certain.

I do not mean to suggest our remand order transformed

any subsequent interpretation by the Coast Guard into a ruling

without the “force of law.” To the contrary, the Coast Guard

9

had every opportunity to proceed in a fair and considered

manner, following the APA’s procedural requirements for

delegated agency action. The agency simply chose not to do

so.

Unlike agency positions taken as a result of more

structured adjudicatory proceedings, whether formal or

informal in nature, nothing binds the Coast Guard to its

current interpretation of the GLPA. The Agency Decision on

Remand is not published or readily available to the public—a

factor distinguishing the Coast Guard’s decision from a

virtual laundry-list of other agencies.3 As a result, the Agency

Decision on Remand does not provide traditional rule-of–law

values: it is not publically knowable; it lacks any assurances

of stability; and litigants cannot rely upon it when challenging

contrary agency action in the future. See Sprint Corp. v.

FCC, 315 F.3d 369, 373 (D.C. Cir. 2003) (describing

informal adjudication as “‘lack[ing] the firmness of a

[prescribed] standard,’” not “‘affect[ing] subsequent [agency]

acts,’” and having no “‘future effect’”) (second and fourth

alterations in original) (quoting Sugar Cane Growers Coop. v.

Veneman, 289 F.3d 89, 95–96 (D.C. Cir. 2002)); see also

William N. Eskridge, Jr. & Lauren E. Baer, The Continuum of

Deference: Supreme Court Treatment of Agency Statutory

Interpretations from Chevron to Hamdan, 96 GEO. L. J. 1083,

1169–70 (2008) (arguing deference is most appropriate when

agency process supports rule-of-law values). In sum, because

the Coast Guard “abjure[d] the APA’s procedures for making

decisions,” Krzalic, 314 F.3d at 882 (Easterbrook, J.,

3

See, e.g., THE BLUEBOOK: A UNIFORM SYSTEM OF CITATION

218–28 (Columbia Law Review Ass’n et al. eds., 19th ed. 2010)

(providing a non-exclusive list of over thirty different agencies, and

their various sub-branches, which publish their administrative

decisions).

10

concurring), and because the resulting unpublished Agency

Decision on Remand does not promote traditional rule-of-law

values, the court owes the agency’s interpretation of the

GLPA nothing more than careful consideration. See

Skidmore, 323 U.S. at 140.

The court argues the Agency Decision on Remand is a

“legislative regulation[] given controlling weight” because the

Coast Guard acted pursuant to authority delegated to it by the

GLPA. Maj. Op. 19. This is certainly true with respect to

regulations promulgated after notice-and-comment

rulemaking. But the Coast Guard’s regulations existed when

we decided Menkes II; they are not the source to which we

now look for the agency’s “forthright . . . interpretation of the

statute.” Menkes II, 486 F.3d at 1313. A mere nod to the

delegating statute in the Agency Decision on Remand does not

in itself trigger the application of Chevron. Otherwise magic

words could defeat Mead’s metric for proper obligatory

deference and a mere citation could turn the Agency Decision

on Remand into one carrying the “force of law.” See Krzalic,

314 F.3d at 883 (“Chevron does not require courts to

implement ‘interpretations’ that agencies announce without

following the APA’s requirements for rulemaking: following

forms is a condition attached to the delegation.”)

(Easterbrook, J., concurring). Mead declared Chevron

deference appropriate only where Congress both “delegated

authority to the agency . . . and . . . the agency interpretation

claiming deference was promulgated in the exercise of that

authority.” 533 U.S. at 226–27. Thus, under Mead, all

expressly delegated agency action does not garner an Article

III rubberstamp. If that were the case, we would have

deferred to the Health Care Financing Administration’s PRO

manual in Public Citizen, Inc. v. Department of Health &

Human Services, 332 F.3d 654, 659–60 (D.C. Cir. 2003), the

settlement agreement in Southeastern Federal Power

11

Customers v. Geren, 514 F.3d 1316, 1327 (D.C Cir. 2008)

(Silberman J., concurring), and judges would apply Chevron

to interpretations of the Sherman Antitrust Act by the

Attorney General or interpretations of RICO by prosecutors,

cf. United States v. Western Elec. Co., 900 F.2d 283, 297

(D.C. Cir. 1990).

The court also says Chevron deference is owed under

Barnhart v. Walton, 535 U.S. 212, 222 (2002). Maj. Op. 20–

21 But Walton is an odd case upon which to rely as it

involved regulations promulgated after notice-and-comment

rulemaking and clearly entitled to deference under Mead.

Walton, 535 U.S. at 217. Mead, of course, acknowledges

Chevron may apply amidst more informal circumstance, but

fails to elaborate further. Walton fills this doctrinal gap in

dicta by suggesting various factors define Chevron’s

applicability when notice-and-comment rulemaking does not

occur. Yet I do not read Walton’s dicta to gut the framework

Mead painstakingly constructed the year before—separating

and sequencing questions concerning the deference owed an

agency and those concerning statutory interpretation. This is

especially true given Chevron’s approach—accepting “a

range of permissible interpretations” and that “the agency is

free to move from one to another”—calls into serious doubt

Walton’s reliance on the vintage of an agency’s interpretation.

Walton, 535 U.S. at 226 (citing Rust v. Sullivan, 500 U.S.

173, 186–87 (1991); Chevron, 467 U.S. at 863–64).

In any event, the Walton factors do not “indicate that

Chevron provides the appropriate legal lens through which to

view the legality of the Agency interpretation here at issue.”

Walton, 535 U.S. at 222. First, the court suggests the GLPA

authorizes the Coast Guard “to set parameters for voluntary

associations.” Maj. Op. 20. But this conflates “voluntary

associations” and “pilotage pools.” The statutory text only

12

authorizes the Coast Guard to promulgate rules pertaining to

the latter, not the former. 46 U.S.C. § 9304(b) (“For pilotage

pools, the Secretary may— . . . .”) Furthermore, the GLPA

enumerates five ways the Coast Guard may regulate pilotage

pools, none of which include the authority to limit pilotage

pools’ composition—such as by requiring registered pilots to

be members of a “voluntary association”—to anything but

“United States registered pilots.” Second, the court argues

deference is appropriate because the Agency Decision on

Remand addresses “interstitial” questions, the potential

ramifications of which could “impact[] myriad aspects of the

regulatory scheme.” Maj. Op. 21. Of course, the

pervasiveness of the court’s suggested ramifications implies

the question presented does not fill a regulatory “gap,” but

rather strikes at a keystone of regulatory design. Either way,

the Coast Guard does not make this argument and there is no

record evidence these “ramifications” will come to fruition.

For starters, how the Association would apportion costs if it

chose to dispatch non-members pro-rata remains a mystery.

Further, these “ramifications” could only occur if non-

association members—like Menkes—could free-ride, and

Menkes offers to pay his “share of the costs,” which

presumably includes the equivalent of an equity stake in the

association and any sur-charge assessed for dispatching the

pilotage pool on a pro-rata basis. And even if the court’s

predictions prove correct, the “interstitial” nature of the

question presented is but one of Walton’s many non-

dispositive factors. Finally, unlike this case, the regulations in

Walton “reflect[ed] the Agency’s own longstanding

interpretation.” 535 U.S. at 219. The court’s insinuation the

same is true here is risible. We remanded in Menkes II

because the Coast Guard “did not have a forthright agency

interpretation of the statute,” let alone an interpretation it

consistently applied over time. The court accepts the

agency’s bald assertion that its interpretation of “voluntary

13

association” is longstanding. But the Agency Decision on

Remand cites no previous agency decision articulating its

interpretation and only cryptically refers to a past settlement

between the agency and the pilots’ association, which

pertained to the “wording of 46 C.F.R. § 401.720(b),” not

§ 9304 of the GLPA. Agency Decision on Remand at 9, J.A.

287.

In Menkes II, we characterized the Coast Guard’s varied

interpretations as deriving from an “informal adjudication”

with a sparse record and questioned whether deference would

be owed such a proceeding under Mead. Menkes II, 486 F.3d

at 1314. Unfortunately, remand was no remedy. The

proceedings remain far-removed from “notice-and-comment

process” and “other circumstances reasonably suggesting” the

Coast Guard’s newfound interpretation has the “effect of

law.” Mead, 533 U.S. at 230, 231. The theoretical

framework for administrative review assumes a structured,

rule-of-law infused process. In reality, however, the process

is often an ad hoc and idiosyncratic pastiche in which the

rules, and the rules of engagement, can be distressingly

protean. This case is a paradigmatic example. Regardless if

the Agency Decision on Remand interprets Coast Guard

regulations or the GLPA itself, deference is not appropriate.

III

The GLPA authorizes the creation of “a pool by a

voluntary association of United States registered pilots to

provide for efficient dispatching of vessels and rendering of

pilotage services.” 46 U.S.C. § 9304(a). As the court

concludes: “[i]t is not clear from the text of 46 U.S.C. § 9304

whether a voluntary association can decide to dispatch only

its members, for the term ‘voluntary association’ is

undefined.” Maj. Op. 22. To this extent, I agree. The term

14

“voluntary association” is a changeling, capable of multiple

meanings. But the absence of a statutory definition does not

mean Congress failed to answer the question at issue. A

careful analysis of the meaning commonly ascribed to

“voluntary association,” § 9304(a)’s plain language, the

broader statutory context, and the underlying purpose of the

GLPA reveals a more precise meaning.

As a preliminary matter, an “association” is not

“voluntary” if “membership . . . is necessary, in a substantial

sense, for the practice of one’s profession.” BALLENTINE’S

LAW DICTIONARY 1350 (3d ed. 1969). This definition

comports not only with its legal usage at the time Congress

passed the GLPA, see id. at 1350 (defining “voluntary

association” as “[a]n association in which one may seek, or be

accepted into, membership as a matter of choice.”) (citing 6

AM. JUR. 2d Associations and Clubs § 1), but also how courts

utilize the term in the case law, see, e.g., Goldfarb v. Va. State

Bar, 421 U.S. 773, 776 (1975) (contrasting the Fairfax

County Bar Association, which “as a purely voluntary

association of attorneys . . . ha[d] no formal power to enforce”

a bar requirement, with the Virginia State Bar, in which

“membership . . . is required in order to practice in Virginia”);

Lathrop v. Donohue, 367 U.S. 820, 832–33 (1961) (plurality

opinion) (noting that “integrated” bars arose because efforts to

accomplish the desired ends “through voluntary association

had not been effective”; “membership in the voluntary

association ha[d] become static”); Int’l Ass’n of Machinists v.

Street, 367 U.S. 740, 796 (1961) (Black, J., dissenting)

(contrasting union-shop agreements with “[u]nions composed

of a voluntary membership,” and explaining that “to the

extent that Government steps in to force people to help

espouse the particular causes of a group, that group—whether

composed of railroad workers or lawyers—loses its status as a

voluntary group”); In re China Union Lines, Ltd., 342 F.

15

Supp. 426, 428–29 (E.D. La. 1971) (characterizing a pilots’

association as a “purely voluntary private organization” where

a member could be divested of his membership “and, yet,

continue to retain his commission and work as a licensed

Crescent River Port Pilot”); Firemen’s Pension Fund, by

Smith v. Minnaugh, 80 Pa. D. & C. 297, 303 (C.P. Dauphin

Cty. 1951) (“The element of voluntary association is lacking

in the Firemen’s Pension Fund. This fund was established by

legislative mandate. Membership in the fund is involuntary

and contributions thereto are made mandatory upon the paid

members of the fire department.”). Thus in context, the term

“voluntary association” means the Coast Guard has to provide

pilotage services through registered pilots and can utilize

voluntary associations to handle recruitment, training, and

dispatch.

The language of § 9304(a), and the Coast Guard’s own

interpretive regulations promulgated thereunder, do not

support the Coast Guards’ interpretation, as neither equates

“pilotage pools” from which registered U.S. pilots are

dispatched, with “voluntary associations” potentially tasked

with administering the dispatch of pilots from the pools. The

statutory text says the Coast Guard “may authorize the

formation of a pool by a voluntary association.” 46 U.S.C.

§ 9304 (emphases added). The court makes this same error,

suggesting at times the SLSPA is a “pilotage pool,” Maj. Op.

6, and at times it is a “voluntary association,” Maj. Op. 2.

Moreover, under existing Coast Guard regulations, voluntary

associations “can establish” a pool or pools, thereby

indicating the two terms are not interchangeable. 46 C.F.R.

§§ 401.300, 401.320, 401.340(b). Indeed, at least one

regulation (46 C.F.R. § 401.340) provides for the dispatch of

non-member pilots from the pilotage pool and “grants the

pilots’ association authority to deny the facilities and services

of the pool to pilots refusing to agree to important terms for

16

participation in the pool.” Agency Decision on Remand at 9–

10, J.A. 287–88. Although the Coast Guard may be correct in

arguing § 401.340 does not “explicitly address whether a

pilots’ association must otherwise make the facilities and

services of the pool available to non-member pilots,” Agency

Decision on Remand at 9, J.A. 287, it fails to recognize that

§ 401.340 implicitly does just that. If the reasons for denying

a pilot dispatch are not limited to a refusal to pay or a

violation of work rules, the association could refuse to

dispatch a pilot on mere whim, without any specific rule

authorizing its denial. Section 9304 suggests pilotage pools

and voluntary associations are separate, distinct, and not

coextensive. The Coast Guard’s own regulations support this

point by outlining specific criteria governing when a

voluntary association may deny registered pilots access to

pilotage pools. Membership in a voluntary association is not

the same as, and need not be a precondition for, membership

in the pilotage pool.

The greater statutory context also sheds an interpretive

light. Section 9303 requires U.S. registered pilots to meet

certain “standards of competency.” 46 U.S.C. § 9303(a). If a

pilot meets these “conditions for service,” id. § 9303(d), the

Coast Guard must “issue . . . a certificate of registration,” id.

§ 9303(b). In this respect, the GLPA promotes maritime

safety by explicitly setting objective standards of qualification

for registered U.S. pilots, including requiring applicants to

“have a license as a master, mate, or pilot,” id. § 9303(a)(1),

and to have at least twenty-four months’ experience operating

towing vessels on the Great Lakes, id. § 9303(a)(2).

Interpreting “voluntary association” in § 9304 to allow the

association ultimate control over the dispatch process imposes

an additional subjective and a-textual condition for

employment of registered pilots—membership in the

Association. It is no longer sufficient for an applicant to meet

17

the regulatory “conditions for service” if he cannot also

navigate the politics of the association. As a result, a

certification process designed to focus on safety circuitously

becomes one focused on sycophancy. Here, Menkes sought

work through the Association as a non-member. The SLSPA

refused to dispatch him, however, and even informed the

Canadian pilot association that Menkes could not be

dispatched in District One despite his standing as a registered

U.S. pilot. See letter from Roger S. Paulus, President, St.

Lawrence Seaway Pilots’ Association, to Robert Lemire at

(March 26, 2004), reprinted in J.A. 62.

The Agency, in contrast, relies on a series of descriptions

gleaned from a general encyclopedia of law, American

Jurisprudence, to support its argument that allowing the

SLSPA to compel membership and screen pilots before

dispatching them to work on the Great Lakes is consistent

with the way “voluntary” is used in the statute. Agency

Decision on Remand 12, J.A. 290. The court capitulates,

swept away by the under-current of a powerful deference

regime. I find Chevron’s ebb tide less beguiling. Why would

the government delegate authority to a voluntary group,

operating without constraints, to have complete power over

someone’s livelihood? The Association could impose a rule

by nepotism, or discriminate on the basis of race, gender,

religion, or just plain cussedness, insulated from

constitutional scrutiny only by the porous and symbolic

distinction between state and private action. In any event,

American Jurisprudence did not always define “voluntary

association” in this way. During the time Congress passed the

GLPA, as well as in the decades following, the encyclopedia

read:

The term “voluntary” is frequently used in

connection with the term ‘association’ or ‘society,’

18

and some principles of law are confined, in their

operation, to ‘voluntary’ organizations. In this

connection, the term means simply that the

organization is one in which one may seek, or be

accepted into, membership in the organization as a

matter of choice. If membership is required by

legislative mandate, as in the case of public

officers or employees, such an organization is not a

‘voluntary’ organization.

6 AM. JUR. 2d Associations and Clubs § 1 (1963); see 6 AM.

JUR. 2d Associations and Clubs § 1 (2007) (same).

Allowing the Association exclusive control over the

composition of pilotage pools also creates an odd incentive

and undermines the safety-promoting purpose of the GLPA.

Recall, when the association has a “physical or economic

inability to [provide service],” the Coast Guard may order

“any U.S. registered pilot to provide pilotage service.” 46

C.F.R. § 401.720(b). Thus, to maintain control, the

Association must be able to provide adequate service.

Between the 2001 and 2003 navigation seasons, the

Association faced an attrition problem which left it physically

unable to provide adequate pilotage service. The court

suggests the SLSPA was not responsible for the pilot attrition

problem. This may be true. But I do not understand its

relevance. If the association’s service is not adequate, the

Coast Guard can act. Moreover, to the extent the attrition

problems resound from issues with recruitment, training, and

pilot compensation, they suggest the SLSPA was responsible.

The Association solved its attrition problem by hiring both

contract pilots, including one who “had never been certified

as an independent pilot,” J.A. 357, and new pilots who had

not finished the statutory required training and needed “to

receive a temporary registration permitting them to go pilot

19

boat to pilot boat while continuing their training for ports,”

J.A. 311. Thus, in lieu of a registered pilot with over thirty

years’ experience, seasoned and intimately familiar with the

water in which he works, the Association dispatched pilots

with the equivalent of learners’ permits to maintain exclusive

control over the pilotage pool.

The court upholds the reasonableness of the agency’s

interpretation at Chevron step two by focusing on various

perceived gains in efficiency. Notably, the court accepts the

Coast Guard’s rationale that allowing “voluntary

associations” to exclude registered pilots from the pilotage

pool (1) “‘removes the Director from day to day

involvement’”; (2) “‘allows the pilots’ associations . . . to

apply their expertise’”; and (3) “‘promotes retention of pilots,

by giving the pilots in the association some control over

decisions that will affect the financial health of the pilots, the

pilots’ association and other entities that may provide

infrastructure support to the pilots.’” Maj. Op. 23 (quoting

Agency Decision on Remand at 15, J.A. 293).

Of course, the Director’s removal from day-to-day

operations would occur whether the association dispatches

non-members or not. It is also difficult to defend the

Association’s monopoly power as efficiency producing when

applying more exacting scrutiny. Generally speaking, market

competition—not cartels—produce efficiency gains and

public benefit, which in this context may mean the dispatch of

more experienced pilots and greater overall safety. Cartels,

on the other hand, improve the profitability of their own

participants. Or, as the Coast Guard might say: “‘giv[e] the

pilots in the association some control over decisions that will

affect the financial health of the pilots.’” Maj. Op. 23

(quoting Agency Decision on Remand at 15, J.A. 293).

20

Finally, although I agree Menkes v. St. Lawrence Seaway

Pilots’ Ass’n, 269 F. App’x. 54, 55 (2d Cir. 2008), precludes

Menkes’s First Amendment claim, I do not think the

underlying constitutional issues—if properly presented—are

so clear cut. The canon of constitutional avoidance therefore

also cautions against the Coast Guard’s statutory reading. See

Clark v. Martinez, 543 U.S. 371, 385 (2005) (“The canon of

constitutional avoidance comes into play only when, after the

application of ordinary textual analysis, the statute is found to

be susceptible of more than one construction; and the canon

functions as a means of choosing between them.”) (emphasis

omitted) (citing Almendarez-Torres v. United States, 523 U.S.

224, 237–38 (1998); United States ex rel. Attorney General v.

Del. & Hudson Co., 213 U.S. 366, 408 (1909)); Rust v.

Sullivan, 500 U.S. 173, 191 (1991) (discussing constitutional

avoidance as a means of circumventing “grave and doubtful

constitutional questions.”). By raising constitutional

avoidance I do not mean to suggest a constitutional violation

has occurred; nor that “grave” constitutional questions persist.

This is not a case in which competing interpretations are in

equipoise. I invoke constitutional avoidance in the alternative

only to suggest the constitutional question is not as simple as

the court makes it seem; to the extent the canon colors

interpretation of the statute, its gloss does not favor the Coast

Guard’s reading.

The court relies upon “agency shop” cases for the

proposition that the Coast Guard can compel Association

membership as a condition of employment. Maj. Op. 25–26.

This reliance strikes me as misplaced. Unlike “agency shop”

cases, no “free-rider” problem exists here. See Keller v. State

Bar of Calif., 496 U.S. 1, 12 (1990) (“The reason behind the

legislative enactment of ‘agency-shop’ laws is to prevent ‘free

riders . . . .’”); Abood v. Detroit Bd. of Educ., 431 U.S. 209,

221–22 (1977) (“A union-shop arrangement . . . counteracts

21

the incentive that employees might otherwise have to become

‘free riders,’ to refuse to contribute to the union while

obtaining benefits of union representation that necessarily

accrue to all employees.”). Captain Menkes offers to pay his

“share of the expenses,” Or. Arg. 32:57–33:00, and the

Association does not dispute he did so during the 2001, 2002,

and 2003 navigation seasons.4 In addition, the government’s

interest here—regulating pilotage—does not justify impinging

Menkes’s First Amendment rights in the same manner as the

government’s interest in the “agency shop” cases. Exclusive

union representation “is a central element in the congressional

structuring of industrial relations.” Abood, 431 U.S. at 220.

Utilization of a voluntary association, by comparison, is not

mandatory; the Coast Guard’s authorization to do so is

discretionary.

The more apt analog is the Supreme Court’s professional

licensure cases. In Schware v. Board of Bar Examiners of

New Mexico, a State Board of Bar Examiners prohibited an

4

The court says Menkes “did not offer to purchase the equity stake

. . . that members are required to purchase.” Maj. Op. 26. It is true

Menkes objects to the requirement that he purchase stock in

Seaway Pilots, Inc., which owns the pilot boats. But the relevant

Coast Guard regulations allow the voluntary association to “bill for

services,” 46 C.F.R. § 401.340(b), and registered pilots must

“comply with [the association’s] working rules,” id. § 401.340(a).

Menkes signed a “written authorization” agreeing to do just that.

At oral argument, Menkes reiterated he would pay his “share of the

expenses.” Or. Arg. 32:57–33:00. It does not follow from

Menkes’s objection that his “share” does not include any marginal

fixed costs incurred by Seaway Pilots, Inc. on-top of whatever

operational costs incurred by the Association when Menkes is

dispatched. The regulations allow the inclusion of such costs when

the Association bills Menkes.

22

applicant from sitting for the bar exam because he was

previously a member of the communist party. 353 U.S. 232,

234–35 & n.2 (1957). The Court held the act unconstitutional

under the Due Process Clause, reasoning the state bar

association could not exclude an individual from the practice

of law because the individual failed to satisfy a “standard[] of

qualification” having no “rational connection with the

applicant’s fitness or capacity to practice [a given trade].” Id.

at 238–39; see also Dent v. State of West Virginia, 129 U.S.

114, 124 (1889) (upholding medical licensing requirements

because the requirements were not arbitrary). Applied here,

Schware and Dent serve a useful warning. Wielding the

government’s imprimatur, the “voluntary association” can

arbitrarily exclude qualified pilots from working on the Great

Lakes. The court suggests Menkes did not raise this point.

Maj. Op. 26. But this is just wrong. Throughout this

litigation, Menkes alleged the SLSPA engaged in nepotism

and arbitrary membership decisions. See, e.g., Menkes Aff. ¶

Exhibit A, reprinted in J.A. 159. Of course, arbitrary

exclusionary practices have not always sounded constitutional

alarms in the context of tug-boat pilotage. In Kotch v. Board

of River Port Pilot Commissioners for Port of New Orleans

the Court approved regulations condoning nepotistic hiring of

river boat pilots, allowing in effect the exclusion of applicants

on the basis of race, gender, or religion. 330 U.S. 552, 565

(1947) (“Blood is, in effect, made the crux of selection.”).

Curiously, the state justified its regulations on a “relationship

to the end of securing an efficient pilotage system” there too.

Id.

In sum, I do not read the term “voluntary” to compel

Association membership. This interpretation comports with

the common definition of the term “voluntary association,”

the plain language of § 9304, the surrounding statutory

context, and the underlying purpose of the GLPA. It also

23

avoids constitutional implications which may occur when the

Government condones the use of arbitrary means of excluding

individuals from their chosen profession. Even applying

Chevron’s deferential standard, I would reverse the district

court in part, holding the Coast Guard’s interpretation of

§ 9304 as unreasonable and “contrary to law.” 5 U.S.C.

§ 706(2).

IV

In Menkes II, the Coast Guard’s inability to explain its

actions was troubling. The court went to considerable lengths

to suggest the appropriate seriousness with which the agency

should have approached the opportunity to clarify itself on

remand. This is not an easy case. Nor should it be. It ought

to be difficult to conclude Congress condoned the

establishment of a cartel or guild unfettered by the strictures

of the APA to which the responsible federal agency would be

subject. What public interest does ceding so much power to

the Association serve? Why should the Association be free to

act arbitrarily and capriciously when the Coast Guard clearly

could not? On remand, the Coast Guard apparently eschewed

judgment in favor of justification. In the process, the agency

jettisoned even the most minimal procedural safeguards

designed to ensure it acted in a “fair and considered” manner.

Consequently, I do not believe deference is due.

Pilotage on the Great Lakes is a difficult and dangerous

job. Those who choose it as a profession often come from a

certain proud lineage. The GLPA regulates the profession by

setting out safety requirements and other responsibilities for

the Coast Guard to administer. For example, if it so chooses,

the Coast Guard “may authorize the formation of a pool by a

voluntary association . . . for efficient dispatching of vessels

and rendering of pilotage services.” 46 U.S.C. § 9304. I do

24

not read this language to allow the “voluntary” association to

compel membership in its organization before dispatching

pilots. Such an interpretation seemingly conflicts with the

definition of “voluntary association,” the statute’s plain

language, broader context, and underlying purpose. But

reading the statute in this way, the Coast Guard places the

government’s imprimatur behind the Association, providing it

monopoly power over District 1 pilots, and allowing the

Association to exclusively set the conditions under which

pilots may work. Granted, the Supreme Court previously

condoned a similarly arbitrary and discriminatory exercise of

state power against constitutional attack; and it did so in the

context of river boat pilots, a profession that shares more with

Great Lakes pilotage than just its nautical roots. See Kotch,

330 U.S. at 565. But I am confident that decision is a relic of

a time past, now serving only as a historical bookmark, rather

than a contemporary statement of the law. The court’s

deference makes me question whether I am too optimistic.