The U.S. Supreme Court has determined that Delaware and New Jersey must share jurisdiction of the Delaware River, effectively nixing a liquefied natural gas project that would have been partly financed with municipal bonds, because of Delaware's claim the project would violate its environmental laws.

But officials with British Petroleum, chief sponsor of the project, said yesterday that they plan to explore options for proceeding with some type of plant.

In a 6-2 decision, the high court determined that New Jersey's "riparian rights," as defined by a century-old compact between the states, does not permit it to build an energy facility and accompanying wharf that would violate Delaware laws.

"Just as New Jersey cannot grant land belonging to Delaware, New Jersey cannot authorize activities that go beyond the exercise of ordinary and usual riparian rights in the face of contrary regulation by Delaware," said Justice Ruth Bader Ginsburg, who wrote the decision. "The project British Petroleum sought to construct and operate ... goes well beyond the ordinary or usual."

Ginsburg was joined in the decision by Chief Justice John Roberts and Justices Anthony Kennedy, David Souter, and Clarence Thomas. Justice John Paul Stevens partially agreed with the ruling, but Justice Samuel Alito joined Justice Antonin Scalia, who wrote the dissenting opinion. Justice Stephen Breyer removed himself from the case after disclosing that he owns between $15,000 and $50,000 in BP stock.

The facility in question is a $500 million liquefied natural gas plant proposed by BP subsidiary Crown Landing LLC. Plans for the plant include a 2,000-foot pier and wharf, as well as three 150,000-cubic-meter storage tanks, which could potentially be partly financed with as much as $100 million of tax-exempt bonds.

While the plant itself would be built on New Jersey soil, the accompanying pier would extend into the river beyond the New Jersey-Delaware state boundary, which is at the eastern low watermark along New Jersey's shore. Delaware has refused to sign off on the wharf, saying that the loading and unloading of barges of chilled natural gas would violate its environmental laws. Also, construction would require the dredging of 1.24 million cubic yards over roughly 29 acres of Delaware riverbed.

The debate centered around what rights New Jersey could exert into Delaware waters as defined by the 1905 compact, an agreement reached between the two states to settle disputes related to river fishing.

The high court disagreed with New Jersey's contention that Article VII of the compact, which gives the Garden State "riparian jurisdiction," permits the plant. The court said the term permits only ordinary behavior extending beyond the boundary.

"Article VII ... does not grant New Jersey exclusive jurisdiction over all riparian improvements extending outshore of the low-water mark," Ginsburg said in the decision.

The court agreed with Delaware's citation of Article VIII of the compact, which permits the state to exercise its territorial rights and approve or deny projects crossing into its land.

In reaching its decision, the court also pointed to statements made by New Jersey in the past that appear to acknowledge Delaware's ability to sign off on projects of this type.

In 1972, Congress enacted the federal Coastal Zone Management Act, which required states to submit their coastal management programs to the Secretary of Commerce for approval. And when New Jersey submitted its program, it noted that "any New Jersey project extending beyond mean low water must obtain coastal permits from both states."

The court found New Jersey's position in this case inconsistent with the one submitted to the secretary.

In the dissenting opinion Justice Scalia maintained that Article VII of the compact could never have been intended as it is currently interpreted.

"If Delaware could forbid the wharfing out that Article VII allowed New Jersey to permit, Article VII was a ridiculous nullity," he wrote. "That could not be what was meant."

He also took to task the court's decision that New Jersey could not do anything "extraordinary" in Delaware's waters without approval.

"The exception (whatever it means) has absolutely no basis in prior law ... so unheard-of is the exception that its first appearance in this case is in the court's opinion," Scalia stated.

Despite the courtroom setback, BP said it will search for a way to bring the plant to New Jersey without encroaching on Delaware land or violating its environmental laws.

"This is an important energy project for the nation and for the region. We will continue to explore other options and anticipate that the project will move forward and eventually be built here on the Delaware River," said BP government and public affairs director Tom Mueller.

 

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