         In the United States Court of Federal Claims
                                            No. 11-543L
                                    (Filed: February 27, 2013)

************************
                                              *
LONE STAR INDUSTRIES, INC.,                   *          Fifth Amendment Taking; Closure
                                              *          of Waterway Outlet; Property
                       Plaintiff,             *          Interest; Motion to Dismiss for
                                              *          Failure to State a Claim upon
               v.                             *          Which Relief Can Be Granted;
                                              *          Rule 12(b)(6); LA. CIV. CODE ANN. art.
UNITED STATES OF AMERICA,                     *          690, et seq.; Predial Servitude;
                                              *          Enclosed Estate; Regulatory Taking;
                       Defendant.             *          Lack of Property Interest in
                                              *          Deep-Draft Access; Lack of Direct
                                              *          Regulation of Private Property.
                                              *
                                              *
************************

        David M. Flotte, Edward F. Kohnke, and Joseph E. Lee III, Preis & Roy, 601 Poydras
Street, Suite 1700, New Orleans, La., 70130, for Plaintiff.

       Ignacia S. Moreno and Charlotte M. Youngblood, United States Department of Justice,
Environment & Natural Resources Division, 601 D Street, NW, Washington, D.C., 20004, for
Defendant. David R. Dyer and Jennifer Labourdette Burck, United States Army Corps of
Engineers, of Counsel.
______________________________________________________________________________

             MEMORANDUM OPINION AND ORDER OF DISMISSAL
______________________________________________________________________________

WILLIAMS, Judge.

        The instant litigation arises from the 2009 closure of the Mississippi River Gulf Outlet
(“MRGO”). Plaintiff Lone Star Industries, Inc. (“Lone Star”), brings this suit under the Fifth
Amendment to the Constitution, alleging that the Government’s closure of the MRGO resulted in
a taking of deep-draft access to its property and of its real estate improvements in New Orleans,
Louisiana. This matter comes before the Court on Defendant’s Motion to Dismiss Plaintiff’s
First Amended Complaint for failure to state a claim upon which relief can be granted. Because
Plaintiff has failed to allege a compensable property interest in deep-draft access to its property,
Plaintiff has failed to state a plausible claim for a physical Fifth Amendment taking. In a similar
vein, because Plaintiff has not alleged facts indicating that it was directly regulated by the



                                                  1
Government’s closure of the MRGO, Plaintiff has failed to state a plausible claim for a
regulatory taking of its deep-draft vessel terminal.

                                          Background

       On March 29, 1956, Congress approved construction of the MRGO, a 76-mile, man-
made navigation channel running northwest from the Gulf of Mexico to the Port of New
Orleans.1 Prior to construction of the MRGO, deep-draft vessels could reach New Orleans only
by traveling 90 miles up the Mississippi River from the Gulf of Mexico.2 The MRGO, which
was constructed in the late 1950s and early 1960s, reduced that distance by approximately 40
river miles. A shallower channel that cannot accommodate deep-draft vessels, the Gulf
Intracoastal Waterway (“GIWW”), runs west from the Gulf of Mexico and intersects with the
MRGO near the MRGO’s northern terminus. East of this intersection, the Michoud Canal runs
north from the GIWW before terminating in New Orleans. The GIWW connects to the
Mississippi River via the Inner Harbor Navigation Channel, which is too narrow to accommodate
deep-draft vessels.

       Congress authorized the MRGO to be dredged to a depth of 36 feet. In 2005, Hurricane
Katrina caused massive shoaling in the channel, limiting the MRGO to a depth of 22 feet. In
2006, Congress passed the Emergency Supplemental Appropriations Act for Defense, the Global
War on Terror, and Hurricane Recovery, Pub. L. No. 109-234, 120 Stat. 418 (2006), which
provided that “the Secretary of the Army, acting through the Chief of Engineers . . . shall
develop a comprehensive plan, at full Federal expense, to deauthorize deep-draft navigation on
the [MRGO], extending from the Gulf of Mexico to the [GIWW] . . . .”

        The Water Resources Development Act of 2007, Pub. L. No. 110-114, 121 Stat. 1041
(2007), provided that submission of the plan to de-authorize deep draft navigation to Congress
would trigger de-authorization, and authorized the Secretary of the Army to close the MRGO.
The Act also stated:

       There is authorized to be appropriated to the Assistant Secretary $85,000,000, to
       remain available until expended, to provide assistance pursuant to sections
       209(c)(2) and 703 of the Public Works and Economic Development Act of 1965
       (42 U.S.C. 3149(c)(2), 3233) to one or more eligible recipients under such Act to
       establish revolving loan funds to make loans for terms up to 20 years at or below
       market interest rates (including interest-free loans) to private businesses within
       the Port of New Orleans that may need to relocate to the Mississippi River within
       the State of Louisiana due to the treatment of the [MRGO] under title VII of this
       Act.



       1
           A map of the MRGO and the surrounding area can be found in Appendix A.
       2
         Plaintiff defines “deep-draft vessels” to include “both Panamax ships and Handymax
ships and other ships used to carry dry cargo in bulk which are wider than 75 feet or have a draft
of over 31.5 feet.” Am. Compl. ¶ 3.
                                                2
Id. at § 3082(b). These funds have yet to be appropriated. Am. Compl. ¶ 21.

        In 2008, the Army Corps of Engineers submitted a “(Revised) Integrated Final Report to
Congress and Legislative Environmental Impact Statement,” triggering de-authorization of the
MRGO. The Army subsequently contracted with Pine Bluff Sand and Gravel to deposit 430,000
tons of rock directly across the channel, a task which was completed on July 20, 2009. The
finished rock dike makes it impossible for vessels to enter the MRGO.

        Lone Star, a cement importer, owns a deep-draft terminal abutting the Michoud Canal at
14900 Intracoastal Drive, New Orleans, Louisiana. Lone Star describes its property as being
located “on the Michoud Canal, just north of its intersection with the [MRGO].” Am. Compl. ¶
1. Lone Star’s property does not border on the MRGO. Water access to the MRGO from Lone
Star’s property is by way of the Michoud Canal, and then the GIWW.

       As of the time Plaintiff filed its First Amended Complaint, it had invested approximately
$100 million in a deep-draft import terminal and manufacturing facility on its property. Lone
Star was the largest user of the MRGO on a tonnage basis.

                                           Procedural History

         Lone Star filed its complaint in this Court on August 29, 2011, arguing that the
Government, by effectively excluding deep-draft vessels from its import facility, had taken
certain real estate improvements worth at least $61,480,800. Defendant moved to dismiss for
failure to state a claim upon which relief can be granted. This Court denied Defendant’s motion
and granted Plaintiff leave to file an amended complaint. In granting Plaintiff leave to file an
amended complaint, the Court asked Plaintiff to clarify its property interest and the legal grounds
for its takings claims. Mem. Op. and Order Denying Def.’s Mot. to Dismiss Without Prejudice 5
(June 19, 2012).

        Lone Star filed its First Amended Complaint on July 24, 2012, alleging a categorical or
hybrid taking of a compensable property interest in deep-draft access to its terminal under both
Louisiana and Federal law.3 Am. Compl. ¶¶ 30, 32, 38. Additionally, Lone Star alleges a
regulatory taking of a compensable property interest in “real estate and improvements.” Id. at ¶¶
37, 40. Lone Star does not contend that the closure of the MRGO violated the Water Resources
Development Act (“WRDA”). Id. at ¶ 22. Rather, Plaintiff submits that the Act reflected “the
Government’s specific admission and acknowledgement that it had taken compensable property
interests from Lone Star and for which Lone Star should be entitled to just compensation.” Id. at
¶ 41. Defendant contests Lone Star’s assertion of compensable property rights under state or
Federal law, and has moved to dismiss Plaintiff’s First Amended Complaint.




       3
          In a status conference on August 13, 2012, the Court orally granted Plaintiff leave to file
its First Amended Complaint, accepted that complaint for filing on that date, and ordered
Defendant to respond to the First Amended Complaint by September 10, 2012.


                                                 3
                                              Discussion

Jurisdiction

        Under the Tucker Act, this Court “shall have jurisdiction to render judgment upon any
claim against the United States founded either upon the Constitution, or any Act of Congress or
any regulation of an executive department, or upon any express or implied contract with the
United States . . .” 28 U.S.C. § 1491(a)(1) (2006); Cyprus Amax Coal Co. v. United States, 205
F.3d 1369, 1373 (Fed. Cir. 2000). The Tucker Act operates as a waiver of sovereign immunity,
but does not create causes of action against the United States. United States v. Mitchell, 463
U.S. 206, 216 (1983); United States v. Testan, 424 U.S. 392, 398 (1976). “A claimant who is not
relying upon breach of a contractual obligation, therefore, must look beyond 28 U.S.C. § 1491
and establish that some substantive provision of law, regulation, or the Constitution can be fairly
construed as mandating compensation in order to state a claim within the jurisdiction of the
court.” Yancey v. United States, 915 F.2d 1534, 1537 (Fed. Cir. 1990) (citing United States v.
Mitchell, 445 U.S. 535, 538 (1980)). The Takings Clause of the Fifth Amendment to the
Constitution prohibits the taking of private property for public use “without just compensation.”
U.S. CONST. amend. V. “It is undisputed that the Takings Clause of the Fifth Amendment is a
money-mandating source for purposes of Tucker Act jurisdiction.” Jan’s Helicopter Serv., Inc.
v. Fed. Aviation Admin., 525 F.3d 1299, 1309 (Fed. Cir. 2008); see also Moden v. United States,
404 F.3d 1335, 1341 (Fed. Cir. 2005).

Defendant’s 12(b)(6) Motion

        Defendant moves to dismiss Lone Star’s takings claim pursuant to Rule 12(b)(6) of the
Rules of the Court of Federal Claims (“RCFC”) asserting that Plaintiff failed to identify a
cognizable property right on which to base its takings action.4 To meet this Court’s pleading
requirements, Plaintiff must comply with Rule 8(a)(2) and proffer a “short and plain statement of
the claim showing that the pleader is entitled to relief.” RCFC 8(a)(2); Martin v. United States,
96 Fed. Cl. 627, 629-30 (2011); see also Ashcroft v. Iqbal, 556 U.S. 662, 677-80 (2009)
(analyzing the pleading requirements of Federal Rules of Civil Procedure 8(a)(2), which is
identical to RCFC 8(a)(2)). Rule 8 does not require “‘detailed factual allegations,’ but it
demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Iqbal, 556
U.S. at 678. To survive a motion to dismiss under Rule 12(b)(6), “a complaint must contain
sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’”
Iqbal, 556 U.S. at 678 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)).
Determining the plausibility of a claim for relief requires a context-specific analysis into whether
the complaint demonstrates entitlement to relief. Id. at 679. “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. at 678. A federal court evaluating a

        4
         Defendant also moves to dismiss any promissory estoppel claims under Rule 12(b)(1),
for lack of subject-matter jurisdiction, but Plaintiff has abandoned that claim. Pl.’s Opp’n. to
Def.’s Mot. to Dismiss the First Am. Compl. 10 (“Lone Star concedes that it is not pursuing a
cause of action separate from its takings claim in this Court, and indeed has never been pursuing
such a claim in this Court.”).
                                                   4
motion to dismiss must accept all factual allegations as true, but it is not obliged “to accept as
true a legal conclusion couched as a factual allegation.” Bell Atl. Corp., 550 U.S. at 555.

        The Federal Circuit employs a two-part test to determine whether a Government action
amounts to a taking of private property. M&J Coal Co. v. United States, 47 F.3d 1148, 1153-54
(Fed. Cir. 1995); see also Maritrans, Inc. v. United States, 342 F.3d 1344, 1351 (Fed. Cir. 2003);
Conti v. United States, 291 F.3d 1334, 1339 (Fed. Cir. 2002), cert. denied, 537 U.S. 1112 (2003).
As a threshold matter, a plaintiff must prove the existence of a compensable property interest that
the Government has allegedly taken. Air Pegasus of D.C., Inc. v. United States, 424 F.3d 1206,
1212 (Fed. Cir. 2005); Am. Pelagic Fishing Co. v. United States, 379 F.3d 1363, 1372 (Fed. Cir.
2004). Indeed, “[i]t is essential in advancing a taking claim that a plaintiff establish that he is the
owner of a compensable interest in property.” Payne v. United States, 31 Fed. Cl. 709, 710
(1994) (citing Armstrong v. United States, 364 U.S. 40, 44-46 (1960)). The Constitution neither
creates nor defines the universe of compensable Fifth Amendment property interests. Maritrans,
Inc., 342 F.3d at 1352. “Because the Constitution protects rather than creates property interests,
the existence of a property interest is determined by reference to ‘existing rules or
understandings that stem from an independent source such as state law.’” Phillips v. Wash.
Legal Foundation, 524 U.S. 156, 164 (1998) (quoting Bd. of Regents of State Colls. v. Roth, 408
U.S. 564, 577 (1972)); see also Maritrans, Inc., 342 F.3d at 1352 (recognizing that independent
sources of property interests also include federal and common law); 120 Del. Ave., LLC. v.
United States, 95 Fed. Cl. 627, 631-32 (2010) (“Courts look to state law ‘to define the range of
interests that qualify for protection as “property” under the Fifth and Fourteenth Amendments.’”
(quoting Lucas v. S.C. Coastal Council, 505 U.S. 1003, 1030 (1992)).

        After identifying a compensable property interest, this Court then must analyze whether a
Government action has effected a taking of that interest. Maritrans, Inc., 342 F.3d at 1351. If a
plaintiff fails to allege a compensable property interest, however, the takings action must be
dismissed summarily. See Air Pegasus of D.C., Inc., 424 F.3d at 1208 (affirming grant of
summary judgment for defendant based on a lack of cognizable property interest in the navigable
air space over plaintiff’s heliport); Palmyra Pac. Seafoods, LLC v. United States, 561 F.3d 1361
(Fed. Cir. 2009) (affirming dismissal of takings claim for failure to articulate a compensable
property interest in a contractual right to establish a commercial fishing operation). Here, Lone
Star asserts that the Government’s closure of the MRGO effected a taking of its property
interests in deep-draft access and of its real estate and improvements on land abutting “the
Michoud Canal, just north of its intersection with the [MRGO].” Am. Compl. ¶ 1.

Plaintiff Has Failed to Allege a Compensable Property Interest in Deep-Water Access to Its
Property under Louisiana Law

        Lone Star alleges that Louisiana law establishes its compensable property interest in the
deep-draft, 36-foot access to its marine import and manufacturing facility. Am. Compl. ¶¶ 13,
30, 32. Lone Star contends that the MRGO represents a “right of passage under Louisiana Civil
Code Article 690, et seq. including Articles 698, 705, 723, 726, 748, and Louisiana Revised
Statutes, Title 9, Section 1251 et seq.” Am. Compl. ¶ 32. Lone Star emphasizes that “Article
689 of the Louisiana Code provides a right of passage – a “predial servitude” in Louisiana
parlance – to the owners of enclosed estates.” Pl.’s Opp’n. to Def.’s Mot. to Dismiss 16 (“Pl.’s

                                                  5
Opp’n.”). Plaintiff argues that, “instead of losing a preferred access point . . . Lone Star has no
access point by which deep-draft ships can reach its ship-sized assets . . . .” Id. at 17. Lone Star
suggests that, by cutting off deep-draft access to its facility, the Government’s closure of the
MRGO has rendered the property an “enclosed estate” with respect to deep-draft shipping
activities. See id. at 16-17.

        Lone Star alleges that its estate is “enclosed” while acknowledging that it continues to
have access to a public “water route to the Lone Star facility via the Mississippi River and
Industrial Canal . . . via Lake Pontchartrain . . . [and] from Lake Borgne using the Intracoastal
Canal.” Am. Compl. ¶ 20. The facility is likewise accessible by rail and truck. Id. The thrust of
Lone Star’s argument is that Article 689 requires “access sufficient to satisfy the owner’s right of
passage,” and that Lone Star has lost sufficient access because it “has no access point by which
deep-draft ships can reach its ship-sized assets.” Pl.’s Opp’n. 17. Plaintiff also alleges that its
position is supported by Louisiana Revised Statutes, Title 9 Section 1254, which states, in
relevant part, that “[t]he owner of an enclosed estate who has no access to his estate other than
by way of an existing waterway passing through neighboring property shall have a right and
servitude of passage on such waterway.” LA. REV. STAT. ANN. § 9:1254(A) (2011). According
to Lone Star, this provision must be interpreted to mandate not just “any” access but “sufficient”
access. Pl.’s Opp’n. 19.

        In support of its argument, Lone Star cites the civil code provisions that embody
Louisiana’s law on predial, or real, servitudes. “A predial servitude is a charge on a servient
estate for the benefit of a dominant estate. There must be two different estates, servient and
dominant (with a benefit to the dominant estate), belonging to different owners.” Marina Enters.
v. Ahoy Marine Servs., 496 So. 2d 1080, 1082-83 (La. Ct. App. 1986) (internal citations
omitted); LA. CIV. CODE ANN. art. 646 (2011). Pursuant to Article 723, “[p]redial servitudes
may be established on public things, including property of the state, its agencies and political
subdivisions.” LA. CIV. CODE ANN. art. 723 (2011). A servitude of passage over another estate
is a type of predial servitude, LA. CIV. CODE ANN. art. 699 (2011), and an enclosed estate “that
has no access to a public road or utility may claim a right of passage over neighboring property
to the nearest public road or utility.” LA. CIV. CODE ANN. art. 689 (2011). “The right of passage
for the benefit of an enclosed estate shall be suitable for the kind of traffic that is reasonably
necessary for the use of that estate.” LA. CIV. CODE ANN. art. 690 (2011).

        The servitude of passage only applies, however, to estates that are truly enclosed by a
complete lack of access to the nearest public thoroughfare. See LeBlanc v. Thibodeaux, 615 So.
2d 295, 298 (La. 1993) (“Civil Code Article 689 details the legal right of passage. It allows an
owner of an estate that has no access to a public road to claim a right of passage over
neighboring property to the nearest public road provided that the owner pays indemnity for the
damage he causes.”) (emphasis added); Vermillion Parish Sch. Bd. v. Broussard, 270 So. 2d 523,
524-25 (La. 1972) (referring to an enclosed estate as a “landlocked” estate). In defining
enclosure, Louisiana law “does not take into account the inconveniences of the situation, nor the
greater or less cost of reaching the railroads, refineries, or the public centers of business and
trade, but contemplates the absolute inability of doing so without the right of way sought to be
expropriated.” Breaux v. Bienvenu, 25 So. 321, 323 (La. 1899). While enclosure may occur as a
result of a restriction preventing the use of adjacent public roads, there must be an inability to

                                                 6
access any public road as a result. See, e.g., Rockholt v. Keaty, 237 So. 2d 663, 668 (La. 1970).
Additionally, while the nature of passage for an enclosed estate is “to be governed according to
the circumstances and as the exigencies of the case may require,” a finding of enclosure is a
prerequisite to finding a servitude of passage. Id.

        Here, Lone Star requests the Court to reinterpret Louisiana jurisprudence to include a
new definition of enclosure that hinges not on access to the nearest public road, but on access to
the thoroughfare most conducive to the type of economic activity performed on its property.
Plaintiff still maintains access to its property by public road, railroad, and several other public
waterways including the Mississippi River and Industrial Canal, Lake Pontchartrain, and the
Intracoastal Canal. Am. Compl. ¶ 20. The only type of access that has been eliminated is the
deep-water access necessary to receive deep-draft shipping vessels. The provisions of Article
689 regarding right of passage sufficient for reasonable use are implicated only after an initial
finding of enclosure due to complete lack of access to a public road. See Rockholt, 237 So. 2d at
668. While Lone Star makes clear that the closure of the MRGO has caused the company
significant financial hardship, it has failed to support its interpretation of “enclosure” under
Louisiana law.

        The Louisiana Supreme Court admonishes against finding servitudes where they do not
clearly exist. “Predial servitudes are in derogation of public policy because they form restraints
on the free disposal and use of property. Therefore, servitudes are not entitled to be viewed with
favor by the law and can never be sustained by implication.” Palomeque v. Prudhomme, 664 So.
2d 88, 93 (La. 1995). In fact,

       When these elements are unclear or doubtful on the face of the title, a court may
       not supply them by implication or reform the language used in the title to broaden
       or restrict the terms of the original agreement. Doubt as to the existence, extent or
       manner of exercise of a servitude must be resolved in favor of the estate claimed
       to be burdened by the servitude.

St. Andrew’s Place, Inc. v. City of Shreveport, 914 So. 2d 1203, 1210 (La. Ct. App. 2005) (citing
LA. CIV. CODE art. 730, Mardis v. Brantley, 717 So. 2d 702 (La. Ct. App. 1998)). In this case,
Lone Star has not made a plausible allegation that the MRGO is a servitude of passage under
Louisiana law. Plaintiff has failed to allege any facts that would suggest that access to the
MRGO for use of a particular type of vessel inhered in the title to its property. By virtue of
access to several public waterways, a public road and a railway, Plaintiff’s property is not an
enclosed estate as defined under Louisiana law. This Court therefore finds that Plaintiff has not
alleged a cognizable property right to deep-draft access under Louisiana law.

Plaintiff Has Failed to Allege a Compensable Property Interest in Deep-Water Access to Its
Property under Federal Law

       Public Law 455

       Lone Star also submits that, under Federal law – Public Law 455 of 1956 – it has a right
of deep-draft access to its facility. Am. Compl. ¶ 27. Plaintiff contends that “federal law

                                                7
established a federal right of access by Public Law 455, which modified the then-existing
MRGO project in accordance with a specific recommendation of the chief of engineers
incorporating House Document 245 and its provisions for a ‘permanent deep draft channel,’ with
a minimum depth of 36 feet.” Pl.’s Opp’n. 15.

        Public Law 455 states:

        Be it enacted by the Senate and House of Representatives of the United States of
        America in Congress assembled, That the existing project for Mississippi River,
        Baton Rouge to the Gulf of Mexico, is hereby modified to provide for the
        Mississippi River-Gulf outlet to be prosecuted under the direction of the Secretary
        of the Army and supervision of the Chief of Engineers, substantially in
        accordance with the recommendation of the Chief of Engineers contained in
        House Document Numbered 245, Eighty-second Congress, at an estimated cost of
        $88,000,000: Provided, That when economically justified by obsolescence of the
        existing industrial canal lock, or by increased traffic, replacement of the existing
        lock or an additional lock with suitable connections is hereby approved to be
        constructed in the vicinity of Meraux, Louisiana, with type, dimensions, and cost
        estimates to be approved by the Chief of Engineers: Provided further, That the
        conditions of local cooperation specified in House Document Numbered 245,
        Eighty-second Congress, shall likewise apply to the construction of said lock and
        connection channels.

An Act to Authorize Construction of the Mississippi River-Gulf Outlet, Pub. L. No. 84-455, 70
Stat. 65 (1965).

         There is nothing in the plain language of this Act to suggest that, in constructing the
MRGO, Congress created a compensable property interest in perpetual deep-draft access for
owners of property located near the MRGO. “When determining the meaning of a statute, we
first look to the language of the statute itself . . . . If the language is clear, then the plain meaning
of the statute will be regarded as conclusive.” Delong v. Dep’t. of Health & Human Servs., 264
F.3d 1334, 1339 (Fed. Cir. 2001) (internal quotations omitted); see also Bull v. United States,
479 F.3d 1365, 1376 (Fed. Cir. 2007) (“[W]here the statutory language provides a clear answer
to [the question at issue], it ends there as well.” (quoting Hughes Aircraft Co. v. Jacobson, 525
U.S. 432, 438 (1999) (alterations in original))).

        Contrary to Plaintiff’s arguments, Public Law 455 makes no mention of perpetual
maintenance of the MRGO to a minimum depth of 36 feet. Construed in the light most favorable
to Plaintiff, Public Law 455 approved replacement of the existing lock or an additional lock
subject to approval by the Army Corps of Engineers “when economically justified by
obsolescence of the existing industrial canal lock or by increased traffic.” This authorization is a
far cry from the right to perpetual deep-water access Plaintiff would have this statute bestow.




                                                   8
       Water Resources Development Act

        While Plaintiff does not allege a separate cause of action under the Water Resources
Development Act of 2007 (“WRDA”), Plaintiff argues that WRDA Section 3082 “constituted a
specific acknowledgement by the Government that its action in permanently closing the MRGO
deprived Lone Star and others similarly situated of property and property rights for which some
compensation should be paid.” Am. Compl. ¶ 22. Section 3082(b) of the WRDA reads:

       (b) REVOLVING LOAN FUND GRANTS. – There is authorized to be appropriated to
       the Assistant Secretary $85,000,000, to remain available until expended, to
       provide assistance pursuant to sections 209(c)(2) and 703 of the Public Works and
       Economic Development Act of 1965 (42 U.S.C. 3149(c)(2), 3233) to one or more
       eligible recipients under such Act to establish revolving loan funds to make loans
       for terms up to 20 years at or below market interest rates (including interest-free
       loans) to private businesses within the Port of New Orleans that may need to
       relocate to the Mississippi River within the State of Louisiana due to the treatment
       of the Outlet under title VII of this Act.

Pub. L. No. 110-114, § 3082, 121 Stat. 1041, 1127 (2007). Again, nothing in the text of this Act
would support Plaintiff’s interpretation that closing the MRGO deprived it of a property right.
Plaintiff appears to argue that the Government intended to compensate businesses such as Lone
Star that would have to move due to the MRGO’s closure. Even if Plaintiff’s interpretation is
accurate, the establishment of a loan fund does not bestow a compensable property interest in
deep-water access.

The Navigational Servitude Eliminates Plaintiff’s Claim to a Compensable Property
Interest in Deep Water Access

        As explained above, Plaintiff has failed to make a facially plausible allegation that it has
a compensable property interest in deep-draft access under Louisiana or Federal law. In
addition, for the purposes of establishing a property interest to support a takings claim, any such
interest would be subsumed by the federal navigational servitude. The Commerce Clause vests
the Federal Government with control of the navigable waters of the United States for the
regulation of commerce, and “confers upon the United States a dominant servitude” for that
purpose. United States v. Rands, 389 U.S. 121, 123 (1967) (internal quotations omitted); see
also Mildenberger v. United States, 91 Fed. Cl. 217, 247-48 (2010). The “title of the owner of
fast land upon the shore of a navigable river to the bed of the river is, at best, a qualified one.”
United States v. Chandler-Dunbar Water Power Co., 229 U.S. 53, 62 (1913). “[W]ithout being
constitutionally obligated to pay compensation, the United States may change the course of a
navigable stream, or otherwise impair or destroy a riparian owner’s access to navigable waters.”
Rands, 389 U.S. at 123 (internal citations omitted); see also United States v. Commodore Park,
Inc., 324 U.S. 386, 393 (1945) (“There is power to block navigation at one place to foster it at
another. Whether this blocking be done by altering the stream’s course, by lighthouses, jetties,
piers, or a dam made of dredged material, the government’s power . . . is derived from the same
source-its authority to regulate commerce”). “[A]cts done in the proper exercise of
governmental powers, and not directly encroaching upon private property, though their

                                                 9
consequences may impair its use, are universally held not to be a taking within the meaning of
the constitutional provision.” Scranton v. Wheeler, 179 U.S. 141, 154 (1900) (holding that a
landowner has no title to the downstream riverbed on which the Government built a pier such
that he would be entitled to compensation for loss of access to his upland property) (quoting N.
Transp. Co. v. City of Chicago, 99 U.S. 635, 642 (1878)).

        The economic value attributable to a strategic riparian location is not a compensable
property interest when diminished or destroyed by the United States in aid of navigation. See,
e.g., United States v. Willow River Power Co., 324 U.S. 499, 509 (1945) (“[A] strategic position
for the development of power does not give rise to right to maintain it as against interference by
the United States in aid of navigation.”); Miller v. City of New York, 109 U.S. 385 (1883)
(affirming the dismissal of takings complaint for construction of bridge that prevented profit-
generating, tall-mast ships from reaching plaintiff’s warehouses); Nw. La. Fish & Game Pres.
Comm’n v. United States, 79 Fed. Cl. 400, 411 (2007) (noting that Willow River Power Co. “has
been consistently held to bar claims in which the property interest is dependent on the use of a
navigable waterway”), aff’d, 574 F.3d 1386 (Fed. Cir. 2009). “[I]f the interests of navigation are
served, it is constitutionally irrelevant that other purposes may also be advanced.” United States
v. Twin City Power Co., 350 U.S. 222, 224 (1956). The interests of navigation may, at times,
require complete appropriation of the water flow for public purposes. Id. at 225, 228.

        Lone Star alleges that the MRGO was closed after Congress de-authorized the MRGO
under the WRDA, and “adopted the Army Corps’ plan to build a rock dike across the MRGO at
Bayou La Loutre.” Am. Compl. ¶ 17. The WRDA states that it is “[a]n Act [t]o provide for the
conservation and development of water and related resources, to authorize the Secretary of the
Army to construct various projects for improvements to rivers and harbors of the United States,
and for other purposes.” Pub. L. No. 110-114, 121 Stat. at 1041. The WRDA sets forth express
intent to improve navigation, as exemplified by Title I, Section 1004, which lists “Small Projects
for Navigation,” 121 Stat. at 1061, and Section 1009, “Small Projects to Prevent or Mitigate
Damage Caused by Navigation Projects.” 121 Stat. at 1067 (emphasis added).

        Because the WRDA specifies Congress’ navigational purpose in the development and
alteration of waterways around the country, the de-authorization of the MRGO occurred in the
Government’s exercise of the navigational servitude. Lone Star undoubtedly had an economic
interest in its riparian location. This economic interest, however, does not give rise to a right to
maintain a deep-draft channel against interferences by the United States in aid of navigation. See
Twin City Power Co., 350 U.S. 222; Willow River Power Co., 324 U.S. 499; Miller, 109 U.S.
385. The Government’s navigational servitude as expressed in the WRDA prevents Lone Star
from stating a plausible claim that the closure of the MRGO effected a taking of its property
interest in deep-draft access.

Plaintiff Has Failed to Allege Facts Supporting a Plausible Claim that the Government
Effected a Regulatory Taking of the Improvements to Its Property

       Lone Star also contends that the Government’s action in closing the MRGO has effected
a regulatory taking of its compensable property interest in the “substantial improvements at the
deep-draft vessel terminal.” Pl.’s Opp’n. 1. Lone Star argues that the closure of the MRGO has

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stranded and “render[ed] worthless certain real estate and improvements located at 14900
Intracoastal Drive.” Am. Compl. ¶ 26. It posits that “the government’s erection of a permanent
Total Closure Structure across the MRGO has taken ‘all economically beneficial use’ of certain
improvements at Lone Star’s Michoud Canal facility, and effected a ‘non-categorical’ taking of
other asset groups” that allow it to function as a deep-draft vessel terminal. Pl.’s Opp’n. 26.
According to Plaintiff, the closure of the MRGO “unduly burdens Lone Star’s private property to
the point of diminishing its utility or value, because Lone Star’s improvements either cannot be
moved or moving them would be [so] expensive as to make moving them pointless.” Am.
Compl. ¶ 34.

        A regulatory taking occurs when a Government regulation “goes too far” in burdening
the use of private property. Pa. Coal Co. v. Mahon, 260 U.S. 393, 415 (1922) (“[W]hile property
may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking.”);
see also M&J Coal Co. v. United States, 47 F.3d 1148, 1153 (Fed. Cir. 1995) (“To determine
whether a governmental regulation of property has gone so far as to effect a taking, courts have
engaged in an essentially ad hoc, factual inquiry . . . .”) (internal quotations omitted). However,
the Court must still make the threshold takings inquiry into whether the Plaintiff has claimed a
compensable Fifth Amendment property interest in the right to that use. Am. Pelagic Fishing
Co., 379 F.3d at 1372 (“It is axiomatic that only persons with a valid property interest at the time
of the taking are entitled to compensation.”) (quoting Wyatt v. United States, 271 F.3d 1090,
1096 (Fed. Cir. 2001). Indeed, “even when a governmental land use regulation deprives a
claimant of all economically beneficial use of his property, the government may avoid
compensation if ‘the logically antecedent inquiry into the nature of the owner’s estate shows that
the proscribed use interests were not part of his title to begin with.’” M&J Coal Co, 47 F.3d at
1153 (quoting Lucas v. S. C. Coastal Council, 505 U.S. 1003, 1027 (1992)).

        Identification of property interests for the purposes of regulatory takings analyses
requires an inquiry into the “bundle of sticks” in the plaintiff’s title to its property. Hearts Bluff
Game Ranch, Inc. v. United States, 669 F.3d 1326, 1328 (Fed. Cir. 2012) (affirming that “Hearts
Bluff did not have a property interest that could be subject to a Fifth Amendment taking because
a mitigation banking instrument is not ‘an inherent stick in a landowner’s bundle.’”), cert.
denied, 132 S. Ct. 2780 (2012) (mem.); see also Colvin Cattle Co. v. United States, 468 U.S.
803, 808 (Fed. Cir. 2006) (stating that because “Colvin’s water rights do not have an attendant
right to graze, no governmental action restricting Colvin’s ability to graze on federal land can
affect its water right in a manner cognizable under the Fifth Amendment.”). As the Federal
Circuit has recognized, in takings jurisprudence, “there is a distinction between simply not being
disturbed in the particular use of one’s property and having the right to the use of the property.
Clearly, in order for there to be a cognizable property interest sufficient to support a takings
claim, the latter must be true.” Am. Pelagic Fishing Co., 379 F.3d at 1377 (emphasis in
original).

        The failure to establish a right to a particular use renders a takings claim based on that
right “fatally defective.” Id. at 1383. An owner’s interest in a specific economic use of its
property, such as that conferred by license, does not lead to a finding of a compensable Fifth
Amendment property interest. Id.; Air Pegasus of D.C., Inc., 424 F.3d at 1217 (affirming that
the property interest in the lease of land for use as a heliport does not include a compensable

                                                 11
interest in access to navigable airspace, because “navigable airspace is public property not
subject to private ownership.”).

        Here, Lone Star alleges that the Government’s closure of the MRGO “has taken away ‘all
economically beneficial use’ of certain improvements at Lone Star’s Michoud Canal facility and
a ‘non-categorical’ taking of other asset groups.” Pl.’s Opp’n. 26; see also Am. Compl. ¶ 29.
Importantly, however, Lone Star has not plausibly alleged that the ability to use its property as a
deep-draft vessel terminal is a right that inheres in its title to that property. Thus, Plaintiff has
not alleged facts indicating that its ownership of this facility located on the Michoud Canal just
north of the Canal’s intersection with the MRGO carried with it the perpetual right to deep-draft
access via the MRGO to its facility.

         Nor has Plaintiff demonstrated that the closure of the MRGO constituted a direct
regulation of its facility. See Air Pegasus of D.C., Inc., 424 F.3d at 1216 (“Air Pegasus, which
did not itself own or operate any helicopters, does not allege that the FAA’s restrictions regulated
its operations under the lease . . . . Air Pegasus, while no doubt injured by reason of the
government’s actions, has not alleged a taking of private property under the Fifth Amendment.”)
(emphasis in original). When an economic injury is not the result of the Government’s direct
regulation of a plaintiff’s property, but rather is derivative of Government regulation of some
other party or property, there is no viable claim for a regulatory taking. See Huntleigh USA
Corp. v. United States, 525 F.3d 1370, 1380 (Fed. Cir. 2008) (“[The act] did not, however,
regulate Huntleigh directly. Rather, it modified governmental regulation of the airlines, which
resulted in adverse economic consequences for Huntleigh.”); see also Palmyra Pac. Seafoods,
Inc., 561 F.3d at 1366 (“The fact that the government’s regulation of activities in the waters
surrounding Palmyra may have adversely affected the value of their contract rights to engage in
activities on shore is not sufficient to constitute a compensable taking.”).

         Lone Star alleges that the closure of the MRGO has caused it to suffer economic loss,
specifying that “[u]nadjusted for inflation, [it has] spent in excess of $115 million to purchase
and improve a deep-draft cement importation terminal.” Pl.’s Opp’n. 26. It alleges that its
improvements “are effectively stranded . . . because those improvements cannot be moved
without destroying them, or alternately because moving said improvements would be so
expensive as to render moving them pointless . . . .” Am. Comp. ¶ 40. However, Lone Star has
failed to claim that its facilities have been directly regulated by the closure of the MRGO. Lone
Star’s failure to allege how its property or operations were regulated by the Government’s
closure of the MRGO is an additional death knell to its regulatory takings claim. See Palmyra
Pac. Seafoods, Inc., 561 F.3d at 1370 (“While it might be different if the government regulated
activities on a private individual’s property . . . that is another matter altogether from the
government regulating activities on its own property, or property over which it has full control,
even if that regulatory action disappoints the expectations of nearby property owners”);
Huntleigh USA Corp., 525 F.3d at 1380.

                                            Conclusion

       Plaintiff has failed to allege a compensable property interest in deep-draft access to its
property under Louisiana or Federal Law. Plaintiff has likewise failed to allege that its facilities
or operations were directly regulated by the Government’s closure of the MRGO. As such,

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Plaintiff has failed to allege facts giving rise to a plausible physical or regulatory takings claim.
The Court therefore grants Defendant’s Motion to Dismiss Plaintiff’s Amended Complaint for
failure to state a claim upon which relief can be granted.

                                                      s/ Mary Ellen Coster Williams
                                                      MARY ELLEN COSTER WILLIAMS
                                                      Judge




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                                    Appendix A5




5
    These maps were first presented as Exhibit B to Defendant’s First Motion to Dismiss.
                                         14
