United States Court of Appeals
Fifth Circuit
F I L E D
UNITED STATES COURT OF APPEALS January 30, 2004
FIFTH CIRCUIT
Charles R. Fulbruge III
Clerk
No. 02-20442
AIR LIQUIDE AMERICA CORPORATION; EGP FUELS COMPANY; EQUILON
PIPELINE COMPANY, LLC; EXXON PIPELINE COMPANY; FLORIDA GAS
TRANSMISSION COMPANY; HOUSTON PIPE LINE CO.; HSC PIPELINE
PARTNERSHIP LP; MOBIL CHEMICAL COMPANY, an unincorporated
division of Mobil Oil Corporation; MOBIL PIPELINE COMPANY;
SEADRIFT PIPELINE CORPORATION; TE PRODUCTS PIPELINE COMPANY
LIMITED PARTNERSHIP; TEXAS EASTERN TRANSMISSION CORP.; UCAR
PIPELINE INCORPORATED; CHEVRON CHEMICAL CO.; CHEVRON PIPELINE
CO.; DYNEGY MIDSTREAM SERVICES; TEPPCO CRUDE OIL LLC,
Plaintiffs-Counter Defendants-
Appellees-Cross-Appellants,
DUKE ENERGY TRANSPORT AND TRADING COMPANY,
Plaintiff-Counter Defendant-Appellee,
AIR PRODUCTS INCORPORATED; AIR PRODUCTS MANUFACTURING
CORPORATION; BLACK MARLIN PIPELINE COMPANY;
TEJAS SHIP CHANNEL LLC; TEJAS SOUTH PIPELINE PARTNERSHIP,
Intervenor Plaintiffs-Appellees-Cross-Appellants,
versus
US ARMY CORPS OF ENGINEERS,
Defendant-Counter Claimant-
Appellant-Cross-Appellee,
PORT OF HOUSTON AUTHORITY OF HARRIS COUNTY, TEXAS,
Movant-Appellant-Cross-Appellee.
AIR LIQUIDE AMERICA CORPORATION; EGP FUELS COMPANY;
EQUILON PIPELINE COMPANY LLC; EXXON PIPELINE CO.;
FLORIDA GAS TRANSMISSION COMPANY; HOUSTON PIPE LINE CO.;
HSC PIPELINE PARTNERSHIP LP; MOBIL CHEMICAL COMPANY,
an unincorporated division of Mobil Oil Corporation;
MOBIL PIPELINE COMPANY; SEADRIFT PIPELINE CORPORATION;
TE PRODUCTS PIPELINE COMPANY LIMITED PARTNERSHIP;
TEXAS EASTERN TRANSMISSION CORP.; UCAR PIPELINE INC.
Plaintiffs-Appellees-Cross-Appellants,
DUKE ENERGY TRANSPORT AND TRADING COMPANY,
Plaintiff-Appellee,
versus
PORT OF HOUSTON AUTHORITY OF HARRIS COUNTY, TEXAS,
Defendant-Appellant-Cross-Appellee.
Appeal from the United States District Court
for the Southern District of Texas
__________________________________________________________________
Before BARKSDALE, DeMOSS, and BENAVIDES, Circuit Judges.
RHESA HAWKINS BARKSDALE, Circuit Judge:
At issue is cost-allocation for privately owned pipelines
under the Houston Ship Channel (channel) being relocated as part of
the project by the United States Army Corps of Engineers and the
Port of Houston Authority to widen and deepen the channel. The
Corps and the Port appeal the partial summary judgment awarded the
pipeline owners: inter alia, the Port was held responsible for the
relocation cost. Owners’ conditional cross-appeal is from the
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district court’s denial of their alternative summary judgment
claim: that the project was for a deep-draft harbor; and that,
accordingly, the Port would have to bear half of the relocation
cost.
The principal sub-issues are: whether, as held by the
district court, the Port must bear the cost, pursuant to TEX. WATER
CODE § 60.102 (relocation cost to be borne by district if it
“required” the relocation); and, if not, whether, in requiring
Owners to relocate the pipelines at their expense, the Corps was
properly enforcing both the federal navigational servitude and the
Corps’ associated federal permit authority.
Texas law does not control. Consistent with, inter alia, the
Corps’ well-settled authority to enforce its permits, Owners were
required to relocate their pipelines at their expense. Concerning
Owners’ conditional cross-appeal, the project was not for a deep-
draft harbor; therefore, the Port was not required to bear half of
the relocation cost. VACATED in PART; AFFIRMED in PART; and
RENDERED.
I. The Rivers and Harbors Act of 1899, 33 U.S.C. § 401 et seq.,
prohibits construction in navigable waters of the United States
unless the work has been approved by the Secretary of the Army.
Pursuant to this Act, and for more than 100 years, the Corps has
regulated such construction, in part by issuing permits under § 10
of that Act. 33 U.S.C. § 403. These § 10 permits provide, inter
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alia, that pipelines and other structures beneath navigable waters
are to be relocated at no expense to the United States if required
by federal navigation interests or projects. In the 1940s and 50s,
the Corps issued § 10 permits to Owners to install pipelines
beneath the channel. Each permit mandates pipeline-relocation as
required by navigation needs and at no cost to the government.
Similarly, when the Texas legislature granted ownership of the
land under the channel to the Port in 1927, the Port was given
authority to franchise or lease the land for limited periods and
purposes. See Act of March 11, 1927, 40th Leg., R.S., ch. 292,
1927 Tex. Gen. Laws 437. Accordingly, in addition to a federal §
10 permit, each Owner holds a license from the Port. One license
condition is that Owners must relocate their pipelines at their
cost if necessary for the channel.
In 1967, the House Committee on Public Works authorized a
study for improving deep-draft channels, including the channel.
The reconnaissance report for this study was completed in 1980.
The next step was the Water Resources Development Act of 1986
(WRDA-86), Pub. L. No. 99-662, 100 Stat. 4082 (1986); 33 U.S.C. §
2201 et seq. It contained the following cost-allocation provision:
The non-Federal interests [here, the Port] for
a [harbor navigation project] shall perform or
assure the performance of all relocations of
utilities necessary to carry out the project,
except that in the case of a project for a
deep draft harbor [deeper than 45 feet] one-
half of the cost of each such relocation shall
be borne by the owner of the facility being
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relocated and one-half of the cost ... shall
be borne by the non-Federal interests.
33 U.S.C. § 2211(a)(4) (emphasis added).
The feasability study for the project was completed in 1987.
In May 1995, the Corps published a draft report for public review
that recommended proceeding with the channel’s expansion. The
draft report stated that Owners would bear the cost for relocation
of approximately 130 pipelines. No Owner responded to the Corps
about this notice.
The final version of the notice — the Limited Reevaluation
Report (LRR) — was published in November 1995. The LRR estimated
the pipeline relocation cost would exceed $100 million; and, as did
the draft report, the LRR stated that Owners would bear that cost.
Again, the Corps received no response from Owners. At the end of
the comment period, the LRR was incorporated in the Chief of
Engineers’ Report (Chief’s Report), which was transmitted to
Congress by the Secretary of the Army.
The project was authorized by the Water Resources Development
Act of 1996 (WRDA-96), Pub. L. No. 104-303, 110 Stat. 3658 (1996);
33 U.S.C. § 2330 et seq. That Act provided: “[t]he removal of
pipelines and other obstructions that are necessary for the project
shall be accomplished at non-Federal expense”, id. § 101(a)(30),
110 Stat. at 3666; and the project would be “substantially in
accordance with the plans, and subject to the conditions, described
in” the Chief’s Report, id. § 101(a), 110 Stat. at 3662. Again,
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one condition in that report was for the relocation cost to be
borne by Owners.
As required for commencing the project, the Port entered into
a Project Cooperation Agreement (PCA) with the Corps in June 1998.
42 U.S.C. § 1962d-5b(a); see Pub. L. No. 99-662, 100 Stat. 4082,
4083 (1986). Shortly thereafter, as requested by the Port, the
Corps, by removal-notices to Owners, enforced the § 10 permit
conditions and instructed Owners to relocate their pipelines at
their expense because of the project’s requirements. Owners
complied.
In November 1998, however, Owners filed this action, seeking
a declaration that the Corps’ removal-notices were void.
Simultaneously, Owners filed an action in state court, claiming:
pursuant to TEX. WATER CODE § 60.102, the Port had “required” the
relocation and was therefore responsible for the cost; and the
Port’s not paying it was an unconstitutional taking. In the
alternative, Owners’ state action claimed the project was for a
deep-draft harbor pursuant to WRDA-86, subject to its mandated
cost-sharing among the Port and Owners.
The state action was removed by the Port and consolidated with
this action. The Port counterclaimed, seeking a declaration that
either WRDA-96 or the § 10 permits required Owners to pay the
relocation cost.
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In early 2002, on cross-motions for summary judgment, the
district court granted partial judgment to Owners, holding: WRDA-
96 did not amend the cost-sharing provisions of WRDA-86; pursuant
to WRDA-86, state law was to answer the cost-allocation question;
under Texas law, that cost was to be borne by the Port; and the
licenses issued by the Port (placing cost with Owners) were
preempted by Texas law. The district court amended the Corps’
removal-notices to Owners to reflect this ruling. On the other
hand, the district court rejected Owners’ alternative claim that
the project was for a deep-draft harbor.
II.
A summary judgment is reviewed de novo. E.g., Texas Soil
Recycling, Inc. v. Intercargo Ins. Co., 273 F.3d 644, 648-49 (5th
Cir. 2002). The Corps and Port contest the Port’s being liable for
the relocation cost and the amendment of the Corps’ removal-
notices. If those rulings are vacated, Owners contest the not-
deep-draft-harbor-project ruling.
A.
1.
As the district court concluded, the language in neither WRDA-
86 nor WRDA-96 explicitly allocates the relocation cost. The
district court ruled that Texas law required the Port to bear it.
Taking a similar approach, Owners contend that WRDA-86, not
WRDA-96, establishes the Port’s cost liability. Support is found
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in the WRDA-86 conference report: “This [cost allocation] question
is to be resolved between the non-Federal interest [Port] and the
Owners of the facilities being relocated”. H.R. CONF. REP. NO. 99-
1013, at 205 (1986). Along this line, Owners claim the Port must
bear the cost pursuant to TEX. WATER CODE § 60.102, which provides:
“If a district in the exercise of powers conferred by this
subchapter [port improvement] ... requires the relocating ... of
any ... pipeline, the relocating ... shall be done at the sole
expense of the district”.
The Corps and Port maintain: WRDA-96, not WRDA-86, controls
cost-allocation; and WRDA-96 places it on Owners. As discussed in
part, infra, it is not necessary to resolve whether WRDA-86 or
WRDA-96 controls. In any event, TEX. WATER CODE § 60.102 does not
apply. First, to trigger that section’s application, the Port had
to “require” the relocation. It did not (and cannot) do so.
Second, as discussed infra, the federal navigational servitude
(applied through the § 10 permits) cannot be “trumped” in the
absence of a clear Congressional waiver.
As quoted in part earlier, TEX. WATER CODE § 60.102 provides:
“If a district in the exercise of the powers conferred by this
subchapter or in the exercise of the power of eminent domain or the
police power requires the relocating ... of any ... pipeline, the
relocating ... shall be done at the sole expense of the district”.
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(Emphasis added.) This provision is not applicable because the
Port did not require the relocation – the Corps did.
In this regard, the district court held, and Owners contend:
The Corps issued the removal notices at the
Port’s request, acting as the Port’s agent in
requiring the owners to relocate the
pipelines. The Port cannot escape its
obligation to pay by shunting its order
through an agent.
Air Liquide America Corp. et al. v. United States Army Corps of
Eng’rs, et al., No. H-98-3982 at 5 (S.D. Tex. filed 25 Jan. 2002).
Under Texas law, for an agency relationship, the agent must be
under the control of the principal; “even though one acts for and
in behalf of another, if he is not under that other person’s
control, the relation of agency does not exist”. Daily Int’l Sales
Corp. v. Eastman Whipstock, Inc., 662 S.W.2d 60, 64 (Tex. App.
2001). In this instance, agency would require the Port’s being “in
control” of the Corps; for quite obvious reasons, the Port is not.
By requiring removal of an obstacle to a navigable waterway, the
Corps was acting pursuant to power delegated to it by Congress. It
was pursuant to this power, not the Port’s request, that the Corps
required the relocation.
Owners contend the Port required removal through the Corps by:
undertaking, initiating, and financing the project; signing a PCA
with the Corps; and requesting the removal-notices from the Corps.
First, the Corps, not the Port, sought Congressional approval for
the project. Second, Congress authorized the project and provided
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the funds for construction of the navigation features, subject to
partial reimbursement by the Port. Third, the Port’s entering into
the required PCA with the Corps in no way establishes that the Port
required the relocation. To the contrary, the Port determined that
it could not require pipeline relocation at Owners’ expense.
Therefore, the Port requested the Corps to exercise its § 10 permit
authority under the federal navigational servitude.
Owners contend that, but for the Port’s partial reimbursement,
role in the PCA, and request that the Corps enforce the § 10
permits, there would have been no project. This misunderstands the
meaning of “require” in § 60.102. These were necessary components
of the project but certainly not sufficient on their own to cause
the project to be undertaken. Restated, in order for the Corps and
the Port to proceed, an agreement was required — the PCA. The PCA
provided that the Corps would accomplish relocation, which it
agreed to do through its § 10 permits. The PCA did not require the
Corps to exercise its permit authority; and it certainly did not
empower the Port to mandate the Corps to require pipeline
relocation.
In support of their construction of state law, Owners point to
TEX. WATER CODE § 50.052 (now repealed). It provided: if the
district required relocation or alteration in its construction of
any properties, it “shall be done at the sole expense of the
district or authority”. The Harris County Flood Control District
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(an entity analogous to the Port) sought an opinion on whether,
under § 50.052, it would be required to bear the cost for
lengthening a bridge. Texas’ Attorney General opined: “[I]f the
district widens the channel so as to render the bridge unusable,
the district may reasonably be said to have acted to require the
‘relocation ... rerouting ... or alteration in construction of ...
properties’”. OP. TEX. ATT’Y GEN. NO. MW-412 (1981) (citing TEX. WATER
CODE § 50.052).
Owners contend that § 60.102 applies to the Port in the same
way. This contention neglects a crucial distinction: the Corps,
not the Port, required Owners to relocate their pipelines.
Similarly, the Port’s request for removal-notices by the Corps did
not obligate it to issue them. See, e.g., California v. Sierra
Club, 451 U.S. 287 (1981).
2.
The Corps has the authority, under the federal navigational
servitude, to require Owners to pay the relocation costs according
to the original permits, as necessitated by the project. See
United Texas Transmission Co. (UTTCO) v. United States Army Corps
of Eng’eers, 7 F.3d 436 (5th Cir. 1993), cert. denied, 512 U.S.
1235 (1994). Because neither WRDA-86 nor WRDA-96 includes a clear
Congressional waiver of the navigational servitude, we need not
reach which Act controls for cost-sharing.
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Congress derives the power to control navigation from its
power to regulate commerce. Gibbons v. Ogden, 22 U.S. (9 Wheat.)
1, 230-31 (1824). This power has been recognized to impose a
“navigational servitude”, described as follows:
All navigable waters are under the control of
the United States for the purpose of
regulating and improving navigation, and
although the title to the shore and submerged
soil is in the various states and individual
owners under them, it is always subject to the
servitude in respect of navigation created in
favor of the Federal government by the
Constitution.
Gibson v. United States, 166 U.S. 269, 271-72 (1897) (emphasis
added). This servitude operates to the exclusion of any competing
or conflicting right. See United States v. Virginia Elec. & Power
Co., 365 U.S. 624, 627-28 (1961).
The navigational servitude includes the right to authorize
improvements to harbors and bays, as well as the power to determine
what will be deemed an obstruction to navigation. See Pennsylvania
v. Wheeling and Belmont Bridge Co., 59 U.S. (18 How.) 421, 431
(1855). Pursuant to § 10 of the Rivers and Harbors Act of 1899,
Congress delegated this power to regulate such obstructions to the
Secretary of War (now Secretary of the Army). It bears repeating
that each Owner (or predecessor in interest) obtained a § 10 permit
prior to construction of its pipeline.
a.
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Addressing Owners’ “contractual agreement[s]”, the district
court held: “The licenses [issued by the Port, requiring Owners’
to bear relocation cost,] are preempted by the Texas Water Code”.
Air Liquide, No. H-98-3982 at 5. As discussed supra, when title to
submerged lands was granted to the Port in 1927, the Texas
Legislature gave the Port “the right, power and authority to abate
and remove any and all encroachments or structures of any kind now
or hereafter existing on said property, save such as may have been
constructed under permit from the United States War Department
[later the Corps]....” Act of March 11, 1927, 40th Leg., R.S., ch.
292, 1927 Tex. Gen. Laws 437, 439 (emphasis added). The licenses
issued by the Port provide that, should pipeline relocation be
necessary to accommodate deepening and widening the channel, the
Owner will, “at its cost and expense and without cost or expense to
the Port ... remove, relocate, lengthen, deepen or otherwise
conform” its pipeline to the project.
The district court ruled that Texas law preempted the
licenses, in part because “[t]he Port, as a creature of the state,
is bound by the regulations the state places on it”. Air Liquide,
No. H-98-3982 at 5. But, as discussed supra, Texas law does not
apply to the relocation. Again, the Corps, not the Port,
“required” it. The reason the relocation was necessary - the
project - was contemplated by the licenses. Through them, Owners
agreed that, in the event “any installation [of pipelines] made
13
under authority of this license shall interfere with the widening,
deepening or other revision or improvement of the Houston Ship
Channel”, Owners would bear the relocation cost.
b.
Even if the Port-issued licenses do not control on cost-
allocation, Owners would nevertheless be bound by their agreement
with the Corps in the § 10 permits. As discussed, because the
channel is a navigable waterway of the United States, each Owner
had been required, consistent with the federal navigational
servitude, to obtain a § 10 permit prior to laying a pipeline. In
each permit, Owners: acknowledged they were not receiving an
interest in property; and agreed that, should the Corps require,
Owners would remove any obstruction (e.g., its pipeline) at no cost
to the government.
Our court’s decision in 1993 in UTTCO held that § 10 permit-
holders must pay for the relocation of any portion of a pipeline
located within the original permit area. UTTCO, 7 F.3d at 441.
The permits in UTTCO, as in this action, required removal of
obstructions “without expense to the United States”, but did not
explicitly require owners to bear the cost. Id. at 439.
Nevertheless, our court held that the federal navigational
servitude provided authority to enforce the terms of those permits
at owner expense.
[N]o one seriously contests the rule that the
cost of relocating the portion of a pipeline
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lying between the original banks of the bayou
(i.e., the work that was either “herein
authorized” under ¶ (f) of the permits or
covered by the navigational servitude) must be
borne by the pipeline owner.
Id. at 444.
It was only after UTTCO that the Corps, in October 1995,
issued written guidance — Policy Guidance Letter 44 — for when it
will assert its power to require removal of an obstruction to
navigation at the expense of the owner of the obstruction. When
Texas and the Port determined that they did not have the authority
to require relocation of more than 100 pipelines under the
navigable waterway, they requested the Corps to secure their
relocation under the authority of its federal navigational
servitude and the corresponding § 10 permits.
The Chief’s Report was then sent by the Corps to Congress
concerning this authority and with a specific cost-allocation
provision, noting that all relocation costs would be borne by
Owners. Congress relied on this report in deciding to approve the
project and formally incorporated the Chief’s Report in the
authorizing legislation — WRDA-96. Pub. L. No. 104-303, §
101(a)(30), 110 Stat. 3658, 3662-66 (1996).
Despite this, the district court ruled: “The adoption of the
chief’s report went only as far as its engineering and design
recommendations, not its admonishments on cost allocation”. Air
Liquide, No. H-98-3982 at 5. The cost data in the LRR,
15
incorporated in the Chief’s Report, reflects, however, that
relocation costs are to be borne by Owners. For example, the LRR
includes tables listing individual Owners, their specific § 10
permits, and the number and size of their pipelines.
Indeed, portions of the LRR discuss requiring Owners to bear
pipeline relocation costs according to the § 10 permit power.
(E.g., “The cost for removal and replacement of pipelines and
docking facilities located within the area of navigation servitude
are not included in the cost estimate because these costs are owner
costs, not project costs.”)
Owners contend, erroneously, that WRDA-86 precludes the Corps’
exercising § 10 permit authority to enforce the navigational
servitude. For obvious reasons, Congressional waiver of this
servitude must be express. See, e.g., United States v. Cherokee
Nation of Okla., 480 U.S. 700, 707 (1987) (holding waiver of
navigational servitude “will not be implied, but instead must be
‘surrendered in unmistakable terms’”) (quoting Bowen v. Public
Agencies Opposed to Social Security Entrapment, 477 U.S. 41, 52
(1986)). There is no waiver in WRDA-86; the federal navigational
servitude remains.
In sum, the Corps properly exercised its navigational
servitude over the pipelines and waterway covered by the § 10
permits, requiring Owners to remove those pipelines at their
expense.
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B.
In their conditional cross-appeal, Owners claim the project is
for a deep-draft harbor within the meaning of WRDA-86: one
“authorized to be constructed to a depth of more than 45 feet”. 33
U.S.C. § 2241(1) (emphasis added). As discussed, WRDA-86 provides
that obstruction relocation costs for a deep draft harbor project
are to be divided equally between Owners and the non-Federal
interest (here, the Port). 33 U.S.C. § 2211(a)(4).
In support, Owners contend that the design depth of 47 feet
for the entrance channel of the project makes it one for a deep-
draft harbor. They contend also that over-depth dredging and
advance maintenance have resulted in a channel depth greater than
45 feet.
The reasoning by the district court provides the correct
answer to these contentions: “The depth of the entrance is not the
depth of the channel.... When it adopted the chief’s report,
Congress authorized the construction of a 45-foot-deep harbor, not
a deep-draft harbor”. Air Liquide, No. H-98-4982 at 4 (emphasis
added).
III.
For the foregoing reasons, those parts of the judgment
allocating the pipeline relocation cost to the Port and amending
the Corps’ removal-notices to Owners are VACATED; that part of the
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judgment concerning the project not being for a deep-draft harbor
is AFFIRMED; and judgment is RENDERED for the Corps and Port.
VACATED in PART; AFFIRMED in PART; and RENDERED
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