423 F.

2d 891

BOSTON EDISON COMPANY, Plaintiff, Appellant,

v.
GREAT LAKES DREDGE & DOCK COMPANY et al.,
Defendants, Appellees.
No. 7385.

United States Court of Appeals, First Circuit.

Heard Nov. 4, 1969.
Decided March 25, 1970.
1

William F. Manley, Boston, Mass., with whom Frank B. Frederick and

Johnson, Clapp, Stone & Jones, Boston, Mass., were on brief, for appellant.

Robert V. Zener, Atty., Dept. of Justice, with whom William D. Ruckelshaus,

Asst. Atty. Gen., Herbert F. Travers, Jr., U.S. Atty., and Raymond D. Battochi,
Atty., Dept. of Justice, were on brief, for the United States.

Before McENTEE and COFFIN, Circuit Judges, and CAFFREY, District

judge.

CAFFREY, District Judge.

This is an appeal from a judgment entered in the district court granting a motion
for summary judgment in favor of the United States, co-defendant in an action
brought by Boston Edison Company, (hereafter Edison), against the United
States and Great Lakes Dredge & Dock Company (hereafter Great Lakes).
Great Lakes was an independent contractor employed by the United States to
conduct dredging operations to improve the navigability of the Chelsea River.
The Chelsea River is a navigable stream flowing between Chelsea and East
Boston, Massachusetts, and as a navigable stream it comes under the
jurisdiction of the Secretary of the Army.

The facts which gave rise to this litigation may be summarized as follows: On
January 3, 1949, Edison made a written request to the Secretary of the Army for
permission to install and maintain seven submarine electric power cables under
the Chelsea River. On March 3, 1949, pursuant to that request, the Secretary of

the Army, acting by the Corps of Engineers, issued a permit to Edison for the
installation of the cables at a point about 280 feet downstream from the Chelsea
Street bridge. The cables, running from Chelsea to East Boston, were to be
installed 15 feet below the then river bottom. The permit as issued contained
ten specific conditions spelled out therein and one of the principal issues in the
case is the validity of Clause (g) contained in the permit which provides as
follows:
7

'(g) That the United States shall in no case be liable for any damage or injury to
the structure or work herein authorized which may be caused by or result from
future operations undertaken by the Government for the conservation or
improvement of navigation, or for other purposes, and no claim or right to
compensation shall accrue from any such damage.'

Clause (g) was inserted in the permit as one of the standard conditions required
to be contained in the standard form permit ordinarily used for the letter of
authorization, pursuant to the provisions of 33 C.F.R. 209.130(c) (2). Soon after
the issuance of the permit the seven submarine cables were installed by Edison
under the Chelsea River bottom where they have since remained at all material
times.

On July 21, 1964, the Corps of Engineers notified Edison of its intention to
dredge the Chelsea River in the vicinity of these electric cables. On July 31,
1964, Edison replied to this notice by requesting that 'the utmost care must be
exercised to prevent damage.' Edison also requested that it be notified by the
Engineers as to the identity of the contractor selected to conduct the dredging
operations for the Government 'in order that we may coordinate activities to
prevent damage.' On June 25, 1965, the United States entered into its contract
with Great Lakes, and on the same day Great Lakes informed Edison that it was
the contractor selected to perform the operations under the supervision of the
Corps of Engineers. Various conferences ensued between representatives of
Edison, Great Lakes, and the Army Engineers. There also was a substantial
amount of correspondence between the parties concerning the conduct of the
dredging operation.

10

On April 4, 1966, in the course of carrying out the dredging operation Great
Lakes allegedly caused damage to Edison's submarine cables and on April 2,
1968 the instant suit was filed against both the United States and Great Lakes.
Jurisdiction of the district court in the suit against the United States was based
upon the Suits in Admiralty Act of March 9, 1920, 46 U.S.C. sec. 741 et seq.
The complaint against the United States alleged (1) that the United States was
negligent in planning, supervising, and conducting the dredging, and (2) that

the United States was involved in an inherently dangerous and ultra-hazardous

activity. The complaint sought recovery against Great Lakes in two counts, one
on a negligence theory and the other on the theory that Edison was a third party
beneficiary of the contract between Great Lakes and the United States and, as
such, entitled to recover from Great Lakes by reason of its breach of the
contract.
11

In its answer, among other defenses the United States relied on the exculpatory
provisions of Clause (g) of the permit, contending that the clause precluded any
liability to Edison on its part. The United States also counter-claimed against
Edison for its costs of the litigation and reasonable attorney's fee. Edison's
answer to the counterclaim challenged the constitutionality and legality of
Clause (g) and also claimed that in any event the clause had been waived by the
United States. Thereafter, a motion for summary judgment was filed by the
United States and granted by the district court, which, however, made no ruling
on the Government's counterclaim which is still pending, as are the counts
against Great Lakes which did not file a motion for summary judgment. The
matter is properly before this court because the district court made the
appropriate findings for the existence of appellate jurisdiction under Rule 54(b),
Federal Rules of Civil Procedure, in a situation where the judgment entered
dealt with fewer than all of the claims or parties.

12

The thrust of Edison's argument on appeal is an attack on various aspects of

Clause (g) in the permit. Edison argues both that the clause as a matter of
construction was not intended to cover liability in negligence and, alternatively,
that the insertion of the clause in the permit was beyond the powers exercisable
by the Secretary of the Army at the time of the issuance of the permit. The
latter contention is premised largely on the dual facts that prior to the
Secretary's issuance of the permit, Congress had enacted the Suits in Admiralty
Act, 46 U.S.C. sec. 741 et seq., and the Federal Tort Claims Act, 28 U.S.C. sec.
2671 et seq., both of which waive sovereign immunity of the United States to
suits premised on the negligent actions of its agents.

13

Edison first argues that Clause (g) does not purport to establish governmental
exemption from liability for negligence primarily because of the failure of that
clause to contain the word 'negligent' or any synonym therefor. An examination
of the language in Clause (g) indicates that it contains the words 'The United
States shall in no case be liable for any damage or injury.' Broader language for
a complete disclaimer of financial responsibility in any and all events is
difficult for this court to imagine. Nevertheless, Edison argues that because the
Federal Tort Claims Act had not been enacted in 1943, the first time the
language of Clause (g) was used in a permit, the repetition of this language in

the permit in issue herein, which was issued in 1949, should be construed in the
light of the intent the draftsman had in first constructing Clause (g) in 1943.
Edison then says that because the Federal Tort Claims Act was not in existence
in 1943, the draftsman acting on behalf of the Government, knowing of its then
sovereign immunity, did not attempt or intend to draft an exculpatory clause
which would preclude governmental liability for negligence. The answer to this
argument is that well prior to 1943 Congress had waived sovereign immunity in
the area of maritime negligence by its enactment of the Suits in Admiralty Act
on March 9, 1920. There likewise was a basis in 1943 for believing that in the
light of this waiver of sovereign immunity under the Suits in Admiralty Act, the
United States could be held liable in admiralty for damage to cables located
under navigable waters, since injury to submarine cables by vessels or their
anchors had been held to be within admiralty jurisdiction. Postal Telegraph
Cable Co. v. P. Sanford Ross, 221 F. 105 (E.D.N.Y.1915); The Anita Berwind,
107 F. 721 (E.D.Pa.1901).
14

There is no reason for this court to suppose that the enactment by Congress on
June 19, 1948 of the Admiralty Extension Act, 62 Stat. 496, amending 46
U.S.C. 740, was unknown to the Secretary of the Army, and it is significant to
note that the enactment of this statute extending the admiralty jurisdiction of
the United States to damage caused by vessels on navigable water
'notwithstanding that such damage or injury be done or consummated on land'
preceded the use of Clause (g) in the permit issued on March 3, 1949. In the
light of these considerations we hold that the broad language of Clause (g) was
intended to, and does, preclude liability of the United States for negligence if
the insertion of the clause was within powers validly delegated to the Secretary
of the Army by Congress.

15

Edison next contends that the power to insert a clause of this type was beyond
the powers validly delegable to the Secretary, in view of the congressional
policy of broadly waiving sovereign immunity reflected by the Suits in
Admiralty Act and the Federal Tort Claims Act. More specifically, Edison
argues that the combined effect of these two statutes is to impose liability for
actions of its agents, servants and employees on the United States across the
entire spectrum of governmental activity. Edison further says that the
Government, in effect, is contending that the Secretary of the Army is seeking
herein, by the utilization of Clause (g), to carve out an exception to the
aforementioned congressional policy of waiving sovereign immunity, and that
this is beyond the Secretary's powers.

16

The Government counters this argument by pointing out that under still
subsisting statutory law, the Secretary of the Army has not only the broad

statutory authority to, but also an affirmative duty under 33 U.S.C. sec. 1 to,
17

'prescrible such regulations for the use * * * of the navigable waters of the
United States as in his judgment the public necessity may require for the
protection of life and property, or of operations of the United States in channel
improvement * * *'

18

It is under the authority of this section that the Secretary has promulgated the
regulation requiring the standard form of permit to be used by the Corps of
Engineers prior to authorizing erection of any structure in navigable waters to
include a clause identical to Clause (g). His reason for so doing is said by the
Government to be the protection of operations of the United States in channel
improvements.

19

There are a number of reported decisions which have upheld the validity of the
delegation of power to the Secretary of the Army made by 33 U.S.C. sec. 1.
The attacks on the constitutionality of this statute, all of which have been
rejected, generally were premised on the theory that the statute attempted to
delegate either legislative or judicial powers to the Secretary. Union Bridge Co.
v. United States, 204 U.S. 364, 385, 27 S.Ct. 367, 51 L.Ed. 523 (1907);
Monongahela Bridge Co. v. United States, 216 U.S. 177, 193, 30 S.Ct. 356, 54
L.Ed. 435 (1910); Hannibal Bridge Co. v. United States, 221 U.S. 194, 205, 31
S.Ct. 603, 55 L.Ed. 699 (1911); Louisville Bridge Co. v. United States, 242
U.S. 409, 424, 37 S.Ct. 158, 61 L.Ed. 395 (1917); The Governor Warfield, 39
F.2d 926 (D.C.N.Y.1930), aff'd. 48 F.2d 1069 (2nd Cir.1931); Ryan, et al v.
Chicago, B. & Q.R. Co., 59 F.2d 137 (7th Cir.1932). None of the above cases
discussed the terms and conditions of a permit issued by the Secretary for work
done under governmental auspices.

20

Edison's argument would be more persuasive to this court if the Suits in

Admiralty Act and the Federal Tort Claims Act, taken together, waived
sovereign immunity for all governmental negligence. However, a reading of the
Federal Tort Claims Act makes clear that sovereign immunity was not waived
as to all tortious or even as to all negligent conduct, and, on the contrary, a
substantial number of exceptions to the waiver of sovereign immunity by
Congress were carved out in 28 U.S.C. 2680. The significance of these
exceptions in the particular type of activity involved herein, river
improvements, appears from the discussion of governmental liability by the
Supreme Court in United States v. Muniz, 374 U.S. 150, 83 S.Ct. 1850, 10
L.Ed.2d 805 (1963). In Muniz, the Supreme Court considered what inference it
should draw from the fact that the Federal Tort Claims Act as enacted was the
culmination of a series of attempts to pass legislation to permit tort suits against

the Government. The Court noted (at p. 155, 83 S.Ct. 1850) that going back to
1925 at least one bill was introduced in every Congress, with the exception of
the 75th, until the Federal Tort Claims Act was passed by the 79th Congress in
1946. The Court further noted (at p. 156, 83 S.Ct. 1850) that 31 bills were
introduced during this period, 6 of which had express provisions which barred
suits by inmates of federal prisons. The Court then observed that no such
retention of sovereign immunity to suits by prisoners was retained in the Tort
Claims Act, from which the Court concluded that the omission of the provision
prohibiting suits by prisoners was not inadvertent and it ruled that Congress had
intended to waive immunity as to prisoner suits in the light of the legislative
history so summarized.
21

The Court, however, added a footnote which appears material to the resolution
of the instant case (p. 155, n. 9, 83 S.Ct. p. 1854):

22

'Other than the exception for prisoners' claims, discussed in the text, the only
remaining exceptions having no counterpart in the present Act barred liability
for governmental activity relating to flood control, harbor and river work, and
irrigation projects. To the extent that these activities constitute 'discretionary
function(s),' the exception of 28 U.S.C. 2680(a) still preserves governmental
immunity. United States v. Ure, 225 F.2d 709 (C.A.9th Cir.); Coates v. United
States, 181 F.2d 816, (19 A.L.R.2d 840) (C.A.8th Cir.); McGillic v. United
States, (D.C.), 153 F.Supp. 565.'

23

Each of the cited cases exempted the Government from alleged negligence both
in the planning and in the actual operation of flood control projects. In addition
to the three cases cited by the Supreme Court above, similar rulings have been
made in F. & M. Schaefer Brewing Co. v. United States, 121 F.Supp. 322
(E.D.N.Y.1954) and in Thomas v. United States, 81 F.Supp. 881
(W.D.Mo.1949). The Schaefer case presents a fact situation extremely close to
the facts in the instant case. In that case, the Department of the Navy entered
into a contract with a private contractor, Morris & Cummings Dredging
Company, under the terms of which Morris & Cummings conducted dredging
operations on behalf of the Navy in the vicinity of plaintiff's property for the
purpose of berthing the aircraft carrier CORAL SEA after the vessel was
launched from the Brooklyn Navy Yard where it was then under construction.
The complaint alleged that the dredging was done negligently, as a result of
which a bulkhead and dock on plaintiff's property allegedly collapsed some
fourteen months later. The Court held that:

24

'The Government's contention is correct that the complaint asserts a claim

based upon the exercise or performance of a discretionary function of the

Government within the meaning of the exception to the Federal Tort Claims
Act.'
25

In the Thomas case the complaint alleged that representatives of the Corps of
Engineers of the War Department had 'carelessly and negligently planned and
caused to be installed such revetment at such angle to the main current of the
Missouri River as to deflect and direct the flow of said current against and upon
lands of the plaintiffs above described * * *' The Court held, in pertinent part
(at p. 882):

26

'* * * the details or method of carrying out the plan as submitted to and
accepted by the Congress for the development of navigable streams for
navigation or flood control under the direction of the Chief of Engineers for the
War Department is a discretionary act within the meaning of Subsection (a) of
Section 2680, Title 28, U.S.C.A., which would not render the Government
liable for damage resulting from abuse of that discretion or any error or mistake
made in carrying it out.'

27

It cannot be gainsaid that the decision of the Secretary of the Army to cause a
dredging of the river was a discretionary act on his part. Accordingly, the fact
that Congress retained sovereign immunity as to river and harbor works, at least
to the extent that they involve the discretionary exception set out in 28 U.S.C.
2680, defeats appellant's argument that the Tort Claims Act waived all
governmental immunity and that consequently the regulation enacted pursuant
to 33 U.S.C. sec. 1 violates the intent of said waiver. It also is dispositive of
Edison's contention that the Federal Tort Claims Act repealed 33 U.S.C. sec. 1
by implication.

28

We rule that there is no inconsistency between the policy enunciated by the

Suits in Admiralty Act and the Federal Tort Claims Act, having in mind the
exceptions to liability contained in the Tort Claims Act and the provisions of 33
U.S.C. 1 directing the Secretary of the Army to make regulations appropriate
for the 'protection of the life and property or of the operations of the United
States in channel improvement.'

29

Finally, Edison argues that Clause (g) should be struck down as violative of
public policy, relying primarily on Bisso v. Inland Waterways Corp., 349 U.S.
85, 75 S.Ct. 629, 99 L.Ed. 911 (1955). Bisso, however, enunciates a rule of
contract law and arises in a context in which the Supreme Court ruled, in
substance, that where two parties to a contract are of unequal bargaining power
it is against public policy for the stronger of the two parties to force the weaker

to accept a clause exculpating the stronger from liability for its own negligence.
30

The instant situation is totally distinguishable from Bisso in that Clause (g)
does not appear in a contract. The permit in question was neither negotiated for
nor sold, but was issued by the Secretary of the Army acting under
discretionary authority clearly conferred on him by 33 U.S.C. sec. 1 et seq. If
the insertion of such a clause under authority given to the Secretary be now
thought to be against public policy, the entity enunciating that a policy clearly
contained in a statutory grant of power to the Secretary is no longer held in
favor should be the Congress and not this court.

31

The remaining contention is that certain undertakings by the Corps of

Engineers to assure the safety of Edison's cables raised issues of material fact
relating to estoppel, waiver, and a specific contractual duty. Under no view of
the facts do we see any material issue raised by these precautionary efforts.

32

Affirmed.