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Indiana Port Commission v. Bethlehem Steel Corp.

decided: December 23, 1987.

INDIANA PORT COMMISSION, PLAINTIFF-APPELLANT,
v.
BETHLEHEM STEEL CORPORATION AND LAKE CARRIERS' ASSOCIATION, DEFENDANTS-APPELLEES



Appeal from the United States District Court for the Northern District of Indiana, Hammond Division, No. 71 C 228, James T. Moody, Judge.

Bauer, Chief Judge, Wood, Jr., and Manion, Circuit Judges.

Author: Bauer

BAUER, Chief Judge.

The appellant, Indiana Port Commission ("IPC"), charges a general fee, known as the "Harbor Service Charge" (the "HSC"), on vessels using the Burns Waterway Harbor (the "Harbor"). The IPC billed the Bethlehem Steel Corporation ("Bethlehem") and members of the Lake Carriers' Association (the "Carriers") for fees owed under the HSC. The appellees, Bethlehem and Carriers, refused to pay this fee and, as a defense to the IPC's action for debt collection, alleged that the HSC is invalid. The district court agreed and we affirm.

This case, before us for the second time, has a lengthy historical and factual background, see Indiana Port Comm'n v. Bethlehem Steel Corp., 702 F.2d 107, 108-09 (7th Cir. 1983), which bears repeating.

In 1961, the Indiana state legislature created the Indiana Port Commission for the purpose of promoting "the agricultural, industrial and commercial development of the state, and to provide for the general welfare" by the construction and operation of various port facilities, including "a modern port on Lake Michigan." Ind. Code Ann. § 8-10-1 et seq. (Burns 1973). To carry out its legislative mandate, the IPC decided to construct a port and public terminal, the Harbor, on Lake Michigan near Portage, Indiana. In mid-1962, the IPC, Bethlehem, and the Midwest division of National Steel Corporation ("National") entered into an agreement to construct the new Harbor adjacent to parcels of land already owned by Bethlehem and National. Under the terms of the agreement, the IPC: (1) purchased some land from Bethlehem; (2) granted Bethlehem riparian rights on the leak; (3) waived in perpetuity the IPC's right to condemn Bethlehem's land; and (4) agreed to allow Bethlehem's vessels access to the waters of the outer harbor under the same conditions as all other vessels making use of the Harbor. In exchange, Bethlehem agreed, inter alia, to construct part of the Harbor entrance, the bulkhead at the east end (the Bethlehem side) of the Harbor, the east deflector wall, and riparian enclosure walls. National also agreed to build a bulkhead on its property (the west end).

In late 1969, the federal government agreed to reimburse the IPC for certain of its expenditures on the Harbor. The agreement also provided that the Chief of Engineers of the Army Corp of Engineers would supervise the work paid for by these reimbursed funds, and that, upon completion, the federal government would accept a portion of the project as part of an authorized Federal Project and pay for maintenance and repair expenses for that portion. Pursuant to this agreement, the State of Indiana granted the federal government a deed covering the land around the outer breakwaters of the Harbor and a perpetual right-of-way easement for the use of the outer Harbor.

The IPC spent approximately $25 million on land and construction for the Harbor. The Indiana General Assembly appropriated this money with an express proviso that the IPC was not required to reimburse the state for the money. The United States government, through the Army Corps of Engineers, reimbursed the IPC for approximately $13 million of these expenditures, pursuant to the 1969 agreement.

The Harbor opened in 1970. The IPC established a schedule of fees for the use of the Harbor, including the general-usage HSC. The HSC was intended to defray part of the expense of administration and maintenance of the Harbor. The IPC immediately began to bill Bethlehem and National, as well as other users of the public port, the HSC for all vessels calling at these facilities. Bethlehem and National strenuously objected to the imposition of the HSC upon the ships using their private docking facilities, arguing that the ships calling at their docks used only the federally owned portion of the Harbor, not the IPC facilities. The IPC, unconvinced by this argument, has been engaged in litigation since July, 1971, to collect the unpaid HSc.

The IPC originally filed this action in Indiana state court in July, 1971. After the case was removed to the United States District Court for the Northern District of Indiana in late 1971, proceedings were held up pending the outcome of a challenge to the HSC initiated by Bethlehem before the Federal Maritime Commission ("the Commission"). After nine years of hearings before, and decisions by, the Administrative Law Judge of the Commission, the Cmmission, and the United States Court of Appeals for the District of Columbia Circuit, the Commission dismissed the proceedings for lack of jurisdiction. The IPC then filed an amended complaint in the Northern District of Indiana in October 1980. Chief Judge Sharp then bifurcated the proceedings into a liability phase and a quantum phase. After receiving motions for summary judgment from both Bethlehem and the IPC on April 1, 1981, the district court granted the IPC's motion and entered judgment for it on all liability issues on April 14, 1981. The district court, on February 24, 1982, entered a final judgment awarding $327,258.82 to the IPC. On appeal, we reversed the grant of summary judgment and remanded the case. Indiana Port Comm'n v. Bethlehem Steel Corp., 702 F.2d 107.

In December, 1986, Judge Moody held a bench trial and entered judgment in favor of Bethlehem and the Carriers. Specifically, the district court held, inter alia, that the HSC violates the constitutional prohibition on "duties of tonnage," U.S. Const. art. I, § 10, ch. 3, and the Rivers and Harbors Appropriation Act of 1884, 33 U.S.C. § 5, which prohibits the collection of tolls or charges from vessels passing through navigational waters constructed or acquired by the United States. The IPC challenges these two district court holdings on this appeal.*fn1 We affirm on the basis that the HSC violated 33 U.S.C. § 5 and therefore do not reach the constitutional question.

II.

We avoid deciding constitutional questions if the case may be disposed of on other grounds presented. "Thus, if a case can be decided on either of two grounds, one involving a constitutional question, the other a question of statutory construction or general law, the court will decide only the latter." Ashwander v. Valley Authority, 297 U.S. 288, 347, 80 L. Ed. 688, 56 S. Ct. 466 (Brandeis, J., concurring); Vickers v. Quern, 578 F.2d 685, 688 (7th Cir. 1978); Meredith Corp. v. F.C.C., 258 U.S. App. D.C. 22, 809 F.2d 863, 870 (D.C. Cir. 1987); Thigpen v. Smith, 792 F.2d 1507, 1514 n.12 (11th Cir. 1986). The district court struck down the HSC because it violated both the ...


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