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GREAT LAKES DREDGE & DOCK CO. v. LUDWIG

March 26, 1980

GREAT LAKES DREDGE & DOCK COMPANY and SOUTHERN SHIPBUILDING CORPORATION, Plaintiffs, v COLONEL DANIEL D. LUDWIG, DISTRICT ENGINEER, BUFFALO DISTRICT, UNITED STATES CORPS OF ENGINEERS; ROGER J. AU & SON, INC.,; ROBERT E. CHASEN, COMMISSIONER OF CUSTOMS OF THE UNITED STATES OF AMERICA, Defendants.


The opinion of the court was delivered by: CURTIN

"The lowest and most dejected thing of fortune, stands still in Esperance, . . ." *fn1"

This case involves a challenge to a federal contract award for dredging channels in the Cuyahoga and Old Rivers in Cleveland, Ohio by use of the dredge, the Esperance III. A preliminary injunction which would have prevented defendants from performing the contract was denied by this court on May 10, 1978. The contract work has since been performed. The case is now before the court on cross motions for declaratory judgment, as well as other relief.

The United States Corps of Engineers, Buffalo District (hereinafter "Corps"), maintains navigation channels by dredging at numerous locations in the Great Lakes area, including channels in the Cuyahoga and Old Rivers. The Corps normally advertises and awards federal contracts for the dredging.

 Bidding on the dredging contract at issue in this case opened on February 28, 1978. The only two dredging companies which submitted bids were the plaintiff Great Lakes Dredge & Dock Company (hereinafter "Great Lakes") and defendant Roger J. Au & Son, Inc. (hereinafter "Au"). Great Lakes' bid contained a cost estimate of $ 1,915,000, and Au's contained a cost estimate of $ 1,565,000. These compared with the government cost estimate on the project of $ 2,038,500. Over Great Lakes' protest, the contract was awarded to Au, and notice to proceed was issued.

 As part of its bid, defendant Au stated that the dredging work would be performed by the Esperance III, a self-propelled, self-loading hopper dredge. Built in the United States in 1944 as a World War II landing ship tank ("LST"), the Esperance III was later sold foreign, converted to a hopper dredge in a European shipyard, and placed under Panamanian registry. In 1977, the vessel was purchased by CDECO Maritime Construction, Inc. (hereinafter "CDECO"), a Delaware corporation, to be used for dredging by the defendant Au.

 46 U.S.C. § 292 prohibits foreign-built dredges from engaging in dredging in the United States "unless documented as a vessel of the United States." In accordance with this requirement, prior to the purchase of the vessel by CDECO, Au applied to the United States Coast Guard for a certification of registry for the Esperance III. The Coast Guard's Merchant Vessel Documentation Center advised Au to remove certain equipment installed abroad and reconvert the vessel into a dredge in the United States. Au complied and, on April 7, 1978, a certificate of registry was issued documenting the Esperance III as a United States vessel. The certificate contained a restrictive endorsement prohibiting the use of the Esperance III in coastwide trade. The restriction presumably was imposed because the Esperance III lost its status as an American-built vessel when it was sold and registered abroad, and was therefore within the prohibition of 46 U.S.C. § 883, which provides in part as follows:

 
No merchandise shall be transported by water, or by land and water, on penalty of forfeiture thereof, between points in the United States, . . . in any other vessel than a vessel built in and documented under the laws of the United States . . . : Provided, That no vessel having at any time acquired the lawful right to engage in the coastwise trade, . . . and later sold foreign . . . shall hereafter acquire the right to engage in the coastwise trade.

 The defendant United States Customs Service (hereinafter "Customs"), charged with enforcing the restriction placed on the vessel, issued a decision-letter that the Esperance III was not prohibited by § 883 from engaging in the dredging involved in the contract bid. The ruling was based on a finding that polluted spoil material, which is transported for the sole purpose of disposing of it, is not "merchandise" within the meaning of § 883, and its transportation is not coastwise trade. At the time Au confirmed its bid, it informed the Corps of the ruling.

 The conclusions reached in the decision letter were based in part on an engineering study by Erickson Engineering Associates. They concluded that the polluted spoil was a liability to the government because it had been difficult, and therefore expensive, to finding dumping sites for this undesirable material. The material removed from the rivers included runoff from agricultural lands, and industrial and municipal sewage plant discharges. Since it was highly polluted, the material had to be disposed of in a spoil disposal facility in accordance with 33 U.S.C. § 1293a. The disposal area used in the performance of the contract at issue is located at the Cleveland Harbor and title is held by the Cleveland-Cuyahoga County Port Authority. The contract called for this valueless material to be removed from the navigation channels and then transported to this facility for the sole purpose of disposing of it.

 In the summer of 1978, the plaintiff Great Lakes sought an injunction from this court to prevent Au from performing the contract. Plaintiff contended that the dredging involved under the contract constituted coastwise trade, and that only vessels which are enrolled and licensed to engage in the coastwise trade could perform the work under contract. Since the Esperance III's registration prohibits it from engaging in "coastwise trade," Great Lakes argued that Au's bid was not responsive and the contract should not have been awarded to Au. Great Lakes also argued that the transported spoils was "merchandise," within the meaning of the statute.

 In my decision and order of May 10, 1978, I refused to grant the injunction. I ruled that Great Lakes had standing to pursue the matter, as there had been injury in fact, but that the motion for a preliminary injunction had to be denied because plaintiffs failed to show either irreparable harm or probability of success on the merits. Sonesta International Hotels Corp. v. Wellington Associates, 483 F.2d 247, 250 (2d Cir. 1973). No appeal was taken. As noted earlier, the dredging has been completed.

 The matter now before the court, on plaintiffs' motion for final judgment and defendants' cross-motion for summary judgment, is an action for declaratory judgment as well as other relief. After oral argument the parties supplied the court with certain requested supplemental papers, which I have considered.

 The threshold question concerns defendant Au's claim that Great Lakes lacks standing. This issue was discussed in my earlier decision, and taking all factors into account, I am drawn to the same conclusion. "Great Lakes' status as a disappointed bidder on a federal contract is sufficient to constitute injury in fact." See, e.g., William F. Wilke, Inc. v. Dept. of the Army, 485 F.2d 180 (4th Cir. 1973); Ballerina Pen Co. v. Kunzig, 140 U.S. App. D.C. 98, 433 F.2d 1204 (D.C.Cir.1970); American Maritime Assoc. v. Blumenthal, 458 F. Supp. 849, 854-56 (D.D.C.1977), aff'd on other grounds, 192 U.S. App. D.C. 40, 590 F.2d 1156 (D.C.Cir.1979), cert. denied, 441 U.S. 943, 99 S. Ct. 2161, 60 L. Ed. 2d 1045 (1979).

 The standing of plaintiff Southern Shipbuilding Corporation (hereinafter "Southern"), a builder of self-propelled, self-loading hopper dredges, was not reached in my earlier opinion because Southern did not join in Great Lakes' motion for a preliminary injunction. It must, however, be reached here as Southern has joined in the motion for declaratory judgment and claims that it ...


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