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Johns-Manville Sales Corp. v. New Jersey Water Supply Authority

Decided: June 5, 1986.

JOHNS-MANVILLE SALES CORPORATION, PLAINTIFF-APPELLANT,
v.
NEW JERSEY WATER SUPPLY AUTHORITY AND STATE OF NEW JERSEY, DEFENDANTS-RESPONDENTS



On appeal from the New Jersey Water Supply Authority.

Gaulkin, Deighan and Stern. The opinion of the court was delivered by Gaulkin, J.A.D.

Gaulkin

[211 NJSuper Page 316] Johns-Manville Sales Corporation (Manville) challenges as "ultra vires and without force or effect" a regulation of the New Jersey Water Supply Authority (Authority) imposing water use charges. Alternatively, Manville contends that the regulation is unconstitutional as applied "since it authorizes and accomplishes a taking of [Manville's] property for public purpose without just compensation."

Manville owns a large tract along the Raritan River, on which it conducts a manufacturing business. It has been diverting waters from the river for its commercial operations since approximately 1912. Manville presently draws the water at a point approximately 1800 feet above the United States Geological Survey, Manville Gaging Station, returns approximately 53% to the river just above the Gaging Station and returns the remaining 47% at a point approximately 6000 feet downstream of the Gaging Station. It is undisputed that the water returned to the river is substantially undiminished in quantity and not substantially degraded in quality. Manville draws from the river, through high speed pumps, up to 13,000 gallons per minute, 6,500,000 gallons per day.*fn1

The Authority has imposed charges for Manville's diversion of the waters pursuant to N.J.A.C. 7:11-2.12:

Where the water withdrawn within the Raritan River Basin, as supported by releases from Spruce Run and Round Valley Reservoirs, is returned to the stream channel at a point reasonably considered to be in the near vicinity of the point of withdrawal, substantially undiminished in quantity, and not substantially degraded in quality, all as determined by the New Jersey Water Supply Authority, the purchaser shall only pay at the rate specified under the General Rate Schedule as set forth at N.J.A.C. 7:11-2.2, as applied to the daily allotment. The annual Demand Charge for such use shall be determined by multiplying the daily allotment charge by 365.*fn2

That regulation was initially adopted in 1979 pursuant to the New Jersey Water Supply Law, N.J.S.A. 58:22-1 et seq., and was continued in effect upon the 1981 adoption of the Water Supply Management Act, N.J.S.A. 58:1A-1 et seq., and the New Jersey Water Supply Authority Act, N.J.S.A. 58:1B-1 et seq. See N.J.S.A. 52:14D-6; N.J.S.A. 58:1B-25.

Manville's principal contention is that none of those statutes allows the Authority to charge a riparian owner for the exercise of its common law right to divert water from its natural flow. We find no merit in that contention. Manville does not own the water flowing by its property. That water is publicly owned. As Justice Schreiber stated in K.S.B. Tech. Sales v. No. Jersey Dist. Water Supply, 75 N.J. 272, 285-86 (1977), appeal dism. 435 U.S. 982, 98 S. Ct. 1635, 56 L. Ed. 2d 76 (1978):

The water in our streams that have a natural outlet to the sea is not to be treated or considered in the same manner as private property. Running water of this type historically has been considered common property. E. Vattel, The Laws of Nations, Bk. I, ch. 20; 2 W. Blackstone, Commentaries 14; Arnold v. Mundy, 6 N.J.L. 1, 71-78 (Sup.Ct.1821). Ultimate ownership rests in the people and this precious natural resource is held by the State in trust for the public's benefit. Bor. of Neptune City v. Bor. of Avon-by-the-Sea, 61 N.J. 296, 305 (1972). This is not to say that a riparian owner may not use the water for purposes related to occupation of the adjoining land. But it is a limited or restricted type of ownership.

The riparian owner is limited to a "reasonable use" of the waters of a stream or water course abutting his property; what constitutes reasonable use is "a question of fact to be determined in each case upon a consideration of all the relevant circumstances." Armstrong v. Francis Corp., 20 N.J. 320, 330 (1956). Thus the fact that Manville drew a certain volume of water from the river at one point in time does not confer on it any "right" to continue to do so.

The New Jersey Water Supply Law, N.J.S.A. 58:22-1 et seq., under which N.J.A.C. 7:11-2.11 was originally promulgated, was enacted in 1958 for the purpose, among others, of developing the Raritan River Basin as a source of water supply. N.J.S.A. 58:22-2(b) and (c). Two resevoirs, Spruce Run and Round Valley, were constructed pursuant to the concurrently enacted Water Supply Bond Act, L. 1958, c. 35, to provide additional water in the Raritan River Basin and to assure that legislatively fixed minimum flow rates would be ...


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