By Steven J. Picco, Esq. and Christina Stummer, Esq. 

In Round Three of the Delaware River boundary dispute between Delaware and New Jersey, the United States Supreme Court ruled yesterday that the states of New Jersey and Delaware have overlapping authority to regulate extraordinary riparian and waterfront improvements that extend beyond the low water mark on the eastern shore of the Delaware River within a circle of twelve miles centered on the town of New Castle, Delaware. See New Jersey v. Delaware, 552 U.S. ___ (March 31, 2008). In a 6-2 decision, the Court rejected New Jersey’s position that its authority was exclusive.

This current boundary dispute over the twelve-mile circle arises from the state of Delaware’s denial of certain permits to a company that proposed to construct a Liquefied Natural Gas (LNG) facility on the eastern banks of the Delaware River in New Jersey. Although the LNG facility would be located on-shore of New Jersey, the wharf that would service the LNG facility would extend into the Delaware River, beyond the low water mark in the twelve-mile circle and into territory belonging to Delaware. See New Jersey v. Delaware, 291 U.S. 361, 385 (1934). When the company sought permission from Delaware’s Department of Natural Resources and Environmental Control (DNREC) to construct the facility, the agency refused permission asserting that Delaware’s Coastal Zone Act prohibited the construction of such an off-shore terminal and heavy industrial use along the Delaware River.

Prior to the 1934 boundary determination, the two states had entered into a Compact in 1905, which was ratified by Congress in 1907. Although this compact did not decide the state boundary within the twelve mile circle at that time, the 1905 Compact contained two jurisdictional provisions, which took center stage during round three of the jurisdictional battle:

“Art. VII. 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.

Art. VIII. Nothing herein contained shall affect the territorial limits, rights, or jurisdiction of either State of, in, or over the Delaware River, or the ownership of the subaqueous soil thereof, except as herein expressly set forth.”

After DNREC denied the company the authority to construct the LNG facility, New Jersey commenced an action in the Supreme Court seeking a declaration that Article VII of the 1905 Compact gave it exclusive jurisdiction over all waterfront development projects appurtenant to its shores, including wharves extending past the low water mark on New Jersey’s side into Delaware territory. Disagreeing with New Jersey, the Supreme Court ruled that under the 1905 Compact, the state of Delaware retained police power to regulate certain riparian uses that extend outshore from New Jersey beyond the low water mark within the twelve-mile circle.

According to the Supreme Court, the 1905 Compact only afforded New Jersey exclusive governing control over “ordinary and usual” riparian rights for improvements appurtenant to the eastern shore of the River within the twelve-mile circle, extending outshore beyond the low water mark. Examples afforded by the Court of what are “ordinary and usual” riparian rights include “how far a riparian owner can wharf out, the quantities of water that a riparian owner can draw from the River, and the like.”

On the other hand, if improvements “exceed ordinary and usual riparian uses” or are of “extraordinary character,” the Supreme Court ruled that the 1905 Compact granted Delaware the ability to exercise governing authority over the improvements, subject to the rights reserved to New Jersey, once those improvements extend outshore of the low water mark. Although the Court failed to articulate the meaning of its “extraordinary character” test, it held that the LNG facility went “well beyond the ordinary or usual” and that Delaware had retained police power to regulate the proposed riparian use. The Court rationalized, “New Jersey cannot authorize activities that go beyond the exercise of ordinary and usual riparian rights in the face of contrary regulation by Delaware.”

The Supreme Court retained jurisdiction over the matter to entertain all those future disputes as to what is in fact an ordinary versus an extraordinary riparian use. The decision, while important to Delaware and New Jersey, is limited to the interpretation of the Compact between them, and thus will have limited or no impact in other jurisdictions.

However, under on this decision, anyone pursuing a development on the New Jersey shoreline within the 12 mile circle may need Delaware as well as New Jersey approvals under the states’ respective Coastal Zone Management programs. Saul Ewing, with offices in New Jersey and Wilmington, is uniquely positioned to assist in these circumstances.

A planning board can require as a condition of approval that an applicant/developer provide indvidual deed notices as to the presence of naturally-occurring environmental conditions, such as levels of arsenic in excess of the New Jersey Department of Environmental Protection’s unrestricted soil use standard.   Ginsberg Development Cos. v. Planning Board of the Township of Harrison, A-4162-06, (App. Div. Feb. 29, 2008). 

WHAT ARE THE FACTS? 

In Ginsberg, the applicant, a contract-purchaser, submitted an application for development which included the subdivision of 44 acres into 29 residential lots in the Township of Harrison, Gloucester County.  Environmental testing at the site revealed that, on eight of the lots, there were naturally-occurring levels of arsenic which exceeded NJDEP’s unrestricted soil use standard of 20 parts per million.  While there was apparently an acknowledgement by the applicant that arsenic could cause severe health conditions, there was no information in the record regarding exposure to naturally-occuring exceedances.  Since the levels were naturally-occurring, there is no requirement under law to perform remedial activities.

While the applicant agreed to fully-disclose the arsenic levels in the homeowner association documents, it objected to the inclusion of this information in individual deeds of conveyance because of concerns about the initial or future marketability of the property.   Nevertheless, the Planning Board included the following in its Resolution of Memorialization:

The [Harrison] Township Ordinance permits the Planning Board to consider remedies to address the public welfare concerns posed by an environmental issue. Although the Board may not be permitted to require remediation of the site when the NJDEP is not requiring same, considering the health risks of exposure to elemental arsenic, the Board determined that it is appropriate to require a disclosure in the deeds for each lot and a disclosure in the Homeowner’s association documents regarding the levels of naturally occurring arsenic for all lots affected by these elevated levels.

The applicant filed an action challenging this condition of the preliminary major subdivision approval alleging that the condition was pre-empted by state environmental laws and “ultra vires” under the Municipal Land Use Law.  The trial court affirmed the board’s action.  On appeal, the applicant argued that since deed notices are a form of remedial control under the Brownfield and Contaminated Site Remediation Act, N.J.S.A. 58:10B-1 et seq., and the Brownfield Act does not require remediation of contaminants where the exceedance was the result of regional natural background levels, that the legislature had pre-empted the field and the Board’s condition was improper.  The applicant also generally challenged the condition as beyond the powers granted to the Board under the MLUL. 

WHAT DID THE COURT DECIDE?

The appellate division found that naturally-occurring exceedances do not constitute a “discharge” under the Act and the regulations implementing the Act require a “discharge” before remedial action must occur.  Since the Act does not address such instances, the court found that the pre-emption doctrine should not apply.  The court further held that even if the Act did apply to such exceedances, the Act specifically permitted more stringent local requirements and the court found it was within the Board’s discretion to require a condition authorized by local ordinance.  Additionally, the court found that the deed notice requirements imposed here were not as detailed as the requirements under the Act and that the condition of approval could not be construed to be remedial action.

Furthermore, the court found that the MLUL specifically provides for municipalities to consider the health, safety and welfare of their communities in adopting local zoning ordinances.  In 2003, the township had adopted an ordinance which required:

such other studies, tests or environmental treatments and remedies as may be determined reasonable and necessary for the environmental safety and security of the site, including but not limited to a site investigation in accordance with N.J.A.C. 7:26E, cleanups or other remedies. [Harrison Twp. Ord. ch. 107, § 107-1(15)(m)(2003)]

The court noted that the applicant did not challenge the constitutionality or whether the subdivision ordinance properly incorporated the provisions of the enabling ordinance.   Specifically, the court found that:

The requirement that such a notice be included in each deed is a reasonable method to insure the information is in fact provided from developer to purchaser and to subsequent purchasers. Thus, the permissible governmental purpose of promoting the general health and welfare of its citizens would be served, and there is nothing in the record by which we can conclude that the Board’s action exceeded the powers delegated to it under the subdivision ordinance.

As a result, the court found that the imposition of the condition was not arbitrary, capricious or unreasonable.

WHAT ARE THE IMPLICATIONS OF THE DECISION?

While this is an unpublished decision of the appellate division and, therefore, not controlling precedent, it provides support for land use boards requiring notice of environmental conditions at a property through the recordation of information relating to the condition without any actual remediation being required under law.  Although the court found that the condition was properly imposed, it appears that this was a fact-specific decision in which the court found that the adoption of a local ordinance which allowed the Board to require “environmental treatments and remedies” as well as a “site investigation” was valid.  However, the court left open whether this or similar ordinances could be challenged for failure to incorporate the provisions of the enabling ordinance or on constitutional grounds as the court noted that neither issue was raised on appeal.