On certification to the Superior Court of New Jersey, Law Division.
For reversal -- Chief Justice Vanderbilt, and Justices Heher, Jacobs and Weintraub. For affirmance -- Justices Oliphant, Wachenfeld and Burling. The opinion of the court was delivered by Vanderbilt, C.J.
This is an appeal by the State of New Jersey from a judgment of the Law Division of the Superior Court in favor of the city of Atlantic City. The question to be resolved is whether Atlantic City should be permitted to retain all of the federal grants-in-aid of beach protection projects received by it or whether the State is also entitled to benefit from these federal funds on the projects on which it shared a portion of the cost. We granted the State's petition for certification, 22 N.J. 229 (1955), because of the important public issue involving the relationship among these three divisions of government with respect to a matter of common concern to all.
In 1940 the State of New Jersey initiated a general program to preserve beaches along the Atlantic Coast of this State from the erosive effects of the ocean, L. 1940, c. 52, N.J.S.A. 12:6 A -1, and note, et seq. That act contemplated that federal funds, as well as state and local funds, would be used in these projects. The act did not expressly relate to the city of Atlantic City and it does not appear that the city obtained any benefits under it, but it is, nevertheless, of importance here as an indication of legislative intent.
Then, by L. 1944, c. 93, the Legislature, "in furtherance of the public policy of the State and to meet the present problem of beach erosion," appropriated $1,250,000 for beach protection projects to be approved by the Governor. This act provided that the State would allot "not in excess of fifty per centum (50%) of the cost" of such projects to the county or municipality of a project approved for state aid. The act also provided that "the applicant shall bear the remaining fifty per centum (50%) or such excess thereof of the cost of such project or projects" and also that it "shall detail the proper county or municipal appropriation from which its share of the cost of the project shall be paid." Under this act the supervision and control of these projects was left to the applicants for aid after approval by the State Department of Commerce and Navigation, the agency charged with the responsibility of administering the fund appropriated. Atlantic City received from the State, pursuant to this act, the sum of $187,915 which represented one-half the cost of a hydraulic beach fill.
By L. 1946, c. 258 (N.J.S.A. 12:6 A -2), the Legislature amended L. 1940, c. 52, supra, and supplemented it so as to provide that all moneys appropriated by either the Federal Government, the State, or any county or municipality for the purpose of beach erosion and beach protection should be expended under the direction of the State.
In this same year the Congress of the United States provided for financial assistance for beach protection measures undertaken along the shores of the United States, P.L. No. 727, 79 th Congress, Second Session, approved August 13, 1946, 33 U.S.C.A. sec. 426 e. This law provided that the federal contribution could not exceed "one-third of the total cost." It also required that the plan of protection be specifically adopted and authorized by Congress after investigation and study by the Beach Erosion Board, a federal agency. Atlantic City applied for federal aid and cooperated with the federal agency, to the extent of about $10,000, in a joint study of its beach protection program and policy. As a result of the study and investigation, it was recommended and approved
by the appropriate federal agencies that the United States should participate "in defraying the cost of the construction to the full one third of the total first cost of the work."
The federal assistance was not without conditions. Atlantic City had to give assurance that water pollution from sources within its jurisdiction would not be permitted and that the public use of the beaches would not be curtailed. It had to accept responsibility for maintenance and repair of the works throughout their useful life, provide the necessary lands, easements and rights of way and make provision for claims for damages that might arise as a result of the work.
The policy of the State with respect to the supervision and control of these beach projects to which it was contributing was soon changed. Subsequent appropriation acts, beginning with P.L. 1947, c. 67, provided for supervision and control by the State and ultimately required the municipality to deposit its share of the cost of the project with the State Treasurer, P.L. 1948, c. 117, p. 813; P.L. 1949, c. 43, p. 310; P.L. 1951, c. 49, p. 378; P.L. 1952, c. 43, p. 341; P.L. 1953, c. 102, p. 1255.
In 1954, by P.L. No. 780, 83 rd Congress, Second Session, approved September 3, 1954, 68 Stat. 1248, § 102, the Secretary of the Army was authorized "to reimburse local interests for such work done by them on the beach erosion projects * * * subsequent to the initiation of the cooperative studies which form the basis for the projects." Then, by the Public Works Appropriation Bill ...