Oral argument: November 27, 2007
WATER, RIVERS, RIPARIAN RIGHTS, ORIGINAL JURIDICTION, SPECIAL MASTER
In 2004, British Petroleum America (BP) requested approval to build a liquefied natural gas facility on the New Jersey shore of the Delaware River in an area called the twelve-mile circle. New Jersey approved the project, but Delaware's Department of Natural Resources and Environmental Control said the facility, known as Crown Landing, was a prohibited industrial use under Delaware's coastal zone regulations. BP sought Delaware's approval because, while New Jersey owns the river bank on which BP planned to build, Delaware owns the subaqueous lands beyond the New Jersey low water mark. Delaware's veto of Crown Landing re-opened a long-standing dispute between New Jersey and Delaware concerning authority over land on the New Jersey side of the Delaware River in the twelve-mile circle. In 1934, the United States Supreme Court decided the boundary in Delaware's favor. But this decree was subject to a 1905 Compact that New Jersey claimed gave it authority over riparian (i.e., river bank) improvements extending from its shore. In 2005, New Jersey filed a complaint with the Supreme Court, asking it to declare that New Jersey had exclusive authority over such riparian improvements and to enjoin Delaware's interference with Crown Landing. New Jersey filed exceptions to those recommendations. The Court must decide what authority New Jersey and Delaware will have over riparian improvements extending from New Jersey into Delaware's subaqueous territory.
New Jersey's Exceptions to the Report of the Special Master:
Article VII of the 1905 Compact between New Jersey and Delaware provides that "each State may, on its own side of the river, continue to exercise riparian jurisdiction of every kind and nature, and to make grants, leases, and conveyances of riparian lands and rights under the laws of the respective States." New Jersey excepts to the following conclusions of the special master with regard to Article VII of the Compact:
1. That, although New Jersey may make grants of riparian RIGHTS beyond the low water mark on the New Jersey side of the Delaware River, it cannot make grants of riparian lands beyond the low-water mark. Report at 52, 99.
2. That New Jersey does not have exclusive riparian jurisdiction over improvements like piers and wharves on the New Jersey side of the river if they extend beyond the low-water mark. Report at 85-86, 99-100.
3. That Delaware may exercise its police power over riparian improvements like piers and wharves extending beyond the low-water mark on the New Jersey side, even to the extent of prohibiting improvements approved by New Jersey. Report at 85-86, 99-100.
Delaware's Questions Presented For Review:
The State of Delaware supports the Special Master's recommendations. The State of New Jersey has filed three exceptions, which present the following questions:
- Whether New Jersey's first exception should be overruled because Article VII of the 1905 Compact - read in conjunction with Article VIII's reservation of territorial rights and this Court's cases disfavoring one State from having the power to make grants of another State's lands - does not expressly concede to New Jersey the right to grant submerged lands located within Delaware.
- Whether New Jersey's second and third exceptions should be overruled because "riparian jurisdiction" does not mean "exclusive jurisdiction" over wharves and other riparian structures, and because a State's exercise of jurisdiction over specific private property rights pertaining to riparian landowners is subordinate to the exercise of general police powers, such as Delaware's application of its coastal zone management laws.
Does Delaware have regulatory jurisdiction over construction and operation of riparian projects extending from the New Jersey shore onto Delaware's subaqueous land in the twelve-mile circle of the Delaware River or does New Jersey have exclusive jurisdiction over such projects?
Does New Jersey have authority to grant land associated with riparian projects extending from the New Jersey shore, even if that land extends into Delaware's territory?
The following facts are taken from The Report of the Special Master, The Report of the Special Master Appendices, New Jersey's Motion to Reopen and for a Supplemental Decree, Brief of the State of Delaware in Opposition to New Jersey's Motion to Reopen and for a Supplemental Decree, and the Brief of BP America Inc. and Crown Landing LLC as Amicus Curiae in Support of the State of New Jersey.
History of the Dispute
The Delaware River forms a natural boundary between the states of New Jersey and Delaware, and disputes over each state's rights in this area have existed almost since statehood began. The current dispute before the United States Supreme Court involves an area along the Delaware River known as the "twelve-mile circle." The twelve-mile circle was established in 1682, when William Penn received a grant from the Duke of York for all of the land within a twelve-mile radius surrounding the historic courthouse in New Castle, Delaware. Where the radius extended across the Delaware River, the grant expressly included the submerged soil of the river up to the low-water mark on the opposite shore as part of the land being conveyed.
The current dispute between New Jersey and Delaware dates back to an incident in 1872, when Delaware officials arrested twenty-two New Jersey fishermen within the twelve-mile circle for fishing without a Delaware license. This prompted New Jersey to assert jurisdiction over the eastern side of the river from the mid-point to the eastern shore. In response, Delaware insisted that because its boundary extended to the low-water mark on the eastern shore, it was entitled to exclusive jurisdiction over the entire river. The states appointed commissioners in an attempt to resolve this dispute, but they were unable to reach an agreement. In 1875, Delaware withdrew its commissioners.
In 1877, New Jersey filed it first complaint with the Supreme Court against Delaware. This case, known as "New Jersey v. Delaware I," remained unresolved for nearly thirty years. In 1903, the states appointed new commissioners, this time with greater success. The second attempt at a resolution resulted in the 1905 Compact. After the Compact was ratified by Congress in 1907, the Court dismissed New Jersey's Complaint against Delaware without prejudice.
The 1905 Compact did not determine an exact boundary between Delaware and New Jersey. The 1905 Compact consists of nine Articles that primarily address the rights of each state regarding their common fishery. It establishes the rights of each state on the surface of the river, leaving the boundary dispute for resolution at another time.
One article from the 1905 Compact, however, directly addresses the particular rights at issue in the current case before the Court. Article VII establishes riparian rights, declaring that each state has the right to exercise riparian jurisdiction over, and to make grants, leases and conveyances of, the riparian lands on its own side of the river. Another article, Article VIII, maintains that the Compact does not affect the territorial holdings of the states, including subaqueous lands, except to the extent explicitly stated within the articles of the Compact. A third article, Article IX, provides that once the 1905 Compact is agreed to, and ratified by Congress, the two states are bound to abide by its conclusions in perpetuity.
In 1935, a second dispute arose between Delaware and New Jersey involving the twelve-mile circle and resulting in another original jurisdiction case, known as "New Jersey v. Delaware II." This case resulted in the Court's determination of an exact boundary between the two states. The Court decided that Delaware's boundary within the twelve-mile circle extended to the low-water mark on New Jersey's side of the river. The decision explicitly stated that the determination of this boundary was subject to the provisions of the 1905 Compact. The Court also retained jurisdiction over any future supplement to, or modification of, the 1935 decree.
The Current Controversy
British Petroleum America and its affiliate, Crown Landing LLC (together "Crown Landing"), plan to build a liquefied natural gas ("LNG") terminal in the state of New Jersey. Logan Township is the chosen site for the Crown Landing terminal; it is located on the shore of the Delaware River, on the boundary created by the twelve-mile circle. The Crown Landing terminal will include an onshore storage and regasification facility as well as a 2,000 foot long pier designed to accommodate the large tankers required to transport LNG. The pier is expected to extend 1,455 feet beyond the low-water mark on the New Jersey shore. For the tankers to have access to the pier the river bed will have to be dredged and 1.25 million cubic yards of soil removed. Construction of a pipe-line system along the pier will also be required for the LNG to be transferred from the tankers to the on-shore holding facility.
The Crown Landing terminal was approved by both the Federal Energy Regulatory Commission ("FERC") and the State of New Jersey. Because the chosen site requires building the pier on land belonging to Delaware, Crown Landing has also sought construction permits from Delaware's Department of Natural Resources and Environmental Control ("DNREC"). The DNREC determined that construction of the pier is prohibited under Delaware's Coastal Zone Act ("DCZA"), which prohibits the new construction of heavy industry facilities within Delaware's coastal zone.
New Jersey claims that, according to Article VII of the 1905 Compact, Delaware has no jurisdiction over improvements, such as piers and wharves, extending from the New Jersey shore. Delaware argues that it is entitled to exercise exclusive jurisdiction over all land within its territory, including the submerged soil of the Delaware River.
New Jersey filed a complaint requesting that the Court exercise its retained jurisdiction over matters pertaining to the 1935 Decree. The Court rejected New Jersey's motion to reopen the 1935 case, but allowed the filing of a new Bill of Complaint against Delaware.
A Special Master was appointed by the Court, and the Report of the Special Master was filed on May 14, 2007. New Jersey filed exceptions to the Report of the Special Master, and Delaware responded in support of the Special Master's findings. The Court has set November 27, 2007 as the date for oral argument regarding New Jersey's exceptions to the Report of the Special Master.
Until recently, New Jersey and Delaware have lived in a state of relative peace since the United States Supreme Court's 1935 decision determining the boundary between the two states within the "twelve-mile circle." Due to the current conflict over the twelve-mile circle, however, Delaware considered legislation authorizing the National Guard to protect its border, and a New Jersey legislator considered using the battleship New Jersey to repel an armed invasion by Delaware. This oddly extreme behavior is caused by the intersection of state sovereignty and significant economic concerns.
In this case, the Supreme Court is only considering the extent to which New Jersey and Delaware may exercise jurisdiction over their respective riparian rights within the twelve-mile circle. New Jersey essentially requests an authoritative determination of whether it has exclusive authority to govern improvements such as piers and wharves extending from its own shore, or must share authority to regulate these improvements with Delaware. What gives this case significance beyond the twelve-mile circle is the nature of the particular project that brought nearly seventy years of cooperation between these two states to an end.
The 1935 decree settling the boundary between the two states was made subject to the terms of the 1905 Compact. In the current dispute, New Jersey and Delaware both rely on Article VII of the 1905 Compact to support their opposing views. Article VII provides that "each state may, on its own side of the river, continue to exercise riparian jurisdiction of every kind and nature, and to make grants, leases, and conveyances of riparian lands and rights under the laws of the respective States. A determination of what is meant by each state's "own side of the river" is complicated by the 1935 decree, which set the boundary between the two states at the low-water mark on the New Jersey shore. The Report of the Special Master summarizes the arguments and describes them as seeking mirror-image relief. . New Jersey argues that it should have exclusive jurisdiction to convey land and regulate improvements appurtenant to the New Jersey shore beyond the low-water mark. Delaware asserts that New Jersey has no jurisdiction to convey lands or regulate improvements beyond the low-water mark on the New Jersey shore.
At the center of the conflict between New Jersey and Delaware is the proposed construction of a liquefied natural gas ("LNG") terminal. British Petroleum America and its affiliate Crown Landing LLC (together "Crown Landing") have chosen Logan Township, New Jersey, as the site for this proposed terminal. Logan Township is located on the shore of the Delaware River, bordering on the twelve-mile circle. Crown Landing's proposed construction includes a 2,000 foot long pier that is expected to extend 1,455 feet beyond the low-water mark on the New Jersey Shore.
Because Logan Township shares a border with Delaware as determined by the twelve-mile circle, Delaware maintains that beyond the low-water mark the pier is subject to Delaware's laws and regulations. New Jersey argues that it should have exclusive jurisdiction over the Crown Landing pier because it is an improvement extending from the New Jersey shore. The pier is an essential component of the Crown Landing terminal, without it the terminal will not be useful as a gasification facility. If Delaware prevails it will be able to effectively shut down construction of the terminal by refusing to permit construction of the pier.
According to a Congressional Research Service Report on LNG terminals, demand for LNG is increasing due to the potential shortages in the domestic supply, increased gas prices, and price volatility. In response to this increasing demand, the Federal Energy Regulatory Commission ("FERC") has approved construction of more than twenty new LNG terminals in the United States. According to the Northwest Gas Association, more than forty new terminals have been proposed to regulators in recent years. Despite the growing popularity of LNG, the Crown Landing terminal is not the only proposed LNG facility to meet with resistance.
While there are many supporters for the construction of new LNG terminals, there are also many detractors. Proposed LNG terminals in California and Long Island Sound have been protested by public officials, concerned citizens, and environmental groups. The Crown Landing terminal was opposed by the Mid-Atlantic Environmental Law Center ("MAELC"). According to the MAELC website, MAELC is responsible for presenting the argument that the Crown Landing terminal was a bulk transfer facility prohibited under the DCZA to the Secretary of the DNREC. This argument is the primary reason the Secretary denied permits to Crown Landing and the DCZB upheld this decision on appeal. Given the growing popularity of LNG as an alternative source of natural gas, and the willingness of FERC to approve new LNG terminals, it seems likely that another project will soon be developed to replace the Crown Landing facility if it does not materialize. . A decision allowing Delaware to continue regulating structures that extend across the low-water mark on the New Jersey shore would simply mean that the future of this stretch of the Delaware River will be shaped by Delaware's vision rather than New Jersey's.
The United States Supreme Court appointed a special master, Ralph I. Lancaster, Jr., to manage pre-trial proceedings, take evidence, and prepare a report recommending a decision. This is the Court's usual practice in its original jurisdiction cases. The Special Master's recommendations do not bind the Court, which may accept, reject, or change them after hearing oral argument by the parties.
The Special Master's recommendations to the Supreme Court and New Jersey's exceptions center on the meaning of the 1905 Compact between New Jersey and Delaware. New Jersey and Delaware are disputing how that Compact affects their respective authority over land and activities on the eastern, or New Jersey, side of the Delaware River in the twelve-mile circle. The United States Supreme Court held in a 1934 opinion, New Jersey v. Delaware, 291 U.S. 361, 385 (1934), that Delaware owns the subaqueous land in this area up to the low water line of the New Jersey shore. Nevertheless, questions about New Jersey's rights in this land have persisted because the Court made its 1934 determination "subject to the Compact of 1905." The main Compact provision at issue is Article VII. ThisArticle says that "each State may, on its own side of the river, continue to exercise riparian jurisdiction of every kind and nature" and grant riparian lands and rights.
New Jersey's current motion for summary judgment claimed Article VII gave New Jersey exclusive jurisdiction over "riparian improvements appurtenant to its shores, free from interference by Delaware." Delaware's motion for summary judgment claimed the Compact did not deprive Delaware of the right to regulate structures and activities that extend onto its property from New Jersey. . The Special Master agreed with Delaware. The Special Master also concluded that New Jersey could not grant the land beyond its low water mark but could grant riparian rights extending into Delaware's territory.
A key question in this dispute is whether the 1905 Compact had apportioned a fixed set of rights in Article VII that were to be unaffected by any later boundary resolution or whether the Article's terms were intended to incorporate and reflect the later boundary determination. New Jersey argues for the former interpretation; Delaware and the Special Master have adopted the latter reading.
Riparian Rights and Land
The Special Master found that New Jersey could convey riparian rights beyond the low water mark of the New Jersey shore. Both as owner of the land on the river bank and under Article VII, New Jersey was entitled to convey riparian rights. These rights traditionally included a right to use water from the river and access the river, including the right to "wharf out," or construct a wharf or pier, to the river's navigable portion.
In contrast, the Special Master's report concluded that New Jersey's right to grant land ended at the low water mark. The Special Master's report noted that, according to the Supreme Court's 1934 boundary determination, the low water mark is where Delaware's territory begins. Based on this ownership, there was a presumption against defeat of Delaware's title. This presumption, as well as language in Article VIII, required that any waiver of Delaware's sovereign rights be express, not merely implied. Article VII contained no such express waiver of Delaware's rights to its subaqueous land. The Special Master further found it "improbable" that Delaware would implicitly give New Jersey property rights in 1905 when both sides continued to dispute title to the land until 1934.
New Jersey claimed at oral argument before the Special Master that it had the right to convey riparian land, as well as rights, in space occupied by riparian improvements extending from the New Jersey shore. The New Jersey exceptions to the Special Master's report claim that the Special Master had erred in his strong presumption against defeat of Delaware's title. This presumption was incorrect because the title had been in dispute at the time of the Compact's negotiation. New Jersey also noted that the Supreme Court had denied such a presumption in favor of the title-holding state in an earlier, similar case.
New Jersey said Article VII gave New Jersey the right to grant both riparian rights and any land associated with those rights. . It argued that this intent was clear from both the language of the Article and the circumstances surrounding the Compact's negotiation. . First, New Jersey said, Article VII's language made no distinction between rights and land but gave each state equivalent authority to grant both on "its own side of the river." New Jersey interpreted "side[s] of the river" to mean the two shorelines, based on a perceived symmetry between the rights accorded the two states.
Second, New Jersey noted that the word "continued" in the Article must refer to the negotiators' understanding of contemporaneous practice at the time of the Compact. Because New Jersey had a "long history" of granting riparian land (including land beyond its low water mark), without any interference by Delaware, "continued" must embody an understanding that New Jersey could continue to make such grants. Finally, New Jersey said the Supreme Court's 1934 boundary decision did not affect the rights Article VII conveyed because that decision had specified that it was "subject to the Compact."
Delaware's reply brief to the New Jersey exceptions concurred in the Special Master's findings. It also disputed New Jersey's conclusions concerning New Jersey's riparian land grants in the years leading up to the Compact. Delaware said that regardless of the number of grants New Jersey had issued, few structures extending past the low water mark had actually been built by 1905. Therefore, the Compact could not have reflected acquiescence in that practice. Delaware did acknowledge that New Jersey may have exercised de facto authority past the low water mark during the period of uncertainty before 1934.
The Special Master said New Jersey's authority to grant riparian rights was not absolute but was "subject to regulation by the State under its police powers." A state's police powers include its authority to regulate for the protection of its citizens' health, safety, and morals.
Delaware claimed it was entitled to exercise such police powers with respect to riparian projects, such as BP's Crown Landing project, that extended past New Jersey's low water line. Delaware also claimed enforcement of the Delaware Coastal Zone Act (DCZA) was a legitimate use of such police powers. Delaware said the Crown Landing project was a "prohibited bulk transfer facility" under the DCZA.
New Jersey contended that Article VII had given it, not Delaware, police power jurisdiction over riparian improvements on its shores. The source of this authority was Article VII's grant of "riparian jurisdiction of every kind and nature" to each state on its side of the river. New Jersey argued that "every kind and nature" meant full and unencumbered riparian jurisdiction. Such jurisdiction would naturally include authority over both allocation and oversight of riparian rights, including riparian improvements. This oversight would, in turn, require exercise of the state's police power. Thus, "riparian jurisdiction of every kind and nature" must include exercise of police power over the construction and use of riparian structures, such as wharves.
Finally, New Jersey likened its claim to Virginia's claim in Virginia v. Maryland. In that case, the Court denied Maryland the right to regulate riparian improvements extending from Virginia's shore of the Potomac River even though Maryland owned up to the Virginia low water mark. New Jersey said that the language used in the 1905 Compact was, if anything, stronger than that in the Virginia-Maryland agreement, and that therefore the Court must reach the same conclusion-that the nominal owner of the riparian land could not interfere with its neighbor's riparian rights.
The Special Master recommended that Delaware have police power jurisdiction over the land beyond New Jersey's low water mark. The Special Master's conclusion that Delaware, not New Jersey, was entitled to police power jurisdiction proceeded first from his understanding that (1) Delaware owned the land in question and (2) a sovereign state has jurisdiction over its own land, including regulatory jurisdiction. Thus, Delaware would have exclusive jurisdiction over the land beyond the low water mark unless the Compact said otherwise. Moreover, a waiver of Delaware's sovereignty would have to unmistakable. The Special Master concluded that Article VII had not meant full and exclusive jurisdiction-including police power-when it gave both states "riparian jurisdiction of every kind and nature."
Finally, the report distinguished the Virginia v. Maryland, case from the New Jersey-Delaware dispute. It said language in the Virginia-Maryland compact was more specific in granting Virginia riparian rights free from Maryland's interference and that Maryland had indicated some agreement with this interpretation. The Special Master's opinion on this last matter may carry some added weight with the Court: It was Mr. Lancaster's recommendations that the Court had accepted in Virginia v. Maryland.
The United States Supreme Court must decide whether Delaware has regulatory jurisdiction over New Jersey riparian projects extending from New Jersey's shore of the Delaware River onto Delaware subaqueous land in the area called the twelve-mile circle. The Special Master appointed in this case has recommended that the Court find that Delaware has such jurisdiction. If the Court agrees with the Special Master, Delaware will effectively have veto power over New Jersey industrial development on this part of the river. A Court finding for New Jersey would prevent Delaware from regulating or stopping activities on its land that violate its environmental laws.
Edited by: Richard Beaulieu
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