MS Tabea Schiffahrtsgesellschaft MBH & Co. KG v. Board of Commissioners

Case: 10-30259 Document: 00511417221 Page: 1 Date Filed: 03/18/2011

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT United States Court of Appeals

Fifth Circuit

FILED

March 18, 2011

No. 10-30259

Summary Calendar Lyle W. Cayce

Clerk

MS TABEA SCHIFFAHRTSGESELLSCHAFT MBH & CO. KG,

Plaintiff

v.

BOARD OF COMMISSIONERS OF THE PORT OF NEW ORLEANS,

Defendant - Third Party Plaintiff -

Appellant

v.

UNITED STATES OF AMERICA,

Defendant - Third Party Defendant -

Appellee

Appeal from the United States District Court

for the Eastern District of Louisiana

Before JOLLY, GARZA, and STEWART, Circuit Judges.

EMILIO M. GARZA, Circuit Judge:

The Board of Commissioners of the Port of New Orleans (“the Dock

Board”) appeals from the district court’s interlocutory order dismissing the Dock

Board’s failure to dredge claims against the United States for lack of subject

matter jurisdiction. The Dock Board contends that the United States, through

the Army Corps of Engineers, had a duty to dredge and properly maintain

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certain depths in the Mississippi River near the Port of New Orleans, that the

Corps’ failure to dredge caused the grounding of a containership, and that the

United States should be held liable for related damages.

We have previously held that the United States has not waived sovereign

immunity for claims, like this one, challenging the Army Corps of Engineers’

discretionary judgments concerning when and whether to dredge the nation’s

navigable waterways. See Canadian Pac. Ltd. v. United States, 534 F.2d 1165,

1171 (5th Cir. 1976). The novel question in this appeal is whether the Corps

ceded that discretion when it granted the Dock Board a permit to dredge in the

Port of New Orleans and the Dock Board completed such dredging at its own

expense thereafter. We hold that it did not, and AFFIRM the district court’s

dismissal order accordingly.

I

This case arises out of the damage sustained by the M/V MSC TURCHIA

when it grounded and allided with the Napolean Avenue Wharf in the Port of

New Orleans in June 2008. The ship’s owner (“Tabea”) and the Dock Board sued

the United States, alleging, inter alia, that the Army Corps of Engineers had a

statutory duty to dredge and maintain the Mississippi River as a navigable

waterway, and that the ship’s grounding was caused, in part, by the Corps’

failure to do so. In addition to the parties’ failure to dredge claims, Tabea also

raised a failure to warn claim alleging that the Corps was aware of shoaling in

the Napolean Avenue Wharf vicinity but failed to warn mariners of the hazard.

The United States (“the Government”) moved to dismiss all claims for lack

of subject-matter jurisdiction under F ED. R. C IV. P. 12(b)(1). The Government

argued that it did not have a statutory responsibility to dredge the Mississippi

River to any particular depth or at any particular time. The Government also

argued that because its dredging operations in the nation’s waterways are purely

discretionary and susceptible to policy analysis, the Army Corps of Engineers’

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dredging decisions here, as elsewhere, fell within the discretionary function

doctrine and, consequently, were not subject to a waiver of sovereign immunity

(i.e., the Dock Board’s suit against the Government was barred as a matter of

law).

In response, the Dock Board argued that § 2232(f) of the Water Resources

Development Act (“WRDA”), 33 U.S.C. § 2211 et seq, which was enacted after our

decision in Canadian Pacific, imposed a discretionless obligation on the Corps

to dredge and maintain the Mississippi River bottom at a depth of -45 feet Mean

Low Gulf (MLG). The Dock Board claimed that when it was granted a permit

to dredge to a depth of -45 feet MLG in the Napolean Avenue Wharf area and

then paid for such dredging, § 2232(f) required the Government to maintain

dredging at that depth thereafter. If correct, such a binding obligation would

bring this matter outside the discretionary function doctrine and render the

United States liable to suit. See 46 U.S.C. § 30903.

The district court found that, notwithstanding the Dock Board’s permit,

§ 2232(f) did not eliminate the Corps’ discretion to determine when and how it

would conduct dredging operations in the Mississippi River. The court explained

that such decisions involved an element of “judgment or choice,” were susceptible

to policy analysis, and, thus, fell within the discretionary function doctrine. The

court found that the United States had not waived sovereign immunity and

dismissed the Dock Board’s failure to dredge claims accordingly. The court

denied the Government’s motion to dismiss with respect to the parties’ failure

to warn claims and set those issues for trial.

The Dock Board timely appealed.

II

This case requires us to determine whether, in light of the Dock Board’s

permit and self-financed dredging in the Port of New Orleans, § 2232(f) of the

WRDA obligated the Government to maintain dredging at a certain depth in the

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harbor thereafter. We review questions of statutory construction de novo. See

United States v. Quintana-Gomez, 521 F.3d 495, 496 (5th Cir. 2008). We also

review de novo a district court’s order granting the Government’s motion to

dismiss for lack of subject-matter jurisdiction, applying the same standards as

the district court. See Spotts v. United States, 613 F.3d 559, 565–66 (5th Cir.

2010).

A

Before we address the district court’s subject matter jurisdiction we must

first determine our own. See Ashcroft v. Iqbal, 129 S. Ct. 1937, 1945 (2009)

(“Subject-matter jurisdiction . . . should be considered when fairly in doubt.”).

The Dock Board, upon which the burden to demonstrate subject matter

jurisdiction lies, see Howrey v. Allstate Ins. Co., 243 F.3d 912, 916 (5th Cir.

2001), declares that our power to hear this appeal rests on 28 U.S.C.

§ 1292(a)(3). The Government disagrees, and claims that the Dock Board’s

interlocutory appeal is premature and should be dismissed “because the rights

and liabilities of none of the parties have been established.” Appellee’s Br. at 10.

The Government contends that because the district court’s February 19, 2010

order, from which the instant appeal is taken, only disposed of the Dock Board’s

failure to dredge claims and left the parties’ failure to warn claims for trial, the

rights and liabilities of the parties have not been conclusively determined and,

thus, this interlocutory appeal is premature. This argument need not detain us

long.

Congress has given the courts of appeals jurisdiction over interlocutory

appeals in certain, limited circumstances. See Dardar v. Lafourche Realty Co.,

849 F.2d 955, 957 (5th Cir. 1988). 28 U.S.C. § 1292(a)(3) provides this court with

jurisdiction over “[i]nterlocutory decrees of such district courts or the judges

thereof determining the rights and liabilities of the parties to admiralty cases in

which appeals from final decrees are allowed.” As a general rule, we have

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permitted appeals under § 1292(a)(3) whenever an order in an admiralty case

dismisses a claim for relief on the merits. See Aparicio v. Swan Lake, 643 F.2d

1109, 1111 n.6 (5th Cir. 1981) (“An order that dismisses on the merits only one

of several separate claims for relief is appealable under Section 1292(a)(3).”); see

also Walter E. Heller & Co. v. O/S Sonny V, 595 F.2d 968, 971 (5th Cir. 1979)

(“The term ‘interlocutory decrees’ in section 1292(a)(3) is broadly interpreted.”);

Bergeron v. Elliot, 466 F.2d 514, 516 n.3 (5th Cir. 1972); Crews v. Arundel Corp.,

386 F.2d 528, 529–30 (5th Cir. 1967).

Here, when the district court dismissed the Dock Board’s failure to dredge

claims against the United States for lack of subject matter jurisdiction, it

conclusively determined the parties’ rights and liabilities with respect to those

claims. The pendency of other, separate claims in the underlying admiralty case

is immaterial for purposes of § 1292(a)(3). We have jurisdiction to consider this

appeal.

B

The “discretionary function exception” is a statutory limit on the United

States’ general waiver of sovereign immunity under the Federal Tort Claims

Act.1 It provides that the waiver will not apply to:

[a]ny claim based upon an act or omission of an employee of the

Government, exercising due care, in the execution of a statute or

regulation, whether or not such statute or regulation be valid, or

based upon the exercise or performance or the failure to exercise or

perform a discretionary function or duty on the part of a federal

agency or an employee of the Government, whether or not the

discretion involved be abused.

1

The Suits in Admiralty Act (SAA), which Tabea and the Dock Board have invoked in

this case, provides the appropriate waiver for maritime tort claims against the United States.

See 46 U.S.C. § 30903. Although the discretionary function exception is not referenced in the

SAA, we have found that the exception applies in SAA cases. See Baldassaro v. United States,

64 F.3d 206, 208 (5th Cir. 1995).

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28 U.S.C. § 2680(a). The purpose of the exception is to eliminate the possibility

of suit for any act that involves “an element of judgment or choice” on the part

of a government agency or employee. See United States v. Gaubert, 499 U.S. 315,

322 (1991) (citation omitted). The discretionary function exception “prevent[s]

judicial ‘second guessing’ of legislative and administrative decisions grounded

in social, economic, and political policy through the medium of an action in tort.”

United States v. S.A. Empresa de Viacao Aerea Rio Grandense (Varig Airlines),

467 U.S. 797, 814 (1984). By fashioning an exception for discretionary

governmental functions, Congress took “steps to protect the Government from

liability that would seriously handicap efficient government operations.” Id.

(citing United States v. Muniz, 374 U.S. 150, 163 (1950)).

The Supreme Court has developed a two-part test for determining whether

governmental conduct qualifies as a discretionary function or duty. First, the

court considers whether the challenged conduct involved “an element of

judgment or choice.” Gaubert, 499 U.S. at 322. If a federal statute, regulation,

or policy “specifically prescribes a course of action for an employee to follow,” the

requirement of judgment or choice is not satisfied because the employee has “no

rightful option but to adhere to the directive.” Id. (citing Berkovitz v. United

States, 486 U.S. 531, 536 (1988)). But where the statute, regulation, or policy

leaves it to a federal agency or employee to determine when and how to take

action, the agency or employee is not bound to act in a particular manner and

the exercise of its authority is discretionary. See id. at 329.

Second, the court considers whether the judgment at issue is the kind the

discretionary function exception was designed to protect, that is, whether it is

grounded in social, economic, or public policy. See Gaubert, 499 U.S. at 322–23;

see also Varig Airlines, 467 U.S. at 814. When a statute, regulation, or agency

guideline allows a Government agent to exercise discretion, “it must be

presumed that the agent’s acts are grounded in policy when exercising that

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discretion.” Id. at 324. In light of this presumption, to survive a motion to

dismiss based on the discretionary function exception, a complaint “must allege

facts which would support a finding that the challenged actions are not the kind

of conduct that can be said to be grounded in the policy of the regulatory regime.”

Id. at 324–25. In determining whether the exception bars a suit against the

Government, our focus is on the nature of the action taken and whether that

action is susceptible to policy analysis. Id. at 325.

In Canadian Pacific Ltd. v. United States, we determined that the United

States had not waived sovereign immunity for claims challenging the Army

Corps of Engineers’ discretionary judgments concerning the frequency of

dredging in the nation’s waterways. See id., 534 F.2d at 1171. Specifically, we

observed that there was

[N]o duty imposed on the Corps . . . to survey or dredge . . . at any

particular time or place. To require such a duty would in effect

make the Government the guarantor or insurer of the navigability

at all times of the river, despite its ever-changing bed affected by

tide, currents, erosion and wave wash of vessels constantly plying

its course, and the limitation of funds available to the Corps.

Id. at 1170. While the Corps is statutorily charged with maintaining and

improving the nation’s waterways, see 33 U.S.C. § 540 and § 622(a), “this grant

of power certainly is not an assumption of the duty to make all interstate

waterways navigable.” Id. at 1170 (quotation omitted).

The Dock Board does not contest these points of law as a general matter.

Instead, it contends that on the special facts of this case, § 2232(f) of the WRDA,

which was not at issue in Canadian Pacific, imposes a nondiscretionary duty on

the Government to maintain a depth of -45 feet MLG in the location where the

M/V MSC TURCHIA’s grounding occurred. This is because, the Dock Board

argues, it applied for and was granted a permit to dredge the harbor to that

depth and then completed such dredging at its own expense.

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The WRDA authorizes non-Federal interests, like the Dock Board, to make

improvements to the nation’s harbors and waterways subject to obtaining the

appropriate permits. See 33 U.S.C. § 2232(a). In 2002, the Dock Board applied

for and was granted a permit from the Corps to dredge to a depth of -45 feet

MLG from the face of the Napolean Avenue Wharf to the naturally occurring

deep draft navigation channel in the Mississippi River. The Dock Board

completed such dredging at its own expense in 2002 and again in 2005. The

Dock Board now claims that under § 2232(f), the Army Corps of Engineers

became duty-bound to dredge and maintain navigability in the Napolean Avenue

Wharf area—to the specifications described in the permit—once the Corps

granted the Dock Board a permit under § 2232(a) and the Dock Board financed

the initial dredging project.

Section 2232(f) of the WRDA provides that:

Whenever a non-Federal interest constructs improvements to any

harbor or inland harbor, the Secretary shall be responsible for

maintenance in accordance with section 2211(b) of this title if—

(1) the Secretary determines, before construction, that the

improvements, or separable elements thereof, are economically

justified, environmentally acceptable, and consistent with the

purposes of this subchapter;

(2) the Secretary certifies that the project is constructed in

accordance with applicable permits and the appropriate engineering

and design standards; and

(3) the Secretary does not find that the project, or separable element

thereof, is no longer economically justified or environmentally

acceptable.

33 U.S.C. § 2232(f). This provision unequivocally vests the Secretary [of the

Army] with the discretion to determine whether or not to maintain a non-federal

harbor improvement project. The Dock Board relies on the fact that the statute

states that the “Secretary shall be responsible for maintenance,” in arguing that

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the Government has no discretion in its maintenance decisions. However,

§ 2232(f)(1) clearly gives the Secretary the discretion to determine ex ante the

feasibility of maintaining any such non-federal projects. The statute’s use of the

word “shall” simply indicates that the Secretary of the Army must make a

decision, but it does not indicate what decision he must make.

Moreover, § 2232(f)(3) gives the Secretary the option to reevaluate, at any

time after construction, whether a project continues to be “economically justified

or environmentally acceptable.” Thus, the Corps has the power to determine ex

post that a project is no longer economically justified and not worthy of

continued federal funding for maintenance. Sections 2232(f)(1) and (3) both

require discretionary judgments on the part of the Corps that are specifically the

kind the discretionary function exception was designed to protect, i.e., decisions

grounded in social, economic, and public policy.

The Dock Board suggests that the Army Corps of Engineers made the

requisite policy determinations called for in § 2232(f) when the Corps issued a

permit allowing the Dock Board to dredge in the Port of New Orleans. The Dock

Board points to Corps’ policy on the issuance of permits for harbor

improvements, in which the Corps states that economic and environmental

factors, among other factors, will be considered in the issuance of a permit. See

33 C.F.R. § 320.4(a)(1). However, we agree with the district court for the reasons

stated in its memorandum order that the economic and environmental analysis

required for permitting purposes under § 320.4(a)(1) is distinct from the analysis

required under 33 U.S.C. § 2232(f) for committing federal funds to maintaining

a harbor project. To hold otherwise would require the Corps to finance the

maintenance of every project that it awards a permit for under § 320.4(a)(1).

There is yet another reason to reject the Dock Board’s claim that a permit

issued under § 320.4(a)(1) proxies for the policy-based criteria set forth in

§ 2232(f)(1)-(3), all three of which must be met before the Government becomes

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obligated to maintain a non-federal project. Section 2232(f)(2) describes a

process in which, inter alia, the Secretary of the Army “certifies” that a project

is constructed “in accordance with applicable permits.” This provision clearly

imposes a condition—certification by the Secretary of the Army—which must be

met aside from the permitting process before the issue of obligatory federal

funding is ripe. Although the Dock Board has not addressed this portion of the

statute on brief, its argument would require us to read out of § 2232(f)(2) the

certification requirement. This we decline to do.

The Army Corps of Engineers’ judgments concerning dredging in the

Mississippi River are quintessentially discretionary and susceptible to policy

analysis. Section 2232(f) of the WRDA and the Dock Board’s permit do nothing

to change this. As such, the Dock Board’s failure to dredge claims were barred

as a matter of law by the discretionary function exception. 28 U.S.C. § 2680(a).

III

The district court’s order dismissing the Dock Board’s failure to dredge

claims under F ED. R. C IV. P. 12(b)(1) is AFFIRMED.

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