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Norfolk S. Corp. v. Oberly

ELR Citation: 16 ELR 20714
Nos. No. 84-330 MMS, 632 F. Supp. 1225/24 ERC 1586/(D. Del., 04/08/1986)

The court rules that Delaware's Coastal Zone Act (CZA) is immunized from plaintiffs' Commerce Clause challenge because Congress has authorized the developmental restrictions in the Act by its passage of the Coastal Zone Management Act (CZMA) and the Secretary of Commerce has approved Delaware's coastal management plan under the CZMA. Plaintiffs desire to build a coal "top-off" facility at Big Stone Anchorage in the Delaware Bay to improve the competitiveness of their coal-exporting operations. East Coast port facilities are too shallow to accommodate fully loaded supercolliers (coal-carrying ships). Plaintiffs' facility would allow partially loaded supercolliers to be topped off at Big Stone Anchorage before departing to foreign countries. Plaintiffs brought this action alleging that the application of the CZA's ban on new solid bulk transfer facilities to their proposed top-off operation violated the Commerce Clause of the United States Constitution.

In anticipation of an appeal on this issue of whether Congress authorized the CZA, the court first engages in an analysis of plaintiffs' Commerce Clause claim on the assumption that Congress has not consented to the legislation. The court holds that absent congressional consent, neither party is entitled to summary judgment under the balancing test announced by the Supreme Court in Pike v. Bruce Church, Inc. The court rejects plaintiffs' arguments that the CZA is subject to strict scrutiny because it is protectionist legislation and interferes with foreign commerce. Addressing the protectionist argument, the court holds that strict scrutiny is not warranted on the basis of the discriminatory effects alleged by plaintiffs. The CZA, which distinguishes between uses, not users, does not create a competitive advantage for in-state interests over out-of-state competition. That the ban on bulk transfer facilities may fall entirely on out-of-state interests is not conclusive.Even if strict scrutiny were applicable, issues of material fact exist on the question of whether the CZA impermissibly discriminates against out-of-state interests. Issues of fact also remain over whether the enactment of the CZA was motivated by a discriminatory purpose, which would warrant the application of strict scrutiny. The court holds that strict scrutiny is not mandated by the CZA's alleged burden on foreign commerce.

The court next holds that the CZA is not subject to a highly deferential review analogous to the standard often applied to highway safety regulation. The CZA is directed at the environment, not highway safety. The court is unwilling to extend the review standard to environmental issues absent authority from the court of appeals. The court also refuses to apply a deferential standard to the CZA simply because it has some characteristics of a zoning regulation. Having determined that neither strict scrutiny or a deferential standard should be applied, the court applies the Pike balancing test. The court concludes that summary judgment under the Pike test is inappropriate because questions remain on the extent of the CZA's burden on commerce and its local benefits.

The court holds that Congress has authorized Delaware's ban on coal transfer facilities. By enacting the CZMA, Congess intended to immunize state coastal zone management statutes funded under the CZMA from Commerce Clause challenges. The CZMA allows each state with an approved coastal management plan to exercise full authority over its coastal zones and to resolve choices among competing environmental and developmental interests. Congress was aware that the choices made by the states would affect commercial interests and intended that states could resolve these choices in a way that might otherwise be subject to Commerce Clause challenges. The federal interest in interstate and foreign commerce is protected by the requirement that each state management plan must be approved by the Secretary of Commerce. The Secretary must find that the plans adequately consider the "national interest," which, the court rules, includes commercial activities. By regulation, the Secretary must find not only that the states have considered the national interest, but also that this consideration is reflected in the substance of the state plans. The court rejects plaintiffs' argument that this reading of the CZMA allows the unconstitutional delegation of power by Congress to the Secretary to make a finding on the Commerce Clause. In evaluating state CZMA plans, the Secretary is acting pursuant to a statute with sufficient standards to limit his discretion. The court concludes that the Secretary's approval of Delaware's coastal zone management plan evidences congressional approval of the Delaware plan, of which the CZA is a part.

Finally, the court holds that the ban on plaintiffs' coal-transfer operation is within the scope of the congressionalconsent. The Secretary's most recent approval of the Delaware plan in 1984 continues until the his next review. Amicus briefs submitted by the Department of Commerce and members of Congress claiming that Delaware's ban contravenes the national interest in promoting coal exports do not further plaintiffs' position.

The full text of the opinion is available from ELR (63 pp., $9.50, ELR Order No. C-1352).

Counsel for Plaintiffs
David S. Swayze
Prickett, Jones, Elliot, Kristal & Schree
1310 King St., P.O. Box 1328, Wilmington DE 19899
(302) 658-5102

Counsel for Defendants
Fred S. Silverman, State Solicitor
Department of Justice
89 Kings Hwy., Box 1401, Dover DE 19901

Counsel for Intervenors
Nicholas H. Rodriguez
Schmittinger & Rodriguez
414 S. State St., Dover DE 19901
(302) 674-0140

Schwartz, J.