BG Gulf Coast LNG, L.L.C. v. Sabine-Neches Navigation Dist. of Jefferson Cnty.
| Decision Date | 14 September 2022 |
| Docket Number | 22-40158 |
| Citation | 49 F.4th 420 |
| Parties | BG GULF COAST LNG, L.L.C. ; Phillips 66 Company, Plaintiffs—Appellants, v. SABINE–NECHES NAVIGATION DISTRICT OF JEFFERSON COUNTY, TEXAS, Defendant—Appellee. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Utsav Mathur, Darryl Wade Anderson, Warren S. Huang, Norton Rose Fulbright US, L.L.P., Houston, TX, for Plaintiffs-Appellants.
Harry Max Reasoner, Esq., Shelby Hart-Armstrong, Stacey Vu, Vinson & Elkins, L.L.P., Houston, TX, James T. Dawson, Jeremy Charles Marwell, Michael Smith McCambridge, Vinson & Elkins, L.L.P., Washington, DC, Larry DeWayne Layfield, Law Office of L. DeWayne Layfield, P.L.L.C., Beaumont, TX, Gary Neale Reger, Esq., Orgain, Bell & Tucker, L.L.P., Beaumont, TX, for Defendant-Appellee.
Thomas More Flanagan, Camille Elise Gauthier, Flanagan Partners, L.L.P., New Orleans, LA, Tommy Lee Yeates, Moore Landrey, L.L.P., Beaumont, TX, for Amicus Curiae Port of Port Arthur Navigation District of Jefferson County, Texas.
Thomas More Flanagan, Camille Elise Gauthier, Flanagan Partners, L.L.P., New Orleans, LA, Kelli Burris Smith, Germer, P.L.L.C., Beaumont, TX, for Amicus Curiae Port of Beaumont Navigation District of Jefferson County, Texas.
James F. Buchanan, Esq., Welder Leshin, L.L.P., Corpus Christi, TX, for Amicus Curiae Texas Ports Association.
Thomas More Flanagan, Camille Elise Gauthier, Flanagan Partners, L.L.P., New Orleans, LA, for Amicus Curiae American Association of Port Authorities.
Tillman Lowry Lay, Best Best & Krieger, L.L.P., Washington, DC, for Amicus Curiae Port of Houston Authority of Harris County, Texas.
Before Stewart, Elrod, and Graves, Circuit Judges.
The Sabine–Neches Waterway is located in the southeastern-most parts of Texas and the southwestern-most parts of Louisiana, providing passage from the Gulf of Mexico to Port Arthur, Beaumont, and Orange, Texas, and beyond. It is vitally important to the local, state, and federal economies. Despite its importance, sixty years have gone by without much effort to maintain or otherwise improve it. The Sabine–Neches Navigation District set out to change that. The price tag on the proposed improvements totaled roughly $1.1 billion. After some bureaucratic wrangling, Congress covered most of the cost with the District left to cover the rest. The District planned to cover its share through port fees. But the same federal law that led to congressional funding also sets limits on how costs can be passed onto consumers by local entities. Two energy companies sued the District, claiming that the port fees exceeded those limits. The district court concluded that they failed to state plausible claims and dismissed the case. We AFFIRM.
As waterways here in America go, the Sabine–Neches Waterway is one of our nation's most critical. Not only does it rank near the top in business and busyness, it is home to the U.S. military's largest strategic commercial seaport. But as ships became larger, the Sabine–Neches Waterway largely stayed the same. Its lack of depth and width poses a problem for many modern vessels.
To make the necessary improvements to the Waterway, the District needed funds. Congress opened up the federal purse for such projects through the Water Resources Development Act of 1986, 33 U.S.C. § 2201, et seq. In the years before the Act's passage, trying to improve waterways was a bureaucratic nightmare. See New Orleans S.S. Ass'n v. Plaquemines Port, Harbor & Terminal Dist. , 874 F.2d 1018, 1024–25 (5th Cir. 1989) (). It could take up to twenty-six years from first study to project completion, with as many as nineteen independent reviews along the way. Id. When Congress passed and President Reagan signed the Act, Congress had not approved a project in nearly two decades. Id. Through the Act, Congress streamlined the process and came up with a new way to finance waterway-construction and -improvement projects. Id. at 1025. Rather than rely only on the federal fisc, the federal government would shoulder some or most of the cost and would share the rest with state and local entities. Id. Plus, state and local entities had a greater practical interest in the waterway development, so they were more likely to get it done faster. Id.
The process begins with a feasibility study by the U.S. Army Corps of Engineers. Once that is done, it is published in the Federal Register and the Secretary of the Army gives it to Congress. Congress then reviews the study and the projected costs and puts it to a vote. If it prevails and the President signs it, Congress gives the local entities money to cover the first phase of the project (called "new start" funds). The local entities then enter into a cooperative agreement with the Army Corps of Engineers covering the project, which includes "provid[ing] to the Federal Government the non-Federal share of all other costs of construction of [the] project." 33 U.S.C. § 2211(e)(3). See also Air Liquide Am. Corp. v. U.S. Corps of Engineers , 359 F.3d 358, 361 (5th Cir. 2004) (describing process).
The District prepared for years, but did not formally begin the Sabine–Neches Waterway Channel Improvement Project until 2011. The District worked with the Army Corps of Engineers, and the Corps completed its study in March of that year. The Corps concluded that Congress should fund the Project: deeper waterways means bigger ships which fit more cargo, which means fewer ships, which means less congestion. The Secretary of the Army transferred the Project to Congress, Congress passed it, see Water Resources Reform and Development Act of 2014, Pub. L. No. 113–121, 128 Stat. 1193, 1364, § 7002 (2014) ("WRDA-14"),1 and President Obama signed it into law.2 The Project's price tag was just over $1.1 billion, with the federal government covering around $748 million and the District just under $366 million. Id. Congress then appropriated "new start" funds for the Project to get the ball rolling in 2019. See Energy and Water, Legislative Branch, and Military Construction and Veterans Affairs Appropriations Act, 2019, Pub. L. No. 115–244, 132 Stat. 2897, 2898–99 (2019). Those new-start funds would ultimately be used to complete the first part of the Project: the deepening of Anchorage Basin No. 1 from twenty feet to forty feet.
The District and the Corps then entered into the statutorily required agreement. See 33 U.S.C. § 2211(e)(3). The Agreement listed the projected cost at over $1.2 billion (up a bit from WRDA-14), with a $732 million/$488 million federal–District split (roughly 60%–40%). That number, of course, was a projection, and its fluidity becomes relevant later. The Agreement otherwise detailed the specifics on the deepening and widening of the Waterway and outlined the environmental effects of the Project.3
So the District needed $488 million. The first $20 million in "new start" funds went to deepening Anchorage Basin No. 1—before it was twenty-feet deep, now it is forty-feet deep. Once that was done, the District proposed the User Fee. The User Fee would apply only to ships with drafts greater than twenty feet—in other words, ships that were too big to use the Basin before the deepening. The Fee could change based on certain (unrelated) conditions, but the basics are as follows:
| hydrocarbon cargo | non-hydrocarbon cargo | |
| minimum | $0.00 per short ton | $0.00 per short ton |
| starting rate | $0.20 per short ton | $0.02 per short ton |
| maximum | $0.35 per short ton | $0.035 per short ton |
Every short ton loaded onto a ship or unloaded from a ship is charged.4 Key for our purposes, the ordinance says that the District would collect the Fee until the first of either (a) all construction costs are repaid, or (b) January 1, 2049.
Per the Act, the District published the proposed ordinance in the Federal Register and received public comment. 86 Fed. Reg. 7369-05 (Jan. 28, 2021).5 After a hearing, the Commissioners of the District passed the Ordinance, and the District began levying the fee against the bigger ships on May 1, 2021.
BG Gulf Coast LNG and Phillips 66 Company are energy companies. BG Gulf Coast has already paid well into the six figures because of the Ordinance. As of the filing of the Complaint, Phillips 66 had not yet sent any of its cargo on bigger ships. But it planned to. They both sued, alleging that the Ordinance violated several provisions of the Act. The District moved to dismiss under Rule 12(b)(6). The district court granted the motion on each claim, concluding that the District satisfied all of the requirements of the Act, including the requirement that any fees must be imposed "on a fair and equitable basis."6 The district court then dismissed the case with prejudice. The energy companies (hereinafter "BG Gulf Coast") appealed. We subsequently granted the District's motion to expedite the appeal.
We review de novo the grant of a motion to dismiss under Rule 12(b)(6). Residents of Gordon Plaza, Inc. v. Cantrell , 25 F.4th 288, 295 (5th Cir. 2022). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. We accept all well-pleaded facts as true and draw all reasonable inferences in favor of the plaintiff. Id. But we do not presume that a complaint's legal conclusions are true, no matter how well they are pleaded. Id.
Section 2236 of the Act sets limits on (among other things) how and when a non-federal interest can pass costs onto...
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