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Maher Terminals, LLC v. Port Authority of New York

United States District Court, D. New Jersey

July 21, 2014

MAHER TERMINALS, LLC, Plaintiffs,
v.
PORT AUTHORITY OF NEW YORK AND NEW JERSEY et al., Defendants.

OPINION

KEVIN McNULTY, District Judge.

This matter comes before the court on the motion of Defendants Port Authority of New York and New Jersey ("Port Authority") and Patrick J. Foye to dismiss the complaint (Docket No. 12) brought by Plaintiff Maher Terminals, LLC ("Maher"). For the reasons set forth below, the motion to dismiss is GRANTED.[1]

I. BACKGROUND

Maher brings this Complaint against Port Authority and Foye challenging charges and fees assessed by Port Authority, including charges under a long-term rental agreement. Compl. ¶ 1. Maher alleges that these charges and fees are unlawful in that they violate Section 208 of the Water Resources Development Act of 1984 ("WRDA"), 33 U.S.C. § 2236; the Rivers and Harbors Appropriation Act of 1884 ("RHA"), as amended, 33 U.S.C. § 5(b); and the Tonnage Clause of the United States Constitution, Art. 1, § 10. Id. Solely for the purposes of this motion dismiss, I take the following allegations of the Complaint as true.

A. Parties and Facilities

Maher is a limited liability company organized under the laws of the state of Delaware with its main corporate office in Elizabeth, New Jersey. Compl. ¶ 4. Maher is one of the world's largest multi-user marine container terminal operators. It has operated at Port Elizabeth, stevedoring vessels that are berthing and loading and unloading cargo, for over 60 years. Id. ¶ 11. Maher's marine container terminal in Port Elizabeth is the largest in the Port of New York and New Jersey. Id. ¶ 12.

Defendant Port Authority is a body created by compact between New Jersey and New York, with the consent of Congress. Id. ¶ 5. Its offices are located in New York City. Id. Defendant Patrick J. Foye is the Executive Director of Port Authority. Id. ¶ 6. Port Authority operates an airport system, marine terminals and ports, the PATH rail transit system, six tunnels and bridges between New York and New Jersey, Port Authority Bus Terminal, and the World Trade Center. Id. ¶ 13. It also operates marine terminal facilities, one of which is the terminal leased to Maher in Port Elizabeth. Id.

Port Authority's marine terminals consist of one or more piers, wharves, docks, bulkheads, slips, basins, vehicular roadways, intermodal container transfer facilities, railroad connections, side tracks, sidings or other buildings, structures, facilities, or improvements. The terminals are used to accommodate steamships or other vessels and their cargoes or passengers. Port Authority operates, manages, controls, or leases the terminals. Id. ¶ 16.

The marine terminals include public cargo facilities and leased cargo facilities. Id. ¶ 17. Port Authority's public cargo facilities are the cargo buildings and open areas at a marine terminal designated by Port Authority for the handling of waterborne cargo and the holding of such cargo for further transportation. Id. ¶ 18. Port Authority's leased cargo facilities are the cargo buildings and open areas at a marine terminal operated by firms, corporations, partnerships or individuals under agreements with Port Authority, and are designated "from time to time" for the holding of waterborne cargo for further transportation. Id. ¶ 19. Port Authority also has container terminal facilities, which are leased cargo facilities used primarily for the purpose of receiving and delivering ocean-shipping containers for loading to and unloading from vessels. Id. ¶ 20. Port Authority's Intermodal Container Transfer Facilities are leased cargo facilities used primarily for the purpose of loading ocean-shipping containers to or unloading them from railroad trains or rail cars. Id. ¶ 21.

Port Authority owns, controls, or leases all of the marine container terminal facilities in the Port of New York and New Jersey, including the Maher Terminal, the APM terminal, the Port Newark Container Terminal (PNCT), the New York Container Terminal (NYCT), and the Global marine terminal. Id. ¶ 22.

B. Port Authority's Charges and Fees

Port Authority levies fees and charges for the use of its marine terminals. Id. ¶ 23. For public cargo facilities, it collects dockage, wharfage, demurrage, and related services fees from vessels and cargo using the terminals pursuant to a tariff for all of its public berths. Id. ¶ 24. For leased cargo facilities, Port Authority collects fees and charges directly from the terminal operators, which in turn collect fees and charges from vessels and cargo using the terminals. Id. ¶ 25.

Maher leases its container terminal in Port Elizabeth from Port Authority pursuant to a thirty-year lease agreement. EP-249, FMC Agreement No. 201131 ("EP-249" or the "Lease") (Docket No. 12-4).[2] Id. ¶ 26. Under the lease, Maher is authorized to use the container terminal only for stevedoring, primarily of container vessels and associated cargo containers, as well as activities incident to stevedoring. Id. ¶ 27 (citing EP-249 § 6(a)). Maher's right to berth vessels at the terminal is limited to seagoing vessels that Maher stevedores, and to operations incident to berthing and handling cargo for seagoing vessels. Id. ¶ 28 (citing EP-249(b)).

Under the lease, Port Authority levies and collects charges and fees for the use of Maher's marine terminal and seagoing vessel berthing rights. It does so under a "Basic Rental" agreement and a "Cargo Throughput" rental agreement. Id. ¶ 29.[3]

The "Basic Rental" fee charge for the use of Maher's marine terminal is calculated per acre and is increased annually by two percent. Compl. ¶ 31; Def. Br. (Docket No. 12-1) at 7 (citing EP-249 § 3(A)(a)-(b)). At the time the Complaint was filed in 2012, the Basic Rental charge was $50, 413 per acre, for a total charge of $22, 433, 612 per year. Id. ¶¶ 32, 34.

The Container "Throughput Rental" fee is based on the number of containers loaded and unloaded at Maher's terminal. Id. ¶ 36; Def. Br. at 7 (citing EP-249 §§ 4, 42). Port Authority began charging Maher the Container Throughput Rental fee as of October 1, 2008. Id. ¶ 38. Port Authority charges a minimum throughput rental per annum ("Minimum Throughput Rent") and requires a minimum number of containers per annum as a condition of maintaining the lease ("Terminal Guarantee"). Id. ¶ 40. Regardless of the number of containers actually loaded or unloaded, Port Authority requires Maher to guarantee to pay Minimum Throughput Rent on the equivalent of 775, 000 containers annually. For the first 356, 000 containers, however, there is no per container charge. Id. ¶¶ 39, 41.

As of October 1, 2012, Maher alleges, Port Authority was to increase the Throughput Rent charges from $19.00 to $21.00 for each container over 356, 000 up to 980, 000, and from $14.25 to $15.75 for each container above 980, 000 per annum. Id. ¶ 39. Through a "Terminal Guarantee, " Port Authority requires Maher to guarantee to load or unload from vessels at the terminal a minimum of 420, 000 actual containers annually. Id. ¶ 42. The Terminal Guarantee level is subject to increase to 900, 000 actual containers annually upon the deepening of the federal navigation channels to 50 feet and their availability for use. As of October 1, 2012, Port Authority's guaranteed Throughput Rent charges for the use of Maher's marine terminal and seagoing vessel berthing rights were to increase from $7, 961, 000 to $8, 799, 000 in guaranteed throughput revenue per year. Id. ¶ 43.

Maher loaded or unloaded 1, 024, 561 ocean-shipping containers in 2008; 817, 490 in 2009; and 1, 029, 679 in 2010. Id. ¶ 44. In 2008, at the then-effective container rates, Maher paid Port Authority approximately $12.5 million in actual Throughput Rent. Id. ¶ 45. At post-October 2012 rates, Maher expected to pay approximately $14 million in Throughput Rent based on a similar number of containers. Id. ¶ 46. Maher alleges that the cost or level of services provided by Port Authority, or available to vessels and cargo upon which the Throughput Rent charges are based, do not increase as the number of containers increases or as the Throughput Rent charges increase. Id. ¶ 49.

Maher alludes to other types of charges or fees, to which Maher itself has not been subject. Port Authority levies certain additional port charges and fees on operators of leased marine terminal cargo facilities in other leases or permits. Port Authority also levies other charges and fees not expressed in leases or permits, including fees and other financial consideration required for consent to changes of ownership or control interests in marine container terminal leases. Id. ¶¶ 50-51. Port Authority allegedly also levies still other charges, including intermodal rail and trucking charges, and federal and state funds and grants. Id. ¶ 52.

C. WRDA Navigation Improvement Projects

Port Authority is a "Local Sponsor" of WRDA navigation projects, including the projects to deepen to 50 feet portions of navigational channels such as the Kill Van Kull and Newark Bay Channels, the Port Jersey Channel, the Arthur Kill Channel, and the New York and New Jersey channels. Id. ¶ 53. Port Authority had incurred over $400 million in Local Sponsor share costs for those WRDA navigational channel deepening projects, and project maintenance was projected (at the time of the Complaint's filing) to exceed one billion dollars. Id. ¶¶ 57-58.

The WRDA permits non-Federal interests to recover these share costs through port and harbor fees under certain conditions. 22 U.S.C. § 2236. However, Port Authority has not established an authorized Local Sponsor share cost recovery user fee pursuant to 33 U.S.C. § 2236. Id. ¶ 59. Maher asserts that Port Authority is aware that section 208 of the WRDA prescribes "the permissible means" to recover Local Sponsor share costs. Id. ¶ 87.

Maher alleges that Port Authority, instead of using those "permissible means, " is unlawfully recovering its WRDA Local Sponsor share costs from marine terminal users-specifically container vessels, containerized cargo, and other vessels and cargo, using marine terminals owned, controlled, or leased by Port Authority-by including the costs in charges and fees for the use of marine container terminals. Id. ¶ 60. Port Authority allegedly allocated revenue collected and to be collected from New Jersey leased container terminals, including Maher, to pay for its Local Sponsor share costs. Id. ¶ 60-63. Maher alleges that Port Authority allocates the share costs on a per acre basis, including the 445 acres of the Maher terminal. Id. ¶ 64.

Maher alleges that the revenue Port Authority derives from the use of Maher's terminal exceeds the WRDA Local Sponsor share costs allocated to New Jersey marine container terminals. Id. ¶ 68. Between 2007 and 2011, Port Authority allegedly recovered over $300 million in revenue from marine container terminals for consents to changes of control or ownership and allocated it to the payment of share costs (although Maher does not allege that it contributed to that revenue, see Section I.A at pp. 4-5, supra ). Id. ¶ 73. Port Authority also allegedly allocates excessive Local Sponsor share costs to marine container terminals, including Maher, from Throughput Rental rates and fees Maher pays to Port Authority. Id. ¶¶ 75-78.[4] Maher alleges that the allocated costs exceed the costs of the services provided by Port Authority to vessels and cargo.[5] Id.

D. Procedural History Between Maher and Port Authority

Before filing the present action, Maher filed two cases regarding marine terminal leases against Port Authority in ...


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