Petition for Writ of Certiorari — BG Gulf Coast LNG, L.L.C., et al., Petitioners v. Sabine-Neches Navigation District of Jefferson County, Texas

Supreme Court briefFeb 22, 2023

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APPENDIX

TABLE OF CONTENTS

Page

APPENDIX A—Fifth Circuit’s Opinion

(Sept. 14, 2022) .................................................... 1a

APPENDIX B—District Court’s Order

(Feb. 24, 2022) .................................................... 18a

APPENDIX C—Fifth Circuit’s Order

Denying Rehearing (Oct. 25, 2022) ................... 55a

APPENDIX D—Constitutional and

Statutory Provisions Involved ........................... 57a

APPENDIX E—Complaint Exhibit B –

User Fees Paid by BG Gulf Coast LNG,

LLC ..................................................................... 69a

APPENDIX A

_________

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

_______

No. 22-40158

_______

BG GULF COAST LNG, L.L.C.; PHILLIPS 66 COMPANY,

Plaintiffs-Appellants,

SABINE-NECHES NAVIGATION DISTRICT OF

JEFFERSON COUNTY, TEXAS,

Defendant-Appellee.

_______

Appeal from the United States District Court

for the Eastern District of Texas

USDC No. 1:21-CV-470

_______

Filed: September 14, 2022

_______

OPINION

_______

Before STEWART, ELROD, and GRAVES, Circuit Judges.

JENNIFER WALKER ELROD, Circuit Judge:

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) (digesting the

backstory of the Harbor Development and Navigation

Improvement Act, which was passed as part of the

Water Resources Development Act). 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

Liquid 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

Because each new project that goes through this process

requires an act of Congress (literally), the parties refer to each

new act as “WRDA” followed by a two-digit year, e.g., “WRDA14.” They also refer to the 1986 Act (detailed above) as “WRDA86.” For ease of reference, we refer to the 1986 Act as “the Act”

and otherwise refer to any other project-approval act as “WRDA##.”

See David Hudson, President Obama Signs the Water

Resources Reform and Development Act, and Honors the

“Borinqueneers,” The White House (June 10, 2014),

https://obamawhitehouse.archives.gov/blog/2014/06/10/presiden

t-obama-signs-waterresources-reform-and-development-actand-honors-borinque.

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

“[D]eepening the Sabine Neches Waterway (SNWW) from 40

to 48 feet and the offshore channel from 42 to 50 feet in depth

from offshore to the Port of Beaumont Turning Basin; extending

the 50-foot deep offshore channel by approximately 13.2 miles to

deep water in the Gulf, increasing the total length of the channel

from approximately 64 to 77 miles; tapering and marking the

Sabine Bank Channel from 800 feet wide to 700 feet wide;

deepening and widening the Taylor Bayou channels and turning

basins; easing selected bends on the Sabine-Neches Canal and

Neches

River

Channel;

constructing

new

and

enlarging/deepening existing turning and anchorage basins on

the Neches River Channel; beneficial use of dredged material

features consisting of the restoration of 2,853 acres of emergent

marsh, improvement of 871 acres of shallow water habitat, and

nourishment of 1,234 acres of existing marsh in Texas;

mitigation measures consisting of the restoration of 2,783 acres

of emergent marsh, improvement of 957 acres of shallow water

habitat, and stabilization and nourishment of 4,355 acres of

existing marsh; and post-construction monitoring and adaptive

management of the beneficial use features and mitigation

areas[.]”

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

nonhydrocarbon

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

A “ton” in America and Canada is 2,000 lbs., while a “ton” in

the United Kingdom is 2,240 lbs. To avoid confusion, “short ton”

is used for something that is 2,000 lbs. and “long ton” for 2,240

lbs.

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”)

The District actually went through notice and comment twice.

The first proposed ordinance set a flat $0.35/short ton for

hydrocarbon cargo and no fee at all for the nonhydrocarbon

cargo. 85 Fed. Reg. 37,634, 37,635 (June 23, 2020). After a

hearing and talking with the Corps, the District revised the

ordinance to what it is today. Id.

Dictionaries at the time the Act was passed defined “fair” as

“[h]aving the qualities of impartiality and honesty; free from

prejudice, favoritism, and self-interest,” Fair, Black’s Law

Dictionary 534 (5th ed. 1979), and “equitable” as “[j]ust;

conformable to the principles of justice and right,” Equitable,

Black’s Law Dictionary 482 (5th ed. 1979). See also Webster’s

Third New International Dictionary 815 (1971) (“equitable”

means “characterized by equity”). The most recent edition of

Black’s Law Dictionary includes this example for the term “fair”:

“everyone thought Judge Reavley to be fair.” Fair, Black’s Law

Dictionary 715 (11th ed. 2019).

appealed. We subsequently granted the District’s

motion to expedite the appeal.

II.

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 (2009) (quoting Bell Atl.

Corp. v. Twombly, 550 U.S. 544, 570 (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 wellpleaded 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 consumers vis-à-vis “[p]ort or harbor dues.”

One such condition is in § 2236(a)(1): “Port or harbor

dues may be levied only in conjunction with a harbor

navigation project whose construction is complete

(including a usable increment of the project)[.]”

To BG Gulf Coast, this means that the District can

only impose a fee for either (a) its share of the entire

$1.1 billion project once it is completed, or (b) its share

of a “usable increment” of the Project, provided that

the fee is imposed for use of that usable increment.

Put another way, the District cannot impose the User

Fee on vessels and cargo because of Anchorage Basin

No. 1 to pay for any other part of the project, let alone

(as the Ordinance says) the District’s entire share of

the project. According to BG Gulf Coast, this follows

textually from the words “in conjunction with” in

subsection (a)(1). As well as by contextual inference

from other parts of § 2236 in which Congress only

allows fees for incurred costs, not speculative future

costs. BG Gulf Coast finds some further support in

certain language from Plaquemines, language which,

it says, makes this an open-and-shut issue. See 874

F.3d at 1025.

The District says that BG Gulf Coast’s reading of the

statute stops too soon; the full condition reads: “in

conjunction with a harbor navigation project whose

construction is complete (including a usable

increment of the project) and for the following

purposes and in amounts not to exceed those

necessary to carry out those purposes: (A)(i) to finance

the non-Federal share of construction and operation

and maintenance costs of a navigation project for a

harbor under the requirements of [33 U.S.C. § 2211].”

§ 2236(a)(1). According to the District, this means that

once a usable increment of the project is done, it may

then “finance” its “share of construction and operation

and maintenance costs of” the Project. In contrast to

BG Gulf Coast’s reading—which requires the nonfederal interest to build first and pay later—this

allows for the process under the Act to work like this:

(1) Congress funds the first phase of the project; (2)

the non-federal interest, after going through notice

and comment, imposes a fee to build revenue to cover

its share; (3) the fee raises funds to pay for the next

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increment of the project; and (4) so on until the project

is complete.

The district court agreed with the District. It

concluded that BG Gulf Coast’s approach was

atextual, as it required reading that parenthetical

“(including a usable increment of the project)” out of

the statute. BG Gulf Coast’s way around the

parenthetical was to say that “harbor navigation

project” in (a)(1) must mean the same thing as

“navigation project for a harbor” under (a)(1)(A)(i),

and thus a fee for “a usable increment of the project”

in (a)(1) meant that a fee could only finance the same

“usable increment.” The district court concluded that,

no, “a usable increment of the project” defines what it

means for a project to be “complete,” not what it

means to be a harbor navigation project. As for

Plaquemines, the district court concluded that it did

not apply as it was purely about subsection (a)(2) and

emergency-service fees.

We agree with the district court. BG Gulf Coast’s

interpretation of “in conjunction with” is far too

cramped. To be sure, “conjunction” was defined at the

time as a “simultaneous occurrence in space or time.”

Conjunction, American Heritage Dictionary 311 (2d

College ed. 1982). BG Gulf Coast says that the User

Fee is being levied “in conjunction with” the District’s

“plan to construct the Project’s remaining increments

at some future date.” But that argument fails because

subsection (a)(1) allows fees for projects “whose

construction is complete (including a usable

increment of the project).” It also says that other

subsections, like (a)(3)(B), contemplate using fees for

“project features constructed under this subchapter,”

which shows that fees are only for “incurred costs.”

11a

But subsection (a)(1) refers to “usable increment[s],”

not “project features,” and it has no similar past-tense

“constructed” language. See Christiana Tr. v. Riddle,

911 F.3d 799, 805 (5th Cir. 2018) (“When Congress

includes particular language in one section of a

statute but omits it in another, we presume[] that

Congress intended a difference in meaning.”

(quotation omitted)). So if anything, that cuts against

its argument because Congress presumptively treated

“usable increments” of projects differently than

“project features,” and thus fees are allowed under

different circumstances and require consideration of

completely different factors.

BG Gulf Coast again tries to tie fees to the specific

“usable increment of the project,” so that fees may

only be used after-the-fact to pay for that increment.

But to do so, it has to argue that “(including a usable

increment of the project)” modifies “a harbor

navigation project,” so that later when subsection

(a)(1)(A)(i) says “a navigation project for a harbor,” it

means “a usable increment of the project.” But it

makes far more sense that this language means that

once a usable increment of the project is complete, a

fee may be levied, not that a fee may only be levied to

finance a usable increment of the project. Cf. Antonin

Scalia & Bryan A. Garner, Reading Law: The

Interpretation of Legal Texts 152–53 (2012) (the

Nearest-Reasonable-Referent canon: “When the

syntax involves something other than a parallel series

of nouns or verbs, a prepositive or postpositive

modifier normally applies only to the nearest

reasonable referent.”).

At first blush, some language in Plaquemines

supports BG Gulf Coast, but that case concerned an

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entirely different provision of the Act. Knight v. Kirby

Offshore Marine Pac., L.L.C., 983 F.3d 172, 177 (5th

Cir. 2020) (“A statement is dictum if it could have been

deleted without seriously impairing the analytical

foundations of the holding and[,] being peripheral,

may not have received the full and careful

consideration of the court that uttered it.” (quoting

United States v. Segura, 747 F.3d 323, 328–29 (5th

Cir. 2014))). Plaquemines described § 2236(a)(1) as

“forbid[ing] fees to finance harbor improvements until

after the project is complete,” but that case was

actually about subsection (a)(2), and how the Act does

not otherwise constrain a port’s ability to assess a fee

until a port “has undertaken a harbor improvement

project.” 874 F.2d at 1026, 1024–25. So Plaquemines

is only relevant to the extent it holds that the Act

applies once a project begins, not when it ends, and

the fact that subsection (a)(1) was in no way raised or

relevant to the bottom-line conclusion is dispositive.

See Knight, 983 F.3d at 178 (dicta is “peripheral” and

“may not have received [our] careful consideration”).

BG Gulf Coast’s theory of subsection (a)(1) fails at

every turn. The statute, properly construed, allows

the District to finance its share of the project once a

usable increment of the project is completed. Because

Anchorage Basin No. 1 has been completed,

subsection (a)(1) permitted the District to pass the

Ordinance containing the User Fee.

As discussed, upon completion of a usable increment

of the project, § 2236(a)(1)(A)(i) allows a non-federal

interest to levy a harbor fee “in amounts not to exceed

those necessary to carry out” the following purpose:

“to finance the non-Federal share of construction and

13a

operation and maintenance costs of a navigation

project for a harbor under the requirements of [33

U.S.C. § 2211].” Section 2211(a)(1)(B) says that the

non-federal interest “shall pay, during the period of

construction of the project,” 25% “of the cost of

construction of the portion of the project which has a

depth in excess of 20 feet but not in excess of 50 feet[.]”

BG Gulf Coast reads these provisions together to

argue that “amounts not to exceed those necessary”

means that the District may only use the fee to finance

25% of the Project, as (according to BG Gulf Coast) the

District “voluntarily agreed to pay more than 25% of

the Project’s total cost[.]” The District agreed to cover

around 40% of the project, but if the Project comes in

under budget, BG Gulf Coast alleges that the District

still plans to pay the amount it agreed to—in other

words, it may end up covering 60%–80% of the Project.

Because it voluntarily agreed to pay that much, “the

additional amount above 25% is not a ‘requirement’ of

[33 U.S.C. § 2211],” so the District has to cover

anything above 25% with funds that do not come from

the User Fee. Summing that up, BG Gulf Coast argues

that § 2211(a)(1)(B) places a 25% cap on financing a

non-federal interest’s share of an improvement project

because anything not “require[d]” by § 2211(a)(1)(B) is

not “necessary.”

The District responds with a different provision of §

2211. Subsection (e) says that before any construction

begins on harbors, the Secretary of the Army and the

non-federal interests “shall enter into a cooperative

agreement” and that the non-federal interests “shall

agree to” “provide to the Federal Government the nonFederal share of all other costs of construction” of the

project. 33 U.S.C. § 2211(e)(4). So when § 2236(a)(1)

14a

says “amounts not to exceed those necessary to carry

out” the financing of the Project, the District says that

the cooperative agreement was necessary to carry out

the Project, and so the User Fee can be used to cover

its contractual obligation.

The district court did not squarely address that

argument because it held that the 25% “requirement”

is a floor, not a ceiling or a set amount. As everyone

agrees, the District may voluntarily assume more

than 25% of the cost of the project, which necessarily

means that 25% is not both a floor and a ceiling. Shall

does not mean shall only, and the statute contains no

“up to” or “at least” language either. BG Gulf Coast

then must turn to § 2236(a)(1) which limits fees to the

“amount not to exceed those necessary” under § 2211.

The district court said that it “cannot be that Section

2211 imposes a cap for the fee-based non-Federal

share but not the alternatively funded non-federal

share because that reading would require an express

statutory provision. Section 2236(a)(1)’s language—

‘amount not to exceed those necessary’—is not

enough.”

The question is what § 2236(a)(1)(A)(i) means when

it says that fees must be “in amounts not to exceed

those necessary to carry out” the purpose of

“financ[ing]” the Project “under the requirements of”

§ 2211. BG Gulf Coast says that the “necessary”

amount under § 2211 is the 25% requirement in

subsection (a). The District says that the “necessary”

amount under § 2211 is the amount that the District

agreed to cover in the cooperative agreement with the

federal government in subsection (e). Sadly, Congress

did not say what subsection it was thinking of when it

said “under the requirements of” § 2211, and the most

15a

natural reading

requirements.

that

meant

all

its

The word “necessary” has been hard to pin down

since McCulloch v. Maryland, 17 U.S. (4 Wheat.) 316,

414 (1819). Black’s Law Dictionary, before even

getting to what the definition is, opens with this

warning: “This word must be considered in the

connection in which it is used, as it is a word

susceptible of various meanings. It may import

absolute physical necessity or inevitability, or it may

import that which is only convenient, useful,

appropriate, suitable, or conducive to the end sought.”

Necessary, Black’s Law Dictionary 928 (5th ed. 1979).

And between the two, at least in the legal context,

courts “rarely use ‘necessary’ in the latter sense.”

Payne v. United States, 289 F.3d 377, 389 (5th Cir.

2002) (Garza, J., dissenting in part). The term

“necessary” here “does not exist in a vacuum,” and its

meaning “must be determined in the context in which

[it] appear[s].” Texas v. E.P.A., 983 F.3d 826, 837, 837

n.2 (5th Cir. 2020).

Section 2236(a)(1) is concerned with fees being

levied “for the following purposes and in amounts not

to exceed those necessary to carry out those purposes.”

The purpose relevant here is “to finance.” And what

can it finance? The District’s share of the

“construction and operation and maintenance costs” of

the Project “under the requirements of” § 2211.

Section 2211 has many requirements about costs

under different specific circumstances, but if the

purpose is “to finance” the District’s share of the

Project, the focus should be on what it had to do to

secure financing. So it is true that paying 25% of the

costs was necessary to secure financing vis-à-vis the

16a

fees, but the District also had to secure an agreement

with the federal government under § 2211(e).

As BG Gulf Coast concedes, the Act gives the

District discretion to go beyond that 25% amount for

costs; it only sets a maximum on what percentage the

federal government can spend. See 33 U.S.C. § 2280.

With that discretion, because the amount of fees must

be necessary to secure financing, and because the

District had discretion to vary upward on the

percentage of costs it covers, the term “necessary”

more likely accords with the more permissive

definition of the term. Texas, 983 F.3d at 837. What

follows is that “necessary” means something more like

“convenient, useful, appropriate, suitable, or

conducive to the end sought.” Black’s, supra at 928

(emphasis added). Cf. 33 U.S.C. § 2236(a)(1)

(“necessary to carry out those purposes” (emphasis

added)). In this light, while it may not be strictly

necessary to cover 40% of the costs under § 2236(a)(1)

and § 2211(a), it was convenient and conducive to

financing the Project. Thus, the District did not

violate the Act by pledging to cover the costs above

25% with the proceeds of the User Fee.

BG Gulf Coast’s argument hinges on a strict reading

of “necessary.” But context is needed to determine

whether “necessary” means “absolute physical

necessity” or merely “conducive to the end sought.”

Under these circumstances, it is the latter. Thus, the

District can cover more than 25% of the cost with the

User Fee proceeds.

BG Gulf Coast briefed several other arguments

regarding the legality of the District’s imposition of

the User Fee. In its thorough and well-reasoned

17a

opinion, the district court explained why those claims

must be dismissed. We agree with the conclusions

reached by the district court and thus we do not

disturb its holdings on appeal.

***

Because the district court properly dismissed each

of BG Gulf Coast’s claims, we AFFIRM.

18a

APPENDIX B

_________

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF TEXAS

BEAUMONT DIVISION

_______

BG GULF COAST LNG, LLC, PHILLIPS 66 COMPANY,

Plaintiffs,

SABINE-NECHES NAVIGATION DISTRICT OF JEFFERSON

COUNTY, TEXAS,

Defendant.

_______

Civil Action No. 1:21-cv-00470

_______

Signed 02/24/2022

_______

ORDER GRANTING DEFENDANT’S MOTION

TO DISMISS AND DENYING AS MOOT

PARTIES’ JOINT MOTION FOR PROTECTIVE

ORDERS

_______

MICHAEL J. TRUNCALE, United States District

Judge

Plaintiffs BG Gulf Coast LNG (‘‘BG’’) and Phillips 66

Company (‘‘Phillips’’), two major energy companies,

bring suit against Defendant Sabine Neches

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Navigation District (‘‘SSND’’), a political subdivision

of the State of Texas responsible for the construction

and maintenance of ports and harbors in southeast

Texas. Defendant began levying a fee against users of

the Sabine-Neches Waterway (‘‘Waterway’’) to fund

construction improvements made to the Waterway.

Plaintiffs contest this fee. Before the Court are

Defendant’s Motion to Dismiss, [Dkt. 5], and the

Parties’ Joint Motion for Protective Orders. [Dkt. 34].

For the following reasons, Defendant’s Motion to

Dismiss is GRANTED. Parties’ Joint Motion for

Protective Orders is DENIED AS MOOT.

I. BACKGROUND

Before the Court rests not only a matter of first

impression but also a matter of utmost importance to

this region, this nation, and the global economy.

Defendant SSND, a political subdivision of the State

of Texas responsible for southeast Texas’ ports and

harbors, is spearheading a $1.2 billion infrastructure

project (‘‘Project’’) to modernize the Waterway. The

Waterway feeds the Ports of Beaumont, Port Arthur,

and Orange, Texas. It is the country’s third largest

waterway by total shipping tonnage and critical to

national security.

Like much of the nation’s water infrastructure, the

Waterway has not been improved since the 1960s.

Ships have become larger, and technology has

advanced, but growth of the Waterway has lagged. At

only forty feet in depth, it is unable to accommodate

many modern, larger vessels.

To remedy this, Defendant partnered with the

United States Army Corps of Engineers (‘‘USACE’’) to

improve the Waterway through a process proscribed

20a

by the Water Resources Development Act of 1986, 33

U.S.C. § 2201 et seq. (‘‘WRDA-86’’).1 Congress passed

the WRDA-86 in the mid-1980s to revamp the arduous

process of updating the nation’s ports and harbors.

Prior to the WRDA-86, ‘‘[e]very project underwent

nineteen independent reviews, with an average of

twenty-six years passing between the first study of a

project and the project’s completion.’’ New Orleans

S.S. Ass’n v. Plaquemines Port, Harbor & Terminal

Dist., 874 F.2d 1018, 1024–25 (5th Cir.), opinion

amended on denial of reh’g, 891 F.2d 1153 (5th Cir.

1989). Furthermore, given the serious financial

burden these projects imposed, Congress did not have

enough funding for the projects that needed it most.

132 Cong. Rec. S3402 (1986). The length of time for

approving and the difficulty in financing these

projects hampered their implementation. In fact, ‘‘[n]o

new project was authorized between 1970 until

shortly before passage of the [WRDA-86]. Federal

spending on harbor construction declined 78% after

the 1960’s [sic]; mounting pressures on the federal

budget made increased appropriations for projects

unlikely.’’ Id.

In response, the WRDA-86 overhauled the system

for financing both new construction and improvement

projects for America’s ports and harbors. Instead of

relying solely on federal funding, the WRDA-86 split

the costs of construction with state and local entities

(‘‘non-Federal interests’’). By involving non-Federal

Although the process is proscribed in WRDA-86, Congress

approves new projects and provides cost projections for those

projects in subsequent WRDA enactments. See, e.g., Water

Resources Reform and Development Act of 2014, Pub. L. No. 113121, 128 Stat. 1193, 1364 (2014).

21a

interests, Congress intended to boost local investment

and hasten project completion.

The process prescribed by the WRDA-86 begins with

a feasibility study performed by the USACE. 33

U.S.C. §§ 2215, 2282. This study is published in the

Federal Register, then transferred to Congress by the

Secretary of the Army. Id.; see also Air Liquide Am.

Corp. v. U.S. Army Corps of Eng’rs, 359 F.3d 358, 365

(5th Cir. 2004) (describing the process for harborrestoration projects under the WRDA-86 and

subsequent legislation authorizing new projects

under the Water Resources Development Act of 1996,

Pub. L. No. 104–303, 110 Stat. 3658 (1996)). Upon

congressional approval, which includes projected

costs, Congress allocates funding (‘‘New Start

funding’’) to initiate the first phase of the project. See

Air Liquide, 359 F.3d at 365. The USACE and the

non-Federal interest then enter into a partnership

agreement covering the project. 33 U.S.C. § 2211(e).

This agreement must provide the federal government

with the non-Federal share of costs.

The Project has complied with these requirements.

The USACE produced its feasibility study in March

2011. The study recommended that Congress allocate

funding for the Project because it benefits the

hydrocarbon industry and the United States Military.

[Dkt. 5-3 at 3, 7, 12–14]. Namely, the Project would

ease congestion and allow the Waterway to

accommodate larger ships. The Secretary of the Army

then transferred the study to Congress, which

approved the Project in 2014. Water Resources

Reform and Development Act of 2014, Pub. L. No. 113121, 128 Stat. 1193, 1364 (2014) (‘‘WRDA-14’’). The

WRDA-14 listed the projected costs as $1.1 billion,

22a

with the federal government funding $748 million and

Defendant footing the remaining $365 million. Id. In

2019, Congress allocated New Start funding for the

Project. 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). This New Start funding,

approximately $20 million, funded the first portion of

the Project, Anchorage Basin No. 1. [Dkt. 1 at ¶¶ 31,

50]. In July 2019, the USACE and Defendant entered

into a Partnership Agreement (‘‘Partnership

Agreement’’), which lists a projected $1.2 billion

construction cost, 2 with $732 million coming from

federal coffers and the remaining $488 million coming

from Defendant. Defendant’s projected share of costs

amounts to forty percent of the total cost of

construction.

Pursuant to the Partnership Agreement, the Project

will update many features of the Waterway,

including:

[D]eepening the Sabine Neches Waterway

(SNWW) from 40 to 48 feet and the offshore

channel from 42 to 50 feet in depth from

offshore to the Port of Beaumont Turning

Basin; extending the 50-foot deep offshore

channel by approximately 13.2 miles to deep

water in the Gulf, increasing the total length of

the channel from approximately 64 to 77 miles;

tapering and marking the Sabine Bank

Channel from 800 feet wide to 700 feet wide;

deepening and widening the Taylor Bayou

This is a projected cost. Plaintiffs have proffered evidence

that the actual cost of this Project will be significantly lower.

23a

channels and turning basins; easing selected

bends on the Sabine-Neches Canal and Neches

River Channel; constructing new and

enlarging/deepening existing turning and

anchorage basins on the Neches River Channel;

beneficial use of dredged material features

consisting of the restoration of 2,853 acres of

emergent marsh, improvement of 871 acres of

shallow water habitat, and nourishment of

1,234 acres of existing marsh in Texas;

mitigation measures consisting of the

restoration of 2,783 acres of emergent marsh,

improvement of 957 acres of shallow water

habitat, and stabilization and nourishment of

4,355 acres of existing marsh; and

postconstruction monitoring and adaptive

management of the beneficial use features and

mitigation areas[.]

[Dkt. 5-7 at 1–2]. Construction on the first portion of

the Project, Anchorage Basin No. 1, has been

completed. This portion of the Project deepened

Anchorage Basin No. 1 from twenty feet to forty feet.

To fund its share of Project costs, SSND passed a

User Fee Ordinance (‘‘Ordinance’’) in April 2021,

which charges a User Fee (‘‘Fee’’) on ships with drafts

in excess of twenty feet. [Dkt. 1-1]. Prior to enacting

the Ordinance, SSND published it in the Federal

comment. SNND User Fee Notice, 86 Fed. Reg. 736905 (Jan. 28, 2021). The Fee collects between $0.02–

$0.035 per short ton of non-hydrocarbon cargo and

$0.20–$0.35 per short ton of hydrocarbon cargo. The

Fee may be adjusted to as low as $0.00 for all types of

cargo. [Dkt. 1 at ¶ 38(g)]. SSND will collect the Fee

24a

until either all construction costs are repaid or

January 1, 2049, whichever comes first. Id. SSND

began levying the Fee upon completion of Anchorage

Basin No. 1 on May 1, 2021. Id. at ¶ 37.

Plaintiffs’ ships make extensive use of the

Waterway.3 Attached to the Complaint is a list of BG

ships that have been subject to the Fee, each with a

fully laden forward and aft sailing draft between

thirty-six and thirty-nine feet. [Dkt. 1-2]. At the time

of filing, BG incurred $326,983.70 in Fees. Although

Phillips has not yet paid the Fee, it has executed

contracts which will subject it to the Fee in the

immediate future. [Dkt. 1 at ¶ 43].

II. LEGAL STANDARD

Federal Rule of Civil Procedure 12(b)(6) authorizes

dismissal of a complaint for ‘‘failure to state a claim

upon which relief can be granted.’’ Fed. R. Civ. P.

12(b)(6). In reviewing a Rule 12(b)(6) motion, the

Court ‘‘accepts all well-pleaded facts as true, viewing

them in the light most favorable to the plaintiff.’’

Sonnier v. State Farm Mut. Auto. Ins. Co., 509 F.3d

673, 675 (5th Cir. 2007). However, ‘‘the tenet that a

court must accept as true all of the allegations

contained in a complaint is inapplicable to legal

conclusions [and] . . . Rule 8 does not unlock the doors

of discovery for a plaintiff armed with nothing more

than conclusions.’’ Ashcroft v. Iqbal, 556 U.S. 662,

678–79, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).

To defeat a Rule 12(b)(6) motion to dismiss, a

plaintiff must ‘‘nudge their claims across the line from

conceivable to plausible’’ by pleading ‘‘enough facts to

The ships themselves are not owned by Plaintiffs, rather it is

their cargo that frequently traverses the Waterway.

25a

state a claim to relief that is plausible on its face.’’ Bell

Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct.

1955, 167 L.Ed.2d 929 (2007). In other words, a

plaintiff must establish ‘‘more than a sheer possibility

that a defendant has acted unlawfully.’’ Ashcroft, 556

U.S. at 678, 129 S.Ct. 1937. Determining whether a

complaint states a plausible claim for relief is ‘‘a

context-specific task that requires the reviewing court

to draw on its judicial experience and common sense.’’

Id. at 679, 129 S.Ct. 1937.

In evaluating a motion to dismiss, courts may need

to engage in statutory interpretation. In analyzing the

text, this Court undertakes ‘‘the traditional means of

statutory interpretation, which include the text itself,

its history, and its purpose.’’ Bellum v. PCE

Constructors, Inc., 407 F.3d 734, 739 (5th Cir. 2005).

The Supreme Court and Fifth Circuit prefer the

statute’s plain meaning unless doing so leads to an

absurd result. Hartford Underwriters Ins. Co. v.

Union Planters Bank, N. A., 530 U.S. 1, 6, 120 S.Ct.

1942, 147 L.Ed.2d 1 (2000); Bellum, 407 F.3d at 739.

With that, the Court turns to the merits of Plaintiffs’

claims.

III. DISCUSSION

Plaintiffs contend that the Fee enacted by the

Ordinance violates the WRDA-86 in the following

ways:

a. WRDA permits a non-Federal sponsor to

levy fees only in conjunction with a harbor

navigation project ‘‘whose construction is

complete (including a usable increment of

the project).’’ 33 U.S.C. § 2236(a). The

Ordinance violates WRDA because it

permits SNND to prospectively collect User

26a

Fees for incomplete, unusable increments of

the Project.

b. WRDA contemplates that a project may

include multiple navigational features—

such as channel deepening features or

anchorage basin features—and requires

that fees be levied on a feature-by-feature

basis. Moreover, some vessels are exempt

from paying fees for certain navigational

features. For deepening features, WRDA

prohibits assessing a fee against any vessel

that, based on its design draft, could have

used the waterway before construction of

the project. 33 U.S.C. § 2236(a)(3). And as to

certain other specific project features

enumerated in the statute, ‘‘only vessels at

least comparable in size to those used to

justify these features may be charged’’ the

fee. Id. The Project at issue here includes

multiple navigational features. But, the

Ordinance fails to levy the User Fee on a

feature-by-feature basis and improperly

levies fees against exempt vessels.

c. WRDA caps the total amount of fees the

non-Federal sponsor may levy in two

respects. First, the fee must be limited to the

non-Federal share of construction costs (as

opposed to total construction costs). Second,

the fee must be limited to 25% of total

construction costs. The Ordinance fails to

impose these statutorily-required limits

because: (i) the Ordinance contemplates

collecting User Fees for ‘‘all’’ construction

costs ‘‘associated with the Project’’ and not

27a

merely the non-Federal share; and (ii) even

if such a limit existed, the Ordinance further

fails to limit the amount of User Fees to 25%

or less of the total construction costs.

d. WRDA requires non-Federal sponsors to

levy fees on a ‘‘fair and equitable’’ basis. The

Ordinance, however, improperly levies User

Fees on vessels carrying hydrocarbon cargo

at a rate at least 1000% greater than the

rate for vessels carrying non-hydrocarbon

cargo.

[Dkt. 1 at ¶ 8]. Plaintiffs request monetary damages

in the amount of the Fee already paid by BG as well

as injunctive and declaratory relief. The Court

evaluates each of these contentions in turn and

concludes that Plaintiffs do not state a claim for which

relief can be granted.

Count I

The Court dismisses Count I of the Complaint

because it rests on a fundamental misunderstanding

of the WRDA-86. Plaintiffs contend that Defendant’s

Fee is unlawful because it funds incomplete portions

of the Project in violation of 33 U.S.C. § 2236. This

statute permits the non-Federal interest, Defendant,

to levy harbor fees to finance construction:

Port or harbor dues may be levied only in

conjunction with a harbor navigation project

whose construction is complete (including a

usable increment of the project) and for the

following purposes and in amounts not to

exceed those necessary to carry out those

purposes:

28a

(A)(i) to finance the non-Federal share of

construction

and

operation

and

maintenance costs of a navigation project for

a harbor under the requirements of section

2211 of this title.

§ 2236(a)(1). Defendant contends that this language

permits it to charge the Fee for the entire Project upon

completion of a usable increment. Plaintiffs assert

that Defendant may only charge the Fee for ‘‘(a) a

project whose construction is complete; or (b) for a

usable increment of a project whose construction is

complete.’’ [Dkt. 1 at ¶ 47 (internal quotations

omitted)].

Plaintiffs’ reading requires the Court to add

language to the statute and is therefore incorrect.

Section 2236(a) treats the completion of a usable

increment in the same manner as the completion of

the entire project; therefore, the non-Federal interest

may charge fees for the whole project upon completion

of one usable increment. The term ‘‘usable increment

of the project’’ defines when a project is considered

complete, which in turn triggers the ability to charge

a fee. Critically, a usable increment is not

synonymous with a harbor navigation project, but a

completed harbor navigation project. In this regard,

the placement of the parenthetical involving usable

increments is instructive. If Congress intended to

define ‘‘harbor navigation project’’ as a ‘‘usable

increment of the project,’’ then it would have placed

the parenthetical next to ‘‘harbor navigation project’’

rather than ‘‘complete.’’ Furthermore, the lack of the

term ‘‘usable increment’’ in Subsection (A)(i)

demonstrates the futility of Plaintiffs’ approach.

Congress did not add a similar parenthetical in

29a

Subsection (A)(i) and, therefore, made clear that

harbor fees may finance the ‘‘navigation project’’ as a

whole and not merely ‘‘a usable increment.’’ Even if

‘‘usable increment’’ and ‘‘harbor navigation project’’

were synonymous in Subsection (a)(1), this does not

transform the meaning of ‘‘navigation project for a

harbor’’ in Subsection (a)(1)(A)(i). Thus, upon

completion of a usable increment, Defendant may

charge the Fee to fund the entire Project. In addition,

other portions of Section 2236 discuss levying fees

based on the characteristics of individual project

features. See § 2236(a)(3); see also infra Part II.ii. The

Court concludes that the distinction between ‘‘project

feature’’ and ‘‘usable increment’’ was intentional, in

part, because Congress chose to discuss project

features in more depth in a different part of the same

section.

Plaintiffs also rely on New Orleans Steamship

Association v. Plaquemines Port, Harbor and

Terminal District for the propositions that Defendant

may only charge the Fee on a feature-by-feature basis

and for features that have already been completed.

874 F.2d 1018 (5th Cir. 1989). In Plaquemines, a

group of ship owners sued a local harbor district for

charging emergency-service fees because they

believed the fees violated, among other provisions, the

WRDA. The Fifth Circuit found that Section 2236

‘‘applies when a port has undertaken a harbor

improvement project and not otherwise.’’ Id. at 1024.

However, nothing in the statute prohibited port and

harbor authorities from charging an emergencyservice fee for regular use of the harbor. Id. at 1027.

Therefore, that fee did not violate the WRDA.

30a

Although Plaquemines dealt primarily with Section

2236(a)(2), part of the opinion discusses Section

2236(a)(1). This is the opinion’s strongest language in

support of Plaintiffs’ argument:

Section 2236(a)(1) forbids fees to finance harbor

improvements until after the project is

complete. Obviously, this prevents nonfederal

ports from fraudulently charging for projects

that are mere speculation or that suffer from

undue delays while under construction. More to

the point, it ensures that the fees will be paid

by ships that benefit directly from

improvements[.]

Id. at 1025.4

This—and other language regarding Section

2236(a)(1)—is dicta. ‘‘A statement is dictum if it could

have been deleted without seriously impairing the

analytical foundations of the holding and being

peripheral, may not have received the full and careful

consideration of the court that uttered it.’’ Int’l Truck

& Engine Corp. v. Bray, 372 F.3d 717, 721 (5th Cir.

2004). But ‘‘if the statement is ‘necessary to the result

or constitutes an explication of the governing rules of

law,’ it is not dictum.’’ U.S. Bank Nat’l Ass’n v. Verizon

Commc’ns., Inc., 761 F.3d 409, 427–28 (5th Cir. 2014)

(quoting Int’l Truck & Engine Corp., 372 F.3d at 721).

Plaquemines’s discussion of Section 2236(a)(1) is not

critical to its holding. First, the Fifth Circuit found

that Section 2236 did not apply because the

emergency-service fees were not assessed with a

harbor improvement project. Plaquemines, 874 F.2d

Plaintiffs cite to other language, but this is the strongest.

Regardless, all Plaintiffs’ references to Plaquemines are dicta.

31a

at 1024. Whether the non-Federal interest could

charge fees after the project’s completion is irrelevant

to the holding.

Even if the Fifth Circuit’s discussion of Section

2236(a)(1) were precedential, it would not necessarily

favor Plaintiff. Although the opinion states that fees

are only permissible after construction is complete,

the court does not specify whether it is completion of

the entire project or simply a usable increment. The

statement that ‘‘fees will be paid by ships that benefit

directly from improvements,’’ Id. at 1026, is similarly

unclear. While Plaintiffs contend that the direct

beneficiary language requires Defendant to charge on

a feature-by-feature basis, 5 the Fifth Circuit’s

language is vague as to whether ships must benefit

from the specific feature of the project or from the

project as a whole. Thus, the Plaquemines dicta does

not provide Plaintiffs’ claims with enough support to

withstand Defendant’s Motion to Dismiss.

ii.

Count II

In Count II, Plaintiffs assert that the Project should

assess the Fee on a feature-by-feature basis. 6

Plaintiffs principally rely on 33 U.S.C. § 2236(a)(3):

a. Port or harbor dues may not be levied under

this section in conjunction with a deepening

feature of a navigation improvement project

on any vessel if that vessel, based on its

design draft, could have utilized the project

Charging on a feature-by-feature basis would only permit

Fees for those features that Plaintiffs actually use, rather than a

single Fee for using any portion of the Project.

While there may be situation in which certain vessels are

exempt from Harbor Fees, this is not one of them.

32a

at mean low water before construction. In

the case of project features which solely—

i. widen channels or harbors,

ii. create or enlarge bend easings, turning

basins or anchorage areas, or provide

protected areas, or

iii. remove obstructions to navigation,

only vessels at least comparable in size to those

used to justify these features may be charged

under this section.

The Court distills this provision into two limitations:

(1) the Design Draft Limitation; and (2) the Size

Limitation.

(A) The Design Draft Limitation

First, Section 2236(a)(3) limits the fees that may be

assessed for a ‘‘deepening feature of a navigation

project’’:

Port or harbor dues may not be levied under

this section in conjunction with a deepening

feature of a navigation improvement project on

any vessel if that vessel, based on its design

draft, could have utilized the project at mean

low water before construction.

§ 2236(a)(3)(A). Plaintiffs assert that Defendant may

only charge ships for features that they would not be

able to use but for the Project’s improvements.

Accordingly, Plaintiffs believe that Defendant’s Fee

violates the statute because it charges all vessels with

a design draft in excess of twenty feet for all Project

features.

This reading ignores the statute’s plain meaning: a

vessel must be able to utilize the entire project before

33a

construction to avoid post-construction fees. Courts

assume that the legislature intended different

meanings when ‘‘the legislature uses certain language

in one part of the statute and different language in

another[.]’’ Sosa v. Alvarez-Machain, 542 U.S. 692,

711 n.9, 124 S.Ct. 2739, 159 L.Ed.2d 718 (2004)

(internal quotation marks omitted). Here, the statute

requires that the vessel be able to use the ‘‘project’’

prior to construction. § 2236(a)(3)(A). The Court

interprets this language to mean that a ship must be

able to use every feature of the project prior to

construction to avoid paying the fees associated with

project improvements. It is immaterial that a vessel

can use certain features before the project but not

others—‘‘features’’ is specific to a project’s subparts,

while ‘‘project’’ refers to the entire project. If Congress

intended to charge harbor fees on a feature-by-feature

basis, it could have used the term ‘‘deepening feature’’

in lieu of ‘‘project.’’ Indeed, Congress used the term

‘‘project features’’ in the next sentence of the statute

(‘‘In the case of project features . . . .’’). Id. Because

Congress used the term ‘‘project features’’ in a

different part of the same statute, the Court infers

that this distinction was intentional. At least one

other court has similarly found that the exemption

only applies to ‘‘any vessel that could have utilized the

harbor without the improvement.’’ Maher Terminals,

LLC v. Port Auth. of N.Y. and N.J., No. 2:12-6090,

2014 WL 3590142, at *11 (D.N.J. July 21, 2014), aff’d,

805 F.3d 98 (3d. Cir. 2015) (emphasis added).

Here, Plaintiffs’ ships could not have utilized the

whole Waterway prior to construction. For example,

before the Project, Anchorage Basin No. 1 had a draft

above twenty feet, meaning that it was fewer than

34a

twenty feet deep. [Dkt. 5 at 2]. Plaintiffs’ ships subject

to the Fee have design drafts in excess of twenty feet.

[Dkt. 1-2]. A ship cannot make port or sail in water

that is shallower than its design draft. Therefore,

Plaintiffs’ vessels could not have used the entire

Waterway prior to construction. Plaintiffs’ ships are

subject to the Fee.7

As they do in Count I, Plaintiffs rely on Plaquemines

for the proposition that only those ships that actually

benefit from the improvements may be charged for

those improvements. Plaquemines, 874 F.2d at 1026

(‘‘[the statute] ensures that the fees will be paid by

ships that benefit directly from improvements’’). As

explained, this is dicta. And, even if precedential, this

proposition does not provide Plaintiffs with the level

of support they believe it does. The Fifth Circuit did

not claim that the ships subject to the fee needed to

benefit from every single element of the improvement

project. Rather, the Fifth Circuit required that the

ships obtain some direct benefit from the project. This

Project is multifaceted. It is immaterial that

Plaintiffs’ ships do not benefit from every feature.

(B) The Size Limitation

Section 2236(a)(3) imposes fee limitations for certain

features of harbor improvement projects. However,

It is possible that a ship may not have been able to use the

usable increment, such as Anchorage Basin No. 1, either before

or after the improvement. But to avoid the fee, the statute only

requires that the ship be able to use the entire project before

construction. The Court takes no opinion on an improvement

that only improves portions of a harbor that a ship could not use

both before and after construction.

35a

these limitations are inapplicable to Plaintiffs. The

statute provides that:

In the case of project features which solely—

i. widen channels or harbors,

ii. create or enlarge bend easings, turning

basins or anchorage areas, or provide

protected areas, or

iii. remove obstructions to navigation,

only vessels at least comparable in size to those

used to justify these features may be charged

under this section.

§ 2236(a)(3). Plaintiffs complain that numerous

features of the Project incorporate the above

limitations:

The Project involves several navigational

features, including: (i) deepening the Waterway

from 40 to 48 feet; (ii) deepening the offshore

channel portion of the Waterway (up to the Port

of Beaumont Turning Basin) from 42 to 50 feet,

(iii) extending the 50-foot deep offshore channel

by approximately 13.2 miles to deep water in

the Gulf, increasing the total length of channel

from approximately 64 to 77 miles, (iv) tapering

and marking the Sabine Bank Channel from

800 feet wide to 700 feet wide, (v) deepening

and widening the Taylor Bayou channels and

turning basins, (vi) easing selected bends on the

Sabine-Neches Canal and Neches River

Channel, and (vii) constructing new and

enlarging/deepening existing turning and

36a

anchorage

Channel.8

basins

the

Neches

River

[Dkt. 1 at ¶ 26]. Only one of these features ‘‘solely’’

conforms to the limitations of Section 2236(a)(3):

feature (vi). However, Plaintiffs assert that many

features meet Section 2236(a)(3)(A)’s criteria. This is

because Plaintiffs improperly define ‘‘solely.’’

Plaintiffs argue that it is inappropriate to group

improvements to the same portion of the Project

together. Instead, Plaintiffs contend that each

improvement to each portion of the Project should be

assessed individually. 9 This ignores the plain

meaning of the statute, which requires the Court to

evaluate each feature and all the improvements made

to that feature. Therefore, only those project features

that solely ‘‘widen,’’ ‘‘create or enlarge,’’ or ‘‘remove

obstructions’’ can be considered. See § 2236(a)(3).

Plaintiffs’ reading would render the word ‘‘solely’’

meaningless, which violates the cannon against

surplusage—‘‘the presumption that each word

Congress uses is there for a reason.’’ Advoc. Health

Care Network v. Stapleton, ––– U.S. ––––, 137 S. Ct.

1652, 1659, 198 L.Ed.2d 96 (2017); see also Williams

v. Taylor, 529 U.S. 362, 404, 120 S.Ct. 1495, 146

L.Ed.2d 389 (2000) (‘‘we must give effect, if possible,

to every clause and word of a statute.’’) (internal

This language is derived from the Project Partnership

Agreement. [Dkt. 5-7 at 1–2].

For example, instead of evaluating feature (v) as both

‘‘deepening and widening the Taylor Bayou channels and turning

basins’’ Plaintiffs’ reading would have the Court separate (v) into

deepening the Taylor Bayou channels and turning basins, and

also widening the same. When taken separately, Plaintiffs claim

the feature solely engages in widening a channel or harbor.

37a

citations omitted). The word ‘‘solely’’ indicates that

Congress intended for each project feature to be

evaluated in light of all the improvements performed

on that feature. Therefore, the Court must evaluate

every feature to determine whether the feature solely

engaged in any of the activities enumerated in Section

2236(a)(3)(A). Features (i)–(iii) only engage in

deepening. Feature (iv) narrows, rather than widens,

the channel. Feature (v) deepens and widens certain

channels and basins. Feature (vii) deepens turning

basins and anchorage areas, in addition to creating

and enlarging them.10

This leads the Court to feature (vi), which solely

engages in creating or enlarging bend easing and

turning basins. Because this feature meets the first

prong of the Size Limitation, the Court must

determine whether Plaintiffs’ ships are ‘‘at least

comparable in size to those used to justify these

features[.]’’ § 2236(a)(3). Courts have broad discretion

when comparing boats’ sizes, which is evidenced by

the statute’s plain meaning. The statute only requires

that the boats subject to the fee be ‘‘at least

comparable in size.’’ § 2236(a)(3)(A) (emphasis added).

By using the term ‘‘at least,’’ Congress clarified that

this is not an exacting inquiry. The boats subject to

the fee need not be the same size or even within a few

To deepen is not to enlarge. However, the statute uses

‘‘deepening’’ in the Draft Limitation. By using ‘‘deepening’’ in one

part of the statute and ‘‘enlarge’’ in another, Congress

intentionally distinguished the meaning of these words. See

Sosa, 542 U.S. at 711 n.9, 124 S.Ct. 2739 (‘‘when the legislature

uses certain language in one part of the statute and different

language in another, the court assumes the different meanings

were intended.’’).

38a

feet of the ship used to ‘‘justify’’ the project features

(the ‘‘design ship’’). Rather, they need only be at least

comparable in size to be subject to the fee for that

feature. Furthermore, courts may consider numerous

additional factors under Section 2236(a)(3)(B), such

as: elapsed time of passage; safety of passage; vessel

economy of scale; under-keel clearance; vessel draft;

vessel squat; vessel speed; sinkage; and trim.

§ 2236(a)(3)(B). Congress further expanded the

district courts’ discretion by allowing them to evaluate

these additional factors beyond a ship’s basic

dimensions.

In its Motion to Dismiss, [Dkt. 5], Defendant asserts

that the design ship is a 158,000 DWT Suez Supermax

Tanker, which is the ship that the USACE used in its

feasibility study. [Dkt. 5-10 at 12].11 This is not so. The

design ship is the ship that the project was meant to

benefit: any ship with a design draft in excess of

twenty feet. Fees may only be levied on ‘‘vessels at

least comparable in size to those used to justify these

features[.]’’ § 2236(a)(3)(A) (emphasis added). The

Court’s reading of this provision turns on the word

‘‘justify,’’ which Merriam-Webster dictionary defines

as ‘‘to provide or be a good reason for (something).’’

Justify, Merriam Webster Dictionary, https://

www.merriam-webster.com/dictionary/ justify (last

visited February 23, 2022). This definition necessarily

looks to the benefits created by someone or something.

In the context of the Size Limitation, this Court must

look to the benefits the features create and to whom

The Court takes judicial notice of the feasibility study

prepared by the USACE. See Fed. R. Evid. 201(b); see also Funk

v. Stryker Corp., 631 F.3d 777, 783 (5th Cir. 2011) (permitting

judicial notice of documents produced by a federal agency).

39a

those benefits were designed to inure. This is because

the beneficiaries of a harbor improvement project

should bear the brunt of its costs.

The Project was designed to benefit ships with

design drafts in excess of twenty feet. Although the

USACE design ship may be helpful in determining

certain characteristics for the Project, the Project

itself was not meant to exclusively benefit Suez

Supermax Tankers. As the Ordinance asserts: ‘‘a User

Fee as set out below reflects the benefits provided by

the Project to vessels whose design draft exceeds 20

feet.’’ [Dkt. 1-1 at 3]. Therefore, any ship with a design

draft in excess of 20 feet may be considered ‘‘at least

comparable in size to those used to justify these

features’’ and therefore ‘‘may be charged under this

section.’’ See § 2236(a)(3).12

The Court already possesses sufficient legal and

evidentiary support that the Fee complies with the

Size Limitation. Even so, the Court finds it significant

that Defendant, as the non-Federal interest,

determined that ships with design drafts in excess of

twenty feet justified the Project features. [See Dkt. 11 at 3]. The statute delegates authority to non-Federal

interests in determining which ships are ‘‘at least

comparable in size to those used to justify these

features.’’ § 2236(a)(3). Section 2236(a)(3)(B) reads:

‘‘In developing port or harbor dues that may be

charged under this section on vessels for project

features constructed under this subchapter, the non12

Even if the design ship were a 158,000 DWT Suezmax

Tanker (‘‘Suezmax Design Ship’’), the Court’s decision would not

change. Plaintiffs’ ships that have thus far been subject to the fee

are comparable in size to the Suezmax Design Ship. See [Dkt. 510 at 12].

40a

Federal interest may consider such criteria as . . . .’’

§ 2236(a)(3)(B) (emphasis added). By delegating

authority to the non-Federal interest in crafting the

fee, Congress intended to give broad discretion in

determining the size of the ship used to justify project

features and which vessels are ‘‘at least’’ comparable

in size.

The statutory scheme of the WRDA is a prime

example of the cooperative federalism that permeates

the administrative state. Enlarging federal programs

requires investment and execution by state and local

actors. However, this increased cooperation leaves

courts grappling with whether to afford deference to

state agency interpretations of federal law. With

scarce precedent, the Court finds Voigt v. Coyote Creek

Mining Co., LLC influential. 999 F.3d 555 (8th Cir.

2021). In Voigt, the Eighth Circuit grappled with

whether to afford deference to a state agency given

permitting authority under the Clean Air Act, 42

U.S.C. § 7401, et seq. On its first appeal, the court

determined that the state agency’s permitting

decision should be afforded deference. Voigt v. Coyote

Creek Mining Co., LLC, 980 F.3d 1191 (8th Cir. 2020),

aff’d on reh’g on other grounds, 999 F.3d 555 (8th Cir.

2021). However, on rehearing, the court sidestepped

the issue, finding for the defendant on alternate

grounds. Voigt, 999 F.3d at 562. While the court did

not explicitly rule on whether deference was

appropriate, it found that the state agency’s

‘‘permitting decision [was] a useful guide in reaching

41a

[its] decision regarding the most

interpretation of the regulations[.]’’13 Id.

reasonable

Public policy supports applying the Eighth Circuit’s

logic here: granting the non-Federal interest some

leeway will provide future vessel and cargo owners

with a manageable standard for determining whether

their vessels will be subject to the fee, so they will not

need to petition the Court for guidance. Such

frequent, individualized determinations would be

unworkable and kill any harbor construction project.

Accordingly, the Court treats Defendant’s decision to

charge vessels with design drafts in excess of twenty

feet as a significant but non-dispositive factor when

deciding whether Plaintiffs’ ships are comparable in

size. To clarify, non-Federal interests do not have

carte blanche to levy harbor fees. The Court merely

finds significance in SSND’s, the non-Federal

interest’s, determination that a certain size ship was

used to justify the Project, and SSND has broad

discretion in determining which ships ‘‘are at least

comparable in size[.]’’ § 2236(a)(3)(A).

iii. Count III

Count III rests on a misinterpretation of the

Ordinance and is not ripe for adjudication. It contends

that the Ordinance enacting the Fee is unlawful

because it allows Defendant to use the Fee to fund

construction costs for the entire Project, rather than

Although the Eighth Circuit did not give deference to the

state agency’s decision, it did not rule out the possibility of

affording such deference. The court appeared to apply prior

Supreme Court rulings, and the factors therein, regarding

deference to federal agency decisions to the decisions of the state

agency. Regardless, it is not within the providence of this Court

to create doctrine.

42a

for only the non-Federal share. Plaintiffs read the

Ordinance improperly. But, even if their reading of

the Ordinance was correct, their claim is not yet ripe.

The Ordinance reads: ‘‘User Fee authorized by this

ordinance will expire on January 1, 2049, or upon final

payment of all construction and construction

financing costs associated with the Project, whichever

comes first.’’ [Dkt. 1 at ¶ 65; Dkt. 1-1 at 6 (emphasis

added)]. By setting the expiration of the Fee after ‘‘all’’

construction costs are paid, Plaintiffs assert that the

Ordinance permits levying the Fee for costs related to

both the federal and non-Federal shares of the Project,

in violation Section 2236(a)(1)(A)(i). The statute

permits fees only ‘‘to finance the non-Federal share of

construction and operation and maintenance costs of

a navigation project for a harbor under the

requirements of section 2211 of this title[.]’’

§ 2236(a)(1)(A)(i). The complained-of portion of the

Ordinance imposes a temporal limitation on

Defendant’s ability to charge the Fee. It does not, and

indeed cannot, mandate that ships subject to the Fee

finance the federal portion of Project costs.

Plaintiffs have also not overcome the presumption of

regularity that attaches to government actions.

Courts presume that government actors act lawfully

and do not violate their own regulations. Sealed

Appellee 1 v. Sealed Appellant 1, 767 F.3d 418, 423

(5th Cir. 2013). While this presumption may be

overcome, Plaintiffs’ ‘‘assertion amounts to nothing

more than speculation that the Government may

intend to violate its own regulations, which we

normally do not assume.’’ Id.

Additionally, Plaintiffs’ claims regarding Count III

are speculative and therefore not ripe. ‘‘Ripeness is a

43a

justiciability doctrine ‘drawn from both Article III

limitations on judicial power and from prudential

reasons for refusing to exercise jurisdiction.’ ’’ Watkins

v. City of Arlington, No. 4:14-CV-381-O, 2015 WL

12733395, at *3 (N.D. Tex. Jan. 8, 2015) (citing Reno

v. Catholic Soc. Servs., Inc., 509 U.S. 43, 57 n.18, 113

S.Ct. 2485, 125 L.Ed.2d 38 (1993)). It ‘‘separates those

matters that are premature because the injury is

speculative and may never occur from those that are

appropriate for judicial review,’’ United Transp.

Union v. Foster, 205 F.3d 851, 857 (5th Cir. 2000), and

stops courts ‘‘from entangling themselves in abstract

disagreements over administrative policies . . . .’’

Abbott Labs. v. Gardner, 387 U.S. 136, 148–49, 87

S.Ct. 1507, 18 L.Ed.2d 681 (1967), abrogated on other

grounds by Califano v. Sanders, 430 U.S. 99, 97 S.Ct.

980, 51 L.Ed.2d 192 (1977). ‘‘A court should dismiss a

case for lack of ‘ripeness’ when the case is abstract or

hypothetical.’’ Monk v. Huston, 340 F.3d 279, 282 (5th

Cir. 2003).

When assessing ripeness, courts examine: ‘‘(1) the

fitness of the issues for judicial resolution, and (2) the

potential hardship to the parties caused by declining

court consideration.’’ Lopez v. City of Hous., 617 F.3d

336, 341 (5th Cir. 2010) (citing Texas v. United States,

497 F.3d 491, 498 (5th Cir. 2007), cert. denied, 555

U.S. 811, 129 S.Ct. 32, 172 L.Ed.2d 18 (2008)). When

declaratory judgment is sought, courts also

determine, (3) whether the case ‘‘presents sufficient

adversity and concreteness by examining whether an

‘actual controversy’ exists between the parties.’’ Bear

Creek Bible Church v. EEOC, No. 4:18-cv-00824-O,

571 F.Supp.3d 571, 597 (N.D. Tex. 2021) (citing Orix

44a

Credit Alliance, Inc. v. Wolfe, 212 F.3d 891, 896 (5th

Cir. 2000)).

First, ‘‘[a] case is generally ripe’’ and fit for review

‘‘if any remaining questions are purely legal ones.’’

New Orleans Pub. Serv., Inc. v. Council of City of New

Orleans, 833 F.2d 583, 587 (5th Cir. 1987). However,

a case may still be unfit for adjudication even if the

legal issues are clear:

[T]he question of fitness does not pivot solely on

whether a court is capable of resolving a claim

intelligently, but also involves an assessment of

whether it is appropriate for the court to

undertake the task. Federal courts cannot—

and should not—spend their scarce resources

on what amounts to shadow boxing. Thus, if a

plaintiff’s claim, though predominantly legal in

character, depends on future events that may

never come to pass, or that may not occur in the

form forecasted, then the claim is unripe.

Ernst & Young v. Depositors Econ. Prot. Corp., 45 F.3d

530, 537 (1st Cir. 1995). This is the case here.

Plaintiffs have not alleged that Defendant is using the

Fee to fund the federal portion of construction costs,

just that they might do so in the future. This is

speculation, and Plaintiffs require further factual

development to successfully lodge this claim.

Furthermore, Plaintiffs have not demonstrated that

they meet the ‘‘hardship’’ prong of the analysis. For

example, Plaintiffs have not pled that Defendant has

turned over the Fees to the federal government.

Dismissal is warranted.

45a

iv. Count IV

Count IV of Plaintiffs’ Complaint must be dismissed

because Section 2211 does not impose a cap on the

non-Federal interest’s spending. This Count alleges

that Defendant is using the Fee to fund a larger

portion of project costs than the statute permits.

Section 2236(a)(1) permits non-Federal interests to

levy fees in ‘‘amounts not to exceed those necessary . . .

to finance the non-Federal share of construction and

operation and maintenance costs of a navigation

project for a harbor under the requirements of section

2211[.]’’ 33 U.S.C. § 2236(a)(1)(A)(i) (emphasis added).

Pursuant to Section 2211:

The non-Federal interests for a navigation

project for a harbor . . . shall pay, during the

period of construction of the project, the

following costs associated with general

navigation features: . . . (B) 25 percent of the

cost of construction of the portion of the project

which has a depth in excess of 20 feet but not in

excess of 50 feet[.]

33 U.S.C. § 2211(a)(1)(B) (emphasis added). By

limiting the use of fees to ‘‘amounts not to exceed those

necessary’’ to finance a harbor improvement project,

Plaintiffs claim that Section 2211 imposes a cap on fee

collection for non-Federal interests. Plaintiffs concede

that non-Federal interests may contribute more than

twenty-five percent of the cost of construction. [Dkt.

23 at 24–25]. However, they claim Defendant may not

use port fees to fund any voluntary additional cost

sharing.

Plaintiffs’ reading is incorrect. The language of

limitation in Section 2236 does not transform the

percentages of Section 2211 into a cap on non-Federal

46a

funding. Rather, it limits what the fee may fund to

construction, operation, and maintenance costs.

Plaintiffs are not exempt from paying their share of

costs through a user fee merely because the nonFederal interest assumes a larger percentage of

project costs. And Plaintiffs’ concession that

Defendant may voluntarily assume a greater portion

of the Project’s costs undermines their argument. It

cannot be that Section 2211 imposes a cap for the feebased non- Federal share but not for the alternatively

funded non-Federal share because that reading would

require an express statutory provision. Section

2236(a)(1)’s language—‘‘amount not to exceed those

necessary’’—is not enough.

Even without Plaintiffs’ concession, the law itself

expressly permits non-Federal interests to assume a

higher share of project costs. Under 33 U.S.C. § 2280,

the projected costs listed in WRDA-14 form the

maximum federal share of project costs. § 2280(a).14

However, Section 2280(b) expressly permits ‘‘the

Secretary [to] accept funds from a non-Federal

interest for any authorized water resources

development project that has exceeded its maximum

cost under subsection (a), and use such funds to carry

Although the statute was originally enacted in 1986, it

expressly encompasses projected costs listed in any subsequent

WRDA enactment: ‘‘In order to insure against cost overruns,

each total cost set forth with respect to a project for water

resources development and conservation and related purposes

authorized to be carried out by the Secretary in this Act or in a

law enacted after the date of the enactment of this Act, including

the Water Resources Development Act of 1988, or in an

amendment made by this Act or any later law with respect to such

a project shall be the maximum cost of that project[.]’’ 33 U.S.C.

§ 2280(a) (emphasis added).

47a

out such project, if the use of such funds does not

increase the Federal share of the cost of such project.’’

§ 2280(b). This clear mandate permits non- Federal

interests to contribute additional funds within their

discretion.

Even without Section 2280(b)’s command, Plaintiffs’

reading requires that the Court view the percentages

listed in Section 2211 as a cap on the non-Federal

share. However, nothing in the statute’s text or

legislative history suggests this. The term ‘‘shall pay’’

indicates that Section 2211 imposes either a spending

floor or discretionary guidelines for cost sharing

between federal and non-Federal interests. The

Supreme Court has found that ‘shall’ can be

mandatory or precatory. See Maine Cmty. Health

Options v. United States, ––– U.S. ––––, 140 S. Ct.

1308, 1320, 206 L.Ed.2d 764 (2020) (holding that

‘shall’ indicates a mandatory requirement); see also

Cairo & F.R. Co. v. Hecht, 95 U.S. 168, 170, 24 L.Ed.

423 (1877) (noting ‘shall’ means ‘may’ in certain

contexts); Gutierrez de Martinez v. Lamagno, 515 U.S.

417, 429–30, 115 S.Ct. 2227, 132 L.Ed.2d 375 (1995);

Castle Rock v. Gonzales, 545 U.S. 748, 760–62, 125

S.Ct. 2796, 162 L.Ed.2d 658 (2005) (concluding that

the word ‘‘shall’’ should not be read as requiring the

police to take action); West Wis., Ry. Co., v. Foley, 94

U.S. 100, 103, 24 L.Ed. 71 (1877).

The Court need not rule on whether the percentages

in Section 2211 are mandatory or precatory because

the result would be the same. Should Section 2211 be

read as precatory, then non-Federal interests would

be able to assume a larger or smaller portion of project

costs. This variable cost structure would afford

48a

discretion in determining the breakdown of project

costs.

However, if the statute is read as mandatory, such

percentages form a minimum contribution from nonFederal interests. It is clear from the statute’s

legislative history that Congress intended to increase

the involvement of non-Federal interests in

constructing and improving America’s ports. Prior to

the WRDA-86, Congress appropriated funds for only

three to four projects every year. 132 Cong. Rec. S3402

(1986). Because of the fierce competition to secure

funding, influence within the people’s chamber

became more important than need. Id. By requiring

local investment, Congress incentivized only those

non-Federal interests that actually needed harbor

improvements to apply for the funding. Id. Given this

motivation to involve non-Federal interests in

‘‘bidding’’ for congressional funding, it would be

absurd to think that Section 2211 forms a ceiling

because it would deprive local interests of the ability

to demonstrate the need for congressional funds. A

principal cosponsor of the statute, Representative

Glenn Anderson, noted that ‘‘[n]ew cost-sharing rules

have been implemented, which are nearly identical to

those proposed by the administration, that require

non-Federal interests to pay a much greater share of

project costs.’’ 132 Cong. Rec. 11561 (1986). It is

unlikely that Congress desired the inclusion of nonFederal funds but imposed a cap on such funding.

Rather, the twenty-five percent minimum assured

that the non-Federal interest had a concrete stake in

a project’s success.

Furthermore, subsequent congressional enactments

on cost sharing for harbor improvement projects

49a

demonstrate that Section 2211 imposed minimum

contribution levels. Where two statutes ‘‘deal with

precisely the same subject matter,’’ they may be read

in pari materia. United States v. Stewart, 311 U.S. 60,

64, 61 S.Ct. 102, 85 L.Ed. 40 (1940). All statutes ‘‘in

pari materia are to be taken together, as if they were

one law.’’ Id.; see also Cope v. Cope, 137 U.S. 682, 687–

88, 11 S.Ct. 222, 34 L.Ed. 832 (1891); United States v.

Freeman, 3 How. 556, 564, 11 L.Ed. 724 (1845). The

WRDA-86 and the WRDA-14 are to be read in pari

materia. Both statutes deal with harbor expansion

projects and provide a cost breakdown for the federal

and non-Federal share. For this Project, Congress

provided a projected split of $748,070,00 in federal

funding and $365,970,000 in non-Federal funding for

the Project. These amounts, which exceed the

percentages listed in Section 2211, reflect

congressional intent to depart from the percentages in

Section 2211.

Count V

Section 2236(a)(4) of WRDA-86 provides that ‘‘dues

may be levied only on a vessel entering or departing

from a harbor and its cargo on a fair and equitable

basis.’’ 33 U.S.C. § 2236(a)(4). Plaintiffs contend that

the Fees are unlawful because SNND imposes a

higher Fee on hydrocarbon cargo than nonhydrocarbon cargo with no ‘‘legitimate justification.’’

[Dkt. 1 at ¶ 82]. The Court disagrees and finds that

this discrepancy is reasonable.

The Fee for hydrocarbon cargo is $0.20 per short ton

with a maximum of $0.35 per short ton, and the Fee

for non-hydrocarbon cargo is $0.02 per short ton with

a maximum of $0.035 per short ton. [Dkt. 1-1 at 7].

This discrepancy is reasonable based on the Section

50a

2236(a)(4) factors for the non-Federal interest to

consider when formulating fees:

a. the direct and indirect cost of construction,

operations, and maintenance, and providing

the facilities and services under [33 U.S.C.

§ 2236(a)(1)];

b. the value of those facilities and services to

the vessel and cargo;

c. the public policy or interest served; and

d. any other pertinent factors.

§ 2236(a)(4).

SNND reasonably decided to impose disparate Fees

depending on the type of cargo so that: (1) the vessels

and cargo benefitting the most from the

improvements would fund the majority of the costs; (2)

the Fee remains approximately equal when measured

as a percentage of the cargo’s value; and (3) the Fee

furthers public policy by ‘‘funding improvements

intended to secure the Waterway’s position as

America’s

leading

import/export

harbor

for

hydrocarbons.’’ [Dkt. 5 at 31].

When calculating harbor fees, a non-Federal

interest must consider ‘‘the value of’’ the facilities ‘‘to

the vessel and cargo’’ pursuant to Section

2236(a)(4)(B). The Project itself was designed to

benefit the hydrocarbon industry, and hydrocarbons

make up a substantial percentage of the tonnage for

both Beaumont and Port Arthur. [Dkt. 5-10 at 4, 8].15

Plaintiffs argue that the Court may not take judicial notice

of Exhibit 9, [Dkt. 5-10], because it is from 2011; therefore, it

cannot be used to determine the Waterway’s hydrocarbon traffic

in 2021 when the Ordinance was passed. But Defendant does not

ask the Court to forward-model 2021 statistics from the

51a

SNND determined it was proper to charge

hydrocarbon carriers more because the improvements

were largely geared to their benefit. [Dkt. 5 at 32].

Whether hydrocarbon carriers are the only vessels

that would benefit from deeper channels is not

dispositive. The same is true for whether all

hydrocarbon cargoes are more valuable than all nonhydrocarbon cargoes. The only material question is

whether SNND appropriately considered this factor

when crystallizing the Project’s plan. The Court finds

that SNND did so. 16 Imposing higher fees on

hydrocarbon carriers also comports with the statute

because it better reflects the value that the facilities

add to the vessel and cargo. This is because the value

of hydrocarbon cargo per ton is generally much higher

than the value of non-hydrocarbon cargo. 17

feasibility study, nor does the Court need to engage in this

exercise. The feasibility study is cited and noted for the purpose

of showing those factors that SNND considered when

formulating the Project and its Fees. Furthermore, the Court

may take judicial notice of ‘‘publicly-available documents and

transcripts produced by [government agencies], which were

matters of public record directly relevant to the issue at hand.’’

Funk v. Stryker Corp., 631 F.3d 777, 783 (5th Cir. 2011). Thus,

the Court takes judicial notice of the Feasibility Report.

SNND need not ‘‘draw the perfect line’’—just a ‘‘rational

line.’’ See Armour v. City of Indianapolis, 566 U.S. 673, 685, 132

S.Ct. 2073, 182 L.Ed.2d 998 (2012).

As Defendant explains in its Motion to Dismiss:

By way of illustration, in April 2021—the month when

the Ordinance was passed—statistics published by the

U.S. Energy Information Administration indicated that

the price of American LNG for export was about $5.92

per thousand cubic feet, or about $318 per short ton

(given that 1 short ton is 53,682.56 cubic feet). Natural

Gas, U.S. Energy Info. Admin. (Sept. 30, 2021),

52a

Additionally, SSND and USACE created the Project,

in part, to benefit the hydrocarbon industry. [Dkt. 5-3

at 3, 7, 12–14]. Thus, the Fee is equitable when

considering the ‘‘value of those facilities and services

to the vessel and cargo.’’ § 2236(a)(4)(B).

Furthermore, a non-Federal interest must also

consider public policy. § 2236(a)(4)(C). The Project

itself is intended to benefit the hydrocarbon industry.

[Dkt. 5-3 at 3, 7, 12–14]. The Ordinance itself

expressly states that the Navigation District’s Board

of Commissioners considered the statutory factors like

‘‘the cost of construction, operations, [and] the value

of the services to the vessel and cargo.’’ [Dkt. 1-1 at 3].

Therefore, this Court concludes that SNND

reasonably imposed a higher Fee for hydrocarbon

carriers because it considered and applied the

relevant statutory factors.

https://bit.ly/3l8RAag. A 20-cent harbor due on cargo

worth $318 per ton equates to dues of about 0.063% based

on the value of the cargo. The average price for of

nonhydrocarbon cargo tends to be much lower, often

around $30 per ton (e.g., $28 per ton for iron and steel

slag, $29 per ton for peat, $33 per ton for pumice rock,

and between $35 and $50 per ton for sand and gravel).

See U.S. Dep’t of Interior, U.S. Geological Survey,

Mineral Commodity Summaries 2020, at 86, 118, 128,

142 (Jan. 2020), https://on.doi.gov/3D3Bh4S. A 2-cent

harbor due on cargo worth $30 per ton equates to dues of

0.066% based on the value of the cargo—almost exactly

the same as the dues for hydrocarbons.

[Dkt. 5 at 25 n.12]. The Court may take judicial notice of these

government statistics because their accuracy and source cannot

be questioned. Fed. R. Evid. 201(b); Funk, 631 F.3d at 783;

Victoria Cruises, Inc. v. Changjiang Cruise Overseas Travel Co.,

630 F. Supp. 2d 255, 263 n.3 (E.D.N.Y. 2008).

53a

vi. Counts VI & VII

Count VI seeks a declaratory judgment that

Defendant’s Fee violates the WRDA-86 and is

therefore unenforceable. Count VII seeks an

injunction barring SNND from implementing the Fee.

Both are pendant upon Plaintiffs’ previous

allegations, Counts I through V. Because Counts I

through V are dismissed, the Court also dismisses

Counts VI and VII. See Adams v. Nissan N. Am., Inc.,

395 F. Supp. 3d 838, 856 (S.D. Tex. 2018) (‘‘Defendant

correctly contends that Plaintiffs’ claims for

declaratory and injunctive relief are derivative of

their other claims, and if the other claims are

dismissed, so too must the claims for declaratory and

injunctive relief be dismissed.’’).

vii. Leave to Amend

A district court may deny leave to amend when ‘‘the

proposed amendment would be futile because it could

not survive a motion to dismiss.’’ Rio Grande Royalty

Co. v. Energy Transfer Partners, L.P., 620 F.3d 465,

468 (5th Cir. 2010); see also Foman v. Davis, 371 U.S.

178, 182, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962) (holding

that denying leave to amend is within the trial court’s

discretion so long as there is an appropriate reason

given, including futility). An amended complaint is

futile when the plaintiff has pled his or her best case,

and there are no ‘‘additional facts that could be alleged

in a second amended complaint that could not have

been alleged in the [original complaint].’’ Heck v.

Orion Grp. Holdings, Inc., 468 F. Supp. 3d 828, 863

(S.D. Tex. 2020).

Here, there are no additional facts that Plaintiffs

may plead that would change the outcome of this

54a

Court’s decision. This case rests on issues of law, and

there is no reasonable possibility that a change in

facts would lead to a change in outcome—any

attempts at amendment are futile. Therefore, this

case is dismissed with prejudice and leave to amend is

not given.

IV. CONCLUSION

After a careful review of all pleadings, facts, and

applicable law, this Court reaches a decision on

Defendant’s Motion to Dismiss.

It is therefore ORDERED that Defendant’s Motion

to Dismiss, [Dkt. 5], is hereby GRANTED.

It is further ORDERED that Counts IVII of

Plaintiffs’ Complaint, [Dkt. 1], are hereby

DISMISSED WITH PREJUDICE.

It is further ORDERED that Parties’ Joint Motion

for Protective Orders [Dkt. 34] is hereby DENIED AS

MOOT.

55a

APPENDIX C

_________

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

_______

No. 22-40158

_______

BG GULF COAST LNG, L.L.C.; PHILLIPS 66 COMPANY,

Plaintiffs-Appellants,

SABINE-NECHES NAVIGATION DISTRICT OF

JEFFERSON COUNTY, TEXAS,

Defendant-Appellee.

_______

Appeal from the United States District Court

for the Eastern District of Texas

USDC No. 1:21-CV-470

_______

Filed: October 25, 2022

_______

ON PETITION FOR REHEARING AND

REHEARING EN BANC

_______

56a

Before STEWART, ELROD, and GRAVES, Circuit Judges.

PER CURIAM:

The petition for panel rehearing is DENIED. Because

no member of the panel or judge in regular active

service requested that the court be polled on rehearing

en banc (Fed. R. App. P. 35 and 5th Cir. R. 35), the

petition for rehearing en banc is DENIED.

Judge Carolyn Dineen King, Jacques L. Wiener, Jr., James L.

Dennis, did not participate in the consideration of the rehearing

en banc.

57a

APPENDIX D

_________

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

_________

U.S. Const. art. 1, § 8, cls. 1, 3 provide in

pertinent part:

[1] The Congress shall have Power * * *

***

[3] To regulate Commerce with foreign Nations, and

among the several States, and with the Indian Tribes;

U.S. Const. art. 1, § 10, cls. 2-3 provide:

[2] No State shall, without the Consent of the

Congress, lay any Imposts or Duties on Imports or

Exports, except what may be absolutely necessary for

executing it’s inspection Laws: and the net Produce of

all Duties and Imposts, laid by any State on Imports

or Exports, shall be for the Use of the Treasury of the

United States; and all such Laws shall be subject to

the Revision and Controul of the Congress.

[3] No State shall, without the Consent of Congress,

lay any Duty of Tonnage, keep Troops, or Ships of War

in time of Peace, enter into any Agreement or

Compact with another State, or with a foreign Power,

or engage in War, unless actually invaded, or in such

imminent Danger as will not admit of delay.

58a

33 U.S.C. § 2211 provides in pertinent part:

Harbors

(a) Construction

(1) Payments during construction

The non-Federal interests for a navigation

project for a harbor or inland harbor, or any

separable element thereof, on which a contract

for physical construction has not been awarded

before June 10, 2014, shall pay, during the period

of construction of the project, the following costs

associated with general navigation features:

(A) 10 percent of the cost of construction of the

portion of the project which has a depth not in

excess of 20 feet; plus

(B) 25 percent of the cost of construction of the

portion of the project which has a depth in

excess of 20 feet but not in excess of 50 feet; plus

portion of the project which has a depth in

excess of 50 feet.

***

(e) Agreement

Before initiation of construction of a project to which

this section applies, the Secretary and the nonFederal interests shall enter into a cooperative

agreement according to the provisions of section

1962d–5b of title 42. The non-Federal interests shall

agree to—

(1) provide to the Federal Government lands,

easements, and rights-of-way, including those

necessary for dredged material disposal facilities,

and perform the necessary relocations required for

59a

construction, operation, and maintenance of such

project;

(2) hold and save the United States free from

damages due to the construction or operation and

maintenance of the project, except for damages due

to the fault or negligence of the United States or

its contractors;

(3) provide to the Federal Government the nonFederal share of all other costs of construction of

such project; and

(4) in the case of a deep-draft harbor, be

responsible for the non-Federal share of operation

and maintenance required by subsection (b) of this

section.

33 U.S.C. § 2232 provides in pertinent part:

Construction of water resources development

projects by non-Federal interests

***

(d) Credit or reimbursement

(1) General rule

Subject to paragraph (3), a project or separable

element of a project carried out by a non-Federal

interest under this section shall be eligible for

credit or reimbursement for the Federal share of

work carried out on a project or separable

element of a project if—

(A) before initiation of construction of the

project or separable element—

(i) the Secretary approves the plans for

construction of the project or separable

60a

element of the project by the non-Federal

interest;

(ii) the Secretary determines, before

approval of the plans, that the project or

separable element of the project is feasible;

and

(iii) the non-Federal interest enters into a

written agreement with the Secretary under

section 1962d–5b of title 42, including an

agreement to pay the non-Federal share, if

any, of the cost of operation and maintenance

of the project; and

(B) the Secretary determines that all Federal

laws and regulations applicable to the

construction of a water resources development

project, and any conditions identified under

subsection (b)(1)(B), were complied with by the

non-Federal interest during construction of the

project or separable element of the project.

(2) Application of credit

The Secretary may apply credit toward—

(A) the non-Federal share of authorized

separable elements of the same project; or

(B) subject to the requirements of this section

and section 2223 of this title, at the request of

the non-Federal interest, the non-Federal

share of a different water resources

development project.

(3) Requirements

The Secretary may only apply credit or provide

reimbursement under paragraph (1) if—

61a

(A) Congress has authorized construction of

the project or separable element of the project;

(B) the Secretary certifies that the project has

been constructed in accordance with—

(i) all applicable permits or approvals; and

(ii) this section; and

appropriations are provided by Congress for

such purpose.

(4) Monitoring

The Secretary shall regularly monitor and

audit any water resources development project,

or separable element of a water resources

development project, constructed by a nonFederal interest under this section to ensure

that—

(A) the construction is carried out in

compliance with the requirements of this

section; and

(B) the costs

reasonable.

the

construction

are

(5) Discrete segments

(A) In general

The Secretary may authorize credit or

reimbursement under this subsection for

carrying out a discrete segment of a federally

authorized water resources development

project, or separable element thereof, before

final completion of the project or separable

element if—

62a

(i) except as provided in clause (ii), the

Secretary determines that the discrete

segment satisfies the requirements of

paragraphs (1) through (4) in the same

manner as the project or separable element;

and

(ii) notwithstanding paragraph (1)(A)(ii),

the Secretary determines, before the approval

of the plans under paragraph (1)(A)(i), that

the discrete segment is technically feasible

and environmentally acceptable.

(B) Determination

Credit or reimbursement may not be made

available to a non-Federal interest pursuant to

this paragraph until the Secretary determines

that—

(i) the construction of the discrete segment

for which credit or reimbursement is

requested is complete; and

(ii) the construction is consistent with the

authorization of the applicable water

resources development project, or separable

element thereof, and the plans approved

under paragraph (1)(A)(i).

(i) In general

As part of the written agreement required

under paragraph (1)(A)(iii), a non-Federal

interest to be eligible for credit or

reimbursement under this paragraph shall—

(I) identify any discrete segment that the

non-Federal interest may carry out; and

63a

(II) agree to the completion of the water

resources development project, or separable

element thereof, with respect to which the

discrete segment is a part and establish a

timeframe for such completion.

(ii) Remittance

If a non-Federal interest fails to complete a

water resources development project, or

separable element thereof, that it agreed to

complete under clause (i)(II), the non-Federal

interest shall remit any reimbursements

received under this paragraph for a discrete

segment of such project or separable element.

(D) Discrete segment defined

In this paragraph, the term ‘‘discrete

segment’’ means a physical portion of a water

resources development project to be carried out,

or separable element thereof—

(i) described by a non-Federal interest in a

written agreement required under paragraph

(1)(A)(iii); and

(ii) that the non-Federal interest can

operate and maintain, independently and

without creating a hazard, in advance of final

completion

the

water

resources

development project, or separable element

thereof.

64a

33 U.S.C. § 2236 provides in pertinent part:

Port or harbor dues

(a) Consent of Congress

Subject to the following conditions, a non-Federal

interest may levy port or harbor dues (in the form of

tonnage duties or fees) on a vessel engaged in trade

entering or departing from a harbor and on cargo

loaded on or unloaded from that vessel under clauses

2 and 3 of section 10, and under clause 3 of section 8,

of Article 1 of the Constitution:

(1) Purposes

Port or harbor dues may be levied only in

conjunction with a harbor navigation project

whose construction is complete (including a usable

increment of the project) and for the following

purposes and in amounts not to exceed those

necessary to carry out those purposes:

(A)(i) to finance the non-Federal share of

construction and operation and maintenance

costs of a navigation project for a harbor under

the requirements of section 2211 of this title; or

(ii) to finance the cost of construction and

operation and maintenance of a navigation

project for a harbor under section 2232 or 2233

of this title; and

(B) provide emergency response services in

the harbor, including contingency planning,

necessary personnel training, and the

procurement of equipment and facilities.

65a

(2) Limitation on port or harbor dues for

emergency service

Port or harbor dues may not be levied for the

purposes described in paragraph (1)(B) of this

subsection after the dues cease to be levied for the

purposes described in paragraph (1)(A) of this

subsection.

(3) General limitations

(A) Port or harbor dues may not be levied

under this section in conjunction with a

deepening feature of a navigation improvement

project on any vessel if that vessel, based on its

design draft, could have utilized the project at

mean low water before construction. In the case

of project features which solely—

(i) widen channels or harbors,

(ii) create or enlarge bend easings, turning

basins or anchorage areas, or provide

protected areas, or

(iii) remove obstructions to navigation,

only vessels at least comparable in size to those

used to justify these features may be charged

under this section.

(B) In developing port or harbor dues that

may be charged under this section on vessels

for project features constructed under this

subchapter, the non-Federal interest may

consider such criteria as: elapsed time of

passage, safety of passage, vessel economy of

scale, under keel clearance, vessel draft, vessel

squat, vessel speed, sinkage, and trim.

66a

section shall not be imposed on—

(i) vessels owned and operated by the

United States Government, a foreign country,

a State, or a political subdivision of a country

or State, unless engaged in commercial

services;

(ii) towing vessels, vessels engaged in

dredging activities, or vessels engaged in

intraport movements; or

(iii) vessels with design drafts of 20 feet or

less when utilizing general cargo and deepdraft navigation projects.

(4) Formulation of port or harbor dues

Port or harbor dues may be levied only on a

vessel entering or departing from a harbor and its

cargo on a fair and equitable basis. In formulating

port and harbor dues, the non-Federal interest

shall consider—

(A) the direct and indirect cost of construction,

operations, and maintenance, and providing

the facilities and services under paragraph (1)

of this subsection;

(B) the value of those facilities and services to

the vessel and cargo;

(D) any other pertinent factors.

(5) Notice and hearing

(A) Before the initial levy of or subsequent

modification to port or harbor dues under this

section, a non-Federal interest shall transmit

to the Secretary—

67a

(i) the text of the proposed law, regulation,

or ordinance that would establish the port or

harbor dues, including provisions for their

administration, collection, and enforcement;

(ii) the name, address, and telephone

number of an official to whom comments on

and requests for further information on the

proposal are to be directed;

(iii) the date by which comments on the

proposal are due and a date for a public

hearing on the proposal at which any

interested party may present a statement;

however, the non-Federal interest may not set

a hearing date earlier than 45 days after the

date of publication of the notice in the Federal

paragraph or set a deadline for receipt of

comments earlier than 60 days after the date

of publication; and

(iv) a written statement signed by an

appropriate official that the non-Federal

interest agrees to be governed by the

provisions of this section.

(B) On receiving from a non-Federal interest

the information required by subparagraph (A)

of this paragraph, the Secretary shall transmit

the material required by clauses (i) through (iii)

of subparagraph (A) of this paragraph to the

Federal Register for publication.

non-Federal interest only after meeting the

conditions of this paragraph.

68a

(6) Requirements on non-Federal interest

A non-Federal interest shall—

(A) file a schedule of any port or harbor dues

levied under this subsection with the Secretary

and the Federal Maritime Commission, which

the Commission shall make available for public

inspection;

(B) provide to the Comptroller General of the

United States on request of the Comptroller

General any records or other evidence that the

Comptroller General considers to be necessary

and appropriate to enable the Comptroller

General to carry out the audit required under

subsection (b) 1 of this section;

representative, including the Secretary of the

Treasury acting on a cost-reimbursable basis,

to receive tonnage certificates and cargo

manifests from vessels which may be subject to

the levy of port or harbor dues, export

declarations from shippers, consignors, and

terminal operators, and such other documents

as the non-Federal interest may by law,

regulation, or ordinance require for the

imposition, computation, and collection of port

or harbor dues; and (D) consent expressly to the

exclusive exercise of Federal jurisdiction under

subsection (c) of this section.

69a

APPENDIX E

_________

[COMPLAINT EXHIBIT B]

_______

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF TEXAS

BEAUMONT DIVISION

_______

BG GULF COAST LNG, LLC AND PHILLIPS 66

COMPANY,

Plaintiffs,

SABINE-NECHES NAVIGATION DISTRICT OF JEFFERSON

COUNTY, TEXAS,

Defendant.

_______

Civil Action No. 1:21-cv-00470

_______

User Fees Paid by BG Gulf Coast LNG, LLC

Load

Date

User Fee

Charged

Fully Laden

Sailing Draft

1-MayMagdala

$15,887.00

Fwd 37.40 / Aft

37.23

13-MayGaslog Gibraltar

$15,981.02

Fwd 37.76 / Aft

37.76

Ship Name

70a

20-MayPan Europe

$15,918.72

Fwd 37.56 / Aft

37.76

21-MaySCF Barents

$15,913.92

Fwd 37.95 / Aft

38.05

26-May- Castillo de

Santisteban

$15,462.21

Fwd 36.05 / Aft

37.76

31-MayGaslog Genoa

$16,357.03

Fwd 38.35 / Aft

38.38

4-JunMaran Gas Roxana

$15,888.87

Fwd 37.76 / Aft

37.76

3-Jun- FLEX

COURAGEOUS

$15,531.92

Fwd 37.40 / Aft

37.43

11-JunMaran Gas Spetses

$15,843.64

Fwd 36.08 / Aft

36.25

19-Jun- Rias Baixas

Knutsen

$16,251.29

Fwd 37.76 / Aft

37.76

24-JunMaran Gas Ulysses

$15,489.64

Fwd 38.35 / Aft

38.38

28-Jun- Maran Gas

Olympias

$15,883.49

Fwd 36.41 / Aft

36.41

5-Jul-21 Minerva Psara

$16,138.92

Fwd 37.69 / Aft

37.76

14-JulLNGships Athena

$15,553.00

Fwd 36.08 / Aft

36.97

23-JulMaran Gas Achilles

$16,072.34

Fwd 37.40 / Aft

37.43

28-JulSCF MITRE

$15,808.09

Fwd 37.76 / Aft

37.82

3-AugGlobal Star

$15,574.72

Fwd 37.76 / Aft

37.56

71a

11-AugMinerva Psara

$15,873.01

Fwd 37.56 / Aft

37.53

17-AugSevilla Knutsen

$15,946.96

Fwd 37.59 / Aft

37.76

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.