Competitor Standing Under the Jones Act: Analysis of Great Lakes Dredge & Dock Co. v. CBP

Introduction

The case of Great Lakes Dredge & Dock Company, L.L.C. v. Chris Magnus, Commissioner, U.S. Customs and Border Protection et al., adjudicated by the United States Court of Appeals for the Fifth Circuit on February 7, 2025, addresses critical issues surrounding the application of the Jones Act in the context of offshore wind farm projects. Great Lakes, a specialized dredging company, sought to challenge a letter ruling from the U.S. Customs and Border Protection (CBP) that impacted its competitive standing in the offshore wind industry, particularly concerning the transportation of scour protection rock using foreign vessels.

Summary of the Judgment

Great Lakes Dredge & Dock Company filed a lawsuit challenging a CBP letter ruling which interpreted the Jones Act's provisions, potentially allowing foreign-flag vessels to compete in transporting scour protection materials for offshore wind projects. The American Petroleum Institute (API) intervened, arguing that Great Lakes lacked the necessary standing to contest the ruling. The district court agreed with API, dismissing Great Lakes' complaint for failing to demonstrate actual or imminent injury. Upon appeal, the Fifth Circuit upheld the district court’s decision, reinforcing the stringent requirements for establishing competitor standing under the Administrative Procedure Act (APA) and related statutes.

Analysis

Precedents Cited

The court extensively referenced several key precedents to underpin its ruling:

Cooper v. Texas Alcoholic Beverage Commission (820 F.3d 730, 2016): Established that regulatory actions allowing increased competition qualify as a clear injury-in-fact for standing purposes.
SHERLEY v. SEBELIUS (610 F.3d 69, 2010): Clarified that plaintiffs must show an actual or imminent increase in competition to establish standing.
Spokeo v. Robins (578 U.S. 330, 2016): Reinforced the requirement that injuries must be concrete, particularized, and actual or imminent.
Manuel v. Merchants and Professional Bureau (956 F.3d 822, 2020): Affirmed the standards for reviewing summary judgments and standing.

These precedents collectively emphasize that competitor standing demands more than speculative harm; there must be tangible evidence of increased competition directly impacting the plaintiff.

Legal Reasoning

The court's legal reasoning centered on the stringent criteria for establishing standing, particularly competitor standing. It underscored that Great Lakes failed to demonstrate an actual or imminent increase in competition resulting from the CBP's March 2021 letter. The court emphasized that hypothetical injuries, such as potential future competition, do not satisfy the injury-in-fact requirement. Additionally, the court dismissed CBP's alternate argument regarding identical operations in other projects, highlighting procedural deficiencies and lack of evidentiary support.

The decision hinges on a meticulous interpretation of the Administrative Procedure Act, which grants agencies deference in their rule-making. However, this deference does not extend to cases where plaintiffs cannot concretely demonstrate how regulatory actions adversely affect them.

Impact

This judgment reinforces the high threshold for competitors seeking to challenge regulatory decisions, particularly under the Jones Act framework. Companies aiming to assert competitor standing must provide concrete evidence of how regulatory actions will imminently affect their competitive landscape. The ruling may discourage frivolous or speculative lawsuits, ensuring that only those with demonstrable harm can seek judicial intervention.

Furthermore, the decision clarifies the application of the Jones Act in the emerging offshore wind sector, signaling to both domestic and foreign entities the parameters within which they can operate. It underscores the necessity for companies like Great Lakes to have firm contracts and operational capabilities before challenging regulatory interpretations that affect their market participation.

Complex Concepts Simplified

Standing and Competitor Standing

Standing is a legal principle that determines whether a party has the right to bring a lawsuit. To have standing, a plaintiff must show that they have suffered or will imminently suffer a concrete and particularized injury that can be addressed by the court.

Competitor Standing is a subset of standing where a competitor challenges a regulatory action that allegedly increases competition against them. However, the competitor must demonstrate that the regulatory change will result in actual or imminent competition, not just a possibility.

The Jones Act

The Jones Act is a federal law that regulates maritime commerce in the United States. It requires that goods transported by water between U.S. ports be carried on ships that are U.S.-built, U.S.-owned, and U.S.-crewed. This act aims to support the domestic maritime industry by limiting foreign competition in coastal shipping.

Scour Protection in Offshore Wind Farms

Scour Protection involves placing rock or other materials around the foundations of offshore structures, such as wind turbines, to prevent erosion caused by water currents. This protection is crucial for maintaining the stability and longevity of offshore wind installations.

Conclusion

The Fifth Circuit's affirmation in Great Lakes Dredge & Dock Company v. CBP underscores the judiciary's adherence to strict standards for establishing competitor standing. By requiring concrete evidence of actual or imminent competitive harm, the court ensures that only legitimate grievances can challenge regulatory actions. This decision not only clarifies the application of the Jones Act in the offshore wind sector but also sets a precedent that reinforces the necessity for businesses to substantiate their claims of injury with factual and immediate impact. Consequently, this ruling plays a pivotal role in shaping how maritime regulations are contested and upheld, fostering a more predictable and stable legal environment for the offshore wind industry and related maritime operations.