United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued April 9, 2013 Decided July 26, 2013
No. 12-1080
CITY OF OAKLAND, ACTING BY AND THROUGH ITS BOARD OF
PORT COMMISSIONERS,
PETITIONER
v.
FEDERAL MARITIME COMMISSION AND UNITED STATES OF
AMERICA,
RESPONDENTS
SSA TERMINALS (OAKLAND), LLC AND SSA TERMINALS,
LLC,
INTERVENORS
On Petition for Review of an Order
of the Federal Maritime Commission
Paul M. Heylman argued the cause for petitioner. With
him on the briefs was Nicholas C. Stewart.
Tyler J. Wood, Deputy General Counsel, Federal
Maritime Commission, argued the cause for respondents.
With him on the brief were Joseph F. Wayland, Acting
Assistant Attorney General, U.S. Department of Justice,
Robert B. Nicholson and Robert J. Wiggers, Attorneys,
2
Rebecca A. Fenneman, General Counsel, Federal Maritime
Commission, and Elisa P. Holland, Attorney-Advisor.
Marc J. Fink, Anne E. Mickey, and Robert K. Magovern
were on the brief for intervenors SSA Terminals (Oakland),
LLC, et al. in support of respondent.
Before: HENDERSON and BROWN, Circuit Judges, and
GINSBURG, Senior Circuit Judge.
Opinion for the Court filed by Circuit Judge BROWN.
BROWN, Circuit Judge: The City of Oakland manages a
port on lands granted by the State of California to benefit its
citizens. This arrangement implicates the public trust doctrine,
an ancient delineation of the states’ rights in (among other
things) their tidelands. But what happens when the public
trust doctrine bumps into the Eleventh Amendment? Oakland
believes it is entitled to a share of the State’s sovereign
immunity for its management of the port and has asked us to
review the Federal Maritime Commission’s contrary
conclusion. We agree with the Commission, however, and
deny Oakland’s petition.
I
A
When California joined the Union in 1850, it acquired
ownership of all underwater land within its borders subject to
the ebb and flow of the tide—otherwise known as “tidelands.”
See Phillips Petroleum Co. v. Mississippi, 484 U.S. 469, 476
(1988). This was simply a consequence of joining the Union,
though California, with its miles of coast, may have benefitted
more than others.
3
Yet California did not acquire proprietary rights in these
lands; instead, under the so-called public trust doctrine, it took
the tidelands in trust for its citizens. See Dist. of Columbia v.
Air Fla., Inc., 750 F.2d 1077, 1082 (D.C. Cir. 1984).
Although the trust objectives have evolved over time,
California currently holds the tidelands in trust for “statewide
public purposes” like commerce, navigation, fishing, natural
preservation, and “other recognized uses.” CAL. PUB. RES.
CODE § 6009(a). See generally Nat’l Audubon Soc’y v.
Superior Court, 658 P.2d 709, 718–24 (Cal. 1983) (describing
the public trust doctrine and its application in California). 1
California’s authority over the tidelands is subordinate to this
trust but is otherwise absolute. CAL. PUB. RES. CODE
§ 6009(b).
California has repeatedly exercised its authority over the
tidelands by granting discrete portions to various
municipalities. We are concerned with only one of these
grants. In 1911, it conveyed certain stretches to the city of
Oakland to be maintained as a “public harbor for all purposes
of commerce and navigation.” 1911 Cal. Stat. 1258. 2 Oakland
did not thereby gain plenary authority over the tidelands,
however; it took the land subject to the public trust, see Nat’l
Audubon Soc’y, 658 P.2d at 721, as well as the conditions
1
The doctrine is not unique to California, see, e.g., Ill. Cent.
R.R. Co. v. Illinois, 146 U.S. 387, 452 (1892), but its contours are
defined by state law. Air Fla., Inc., 750 F.2d at 1082.
2
In fact, California had already granted Oakland a stretch of
land “between high tide and ship channel” in 1852, a portion of
“salt, marsh and tide lands” in 1874, and a stretch of “salt marsh
and tide lands” in 1909. See 1909 Cal. Stat. 665; 1874 Cal. Stat.
132; 1852 Cal. Stat. 180. None of this land, we are told, has
anything to do with the case.
4
expressly enumerated in the grant, which were generally
consistent with the public trust doctrine. For example, the
grant included a proviso retaining for the people of California
an “absolute right to fish in the waters of said harbor, with the
right of convenient access to said waters over said land.” 1911
Cal. Stat. at 1259.
Oakland responded to the grant in 1927 by establishing
the Port Department, a municipal agency charged with “the
comprehensive and adequate development of the Port of
Oakland through continuity of control, management and
operation.” Charter of the City of Oakland § 700 (2008). The
Port Department is run by the Board of Port Commissioners, a
seven-member body of “bona fide” Oakland residents
nominated by the city mayor and appointed and removable by
the city council. Id. §§ 701–03. It acts “for and on behalf of”
Oakland. Id. § 706.
It also acts subject to the oversight of California’s State
Lands Commission, the agency vested with “[a]ll jurisdiction
and authority remaining in the State” over granted tidelands.
CAL. PUB. RES. CODE § 6301. 3 The State Lands Commission
monitors and audits public land grantees like the Port
Department to ensure compliance with the public trust
doctrine and land grant. See id. §§ 6009(c), 6301.
B
SSA Terminals, LLC (“SSA”), occupies three berths in
the Oakland port. At some point SSA concluded the Port
3
The three-member State Lands Commission consists of two
statewide elected officers and one member of the governor’s
cabinet. See CAL. PUB. RES. CODE § 6101; see also CAL. CONST.
art. 5, §§ 2, 9, 11; CAL. GOV. CODE § 13000 et seq.
5
Department failed to consider it when looking for a tenant to
occupy five open berths of choice port real estate. To make
matters worse, the Port Department ultimately leased those
berths to one of SSA’s competitors under terms more
favorable than those governing SSA’s lease. SSA therefore
filed a complaint with the Federal Maritime Commission
alleging the Port Department violated the Shipping Act. See
46 U.S.C. §§ 41102(c), 41106(2)–(3) (requiring marine
terminal operators to follow “just and reasonable” regulations
and practices, and prohibiting them from discriminating
against or “unreasonably” refusing to deal with a party).
Oakland tried to, but could not, convince the
Administrative Law Judge to dismiss the complaint on
grounds of sovereign immunity. Much to Oakland’s dismay,
the Commission was equally unsympathetic and rejected its
sovereign immunity argument on appeal, so Oakland filed this
petition for review.
II
The Eleventh Amendment protects states from suit
without their consent. Alden v. Maine, 527 U.S. 706, 730
(1999). The sovereign immunity provided by the Amendment
draws on principles of federalism and comity, see Alden, 527
U.S. at 728–29; Idaho v. Coeur d’Alene Tribe of Idaho, 521
U.S. 261, 268 (1997), and protects both state dignity and state
solvency, see Hess v. Port Auth. Trans-Hudson Corp., 513
U.S. 30, 52 (1994). It restrains not only the courts, but also
certain federal agencies like the Commission. Fed. Mar.
Comm’n v. S.C. State Ports Auth., 535 U.S. 743, 760 (2002).
Determining what entities are entitled to claim immunity
tracks a simple constitutional line: Eleventh Amendment
sovereign immunity belongs to the states. Lake Country
6
Estates, Inc. v. Tahoe Reg’l Planning Agency, 440 U.S. 391,
400 (1979); see LaShawn A. v. Barry, 87 F.3d 1389, 1393 n.4
(D.C. Cir. 1996) (en banc). This means that when the state is
not named as a defendant, sovereign immunity attaches only
to entities that are functionally equivalent to states (often
called “arms of the state”) or when, despite procedural
technicalities, the suit effectively operates against the state as
the real party in interest. See N. Ins. Co. of N.Y. v. Chatham
Cnty., 547 U.S. 189, 193 (2006); Regents of Univ. of Cal. v.
Doe, 519 U.S. 425, 429 (1997); Lake Country Estates, Inc.,
440 U.S. at 400. These kinds of suits may offend the state’s
dignity or assault its solvency no less than if the state were
itself the named defendant. See, e.g., Coeur d’Alene Tribe of
Idaho, 521 U.S. at 269–70, 281–82.
And so a puzzle. Oakland recognizes, as it must, that
municipalities are not protected by the Eleventh Amendment
even though they exercise a “slice of state power,” Lake
Country Estates, Inc., 440 U.S. at 400 (internal quotation
marks omitted); see also P.R. Ports Auth. v. Fed. Mar.
Comm’n, 531 F.3d 868, 881–84 (D.C. Cir. 2008) (Williams,
J., concurring), and it neither denies it is a municipality nor
claims the Port Department is anything other than a municipal
agency. Oakland likewise concedes it is not an arm of the
State, thereby surrendering its ability to argue that the Port
Department is structurally entitled to sovereign immunity. See
P.R. Ports Auth., 531 F.3d at 873 (“[A]n entity either is or is
not an arm of the State: The status of an entity does not
change from one case to the next based on the nature of the
suit, the State’s financial responsibility in one case as
compared to another, or variable factors.”). And the Port
Department’s funds—which are managed by the city
treasurer—are used only to finance bonds, maintain and
operate Port Department facilities, and compensate
employees, with any surplus potentially going into Oakland’s
7
general treasury. See Charter of the City of Oakland §§ 717,
720. Why, then, would Oakland be entitled to Eleventh
Amendment protection?
Oakland seeks safe passage through these shoals by
relying on a novel reading of the public trust doctrine. Its
argument has two parts, each of which it believes sufficient to
trigger the Eleventh Amendment. First, Oakland explains, the
Port Department functions as a “subordinate governmental
agenc[y] of the state” because the State of California
exercises “virtually complete control” over Port Department’s
administration of the tidelands—which because of the public
trust doctrine is essentially a non-delegable state duty. Pet’r’s
Br. 36, 38, 40 (internal quotation marks omitted). Second,
Oakland reasons, any judgment against the Port Department
would be paid with State funds because revenues generated
from public trust lands are part of the public trust and must be
used for “State purposes.” Pet’r’s Br. 42. Unfortunately for
Oakland, its reliance on cases granting immunity to state
agents adds nothing to the conversation. Those cases establish
the unremarkable proposition that but for Eleventh
Amendment protection, a state, which can act only through its
agents, may be liable for (or otherwise impacted by) the
actions of one. See P.R. Ports Auth., 531 F.3d at 878–79
(“[S]overeign immunity can apply in a particular case if the
entity was acting as an agent of the State or if the State would
be obligated to pay a judgment against an entity in that
case.”); see also Alden, 527 U.S. at 756–57; Shands Teaching
Hosp. & Clinics, Inc. v. Beech St. Corp., 208 F.3d 1308, 1311
(11th Cir. 2000) (holding that a Medicare fiscal intermediary
may be immune “only to the extent that a judgment would
expose the government to financial liability or interfere with
the administration of government programs”). And worse, we
do not think the public trust doctrine changes Oakland’s
Eleventh Amendment calculus: it appears California’s dignity
8
and fisc would survive any suit against the Port Department
untroubled. See Hess, 513 U.S. at 47 (invoking state dignity
and solvency as analytical lodestars).
California retains ultimate responsibility for protecting its
public trust property, see Ill. Cent. R.R. Co. v. Illinois, 146
U.S. 387, 453–54 (1892); Nat’l Audubon Soc’y, 658 P.2d at
723–24, and it may vindicate its responsibility by passing
legislation modifying or terminating the tidelands grant to
Oakland, see Mallon v. City of Long Beach, 282 P.2d 481,
487 (Cal. 1955). The legislature has in fact tweaked
Oakland’s grant twenty-four times during the past century,
and if it revokes the grant entirely, the tidelands will revert to
the State. Id. The same holds true for port revenues, which are
part of the public trust. City of Long Beach v. Morse, 188 P.2d
17, 20 (Cal. 1947).
But until California exercises this authority, the Port
Department will continue to manage the tidelands however it
sees fit within the limits fixed by the public trust and tidelands
grant. See Nat’l Audubon Soc’y, 658 P.2d at 723; People ex.
rel. Webb v. Cal. Fish Co., 138 P. 79, 83, 88 (Cal. 1913). All
liability for port-related debts likewise belongs to the Port
Department, and nothing in the record suggests California
must or would intervene if the Port Department cannot handle
its debts. See 1911 Cal. Stat. at 1259 (requiring Oakland to
improve the port “without expense to the state”); Charter of
the City of Oakland § 717(3)(Ninth) (permitting transfer of
surplus revenue and income generated by the port to the
“General Fund of the City” to the extent the surplus is not
needed for port-related purposes). 4
4
Oakland believes a judgment against the Port Department
would operate against the state treasury under California probate
law, which grants trustees the right to repayment from the trust for
9
Thus, while the State may alter certain parameters
constraining the Port Department’s actions, the record
contains no reason to think it can do more. Certainly none of
the twenty-four amendments to the tidelands grant have
affected the day-to-day management of the port. 5 See also
expenditures that either were “properly incurred in the
administration of the trust” or that “benefited the trust.” CAL. PROB.
CODE § 15684. We are unpersuaded that the public trust doctrine
implies a trust relationship within the meaning of the probate code.
5
Through these amendments, the legislature granted additional
land, reserved for itself mineral rights and the right to use the land
for highways, permitted Oakland to convey land to various military
and educational institutions, extended the allowed length of granted
franchises and leases, approved land use relating to other public
trust purposes and certain land exchanges, and authorized use of
revenue generated by public trust land for certain additional
purposes that would nonetheless promote the public trust. See 2005
Cal. Stat. 5244; 2004 Cal. Stat. 4233; 1986 Cal. Stat. 5065; 1981
Cal. Stat. 3919; 1965 Cal. Stat. 3892; 1961 Cal. Stat. 2553; 1960
Cal. Stat. 319; 1957 Cal. Stat. 1902; 1955 Cal. Stat. 1936; 1953
Cal. Stat. 1908; 1945 Cal. Stat. 686; 1943 Cal. Stat. 2189; 1941
Cal. Stat. 2236; 1939 Cal. Stat. 1261; 1939 Cal. Stat. 1260; 1939
Cal. Stat. 1258; 1937 Cal. Stat. 2500; 1937 Cal. Stat. 752; 1937
Cal. Stat. 335; 1937 Cal. Stat. 115; 1931 Cal. Stat. 1346; 1923 Cal.
Stat. 416; 1919 Cal. Stat. 1088; 1917 Cal. Stat. 63. Suggestively,
one of these modifications purported to permit, but not require,
Oakland to convey particular parcels of the public trust lands to the
State for various transportation projects. See 1937 Cal. Stat. 335
(characterizing the legislation as an “urgency measure necessary for
the immediate preservation of the public peace, health and safety”).
If the legislature has the sort of control Oakland believes, one might
wonder why it did not just reach out and take the land. Of course, if
the State can modify Oakland’s land grant, one might also wonder
whether it could simply run the port directly—but we have no
reason to explore these what-ifs.
10
CAL. PUB. RES. CODE § 6308 (requiring joinder of the state as
a “necessary party defendant” in any proceeding “involving
the title to or the boundaries of tidelands” (emphasis added)).
To the extent the State can do more, its power appears to
derive from the State’s general relationship with
municipalities rather than the public trust doctrine. See, e.g.,
Mallon, 282 P.2d at 487. And that is not enough to claim the
attention of the Eleventh Amendment. See Hess, 513 U.S. at
47.
It is perhaps for these reasons that the State Lands
Commission, though vested with all of California’s
jurisdiction and authority over the tidelands, has limited and
only indirect control of the Port Department—and apparently
only to the extent necessary to ensure compliance with the
public trust and land grant. See CAL. STATE LANDS COMM’N,
PUBLIC TRUST POLICY 3 (2001); see also CAL. PUB. RES.
CODE § 6305. If it concludes the Port Department violated the
terms of the public trust or land grant, it may advise the Port
Department of that fact, report the violation to the state
legislature, or sue to enjoin the violation. CAL. STATE LANDS
COMM’N, PUBLIC TRUST POLICY 3; see CAL. PUB. RES. CODE
§ 6306. The State Lands Commission, as the California
attorney general put it in an amicus brief to the Commission,
is simply the legislature’s “day-to-day eyes and ears.” Far
from establishing an agency relationship, California’s
relationship with the Port Department—its ability to control
Oakland’s management of the port only to the extent Oakland
violates the public trust or tidelands grant—suggests the
opposite. See, e.g., RESTATEMENT (THIRD) OF AGENCY
§§ 1.01 cmts. f, g, 1.04(10) (2006).
Without any record evidence suggesting suits against the
Port Department effectively target the State of California, we
will not distort the Eleventh Amendment by mantling
11
Oakland with sovereign immunity. Cf. Fresenius Med. Care
Cardiovascular Res., Inc. v. P.R. & Caribbean
Cardiovascular Ctr. Corp., 322 F.3d 56, 63 (1st Cir. 2003)
(“It would be every bit as much an affront to the state’s
dignity and fiscal interests were a federal court to find
erroneously that an entity was an arm of the state, when the
state did not structure the entity to share its sovereignty.”).
The State of California had the opportunity to claim a dignity
or financial interest when the Commission invited it to submit
an amicus brief explaining the Port Department’s status under
state law, but nowhere did the State assert any interest in
Oakland’s immunity—a strong signal that California does not
view suits against the Port Department as a threat to its
sovereign interests. Cf. Lake Country Estates, Inc., 440 U.S.
at 401, 407 (looking to state briefs disclaiming intent to
confer immunity on bi-state compact); Morris v. Wash. Metro
Area Transit Auth., 781 F.2d 218, 224–25 (D.C. Cir. 1986)
(similar). Indeed, the State spoke up only after the
Commission affirmatively asked it to do so, and it fell silent
after Oakland filed its petition for review. This is telling and,
we think, representative of Oakland’s rights in and
responsibilities for the tidelands.
III
For the reasons stated, Oakland’s petition for review is
Denied.