In Depth: New Jersey v. Delaware and the Crown Landing Terminal

In July 2005 New Jersey sued Delaware in the U.S. Supreme Court. At issue is whether Delaware may permit, or prevent, the construction of BP’s proposed Crown Landing LNG terminal in the Delaware River. The debate has ignited tempers and attracted media attention on both sides of the river, with New Jersey politicians incensed over Delaware control of ” its side” and Delaware officials championing the state’s coastal zone laws .

The state boundary between New Jersey and Delaware was set in a 1934 Supreme Court case. The boundary is the center of the shipping channel in the Delaware River – except in the vicinity of New Castle where, due to a seventeenth-century deed from the Duke of York, the boundary runs up to the low-water mark on the New Jersey shore. Therefore, even though the Crown Landing facility would be located on the New Jersey shore, its pier would be built on riverbed located in Delaware. Delaware refuses to permit the project.

New Jersey has not asked the court to alter the state line. However, New Jersey does claim to have certain rights in the Delaware River, regardless of the state boundary. It bases these claims in part on a compact between the two states and in part on historical use. The compact, known as the Compact of 1905, settled an even earlier dispute over how Delaware could regulate activities on the Delaware River, particularly fishing rights. New Jersey also claims that Delaware has conceded regulatory authority in the past, particularly when discussing the Compact before the Supreme Court in 1934.

When New Jersey sued in July it asked the Court to reopen the 1934 boundary case or, in the alternative, allow a new complaint.  In November 2005 the Court did the latter, electing to begin a new case rather than refine the existing decision with a supplemental decree. Subsequently Delaware filed an answer to New Jersey’s complaint, and also asked the court to appoint a “Special Master” to investigate the historical facts of the situation.

Generally cases before the U.S. Supreme Court are appeals of lower-court decisions. However, because a dispute between two states falls within the U.S. Supreme Court’s original and exclusive jurisdiction, there has been no lower-court decision and there is no factual record for the court to review. To avoid spending time conducting the necessary fact-finding, the Court appoints a Special Master to handle any investigations, hearings or other evidentiary proceedings. This process can be time consuming: recent border disputes between states have lasted from one year to twenty years.

New Jersey has urged the Court to forgo the Special Master process and base its decision on pleadings and arguments put forward by the two states. If the Court adopts this suggestion, it could issue a decision in 2006. However, if Delaware prevails in its motion for a Special Master, the case could take much longer. Such delay could put the Crown Landing project at a disadvantage, holding it up while competing LNG proposals move in to serve that market. FERC and Coast Guard review of the Crown Landing proposal will continue while the Supreme Court case is pending, and FERC may even issue an order approving or rejecting the terminal. However, such an order would be conditioned on Crown Landing obtaining any state permits made necessary by the outcome of the case.

UPDATE: On January 23, 2006, the Supreme Court granted Delaware’s motion for appointment of a Special Master.  The Court appointed Maine attorney Ralph Lancaster, who will have “authority to fix the time and conditions for the filing of special pleadings, to direct subsequent proceedings, to summon witnesses, to issue subpoenas and to take such evidence as may be introduced and such as he may deem it necessary to call for.”  Lancaster reportedly has set a timeline that allows discovery through October 30, 2006.

For more information on this topic, please contact Rebecca Day or David Wochner.

© 2006 Sutherland Asbill & Brennan LLP

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