Delegated Vessel Inspectors Are “Acting Under” the Coast Guard: Fifth Circuit Clarifies Federal Officer Removal for Recognized Organizations

Introduction

In Krell v. American Bureau of Shipping (5th Cir. Aug. 29, 2025), the United States Court of Appeals for the Fifth Circuit reversed a remand order and held that the American Bureau of Shipping (“ABS”)—a Coast Guard–designated “Recognized Organization” (RO) that performs vessel inspection and certification—was “acting under” the United States Coast Guard (“USCG”) for purposes of the federal officer removal statute, 28 U.S.C. § 1442(a)(1). The case arises from the tragic 2021 capsize and sinking of the SEACOR Power after departing Port Fourchon, Louisiana, leading to multiple fatalities and injuries. The injured sailors and representatives (collectively, the “Sailors”) sued ABS in Texas state court for alleged failures tied to stability requirements. ABS removed under § 1442(a)(1), arguing it acted under federal direction; the district court disagreed and remanded. The Fifth Circuit reversed.

Although the panel’s opinion is not designated for publication (5th Cir. R. 47.5), it provides a detailed, persuasive clarification with practical consequences for maritime litigation and the broader law governing federal officer removal. It confirms that when an RO like ABS performs statutorily delegated inspection and certification functions under detailed USCG oversight, it is “acting under” a federal officer within the meaning of § 1442(a)(1).

Summary of the Judgment

The Fifth Circuit held that ABS satisfied the “acting under” component of federal officer removal because of the USCG’s express statutory and regulatory delegation, comprehensive oversight, and acceptance of RO-conducted inspections and certificates as Coast Guard actions. The court emphasized:

• ABS helps the USCG perform work the Coast Guard would otherwise have to perform itself, anchored in 46 U.S.C. §§ 3305, 3316, and 5107 and implementing regulations.
• Congress mandated an oversight office within the USCG to audit recognized organizations, underscoring subjection, guidance, and control (46 U.S.C. § 3316).
• Express delegation empowers ABS to review and approve plans, conduct inspections, and issue certificates on the USCG’s behalf (46 U.S.C. §§ 3316(b)(1)(A), 5107(a); 46 C.F.R. §§ 8.130(a), 8.200, 8.230).
• USCG regulations deem RO-issued certificates and delegated functions to be those of the USCG (46 C.F.R. § 8.130(a)).
• The ABS–USCG relationship mirrors the “detailed regulation, monitoring, or supervision” standard articulated in Caris MPI, Inc. v. UnitedHealthcare, Inc., 108 F.4th 340 (5th Cir. 2024) and Watson v. Philip Morris Cos., Inc., 551 U.S. 142 (2007).

Because the district court had resolved removal solely on the “acting under” issue, the court of appeals reversed the remand and returned the case to the district court to address the remaining § 1442 elements (e.g., colorable federal defense and the “connected or associated with” nexus) in the first instance.

Analysis

Precedents Cited and Their Influence

• Watson v. Philip Morris Cos., Inc., 551 U.S. 142 (2007): Watson is the Supreme Court’s touchstone for the “acting under” inquiry. It distinguishes mere compliance with federal regulations from the requisite “subjection, guidance, or control” and “an effort to assist, or to help carry out, the duties or tasks of the federal superior.” The Fifth Circuit applied Watson to conclude that ABS’s role transcended compliance; it executed delegated statutory duties on the USCG’s behalf under close oversight.
• Latiolais v. Huntington Ingalls, Inc., 951 F.3d 286 (5th Cir. 2020) (en banc): Latiolais broadened the nexus requirement under § 1442 from a strict “causal nexus” to whether the charged conduct is “connected or associated with” acts under federal direction. Although the panel did not reach this element, Latiolais frames the modern Fifth Circuit test and sets a relatively permissive standard the district court will now apply on remand.
• Martin v. LCMC Health Holdings, Inc., 101 F.4th 410 (5th Cir. 2024): Martin restates the four-part test for private-party removal under § 1442: (1) a colorable federal defense; (2) “personhood”; (3) action pursuant to a federal officer’s directions; and (4) a connection or association between the charged conduct and the federal directions. Martin also reiterates that mere regulatory compliance is insufficient—echoing Watson—which the court leverages to show why the ABS–USCG relationship is qualitatively different.
• Caris MPI, Inc. v. UnitedHealthcare, Inc., 108 F.4th 340 (5th Cir. 2024): Caris is the Fifth Circuit’s recent, influential articulation of when a private actor is “acting under” because the relationship involves detailed regulation, monitoring, or supervision while assisting the federal government with tasks it would otherwise perform. The court analogizes ABS’s role and oversight mechanisms (audits, reporting, contract-like agreement with agency) to the Caris construct.
• St. Charles Surgical Hospital, LLC v. Louisiana Health Service & Indemnity Co., 990 F.3d 447 (5th Cir. 2021): St. Charles emphasizes examining the relationship between the private party and the government to ensure a genuine “acting under” dynamic. The ABS–USCG framework, with formal delegation and acceptance of outputs as federal outputs, satisfies that test.
• Legendre v. Huntington Ingalls, Inc., 885 F.3d 398 (5th Cir. 2018): Cited for the principle that appellate review of federal officer remand orders is de novo “without a thumb on the remand side of the scale,” reinforcing a neutral appellate posture rather than any anti-removal presumption.
• Trevino v. City of Fort Worth, 944 F.3d 567 (5th Cir. 2019) and Simon v. United States, 891 F.2d 1154 (5th Cir. 1990): Provide standards for reviewing the Rule 59(e) reconsideration denial (abuse of discretion), which the Fifth Circuit implicitly found inconsistent with its “acting under” holding.
• Lone Star Nat’l Bank, N.A. v. Heartland Payment Systems, Inc., 729 F.3d 421 (5th Cir. 2013): Supports the court’s decision to pretermit other issues for the district court to consider on remand after resolving a threshold legal question.

Legal Reasoning

The court’s reasoning turns on the formal delegation and deep oversight the USCG exercises over ABS as a Recognized Organization. Five pillars support the “acting under” conclusion:

1. ABS performs tasks the USCG is statutorily obliged to ensure are carried out. Congress imposes inspection, review, audit, and certification obligations to assure vessel safety (e.g., 46 U.S.C. §§ 3305(d)(1), 5107; 33 C.F.R. § 96.320(c)). ABS helps the USCG meet these obligations by executing them directly. This satisfies Watson’s requirement that the private actor is assisting the government with its duties, not merely complying with regulation.
2. Congress required the USCG to comprehensively oversee and audit Recognized Organizations. 46 U.S.C. § 3316 mandates a Coast Guard office to conduct “comprehensive and targeted oversight” of ROs. This statutory structure is incompatible with a mere regulator–regulated relationship; it signals a delegated-execution relationship characterized by “subjection, guidance or control.”
3. Express statutory and regulatory delegation to act on the USCG’s behalf. Section 3316(b)(1)(A) authorizes delegation to ROs like ABS to review and approve plans, conduct inspections and examinations, and issue inspection-related certificates. Section 5107(a) similarly delegates load line authorities. The regulations (46 C.F.R. §§ 8.130(a), 8.200, 8.230) operationalize this delegation with criteria and conditions.
4. USCG acceptance of RO acts and certificates as Coast Guard acts and certificates. Under 46 C.F.R. § 8.130(a), delegated functions performed by ROs and certificates they issue “will be accepted as” Coast Guard functions and certificates. That the agency treats RO outputs as its own underscores that ABS was acting on the sovereign’s behalf.
5. Detailed oversight evidenced by the formal Agreement and regulatory framework. The ABS–USCG “Agreement Governing the Delegation of Statutory Certification and Services” requires recordkeeping, audits, inspections, and adherence to conventions and laws. This matches Caris MPI’s “detailed regulation, monitoring, or supervision” rubric and the Watson standard, confirming that ABS operated under a federal officer’s direction, not merely in a heavily regulated industry.

The court thus concluded that ABS was “acting under” the USCG when it reviewed plans, surveyed the SEACOR Power, witnessed critical testing, and issued or maintained certifications across the vessel’s nearly 20-year career. Because the district court had stopped at this element, the Fifth Circuit reversed the remand and returned the case for the district court to address the remaining § 1442 elements—especially the existence of a colorable federal defense and the “connected or associated with” nexus.

Impact and Forward-Looking Considerations

• Practical path to a federal forum for maritime classification disputes. Plaintiffs often invoke the saving-to-suitors clause to proceed in state court on maritime tort claims. Section 1442 provides an independent removal mechanism that overrides ordinary non-removability. This decision makes it materially easier for USCG-delegated ROs to remove to federal court in the Fifth Circuit when sued over their statutory inspection/certification work.
• Clarifies “acting under” for Recognized Organizations. The opinion cements that the RO model—formal delegation, audits, acceptance of outputs as agency acts—fits squarely within Watson and Caris MPI. That clarity will likely prompt consistent removal by classification societies and other maritime delegates (e.g., load line assignment and ISM Code auditors) when sued for conduct tied to delegated functions.
• Ripple effects beyond maritime. The reasoning is not sector-limited. It strengthens removal prospects for private entities executing delegated governmental functions under detailed oversight (e.g., certain healthcare administrators, security contractors, or technical certifiers) within the Fifth Circuit, provided they can show the same “assist-the-government” and “subjection, guidance, or control” hallmarks.
• Heightened salience of the “colorable federal defense.” On remand, ABS must still establish a colorable federal defense. Typical candidates in delegation contexts include derivative sovereign immunity under Yearsley v. W.A. Ross Construction Co., government-contractor defenses (e.g., Boyle v. United Technologies Corp.), and various preemption defenses. This step will shape whether the case ultimately remains in federal court.
• Forum and case-management implications. Centralizing such disputes in federal court can promote uniform interpretation of federal maritime safety regimes and international conventions, reduce state-by-state fragmentation, and align litigation with the federal agencies that design and supervise the inspection architecture.
• Unpublished but persuasive. While the opinion is not precedential under Fifth Circuit Rule 47.5, its careful application of Watson, Caris MPI, and the statutory/regulatory framework will be persuasive to district courts within the circuit and informative to litigants designing removal strategies.

Complex Concepts Simplified

• Federal officer removal (28 U.S.C. § 1442(a)(1)): Allows a private defendant to remove a case from state to federal court if it: (1) asserts a plausible federal defense; (2) is a “person”; (3) acted under the direction of a federal officer or agency; and (4) the alleged misconduct is connected or associated with that federal direction. The purpose is to provide a federal forum for federal actors and their private delegates.
• “Acting under” vs. “mere compliance”: Being heavily regulated isn’t enough. To be “acting under,” the private party must help carry out the government’s duties and be subject to its guidance, control, or oversight in doing so. Delegation, audits, required reporting, and treating outputs as agency acts are strong indicators.
• Recognized Organization (RO): A classification society or similar body the USCG authorizes to perform statutory functions—such as plan review, inspection, and certification—on the Coast Guard’s behalf. ROs are vetted and audited by the USCG and must meet extensive regulatory criteria (46 C.F.R. §§ 8.200–8.450).
• International Safety Management (ISM) Code: An international framework for safe ship management and operation. Compliance is mandatory for many vessels, and ROs often audit and certify compliance, sometimes under governmental delegation.
• Load lines and stability: A “load line” marks the safe loading depth for a vessel. Federal law (46 U.S.C. § 5107) allows delegation to ROs to assign load lines and issue certificates. Stability requirements ensure a vessel’s ability to withstand environmental forces; failures can lead to capsizing, as alleged here.
• “Connected or associated with” (Latiolais standard): The removal nexus is met if the alleged misconduct is related to or associated with acts the defendant performed under federal direction; a strict causal chain is not required.
• Colorable federal defense: The defendant need not win its defense at the removal stage. It must plausibly articulate a federal-law–based defense (e.g., derivative sovereign immunity), sufficient to justify a federal forum to adjudicate the federal issues.

Conclusion

Krell v. American Bureau of Shipping confirms that USCG-delegated Recognized Organizations are “acting under” a federal officer when carrying out statutory inspection and certification duties under the Coast Guard’s detailed oversight and control. By grounding its holding in Watson, Caris MPI, and the comprehensive statutory and regulatory regime (46 U.S.C. §§ 3316, 5107; 46 C.F.R. Part 8), the Fifth Circuit clarifies the functional boundary between mere regulatory compliance and true delegated execution of federal tasks.

The decision—though unpublished—has significant practical implications. It enables classification societies and similarly situated delegates to leverage § 1442 to secure a federal forum in litigation targeting their delegated functions, with downstream benefits for uniformity in maritime safety law. On remand, the district court will address whether ABS can meet the remaining § 1442 elements, particularly the colorable federal defense and the Latiolais nexus. Regardless of that outcome, the court’s reasoning provides a clear, structured framework for evaluating “acting under” in cases where private entities function as the federal government’s operational arm.