Appendix — Gjessing v. West Indian Co.
Supreme Court brief1988
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IN THE
Supreme Court of the United States
OCTOBER TERM, 1987
LEGISLATURE OF THE VIRGIN ISLANDS,
Appellant,
and
HELEN GJESSING, Individually and as President of Save
Long Bay Coalition, Inc., LEONARD REED, Individually
and as President of Virgin Islands Conservation
Society, Inc., KATE STULL, Individually and as Presi-
dent of League of Women Voters of V.I., Inc., LUCIEN
MOooLeENAAR, Individually and as President of Virgin
Islands 2000, Inc., RUTH MOOLENAAR, Individually and
as Director of St. Thomas Historical Trust, Inc.,
Appellants,
v.
WEsT INDIAN COMPANY, LTD.,
Appellee,
Ve
GOVERN MENT OF THE VIRGIN ISLANDS,
Appellee.
On Appeal from the United States Court of Appeals
for the Third Circuit
JOINT APPENDIX TO JURISDICTIONAL STATEMENT
(Counsel Listed on Inside Cover)
- /A Supreme Cour, US,
8¢- 2133 j FILED
Nos. ——— JUN 29 1988
TOSEPHF. SFANIOL, JR,
CLERK
RAL SATE
WILSON - EPES PRINTING Co., INC. - 789-0096 - WASHINGTON, D.C. 20001
/
settorny
FRED P. BOSSELMAN *
WILLIAM J. TURBEVILLE, II
BURKE, BOSSELMAN & WEAVER
1900 Glades Road, Suite 350
Boca Raton, FL 33431
(407) 391-0400
Ruys S. HODGE
No. 19 Norre Gade
St. Thomas, VI 00801
(809) 774-6490
GODFREY DECASTRO
Attorney General of
The Virgin Islands
Department of Justice
P.O. Box 280
St. Thomas, VI 00801
(809) 774-5666
Counsel for Appellants
Legislature of the
Virgin Islands
BRENDA J. HOLLAR *
2A & 2B Kongens Gade
P.O. Box 8897
St. Thomas, VI 00801
(809) 774-6003
DAviD A. BORNN
LAW OFFICES OF EDITH L. BORNN
8 Norre Gade
P.O. Box 1500
St. Thomas, VI 00804
(809) 774-1400
JUDITH L. BOURNE
14B Norre Gade
P.O. Box 6458
St. Thomas, VI 00804
(809) 776-8487
Attorneys for Appellants
Gjessing et al.
* Counsel of Record
INDEX
Notice of Appeal of Citizens, dated April 20, 1988 _........
Notice of Appeal of Legislature, dated June 13, 1988...
Court of Appeal Opinion, March 31, 1988 _.....................
U.S. District Court Opinion, April 18, 1987 .....................
Court of Appeal Opinion, February 26, 1987 ...................
U.S. District Court Opinion, September 3, 1986 _.........
Complaint of United States v. West Indian Company,
WE tek TOUS CTI Te UE CE ici Sis attics.
Trial Judge’s letter of September 19, 1972 to Governor
Evans urging settlement
District Court Order of December 27, 1973 staying
EERE RIT ESD LISD eke ee GEO rte
Partial Transcript of Oral Argument, December 7,
__- EERIRER TTI SS SIND alee REP LEN Ra eR cele REN ODE SOY) Mp SRM NRE
Convention Between United States and Denmark Ced-
ing Danish West Indies, August 4, 1916 ............00.......
Danish Ministry of Finance Letter dated January 18,
DOES Glee CIO PH hieniscin ik
Memorandum of Understanding of October 3, 1973
First Addendum to Memorandum of Understanding,
ey, acme epee Aine eee Nesta rare
Second Addendum to Memorandum of Understanding
(Revised), September 21, 1981 ...............00000
Act No. 5188, Sixteenth Legislature of the Virgin
eS Ee Eee eee pe eer
Act No. 4700, Fourteenth Legislature of the Virgin
Islands (Bill 14-0664) -...........00.000 0... is ree mente
Act No. 3326, Ninth Legislature of the Virgin Islands
CHE FRG, De) ooo eos... AARNE ERODE ARE CAA ER
Page
ii
INDEX—Continued
Page
Partial Transcript of July 9, 1986 Regular Session of
Sixteenth Legislature of the Virgin Islands ............... 180a
Revised Organic Act of 1954, 48 U.S.C.A. § 1541 et seq.,
Bections 3 e060 6 uc. 2 ee 185a
Territorial Submerged Lands Act, Pub. L. 88-183, 77
stat. 338, November 20, 1963, 48 U.S.C.A. § 1701 _... 188a
Territorial Submerged Lands Act, Pub. L. 93-435, 88
stat. 1212, October 5, 1974, 48 U.S.C.A. § 1704 et
DO inc sncnnonciinnsididanevidiniiieitpaee ae 192a
WICO letter and draft Complaint of 3/16/79 ................ 198a
Department of Conservation and Cultural Affairs Cease
ana Desist Oreo ou 205a
Coastal Zone Management Act 12 V.I.C. §§ 901 et seq... 207a
Special Legislation Prohibition, 48 U.S.C.A. § 1471 ...... 248a
Pie 1 VE Cole €4 oun eee Z249a
ALI Restatement of Property (1944)
1 | een Nene EN UN le LO I oo 250a
SE isc cetinns-andcc4nctnssewnarchc eae 250a
5. > ee eee nnn te 250a
|. nn EMneMmnnE Erste 25la
ALI Restatement (Second) of Foreign Relations Law
of United States (1965)
Oy RB casos sinodcivannstciesncenasdeugtauasepe ee 251a
2 MMMM TM OO MAN 251a
la
IN THE UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
Nos. 87-3369, 87-3370, 87-3371, 87-3372
THE WEST INDIAN COMPANY, LTD.,
Appellee
vs.
GOVERNMENT OF THE VIRGIN ISLANDS, LEGISLATURE OF
THE VIRGIN ISLANDS (Intervenor), HELEN GJESSING
(Intervenor), LEONARD ReeED (Intervenor), KATE
SruLL (Intervenor), LUCIEN MOOLENAAR (Intervenor),
RuTH MOOLENAAR (Intervenor),
Appellants
NOTICE OF APPEAL TO THE SUPREME COURT
OF THE UNITED STATES
Notice is hereby given that HELEN W. GJESSING,
Individually and as President of the Save Long Bay
Coalition, Inc... KATE STULL, Individually and as Presi-
dent of the League of Women Voters, Inc.; RUTH
MOOLENAAR, Individually and as Director of the St.
Thomas Historical Trust, Inc... LEONARD REED, Indi-
vidually and as President of the Virgin Islands Conser-
vation Society, Ine., and LUCIEN MOOLENAAR, Indi-
vidually and as President of the Virgin Islands 2000,
Inc., appellants in this case, hereby appeal to the Supreme
Court of the United States from the judgment of the
United States Court of Appeals for the Third Circuit
dated March 31, 1988, affirming the judgment of the
United States District Court for the District of the Vir-
gin Islands dated April 13, 1987.
2a
This appeal is taken pursuant to Title 28 U.S.C. § 1254
(2).
Dated: April 20, 1988
Attorneys for Appellants
/s/ David A. Bornn
Davip A. BoRNN, Esq.
/s/ Brenda J. Hollar
BRENDA J. HOLLAR, Esq.
/s/ Judith L. Bourne
JUDITH L. BOURNE, Esq.
3a
AFFIDAVIT OF SERVICE
I, LORECIA N. KRIGGER, being duly sworn do here-
by depose and say that on this 20th day of April, 1988,
I caused a true and exact copy of the foregoing Notice
of Appeal to be served, by hand delivery, on Maria T.
Hodge, Esq. for West Indian Company, Ltd., 40B Beltjen
Road, St. Thomas, USVI 00802; Godfrey deCastro, At-
torney General of the V.I., for the Executive Branch of
the Government of the U.S. Virgin Islands, at Depart-
ment of Justice, Post Office Square, St. Thomas, USVI
00802; and on Rhys S. Hodge, Esq. for the Legislative
Branch of the Government of the U.S. Virgin Islands, at
#19 Norre Gade, St. Thomas, USVI 00802.
/s/ Lorecia N. Krigger
LORECIA N. KRIGGER
SWORN AND SUBSCRIBED TO BEFORE ME THIS
20th DAY OF APRIL, 1988.
/s/ David A. Bornn
Notary Public
4a
IN THE UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
Nos. 87-3369, 87-3370, 87-3371, 87-3372
THE West INDIAN COMPANY, LTD.,
. Appellee
GOVERNMENT OF THE VIRGIN ISLANDS, LEGISLATURE OF
THE VIRGIN ISLANDS (Intervenor), HELEN GJESSING
(Intervenor!, LEONARD REED (Intervenor), KATE
STULL (Intervenor), LUCIEN MOOLENAAR (Intervenor),
RUTH MOOLENAAR (Intervenor},
Appellants
NOTICE OF APPEAL TO THE SUPREME COURT
OF THE UNITED STATES
Notice is hereby given that Appellant Legislature of
the Virgin Islands in this case, hereby appeals to the
Supreme Court of the United States from the judgment
of the United States Court of Appeals for the Third Cir-
cuit dated March 31, 1988, affirming the judgment of the
United States District Court for the District of the Vir-
gin Islands dated April 13, 1987.
This appeal is taken pursuant to Title 28 U.S.C. § 1254
(2).
Dated: June 13, 1988
Attorneys for Appellant
s/ Rhys S. Hodge
Ruys S. Hopee, Esq.
BURKE, BOSSELMAN & WEAVER
' Fred P. Bosselman
FRED P. BOSSELMAN, Esq.
2
By
5a
AFFIDAVIT OF SERVICE
I, Fred P. Bosselman, being duly sworn do hereby de-
pose and say that on this 13th day of June, 1988, I
caused a true and exact copy of the foregoing Notice of
Appeal to be served by hand delivery on Maria T. Hodge,
Esq. for West Indian Company, Ltd., 40B Beltjen Road,
St. Thomas, USVI 00802; Godfrey deCastro, Attorney
General of the V.I., for the Executive Branch of the Gov-
ernment of the U.S. Virgin Islands, at Department of
Justice, Post Office Square, St. Thomas USVI 00802;
and on David Bornn, Esq. at No. 8 Norre Gade, St.
Thomas, V.I. 00802, Judith Bourne, Esq. at 14B Norre
Gade, St. Thomas, USVI 00802 and Brenda Hollar, Esq.
at 2A&2B Kongens Gade, St. Thomas, USVI 00802.
s’ Fred P. Bosselman
SUBSCRIBED AND SWORN to before me this 12th
day of June, 1988.
‘s/ William J. Turberville Il
Notary Public
Commission Expires: Oct. 2, 1989
6a
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
Nos. 87-3369, 87-3370, 87-3371, 87-3372
THE WEsT INDIAN COMPANY, LTD.
vs.
GOVERN MENT OF THE VIRGIN ISLANDS
(1) LEGISLATURE OF THE VIRGIN ISLANDS (Intervenor)
(2) HELEN GJESSING (Intervenor)
(3) LEONARD REED (Intervenor)
(4) Kate STULL (Intervenor)
(5) LuctIEN MOOLENAAR (Intervenor)
(6) RuTH MoOoOLENAAR (Intervenor)
LEGISLATURE OF THE VIRGIN ISLANDS,
intervenor above named,
Appellant in No. 87-3369
HELEN W. GJESSING, Individually and as President
of the Save Long Bay Coalition, Inc.,
Appellant in No. 87-3270
KaTE STULL, Individually and as President of the
League of Women Voters, Inc.; and
RUTH MOOLENAAR, Individually and as Director of the
St. Thomas Historic Trust, Inc.,
Appeilants in No. 87-3371
LEONARD REED, Individually and as President of the
Virgin Islands Conservation Society, Inc., and
LUCIEN MOOLENAAR, Individually and as President of
the Virgin Islands 2000, Inc.,
Appellants in No. 87-3372
7a
On Appeal from the District Court
of the Virgin Islands (St. Thomas)
(D.C. Civil No. 86-293)
Argued December 7, 1987
BEFORE: GIBBONS, Chief Judge,
STAPLETON, and MANSMANN, Circuit Judges
(Opinion filed March 31, 1988)
Maria Tankenson Hodge ( Argued)
Maria Tankenson Hodge, P.C.
1 Frederiksberg Gade
P. O. Box 4511
St. Thomas, V.I. 00801
Sanford C. Miller
Christopher G. Kelly
Haight, Gardner, Poor & Havens
195 Broadway
New York, NY 10007
Attorneys for West Indian
Company, Ltd.
Godfrey R. de Castro
Attorney General
Rosalie Simmonds-Ballentine
Solicitor General
Richard O. Baker (Argued)
Assistant Attorney General
General Litigation Services
Department of Justice
+46 Norre Gade
St. Thomas, V.I. 00802
Attorneys for Government
of the Virgin Islands
———S_c0o“.QQGYT
Rhys S. Hodge (Argued)
No. 19 Norre Gade
P. O. Box 6520
St. Thomas, V.I. 00801
Attorney for Legislature
of the Virgin Islands
Brenda J. Hollar (Argued)
Professional Building #14
P. O. Box 8897
St. Thomas, V.I. 00801
Attorney for Helen W.
Gjessing, Individually and
as President of the Save
Long Bay Coalition, Ine.
Edith L. Bornn
David A. Bornn (Argued)
Veronica J. Handy
Law Offices of Edith L. Bornn
+8 Norre Gade
P. O. Box 1500
St. Thomas, V.I. 00801
Attorneys for Kate Stull,
Individually and as
President of the League of
Women Voters, Inc.; and
Ruth Moolenaar, Individually
and as Director of the
St. Thomas Historic Trust,
Ine.
Judith L. Bourne (Argued)
14B Norre Gade
P. O. Box 6458
St. Thomas, V.I. 00801
9a
Attorney for Leonard Reed,
Individually and as
President of the Virgin
Islands Conservation
Society, Inc., and
Lucien Moolenaar,
Individually and as
President of the Virgin
Islands 2000, Ine.
OPINION OF THE COURT
STAPLETON, Circuit Judge:
The intervenors in this action, including the present
Virgin Islands legislature and the officers of various in-
terested citizen groups, appeal from a summary judg-
ment in favor of, and grant of a permanent injunction
to, the West Indian Co., Ltd. (WICO). The central issue
presented is whether a 1982 agreement between WICO
and the Government of the Virgin Islands, ratified by
the legislature then sitting, should be considered con-
tractually binding on the present legislature. The dis-
trict court held that it should; the intervenors contend
that it should not. Because we agree with the district
court’s conclusions that the 1982 agreement is a contract
and that the present legislature’s attempt to cancel it by
means of the Repeal Act is a violation of the contract
clause of the United States Constitution, incorporated
into Virgin Islands law by $3 of the Revised Organic
Act, we will affirm.
&
WICO is a Dutch-owned Virgin Islands corporation.
In 1913, Denmark, then the sovereign of the Virgin
Islands, granted WICO, then a Dutch entity, rights in
certain parts of the Long Bay area of the St. Thomas
10a
harbor on Charlotte Amalie. This grant was evidenced
by two letters to WICO from the Danish Ministry of Fi-
nance, dated January 18, 1913 and April 16, 1913.' Of
these letters, the first was the more significant; it pro-
vided that when designated submerged areas of the har-
bor had been reclaimed by WICO, the company would
acquire free and unrestricted ownership of the land. No
time limitations restricted WICO’s reclamation rights
under this original grant.
In 1914, WICO built a dock and harbor basin in the
area covered by the grant, leaving it with reclamation
rights in 42 additional acres. Although it did business in
the Virgin Islands continuously over the years, using
its dock and harbor basin, WICO did not proceed with
any further reclamation until 1986.
In 1917, Denmark ceded the Virgin Islands to the
United States. WICO’s rights were specifically preserved
by § 3 of the Convention of Cession, which read:
4) The United States will maintain the following
grants, concessions and licenses, given by the Danish
Government, in accordance with the terms on which
they are given:
a. The concession granted to ‘Det vestindiske Kom-
pagni’ (the West Indian Company) Ltd. by the
communications from the Ministry of Finance of
January 18th 1913 and of April 16th 1913 relative
to a license to embank, drain, deepen and _ utilize
certain areas in St. Thomas Harbor, and preferen-
tial rights as to commercial, industrial or shipping
establishments in the said Harbor.
1The Danish Government had originally granted a similar con-
cession to a consortium of Dutch businessmen. The consortium
proved unable to meet the conditions of its concession, however,
and its rights were transferred by the Danish Government to WICO
in the 1913 grant, with certain modifications.
lla
App. at 30, 32. Before signing the Convention, the
United States asked Denmark whether the grant to
WICO was in perpetuity; Denmark responded that it
was, and that there was no limitation as to the time
within which WICO had to exercise its rights.*
No further developments of significance took place
until 1968, when the United States Department of the
Interior filed suit in federal district court in the Virgin
Islands, seeking to quiet title to the area of WICO’s
Danish grant and secure a declaratory judgment that
WICO’s treaty rights had lapsed. WICO defended this
action, arguing that its treaty rights to reclaim and
take title were vested and in perpetuity. While this suit
was pending, the Danish Government sent a formal
diplomatic note, dated June 25, 1970, to the United
States Government, stating that WICO’s treaty rights
had originally been granted by Denmark without con-
dition as to time and requesting that those rights be
respected.
WICO proposed a settlement of the suit to both the
Government, although the latter was not formally a
party, and negotiations began. The parties to the nego-
tiations included the United States Government, the Vir-
gin Islands Government, WICO, and other private par-
ties with interests in the harbor. The negotiations were
suecessfully concluded in 1972 with a settlement agree-
ment, the substance of which was that WICO would sur-
render reclamation rights to 12 out of the 42 acres at
issue and the United States and Virgin Islands Govern-
ments would recognize WICO’s right to reclaim and
obtain title to the remaining 30 acres. A number of
other obligations were also assumed by WICO as condi-
tions of the settlement; for example, WICO agreed to
2 The Danish Government also informed the United States at this
time that because WICO had begun to exercise its rights by doing
some reclamation, WICO’s rights had vested under Danish law.
12a
fill in an extra 2.5 acres for public parkland and trans-
fer it to the Virgin Islands Government, and to fill cer-
tain waterfront land so as to enable the Government to
widen the shoreline highway from two to four lanes.
The conditions of the settlement agreement were em-
bodied in a document called the Memorandum of Under-
standing. The parties included in the Memorandum a
statement of reasons why they believed the conveyance
to WICO would further the public interest, including not
only the above benefits but also the expected increase in
employment, improvement of facilities for tourism, and
elimination of the “possible cloud over the future of St.
Thomas Harbor” posed by WICO’s Danish rights.
Because at that time the United States held title to
the submerged lands surrounding the Virgin Islands,
the parties to the settlement considered it necessary to
arrange a two-step procedure for transferring title to
the 30 acres to WICO after reclamation: the United
States Government would convey to the Virgin Islands
Government, and the Virgin Islands Government to
WICO. The Memorandum was not particularly clear,
however, on just when the transfer of title was to be
accomplished. It provided that after specified conditions
had been met, the parties would meet at a Closing to
exchange various documents; after the Closing, further
conditions would have to be met, mainly the completion
of reclamation within specified time limits, before WICO
would actually receive title. “Once reclaimed,” § 15(b)
of the Memorandum states, “the areas filled shall belong
to WICO in fee simple. . . provided that WICO is then in
compliance with Sections 2 and 8 of this Agreement re-
quiring WICO to fill and provide land for the V.I. Gov-
ernment.” Section 15(b) of the Memorandum also con-
tains the following provision:
Except as otherwise specifically provided herein, this
Agreement shall be binding upon and shall inure to
etna
13a
the benefit of the parties, their successors and
assigns.
When the settlement had been reached, public hearings
were held. The agreement then went to the Virgin
Islands legislature, the Ninth Legislature, for ratifica-
tion, which was forthcoming in the form of Act No.
3326, passed on October 11, 1972 and formally approved
by the Governor on October 30, 1972. Because the Virgin
Islands Government was not a party to the underlying
suit, its ratification of the settlement took the form of
a recommendation to the United States Government to
accept and implement the settlement. There is no evi-
dence that the Ninth Legislature acted hastily or without
full information and adequate opportunity for public
comment in approving the settlement agreement.*
The Memorandum of Understanding was signed on
October 3, 1973 by the United States Government, the
Virgin Islands Government, WICO, and the other inter-
ested private parties. The Memorandum was filed with
the district court, and the Department of the Interior’s
action was stayed sine die pending completion of the
various prerequisites to closing and ultimate transfer of
title specified in the Memorandum.
3In fact, the opposite appears true. One of the intervenors,
discussing the passage of Acts No. 3326 and 4700, asserts that:
If any records were preserved, it [sic] would readily reflect
that the League of Women Voters of the Virgin Islands and
the Virgin Islands Conservation Society have always made
appearances and have voiced strong objection to any dredg-
ing in St. Thomas Harbor... . Despite the vocal opposition
to the dredging . . . prior legislation was nevertheless en-
artes... ss
Gjessing Br. at 23-24. Others of the intervenors state that from the
time of the proposed settlement agreement on, “vigorous public
opposition has been voiced by individuals and citizens groups.”
Moolenaar/Reed Br. at 10.
l4a
The preconditions set by the Memorandum to transfer
of title were never fulfilled; the order of events envi-
sioned by the drafters of the Memorandum was altered
in several respects. First, in October 5, 1974, the United
States passed the 1974 Territorial Submerged Lands Act,
48 U.S.C. $$ 1701-1708 (1982 & 1987 Supp.). Under
this law,
[s]ubject to valid existing rights, all right, title, and
interest of the United States in lands permanently
or periodically covered by tidal waters ... and in
artificially made, filled in, or reclaimed lands which
were formerly permanently or periodically covered
by tidal waters, are hereby conveyed to the govern-
ments of Guam, the Virgin Islands, and American
Samoa, as the case may be, to be administered in
trust for the benefit of the people thereof.
48 U.S.C. §1705(a). To accommodate this change in
circumstances, WICO drafted and presented to the Vir-
gin Islands Government a First Addendum to the Mem-
orandum, dated October 28, 1975. This Addendum simply
eliminated the first of the two steps of the title transfer
procedure. The executive branch of the Virgin Islands
Government agreed to this change, and the Virgin Is-
lands Attorney General, considering the change purely
procedural, determined that there was no need to submit
the First Addendum to the legislature for approval.
A second departure from the expected was the enact-
ment, in October of 1978, of the Virgin Islands Coastal
Zone Management Act (CZMA), 12 V.I.C. §§ 901-914
(1982 & 1987 Supp.). The general purpose of the Virgin
Islands CZMA was to set up a comprehensive program
for the management, conservation, and orderly develop-
ment of the coastal area; the main method of implement-
ing this program was a permit system run by the Coastal
Zone Management Commission, a new unit of the De-
partment of Conservation and Cultural Affairs. The
15a
thrust of the CZMA is thus to require those wishing to
engage in new development of the coastal area, whether
on private or public lands, to obtain a permit to do so
from the Virgin Islands Coastal Zone Management Com-
mission, Federal permits for coastal area development
in the Virgin Islands must often be obtained in addition
to Virgin Islands permits.*
Section 910 of the CZMA sets forth conditions regard-
ing when a Virgin Islands coastal zone permit is re-
quired and may be granted, and outlines the procedures
for application. These conditions and procedures apply
to both privately- and publicly-held land. However, § 911
imposes stringent additional restrictions and conditions
on use or development of public lands. The most im-
portant of these additional restrictions, for purposes of
this case, are those of §§911(a) and (d). These sec-
tions forbid conveyance of publicly-held coastal zone
areas to private parties; they require a permit or lease
for any development or occupancy of such areas, and
limit the term of such permit or lease to a maximum of
20 years.® Coastal zone permits for any use of public
4In this case, for example, WICO’s operations fall within 33
U.S.C. § 403, requiring federal approval for any excavation or fill
within navigable waters, and 33 U.S.C. § 1344, requiring federal
permits for discharge of dredged or fill material into navigable
waters, and possibly within 33 U.S.C. § 1341, requiring federal
permits for any discharge into navigable waters. Section 910(g) of
the Virgin Islands CZMA states that where any development or
occupancy in the coastal zone “require separate and distinct ap-
proval from the United States Government or any agency...
thereof,” the Virgin Islands “coastal zone permit shall be contingent
upon receipt of all other such permits and approvals, and no such
development of occcupancy shall commence prior to receipt of all
such permits and approvals.”
5 A coastal zone permit that includes an occupancy or develop-
ment permit, § 911(d)(1) provides, “shall not constitute a property
right and shall be renewable only if the requirements of this sec-
tion . . . are satisfied”; a coastal zone permit that includes an
occupancy or development lease, § 911(d)(2) provides, “shall only
l6a
lands must provide for payment of rental fees; if the
permit authorizes dredging, the permit must provide for
reclamation fees. § 911(f)(1), (2). Fee schedules are
set by the Coastal Zone Management Commission. § 911
(f) (3). A coastal zone permit for public lands may be
modified or revoked during its term, upon a determina-
tion by the Governor that revocation or modification is
in the public interest and necessary to prevent signifi-
cant environmental damage. §911(g). The CZMA is
careful to avoid retroactive effect by specifying that
[njothing herein contained shall be construed to
abridge or alter vested rights obtained in a develop-
ment in the first tier coastal zone prior to the ef-
fective date of this chapter or any occupancy permit
or lease of trust lands or other submerged or filled
lands issued prior to the effective date of this chap-
CO sc 0s
§ 905(g).®
After passage of the CZMA, WICO promptly notified
the Virgin Islands Legislature and Governor that it
would consider application of the CZMA to it to be a
material breach of the Memorandum of Understanding.
Negotiations began, and by September of 1981 a com-
promise had been worked out. The basic terms of this
bargain, embodied in a Second Addendum to the Mem-
orandum of Understanding,’ were that WICO would give
be granted-for a particular parcel of filled land and for a non-
renewable lease period of not more than 20 years.”
6 The “first tier” is defined as “that area extending landward
from the outer limit of the territorial sea... to distances inland as
specified in the maps incorporated by reference ... .” § 902(r).
WICO’s grant area would apparently fall within the first tier.
7 The Second Addendum amended and restated the Memorandum
of understanding as amended by the First Addendum. As it incor-
porates the entire agreement of the parties, no reference back to
the Memorandum is necessary.
17a
up about half of its remaining 30-acre claim in exchange
for the Virgin Islands Government’s promise to convey
to WICO title to the 15 acres left.8 There are many ad-
ditional conditions in the Second Addendum. WICO
agreed, for example, to specified zoning restrictions and
specified limited uses, to a height restriction of three
stories, and to reserve a certain percentage of its area
for “usable open space.” §11(b). These agreed-upon
restrictions, however, apply only to development com-
menced within ten years of reclamation and completed
within 15 years of reclamation; any development not
commenced or completed within these time limits, and
“any development beyond that explicitly contemplated
by this Agreement,” is controlled instead by the “then
current laws,” the CZMA or its future equivalent.
§12(a). In addition, the Second Addendum provides
that “as to any matters not specifically covered by the
Agreement, such as utilities, siting, performance stand-
ards, design and landscape, WICO shall be subject to
the requirement of a Coastal Zone Management permit.”
§12(b). The Virgin Islands Government, for its part,
agreed in the Second Addendum that WICO was not to
be subject to the charges mandated by § 911 for rental
of or removal of dredge fill from publicly-held lands,
and that WICO was to be able to use its land free of
the use or rental charges imposed by § 911 on publicly-
held land. § 19(e). .
Like the Memorandum, the Second Addendum provides
that after certain conditions are met, a Closing is to be
held, at which conveyances and other documents are to
be exchanged by the parties; transfer of title is accom-
plished after further conditions are met, most impor-
tantly completion of reclamation. Once WICO begins
reclamation, as it has done, time limits within which
8 According to the intervenors, the eastern anchorage of St.
Thomas harbor, the basin in which WICO’s 15 acres is located, is
about 400 acres. Moolenaar/Reed Br. at 3.
18a
it must finish apply. The Second Addendum follows the
Memorandum in stating that when the specified acreage
has been reclaimed, “WICO shall have title to and owner-
ship of the areas filled . . . provided that WICO is then
in compliance with Section 2 of this Agreement requir-
ing WICO to fill and provide land for the V.I. Govern-
ment,” and that “[e]xcept as otherwise specifically pro-
vided herein, this Agreement shall be binding upon and
shall inure to the benefit of the parties, their successors
and assigns.” § 16(b). The Second Addendum also spe-
cifies that nothing contained in it is to affect the rights
of the United States or Virgin Islands Governments to
acquire by eminent domain or condemation the lands
covered by the Addenum. § 19/a).
A condition of the Second Addendum was that the
CZMA be amended to exempt WICO from its provisions
insofar as the Addendum replaced or nullified application
of those provisions. The CZMA was duly amended by
the Fourteenth Legislature on April 7, 1982 by Act No.
4700. Act No. 4700 added the following paragraph to
the Coastal Zone Act:
(5) any treaty right, grant, or concession which
was vested in any party prior to the date of enact-
ment of this chapter and which in whole or in part
has been expressly recognized by statute, court
order, or lawfully executed agreement as binding on
the Government of the Virgin Islands, whether such
recognition precedes or succeeds the date of enact-
ment of this chapter, and subject to any agreements
or Memorandums of understanding pertaining to
such right, grant, or concession which have been or
may hereafter be ratified by law.
12 V.L.C. § 905(i) (5). In addition, Act No. 4700 rati-
fied the Second Addendum “with the full force and effect
of law” provided that “the Governor and Departments
of the Government of the Virgin Islands, and all instru-
a
19a
mentalities thereof are authorized and directed, within
the scope of their jurisdiction, to execute the terms of
such Agreement.” App. at 116. Again, as the inter-
venors themselves maintain, there was no lack of oppor-
tunity for public comment on the Second Addendum and
on Act No. 4700. See supra note 6.
On April 16, 1984, the federal court, acting sua sponte,
entered an order pursuant to Fed.R.Civ.P. 41(b) dis-
missing for lack of prosecution the 1968 action by the
Department of the Interior. No appeal was taken from
this dismissal, and no motion to reopen has ever been
filed. The intervenors, in connection with the present
action, unsuccessfully moved for relief from the dis-
missal.
After the Second Addendum had been ratified and the
CZMA amended, WICO began the lengthy process of
otbaining permits for reclamation from the United States
Army and the Virgin Islands Coastal Zone Management
Commission. On March 9, 1983, WICO submitted an
application for a federal permit to dredge and fill; WICO
received, on February 14, 1985, a permit which would
allow it to fill 7.5 acres, but on the condition that
archaeological surveys be done prior to the start of any
dredging operations.” A Virgin Islands permit was
® The intervenors’ claim that the U.S. Department of Justice
“protested the dismissal as error” is not well founded. The October
6, 1984 letter sent by the U.S. Attorney to the district court on this
matter was “solely for [the court’s] information and for no other
purpose”; it informed the court that the Justice Department was in
touch with the Interior Department
to determine whether the federal government has any present
interest in reopening the litigation. When the Department of
the Interior has completed its review and consideration of this
matter, this office will take any appropriate action.
App. at 699. No further action was taken.
© The Army permit only covers WICO’s dredging and filling. It
notes as “special conditions” not only the requirement that archae-
20a
granted to WICO without substantial additional study,
as the Virgin Islands Government considered itself
bound by the Second Addendum and Act No. 4700 to
allow WICO to proceed pursuant to the terms and lim-
itations of that agreement. After doing the required
archaeological surveys, WICO began dredging in June
of 1986.
WICO’s dredging operations created an immediate
public uproar. In response, the Sixteenth Legislature
called itself into special session and on July 9, 1986
approved a bill to repeal Acts No. 3326 and 4700. The
Governor vetoed the bill, deploring the action to abrogate
the “long-standing agreement to permit the limited fur-
ther development of an already heavily developed harbor-
front at Long Bay.” App. at 131. The Legislature,
again in special session, overrode the veto on August 11,
1986 to make the Repeal Act, Act No. 5188, law. Sec-
tion 1 of the Repeal Act rescinds the two earlier meas-
sures, Acts No. 3326 and 4700, in their entirety; Section
2 provides that
Any and all activities that are conducted in Long
Bay by the West Indian Company, Ltd., shall com-
ply with the provisions of the Coastal Zone Manage-
ment Act, Title 12, Chapter 21, Virgin Islands Code.
Any permit for the development or occupancy of
the submerged lands in Long Bay must be sent to
the Governor for approval and the Legislature for
ratification.
ological surveys be conducted prior to dredging, but also that another
permit application be submitted to the Department of the Army
for review prior to the construction by WICO of a marina on the
filled land. The Army permit also repeats the requirement of the
Second Addendum that the final plans for proposed development
over the filled area be submitted to the Virgin Islands Department
of Cultural and Conservation Affairs for review of siting, design,
and the like.
A a A ea ME: ON a
a
2la
App. at 130. On August 18, 1986, the Virgin Islands
Department of Conservation and Cultural Affairs is-
sued a stop order to WICO on the ground that the per-
mit already issued to WICO was no longer valid in light
of the Repeal Act.
On August 14, 1986, WICO filed suit in the district
court in the Virgin Islands seeking a temporary restrain-
ing order and a preliminary injunction against enforce-
ment of the Repeal Act. A hearing on this motion was
held on August 19, 1986, and a temporary restraining
order forbidding any interference with WICO’s dredging
was granted at that time. A hearing on the preliminary
injunction was scheduled for August 26, 1986.
At the August 14th hearing, the Virgin Islands At-
torney General made a special appearance to advise the
court that the executive branch of the Virgin Islands
Government intended to decline to defend the suit, and
to request the court’s permission for the executive not
to appear in the case. Because the executive braneh con-
sidered the Repeal Act invalid, the Attorney ‘*<neral
argued, appearance would violate Fed. R.Civ.P. 11 and
constitute a breach of the Canon of Ethics. The court
allowed the executive branch to bow out, not because of
the ethics-based arguments but because it believed that
for a federal court to force the executive to defend
would constitute unwarranted interference in the po-
litical affairs of the Virgin Islands Government. The
court then permitted the Legislature, and officers of
several citizen groups supporting the Repeal Act. to in-
tervene.” The citizen intervenors promptly moved to
11 The CZMA mandates that CZMA permits for development or
occupancy of publicly-held coastal areas be sent to the Governor for
approval and the legislature for ratification; if the legislature is not
in session, the Committee on Conservation, Recreation, and Cultural
Affairs may ratify a permit. § 911(e).
12 These officers include Helen Gjessing, president of Save Long
Bay Coalition, Inc.; Lucien Moolenaar, president of Virgin Islands
22a
compel the Attorney General to hire outside counsel to
represent the Virgin Islands Govrnment in the suit; this
motion was denied. The citizen intervenors then filed
cross-claims against both the executive and legislative
branches of their government, charging that the Govern-
ment’s agreement to the Memorandum and Addenda con-
stituted a breach of fiduciary duty and a violation of
the citizens’ constitutional rights. The claim against the
legislative branch has since been dropped, but the citi-
zen intervenors’ claim against the executive branch re-
mains. The citizen intervenors assert that the executive
branch, for various reasons, should be required to pay
the citizens’ attorneys’ fees and costs, plus any costs
awarded to WICO.
At the August 26th hearing, the district court found
that WICO had established a likelihood that it would
prevail on the merits of its claim that the Repeal Act
was an unconstitutional violation of the contract clause,
that WICO would suffer irreparable harm absent is-
suance of an injunction, and that an injunction would
be in the public interest. Based on these findings, the
district court granted WICO’s request for a preliminary
injunction. West Indian Co., Ltd. v. Government of the
Virgin Islands, 643 F. Supp. 869 (D.V.I. 1986). On ap-
peal, this court, employing the narrow scope of review
applicable in appeals from the issuance of a preliminary
injunction, affirmed the decision of the district court.
West Indian Co., Ltd. v. Government of the Virgin Is-
lands, 812 F.2d 134 (3d Cir. 1987) (per curiam).
The district court granted summary judgment to
WICO on April 13, 1986, converting the preliminary in-
junction into a permanent injunction. West Indian Co.,
2000, Inc.; Ruth Moolenaar, director of the St. Thomas Historical
Trust, Inc.; Leonard Reed, president of the Virgin Islands Con-
servation Society, Inc.; and Kate Stull, president of the League of
Women Voters of the Virgin Islands, Inc. All intervene in their
personal capacities as well as their capacities as corporate officers.
23a
Ltd. v. Government of the Virgin Islands, 658 F. Supp.
619 (D.V.I. 1987).
The intervenors appeal from the grant of summary
judgment and a permanent injunction. Making substan-
tially the same arguments here as before the district
court, they contend, inter alia, that United States courts
lack jurisdiction over this matter; that summary judg-
ment was inappropriate; that there is no contract and
thus ne contract clause violation; that the public trust
doctrine barred formation of a valid contract to convey
title to any submerged land to WICO; and that the
Repeal Act is a valid use of police power and, as such,
withstands WICO’s contract clause challenge. The inter-
venors also appeal from dismissal of their cross-claim
against the executive branch. WICO reasserts on appeal
both the contract clause argument with which it pre-
vailed on summary judgment and a takings claim not
reached by the district court.
II.
The intervenors challenge the exercise of subject mat-
ter jurisdiction by the district court, arguing that all
rights of WICO arise under the 1917 Convention of Ces-
sion between the United States and Denmark and are
therefore subject to the Convention’s provision for dis-
pute resolution. We disagree. What is at issue in this
action is not the nature of the original grant to WICO,
preserved in the Convention of Cession, but rather the
nature of the agreements negotiated between WICO and
the Virgin Islands Government.’* The determinative
13 The Convention provides that disputes unreasonable by nego-
tiation between Denmark and the United States are to be brought
before the Permanent Court of Arbitration at the Hague, which is
still extant.
14 We do not accept the intervenors’ argument that the Memo-
randum and Second Addendum are invalid as attempts to modify
the Convention of Cession. The Convention created a right in
24a
nature of the recent agreements, in particular the Sec-
ond Addendum, will be evident from our discussion of
the merits; it is also evident, we think, simply from the
Repeal Act itself, which has nothing to do with the Con-
vention of Cession but is directed to negating the Memo-
randum and Second Addendum. Constitutional issues
arising in connection with the status of agreements made
between a Virgin Islands corporation and the Virgin
Islands Government, and dealing with rights to and uses
of land located within the Virgin Islands, clearly fall
within the subject matter jurisdiction of the District
Court for the Virgin Islands. 48 U.S.C. § 1612; 4 V.L.C.
§ 32. Therefore, the district court properly exercised
jurisdiction, and there is appellate jurisdiction in this
court pursuant to 28 U.S.C. §§ 1291 and 1294(3).
ITI.
In determining whether a grant of summary judgment
was appropriate, we must determine whether, viewing all
reasonable inferences that may be drawn from the evi-
dence in the light most favorable to the intervenors, no
genuine issue of material fact exists and WICO is entitle:
to summary judgment as a matter of law. Goodman v.
Mead Johnson & Co., 5384 F.2d 566, 573 (3d Cir. 1976),
cert. denied 429 U.S. 1038 (1977). The Supreme Court
recently offered the following guidance for identification
of material facts:
As to materiality, the substantive law will identify
which facts are material. Only disputes over facts
that might affect the outcome of the suit under the
governing law will properly preclude the entry of
WICO to have the United States Government respect its original
grant; surely WICO and the United States Government (or its
successor in interest, the Virgin Islands Government) can subse-
quently negotiate a valid contract of settlement concerning the
extent of WICO’s rights.
25a
summary judgment. Factual disputes that are irrele-
vant or unnecessary will not be countered.
Anderson v. Liberty Lobby, Inc., 106 S. Ct. 2505, 2510
(1987).
In this case, the intervenors argue that they are entitled
to summary judgment, and that sumary judgment was
improperly granted to WICO because material facts are
in dispute. Items listed as disputed material facts by the
intervenors include the proper translation and meaning
of the terms used in the 1913 letters from the Danish
Government to WICO; the intent of the parties to the
1913 letters as to the length of the grant of rights to
WICO; whether the United States failed to assert the pub-
lie’s equitable interest in the area claimed by WICO; and
whether the area claimed by WICO was being used for
public trust purposes prior to WICO’s dredging. As will
be clear from our analysis of the substantive law appli-
cable in this matter, disputes over these and other items
claimed by the intervenors to be material facts are not
“disputes over a fact that might affect the outcome of the
suit under the governing law” and thus do not preclude
summary judgment under the standard set forth by the
Court in Anderson.
IV.
We now turn to the merits of this case.. The first and
most important of the issues we confront is whether or
not there is a contract between WICO and the Virgin
Islands Government, and whether the Repeal Act impairs
that contract so as to confiict with the bar set by Article
I, § 10, cl. 1 of the United States Constitution, incorpo-
rated by § 3 of the Revised Organic Act of the Virgin
Islands, 48 U.S.C. § 1561, against any law “impairing the
Obligation of Contracts.”
In discussing this issue, the Supreme Court has said:
In general, a statute is itself treated as a contract
when the language and the circumstances evince a
26a
legislative intent to create private rights of a con-
tractual nature enforceable against the State.
United States Trust Co. v. New Jersey, 431 U.S. 1, 17
n.14 (1977).!° We therefore look to the language and cir-
cumstances of the agreements between the Virgin Islands
Government and WICO to determine whether they evince
the requisite intent to create private contractual rights
in WICO enforceable against the Virgin Islands Govern-
ment.
We begin with, and need go no further back than, the
most recent agreement, the Second Addendum. Negotiated
and ratified after title to the submerged lands had been
transferred to the Virgin Islands and after the Virgin
Islands CZMA had been passed, the Second Addendum is,
in our view, the definitive agreement between WICO and
the Virgin Islands Government. It is clear that both sides
compromised legitimate claims in reaching this agreement.
Clearly the Virgin Islands Government achieved signifi-
cant benefits for itself. WICO traded a full half of its
claimed acreage for definite recognition of its right to
obtain title to the remainder, an area of only 15 acres or
so. WICO also assumed a number of other obligations,
and agreed to many conditions on the use and develop-
ment of its land. The Second Addendum contains time
15 The Virgin Islands Government, although it remains an unin-
corporated territory lacking the sovereignty of a state, is treated
like a state government as far as its contractual obligations are
concerned. .We have often recognized that the ‘Revised Organic
Act conferred upon the Virgin Islands “attributes of autonomy”
similar though not equal to the full autonomy enjoyed by state
governments. See, e.g., Water Isle Hotel v. Kon Tiki St. Thomas,
Inc., 795 F.2d 325, 327 (3d Cir. 1986); In re Hooper’s Estate, 359
F.2d 569, 578 (3d Cir. 1966), cert. denied, 385 U.S. 903; Harris v.
Municipality of St. Thomas and St. John, 212 F.2d 323, 327 (3d
Cir. 1954). The attributes of autonomy relevant to this contract
dispute are the authority to enter into binding contracts and to sue
and be sued on those contracts; that the Virgin Islands Govern-
ment has this authority cannot be gainsaid. See 48 U.S.C. § 1541.
27a
limits within which WICO bound itself to act, and limits
the number of years during which new development by
WICO is not covered by the normal requirements of the
CZMA. WICO has fully complied with, and has acted in
reliance on, the Second Addendum; until pressure by the
public in 1986 led to the passage of the Repeal Act, the
Virgin Islands Government also acted in accordance with
the Second Addendum and considered it binding.’* In ad-
dition to these circumstances, which seem to us to indicate
legislative intent to enter into a binding contract with
WICO, the language with which the Second Addendum
concludes must not be overlooked:
Except as otherwise specifically provided herein, this
Agreement shall be binding upon and shall inure to
the benefit of the parties, their successors and assigns.
§ 16(b). Act No. 4700, the measure with which the Vir-
gin Islands legislature ratified the Second Addendum
after extensive debate and opportunity for public com-
ment, not only amended the CZMA to recognize WICO’s
rights, but gave the Addendum “the full force and effect
of law” and directed all officials and instrumentalities of
the Virgin Islands Government to execute the Addendum’s
terms.
We conclude that there is unambiguous evidence here
of legislative intent to create enforceable private rights
in WICO and that the Second Addendum was intended by
16 We share the f. “owing view expressed by the district court:
[A]s of August, 1986, three successive elected governors, their
respective attorneys general, and two separate Legislatures of
the Virgin Islands have recognized WICO’s rights to dredge
and reclaim certain submerged lands in the harbor Charlotte
Amalie. The various officials described above successfully nego-
tiated limits with respect to both acreage and time as to WICO’s
rights, and gained important concessions in favor of the ter-
ritory. The reason for this case is that the Sixteenth Legisla-
ture, now sitting, takes issue with the validity of the actions
undertaken by the territorial officials above described.
643 F. Supp. at 873.
4
a
28a
all concerned to be a binding contract between WICO and
the Virgin Islands Government.””
V.
The intervenors contend that the public trust doctrine
prevented the formation of any valid contract by Virgin
Islands officials to convey submerged tideland to WICO.
They make two arguments in support of this contention:
first, that because the 1974 U.S. Territorial Submerged
Lands Act conveyed all submerged lands to the Virgin
Islands in an express trust, Virgin Islands officials had
no authority to agree to convey any submerged lands out
of trust to WICO; and second, that because the submerged
lands in question here were always held in trust for the
public under the common law, the lands could not be con-
veyed out of trust to WICO.
The first of these arguments need not long detain us.
The Submerged Lands Act, passed in 1974, does indeed
convey the submerged lands in trust, but does so “subject
to existing rights.” Existing rights include the right of
WICO to reclaim and take title to at least 30 acres of
specified submerged lands, as negotiated and agreed upon
17 Because we view the Second Addendum as definitively establish-
ing contractual rights in WICO, we consider irrelevant the argu-
ments made by the intervenors based on the rule against perpetui-
ties and or alleged improper dismissal of the 1968 iawsuit. The
interevnors assert that the 1913 grant of rights to WICO was in
violation of the rule against perpetuities and, accordingly, invalid.
We doubt that the act of a sovereign like Denmark’s concession to
WICO can violate the rule against perpetuities but we need not re-
solve that issue. WICO’s rights under that concession were bar-
gained away in thhe ensuing settlement negotiations and the rights
it current possesses arise out of thhe contract entered into in 1982
by WICO and the Virgin Islands Government. Similarly, the 1968
lawsuit by the Department of the Interior had been pending sine
die for almost a decade when the Second Addendum was signed;
we agree with the district court that the 1968 suit was properly
dismissed and had no further bearing on the relationship between
WICO and the Virgin Islands Government.
<<
29a
in 1973 by both the United States and Virgin Islands
Governments in the Memorandum of Understanding.
Given this explicit exception, the Submerged Lands Act
cannot be held to create a trust that would prevent con-
veyance to WICO, pursuant to an amendment of the
Memorandum, of a maximum of about 15 acres of the
specified submerged lands.
The second basis for the intervenors’ public trust argu-
ment, the common law public trust doctrine, deserves more
attention. In evaluating this argument we look to the
“rules of common law . . . as generally understood and
applied in the United States.” '* We begin with the lead-
ing case of Illinois Central Ry. Co. v. Illinois, 146 U.S.
387 (1892). There, the state legislature had transferred
ownership of the submerged area of the entire waterfront
of Chicago, over 1000 acres, to the railroad; four years
later, a new legislature sought to revoke the transfer, and
was challenged by the railroad. The revocation was up-
held by the Court, which described title to the land under .
the harbor as:
different in character from that which the state holds
in lands intended for sale. It is different from the
title which the United States holds in public lands
which are open to preemption and sale. It is a title
held in trust for the people of the State that they
may enjoy the navigation of the waters, carry on
commerce over them, and have the liberty of fishing
TERRA GR OR EAA Cheat BE te he ind oad as
2 SA RAN
18 Under 1 V.I.C. § 4, the “rules of the common law, as expressed
in the restatements of the law approved by the American Law
Institute, and to the extent not so expressed, as generally under-
stood and applied in the United States, shall be the rules of deci-
sion in the courts of the Virgin Islands in cases to which they
apply in the absence of local laws to the contrary.” The common law
public trust doctrine is not expressed in a restatement. Moreover,
when the Virgin Islands legislature approved the Second Addendum
in 1982, there were no relevant local laws. While the CZMA had
been enacted in 1978, the legislation ratifying the Second Addendum
amended that statute to grant grandfather status to rights, like
WICO’s, that had been recognized by legislative action.
i - J
30a
therein freed from the obstruction or interference of
private parties.
146 U.S. at 452.”
Submerged lands are thus impressed with a trust for
the benefit of the public, and the sovereign’s use and dis-
position of those lands must be consistent with that trust.
This does not mean, however, that a sovereign may under
no circumstances convey submerged lands to a private
party. To the contrary, the Supreme Court in the Jllinois
Central case expressly noted that alienation in furtherance
of trust purposes was permissible:
The interest of the people in the navigation of the
waters and in commerce over them may be improved
in many instances by the erection of wharves, docks
and piers therein, for which purpose the State may
grant parcels of the submerged lands; and, so long as
their disposition is made for such purpose, no valid
objections can be made to the grants. It is grants of
parcels of lands under navigable waters, that may
afford foundation for wharves, piers, docks and other
structures in aid of commerce, and grants of parcels
which, being occupied, do not substantially impair
the public interest in the land and waters remaining,
that are chiefly considered and sustained in the ad-
judged cases as a valid exercise of legislative power
consistently with the trust to the public upon which
such lands are held by the State. But that is a very
different doctrine from the one which would sanction
the abdication of the general control of the State over
lands under the navigable waters of an entire harbor
or bay, or of a sea or lake. Such abdication is not
19 There are a number of still older Supreme Court cases establish-
ing that the United States, on acquiring territory, holds title to
tidal lands in trust to be transferred to future states or territorial
governments. See, e.g., Weber v. Harbor Commissioners, 85 U.S.
(18 Wall.) 67, 65 (1873); Pollard’s Lessee v. Hagan, 44 U.S. (3
How.) 212, 229 (1845).
4 een anaemia,
3la
consistent with the exercise of that trust which re-
quires the government of the State to preserve such
waters for the use of the public. The trust devolving
upon the State for the public, and which can only be
discharged by the management and control of prop-
erty in which the public has an interest, cannot be
relinquished by a transfer of the property. The con-
trol of the State for the purposes of the trust can
never be lost, except as to such parcels as are used
in promoting the interests of the public therein, or
can be disposed of without any substantial impair-
ment of the public interest in the lands and waters
remaining. It is only by observing the distinction
between a grant of such parcels for the improvement
of the public interest, or which when occupied do not
substantially impair the public interest in the lands
and waters remaining, and a grant of the whole
property in which the public is interested, that the
language of the adjudged cases can be reconciled.
146 U.S. at 452-53.
These same principles were reconfirmed by the Supreme
Court two years later in the context of congressional
action regarding land as to which the sovereign preroga-
tive belongs to the federal government:
We cannot doubt, therefore, that Congress has the
power to make grants of land below high water mark
of navigable waters in any Territory of the United
States, whenever it becomes necessary to do so in
order to perform international obligations, or to effect
the improvement of such lands for the promotion and
convenience of commerce with foreign nations and
among the several States, or to carry out other public
purposes appropriate to the objects for which the
United States hold the Territory.
Shively v. Bowlby, 152 U.S. 1, 47-48 (1894).*°
20 When the federal government of the United States came into
being, it held sovereign power, and had concomitant fiduciary duties,
Faerie
32a
While the common law public trust doctrine varies from
state to state and has been altered by statute and in a
number of state constitutions, see Phillips Petroleum Co.
v. Mississippi, 56 U.S.L.W. 4143, 4145 (Feb. 23, 1988),
the doctrine has developed in a manner consistent with
the analysis of Illinois Central and Shively. The courts
carefully scrutinize any conveyance of submerged lands
to determine if it is in complete congruence with the
fidicuary obligations owed to the public by the sovereign.
If the conveyance represents a deliberate and reasonable
decision of the sovereign that the transaction of which
the conveyance is a part affirmatively promotes the pub-
lie interest in the submerged lands, the courts have de-
ferred to the sovereign’s decision. See Sax, The Public
Trust Doctrine *n Natural Resource Law, 68 Mich. L. Rev.
471 (1970); W. Rodgers, Environmental Law § 2.16
(1977); 1 V. Yannecone & B. Cohen, Environmental
Rights and Remedies § 2.3 (1972). Accordingly, the issue
before us is whether, in 1982, the Virgin Islands legisla-
ture’s ratification of the Second Addendum was consistent
with its fiduciary obligation to manage and control the
lands beneath the harbor at Charlotte Amalie for the ben-
with respect to all public trust lands not already subject to the
sovereignity of the original states. When the United States subse-
quently acquired more territory, the federal government held all
submerged and tidal lands within the newly acquired acreage in
trust, for future transfer to states; as new states came into being,
they replaced the federal government as sovereign and fiduciary.
Under the Constitution, of course, Congress has a paramount in-
terest in the areas of navigation and commerce, and paramount
powers to take action necessary to fulfill international obligations.
With regard to submerged and tidal lands, the status of the Virgin
Islands, as previously noted, is somewhat different from that of the
states; the Virgin Islands did not acquire sovereign power over
trust land within its borders by means of statehood, but rather
through transfer by Congress pursuant to the 1974 Territorial
Submerged Lands Act. With the Submerged Lands Act, Congress
turned over to the Virgin Islands Government both sovereign power
and fiduciary obligations with respect to public trust lands within
the Virgin Islands.
EEO
33a
efit of the public. We hold that its ratification was in
furtherance, not in derogation, of that obligation, and
therefore sustain the validity of its action.
In 1982, the Virgin Islands legislature was confronted
with a bona fide dispute over the issue of whether WICO
had continuing rights in up to 42 acres of submerged land
in the harbor. Wico’s claim rested on a conveyance from
the Danish government, alleged to be perpetuity, which
predated the transfer of the Islands to the United States
| and which the Convention of Cession called for the United
States to consummate through a fee simple conveyance;
if that claim were adjudicated in its favor, WICO would
. be entitled upon reclamation to fee simple title to all 42
. acres free of any public trust. This would follow not only
from the well-established principle that submerged lands
may be conveyed free of trust to satisfy international
| obligations Shively, supra; Montana v. United States, 450
| U.S. 544, 551-52 (1981), reh’g denied 452 U.S. 911, but
also the holding of Knight v. United States Land Ass’n,
142 U.S. 161, 183-84 (1891), that the public trust doctrine
“does not apply to lands that had been previously granted
to other parties by the former government, or subjected
to trusts which would require their disposition in some
other way.”
Though confronted with the possibility, if not the pro-
bability, that the sovereign and its public beneficiaries
would wind up with no interest in the disputed 42 acres,
the legislature had available an attractive alternative in
the Second Addendum, negotiated with WICO by the Vir-
gin Islands executive. By ratifying that agreement, the
legislature, first and foremost, could remove the cloud
from the title to all but 15 of the disputed acres, making
sure that those lands would henceforth be impressed with
a public trust. This would allow planning for the devel-
opment of the harbor in the public interest to go forward
on a timely basis, unhindered by uncertainties about own-
ership rights and future litigation.
aie eeneiaeen eel
34a
While the greatest, this was not the only incentive the
legislature had to exercise its fiduciary discretion in favor
of the proposed settlement. Under the Second Addendum,
WICO was to make a substantial contribution to the de-
velopment of the harbor.** As the district court noted, the
Memorandum explained that the settlement would “satisfy
a compelling public need” in the following respects:
(1) An additional 2% acres will be added by
WICO to the public recreation area near Pearson
Garden, thus doubling its size;
(2) Filled land for the waterfront highway to
permit widening from two to four lanes will be pro-
vided by WICO.
(3) Dredging the harbor in Long Bay will be
provided by WICO, thereby benefiting navigation
and promoting tourism;
(4) The reclamation will enlarge the area of level
land for development near the downtown area of
Charlotte Amalie now limited because of the hilly
terrain;
(5) The development contemplated on the re-
claimed lands for marinas, cruise ship berths, offices
and other like facilities will provide additional em-
ployment for residents of St. Thomas and enhance
tourism facilities ....
643 F. Supp. at 878.
Finally, the record shows no reason for the legislature
to have thought that the proposed settlement would in
21 Harbor development, as we have noted, has consistently been
recognized as a legitimate public purpose for which submerged land
may be conveyed out of trust. E.¢., Appleby v. New York, 271 U.S.
364, 399 (1929) (overturning on contract clause grounds New York’s
attempted invalidation of a grant of title to roughly 18 acres of
submerged ground for purpose of harbor development); City of
Milwaukee v. State, 193 Wisc. 423, 214 N.W. 820 (1927) (Mil-
waukee allowed to convey out of trust, for purpose of harbor de-
velopment, land ceded to Milwaukee by state).
35a
any way impair its ability to manage and control the
harbor in the future for the benefit of the public. The
basin in which the disputed acreage is located is approxi-
mately 400 acres in area, and this basin is only a part of
the total harbor. The lands to be conveyed to WICO under
the Second Addendum thus constitute a small fraction of
the harbor. Moreover, the provisions of that agreement
assured the legislature that WICO’s development of its
acreage would be limited in scope and would not substan-
tially interfere with navigation or commerce. The ab-
sence of any such substantial interference was also en-
sured by the federal permit requirement, and is evidenced
by the actions of the permitting authorities in allowing
WICO to proceed with the development as it has done.
Given these circumstances, we cannot fault the legisla-
ture’s decision to approve the Second Addendum. Ap-
proval was clearly consistent with the fiduciary obligations
of the legislature. For this reason, we conclude that the
public trust doctrine did not bar the formation of a valid
contract involving the conveyance of 15 acres of sub-
merged land to WICO.
V.
The intervenors’ final argument in support of the
Repeal Act is that the Act is a valid use of the police
power, and that the police power cannot be limited by con-
tract. We find this argument unpersuasive. Although
the prohibition of the contract clause is circumscribed,
often sharply, by the inherent police power of the state,
there are limits to this circumscription. Police power, the
Supreme Court has said,
is an exercise of the sovereign right of the Govern-
ment to protect the lives, health, morals, comfort, and
general welfare of the people, and is paramount to
any rights under contract between individuals. .. .
If the Contract Clause is to retain any meaning at
all, however, it must be understood to impose some
36a
limits upon the power of a State to abridge existing
contractual relationships, even in the exercise of its
otherwise legitimate police power.
Allied Structural Steel Co. v. Spannaus, 438 U.S. 234,
241-42 (1978), reh’g denied 439 U.S. 886 (1978); see
also Energy Reserves Group, Inc. v. Kansas Power &
Light Co., 459 U.S. 400, 410 (1983) .”
In Energy Reserves, the Supreme Court set forth a
three-step analysis to be used in cases where contract
clause claims must be balanced against legislation passed
in exercise of police power:
The threshold inquiry is “whether the state law has,
in fact, operated as a substantial impairment of a
contractual relationship.” ... If the state regulation
constitutes a substantial impairment, the State, in
justification, must have a significant and legitimate
public purpose behind the regulation . . . such as the
remedying of a broad and general social or economic
problem. . . . Once a legitimate public purpose has
been identified, the next inquiry is whether the ad-
justment of “the rights and responsibilities of con-
tracting parties [is base] upon reasonable conditions
and [is] of a character appropriate to the public pur-
pose justifying [the legislation’s] adoption.” .. .
Unless the State itself is a contracting party...
courts properly defer to legislative judgment as to the
necessity and reasonableness of a particular measure.
459 U.S. at 411-412 (citations omitted). This court
recently applied the Energy Reserves analysis in Nieves
v. Hess Oil Virgin Islands Corp., 819 F.2d 1237, 1243
(3d Cir. 1987) (amendment of Virgin Islands Workmen’s
Compensation Act to retroactively eliminate application
of the “borrowed employee” doctrine as a bar to pending
22 It is not disputed that the Virgin Islands Government has police
power similar to that of a state.
37a
tort suits constituted unjustified impairment of contract),
and we will now apply it here.
We have already found that the Second Addendum
constitutes a contract between WICO and the Virgin
Islands Government; we begin here with the question
whether the contract contained in the Second Addendum
is substantially impaired by the Repeal Act. There can
be no doubt that it is. Under the Second Addendum,
WICO “shall have title to and ownership of the areas
filled”; WICO may use its reclaimed land free of rental
charges; and WICO is subject, for a limited time, to
development restrictions contained in the contract rather
than those of the CZMA. If the Repeal Act is enforced,
however, WICO will be reduced to the status of a mere
applicant for a permit under the CAMA; WICO will never
take title to the areas it fills, if it is allowed to fill any;
WICO will always have to pay rental charges for use of
any land it is allowed to reclaim; and WICO will be
subject to all the restrictions of the CZMA, including the
requirement that any permit it obtains be ratified by the
legislature and approved by the governor. Clearly,
WiCO’s contract rights are gravely impaired, to the point
of virtual annihilation, by the Repeal Act. That the
coastal zone area is generally subject to considerable regu-
lation does not, in our view, lessen the severity of the
impairment of WICO’s contract rights.
Turning to the second step of the analysis, we find the
Repeal Act’s purpose too narrow in scope to justify the
substantial impairment that it effects. Although it may
be said that the Repeal Act is addressed to the public
interest in the sense that it provides no benefit to special
private interests, abrogating the contract with WICO
and retaining title, albeit a heavily clouded one, to the 15
acres of submerged land at issue is not a “significant”
public purpose, and is by no stretch of the imagination
a remedy for a “broad or general social or economic prob-
lem.” The Repeal Act is by its own terms directed at a
38a
single company and a single 15-acre area. In this way,
it is similar to the legislation we struck down in Nieves,
which we found to be directed at a single company, and
similar to the legislation struck down by the Court in
Allied Structural Steel. The following dconsiderations dis-
cussed in Allied Structural Steel are apposite here:
This Minnesota law simply does not possess the at-
tributes of those state laws that have in the past sur-
vived challenge under the Contract Clause of the Con-
stitution. The law was not even purportedly enacted
to deal with a broad, generalized economic or social
problem. . . . It did not operate in an area already
subject to state regulation at the time the company’s
contractual obligations were originally undertaken
.... It did not effect simply a temporary alteration
of the contractual relationships of those within its
coverage, but worked a severe, permanent, and imme-
diate change in those relationships—irrevocably and
retroactively. . . . And its narrow aim was leveled,
not at every Minnesota employer, not even at every
Minnesota employer who left the State, but only at
those who had in the past been sufficiently enlightened
as voluntarily to agree to establish pension plans for
their employees.
438 U.S. at 250. In this instance, the legislation is even
narrower in scope than the Minnesota legislation found
objectionable by the Court. Accordingly, we conclude that
the Repeal Act cannot be justified by a significant public
purpose.
The final step of the analysis calls for us to determine
whether the Repeal Act’s adjustment of WICO’s rights
is a reasonable and appropriate accommodation in light
of any legitimate public purpose supporting the Act. Be-
cause the Virgin Islands Government is a party to the
contract, we need not defer to the judgment of the Six-
teenth Legislature, but “may inquire whether a less
drastic alteration of contract rights could achieve the
39a
Same purpose and whether the law is reasonable in light
of changed circumstances.” Nieves, 819 F.2d at 1243.
Since we have found no legitimate public purpose support-
ing the Repeal Act, we need not reach this final step.
With respect to the reasonableness of the Repeal Act,
however, we note that the Sixteenth Legislature did not
even purport to base its action upon any facts or circum-
stances not existing and well known to its predecessor at
the time the Second Addendum was approved. The only
circumstance that has arguably changed since 1982 is the
force of public opinion.
We hold only that the Repeal Act is invalid. We do
not, of course, hold that the police power of the Virgin
Islands with respect to WICO’s 15 acres was exhausted
when the Second Addendum was approved. WICO is
obviously not immune from generally appiicable police
power measures not inconsistent with the Second Adden-
dum. Moreover, if conditions materially change so as to
create a substantial problem that could not be foreseen in
1982, it may be that generally applicable land use regula-
tions could validly alter the manner in which WICO may
utilize its property. We are not at present confronted
with an issue, however, and express no opinion with
respect to it.
VI.
The remaining issue is the intervenors’ claim against
the executive branch of the Virgin Islands Government.”
The citizen intervenors now contend that the executive
branch, by declining to defend this suit or hire outside
counsel to defend it, breached its fiduciary duty and vio-
lated the citizens’ constitutional rights.
*3 The intervenors filed a cross-claim under Fed. R. Civ. P. 13(g)
against the executive branch; as Rule 13(¢) applies only to co-
parties, and neither the “excutive branch” nor any members thereof
are parties to this action, this filing cannot be correct. However,
the procedural irregularity may be ignored in light of our conclu-
sion on this issue.
40a
We agree with the district court that the Virgin
Islands executive owed the intervenors no duty to defend
this suit or to hire outside counsel to do so. The statute
cited by the intervenors as imposing on the executive
branch a duty to represent the Government, 3 V.LC.
$114, provides only that the Virgin Islands Attorney
General is to represent the executive branch of the Vir-
gin Islands Government; this does not say or mean that
the executive branch must defend whenever the Virgin
Islands Government is sued. There is simply no author-
ity for the ‘ntervenors’ contention that the executive
branch of a territory must defend a challenge to the
constitutionality of an act of its territorial legislature
when the executive branch is of the view that the legis-
lative action is constitutionally infirm.” We decline to
establish such a precedent.
Vil.
For the foregoing reasons, we will affirm the grant of
summary judgment and a permanent injunction to
WICO, as well as the dismissal of the citizen intervenors’
cross-claim against the executive branch of the Virgin
Islands Government.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
24 This is not a rare situation. See, e.g. Karcher v. May, 108
S. Ct. 388, 391 (1987) (presiding officers of New Jersey legislature
sought and obtained permission to intervene when neither state
attorney general nor other named defenda ‘ts would defend minute-
of-silence statute passed over governor's veto). Accordingly, we
find the absence of any authority for the intervenors’ position
significant.
4la
DISTRICT COURT, VIRGIN ISLANDS
D. ST. THOMAS AND ST. JOHN
Civ. No. 1986/293
THE WEST INDIAN COMPANY, LIMITED,
Plaintiff,
V.
GOVERNMENT OF THE VIRGIN ISLANDS,
Defendant,
v.
THE LEGISLATURE OF THE VIRGIN ISLANDS, HELEN W.
GJESSING, Individually and as President of Save Long
Bay Coalition, Inc., LEONARD REED, Individually and
as President of Virgin Islands Conservation Society,
Ine., KATE STULL, Individually and as President of
League of Women Voters of the V.I., Inc., LUCIEN
MOOLENAAR, Individually and as President of Virgin
Islands 2000, Inc., RUTH MOOLENAAR, Individually and
as Director of the St. Thomas Historical Trust, Inc.,
Intervenors.
April 13, 1987
Maria T. Hodge, St. Thomas, V.I., Sanford C. Miller,
New York City, for The West Indian Co., Ltd.
Rhys S. Hodge, St. Thomas, V.I., for Legislature of
the Virgin Islands.
David A. Bornn, Edith L. Bornn, Judith L. Bourne,
Benjamin A. Currence, Pallme & Mitchell, Veronica J.
ee
42a
Handy, Stedmann Hodge, Brenda Hollar, David Iverson,
Aurelia Rashid, Birch, deJong & Farrelly, Denise Reo-
van, Law Offices of Desmond Maynard, St. Thomas, V.L.,
for intervenors Gjessing, et al.; Gilbert L. Finnel, Jr.,
Houston, Tex., of counsel.
MEMORANDUM OPINION
DAVID V. O’BRIEN, District Judge.
The plaintiff and Helen W. Gjessing, et al., as citizen
intervenors, have each filed a motion for summary judg-
ment in this matter. The Legislature of the Virgin
Islands, as intervenor, opposes the plaintiff's motion.
We grant summary judgment herein in favor of the
plaintiff, and deny the relief sought by the citizen inter-
venors. By so doing, we convert a previously entered
preliminary injunction into a permanent injunction,
barring interference with the plaintiff’s rights under a
Memorandum of Understanding entered into in 1973,
and certain Addenda thereto.
I. FACTS
This case has previously been the subject of a lengthy
published opinion. West Indian Co. v. Government of
the Virgin Islands, 643 F.Supp. 869 (D.V.1.1986), aff'd,
812 F.2d 134 (3d Cir.1987).
The material facts were spelled out in detail in that
opinion. Since its issuance, additional documents have
been filed in conjunction with the motion for summary
judgment, but they do not alter the essential fact pat-
tern or the legal interpretation of those facts.
For the purpose of deciding the motions before us,
we adopt in full the findings of fact as recited in West
Indian Co., supra, at 870-873. Since the record before
us is almost exclusively documentary, the materia! facts
are not in dispute. The legal interpretation of those
facts, however, is sharply contested.
43a
The prior opinion was issued upon a motion for a
preliminary injunction, whereby the plaintiff sought to
enjoin the Government of the Virgin Islands and other
parties from interference with its rights to dredge and
fill land in St. Thomas harbour under a certain Memo-
randum of Understanding dated October 3, 1973. The
Memorandum had previously been approved as to con-
tent by the Legislature of the Virgin Islands by Act No.
3326 in 1972. The plaintiff, the United States of Amer-
ica, and the Government of the Virgin Islands were
parties to that agreement, as were certain other persons.
Subsequent to its execution, two Addenda were also en-
tered into, one of which was substantive in nature. It
was also approved by the Legislature of the Virgin
Islands by Act No. 4700 in 1982.
The Memorandum of Understanding was intended to
resolve a dispute among the parties as to the rights of
the plaintiff preserved in the 1917 treaty between Den-
mark and the United States by which the Virgin Islands
became a possession of the United States. In effect, it
settled a law suit over the nature and extent of those
rights, brought by the United States under Civil No.
1968/337 (St. Thomas & St. John Division) .
The subsequent Addenda further clarified the plain-
tiff’s rights and left the plaintiff free to commence the
dredging and filling of submerged lands in St. Thomas
harbour. This it proceeded to do in 1986. The resulting
public furor caused the duly elected members of the
Legislature to enact, over the governor’s veto, Act. No.
5188, repealing Acts Nos. 3326 and 4700, which. in
effect, repudiated the Memorandum of Understanding
and its Addenda. This, of course, wiped out all of plain-
tiff’s agreed-upon dredging rights, and led to the law
suit herein. |
As noted earlier, a full exposition of the facts is con-
tained in West Indian Co., supra at 870-873.
44a
The grant of a preliminary injunction to the plaintiff
was appealed to the Third Circuit on a variety of
grounds, only some of which had been raised in this
Court earlier.
II. DISCUSSION
A. The Motions for Summary Judgment
It is well settled that cross-motions for summary judg-
ment do not warrant the court in granting summary judg-
ment unless once [sic] of the moving parties is entitled
to judgment as a matter of law upon facts that are not
genuinely disputed. Manetas v. International Petroleum
Carriers, Inc., 541 F.2d 408, 413 (3d Cir.1976) ; Rains
v. Cascade Industries, Inc., 402 F.2d 241, 245 (3d Cir.
1968); F.A.R. Liquidating Corp. v. Brownell, 209 F.2d
375, 380 (3d Cir.1954).
The party who moves for summary judgment has the
burden of demonstrating that there is no genuine issue
of fact. Kress, Dunlap & Lane, Ltd. v. Downing, 286
F.2d 212, 215 (3d Cir. 1960). As we have previously
stated, the facts in this case are largely drawn from
submitted documents. They are not genuinely disputed.
B. Assertions of the Parties
In their response to the plaintiff’s motion for sum-
mary judgment, and in their own cross-motion for sum-
mary judgment, the citizen intervenors raise essentially
the same legal arguments which were raised earlier to
no avail on the same set of material facts. Likewise, the
Legislature of the Virgin Islands makes the same argu-
ment it made before us originally, and thereafter on ap-
peal to the Third Circuit.
The primary arguments, made in this Court earlier,
on appeal, and again with reference to summary judg-
ment, are:
45a
(1) The public trust doctrine prevented the govern-
ment from being a party to the 1973 Memorandum of
Understanding and Addenda thereto. Therefore, the
government acted illegally and the repeal of those actions
by a subsequent legislature was valid.
(2) The repeal of the previous agreements entered
into by the government was a valid exercise of the police
power, even in the face of the Contract Clause contained
in the U.S. Constitution Art. I, Section 10 and the
Revised Organic Act of 1954, Section 3.
The citizen intervenors and the Legislature repeat
these arguments again in their filings concerning the
motions for summary judgment. These same arguments
were rejected by us in West Indian Co. v. Government
of the Virgin Islands, supra, 643 F. Supp. at 873-883.
They were also rejected without discussion by the Third
Circuit. 812 F.2d 134 (1987).
No additional material facts have been presented since
the time of our earlier opinion, and no new or more
persuasive legal arguments have been offered by any of
the intervenors which would cause us to alter our pre-
vious legal rulings with reference to the public trust
doctrine and the police power assertions. We stand on
our previous rulings concerning these contentions, and
once again, reject them.
The intervenors do raise before us a new claim that
the Rule Against Perpetuities was violated by the Mem-
orandum of Understanding and its Addenda. This argu-
ment was briefed and presented to the Third Circuit in
the appeal of our entry of a preliminary injunction. The
Third Circuit, at page 135, noted that it had given “full
consideration of the matters set forth in the briefs and
at oral argument”. Thus, we assume that the conten-
tions concerning the Rule Against Perpetuities were con-
sidered and rejected by the Third Circuit. Since this is
our first review of this argument, we discuss it briefly.
46a
The common law Rule Against Perpetuities is enun-
ciated in the Restatement of Properties (1944), Sections
370-403, and the Restatement (Second) of Properties
(1981) Section 1.1-2.2. The citizen intervenors contend
that because the rule is contained in the restatements of
the law, it must be applied in the‘instant case under
Virgin Islands law. We disagree. The Rule Against
Perpetuities is inapplicable to the matter herein. Title 1,
Section 4 of the Virgin Islands Code states:
The rules of the common law, as expressed in the
restatements of the law approved by the American
Law Institute, and to the extent not so expressed, as
generally understood and applied in the United
States, shall be the rules of decision in the courts of
the Virgin Islands in cases to which they apply, ™
the absence of local laws to the contrary. (emphasis
added)
In this instance the Memorandum of Understanding,
dated October 9, 1973, was executed by the governor of
the Virgin Islands only after its terms had been previ-
ously approved by the Ninth Legislature of the Virgin
Islands on October 30, 1972 (Act No. 3326). Likewise,
the Second Addenda to the Memorandum of Understand-
ing, dated September 22, 1981, was ratified and ap-
proved by the Fourteenth Legislature on April 7, 1982
(Act No. 4700). By its terms, the Second Addenda has
“the full force and effect of law.”
It is clear, then, that even if applicable, the Rule
Against Perpetuities was modified by adoption of local
laws to the contrary.
The Restatement of Property (1944) in effect until
1981, recognizes that the Rule Against Perpetuities is
the common law of each jurisdiction in the United States
only “[i]n the absence of a statutory abrogation or
modification.” Restatement of Property, Part I, Intr.
Note, p. 2133. The same language is carried over in the
47a
Restatement (Second) of Property adopted in 1981, Vol.
I, p. 11. The effect of a legislative enactment is to super-
cede the common law rules. Dague v. Piper Aircraft
Corp., 275 Ind. 520, 418 N.E.2d 207, 213 (S.C. Ind.
1981); Drennan v. Security Pac. Nat. Bank, 28 Cal.3d
764, 170 Cal. Rptr. 904, 621 P.2d 1318, 1327 (S.C. Cal.),
cert. denied 454 U.S. 833, 102 S.Ct. 132, 70 L.Ed.2d 112
(1982).
This remaining primary argument of the citizen in-
tervenors, is, therefore, without merit.
The citizen intervenors, beyond the three primary ar-
guments, raise a variety of other issues on pages 66-68
of their brief in response to plaintiff’s summary judg-
ment motion. Many of them are subsumed in our dis-
cussion of the three primary contentions. The remainder
of them are without merit, being listed as disputes of
material facts, when in reality they are legal arguments
and/or interpretations of facts not actually in dispute
III. CONCLUSION
We have discussed the public trust and the police
power vs. contract clause arguments in our earlier opin-
ion. We discussed the final primary argument concern-
ing the applicability of the Rule Against Perpetuities
herein. We conclude that the piaintiff is entitled to a
permanent injunction, enjoining the Government of the
Virgin Islands and all intervenors from interference with
the rights of the plaintiff arising under the Memoran-
dum of Understanding and its Addenda. Act No. 5188
is an unconstitutional interference with those rights, a
violation of the Contract Clause as contained in both the
Constitution and the Revised Organic Act.
Since the counterclaim by the citizen intervenors and
their cross claim against other parties are rendered moot
by the grant of a permanent injunction, they will be dis-
missed.
48a
ORDER
THIS MATTER came before the Court on a motion
by the plaintiff for summary judgment and a cross-
motion by Helen W. Gijessing, et al. for summary judg-
ment. The plaintiff also previously filed a motion to
dismiss the counterclaim and the Government of the
Virgin Islands moved to dismiss the citizen intervenors’
cross claim. The Court having filed its memorandum
opinion of even date herewith, now therefore it is
ORDERED:
THAT the motion of the plaintiff for summary judg-
ment is GRANTED, and a permanent injunction will
issue thereon; and
THAT the motion of Helen W. Gijessing, et al. for
summary judgment is DENIED; and
THAT the motion of the plaintiff to dismiss the
counterclaim is GRANTED, and it is hereby DIS-
MISSED, WITH PREJUDICE; and
THAT the motion of the Government of the Virgin
Islands to dismiss the cross claim of Helen W. Gjessing,
et al. is GRANTED, and it is hereby DISMISSED WITH
PREJUDICE.
PERMANENT INJUNCTION
THIS MATTER is before the Court on motion of the
plaintiff for summary judgment, and a cross-motion of
Helen W. Gjessing et al. for summary judgment. In an
opinion issued of even date herewith, we find that the
adoption by the Legislature of the Virgin Islands of Act
No. 5188, which repealed Acts Nos. 3326 and 4700, is an
unconstituional interference with the rights of the plain-
tiff under a certain Memorandum of Understanding
dated October 3, 1973, and Addenda thereof, dated Oc-
tober 28, 1975 and September 22, 1981 respectively. The
49a
Government of the Virgin Islands was a party to the
Memorandum of Understanding and its Addenda, and
the substantive contents were approved by the Legisla-
ture by Acts Nos. 3326 and 4700.
The premises considered, now therefore it is
ORDERED and ADJUDGED.
THAT the Government of the Virgin Islands, the
Legislature of the Virgin Islands and the citizen inter-
venors above captioned, be and the same are PERMA-
NENTLY ENJOINED from any and all interference
with the rights of The West Indian Company, Limited,
arising under the Memorandum of Understanding dated
October 3, 1973, as amended on October 28, 1975 by the
First Addendum, and on September 22, 1981 by the
Second Addendum thereto.
a
Je VANDAL cd 1 RN awa a a ai) _ ee ee ee eee ——, « yy)
50a
UNITED STATES COURT OF APPEALS
( THIRD CIRCUIT
Nos. 86-3577, 86-3578
WEST INDIAN COMPANY, LTD.,
Plaintiff / Appellee,
V.
GOVERNMENT OF THE VIRGIN ISLANDS,
Defendant,
and
LEGISLATURE OF THE VIRGIN ISLANDS,
Intervenor/Appellant,
and
HELEN G. GJESSING, LEONARD REED, KATE STULL,
LUCIEN MOOLENAAR, RUTH MOOLENAAR,
Intervenors/Appellants.
LEGISLATURE OF THE VIRGIN ISLANDS,
Appellant in No. 86-3577,
HELEN G. GJESSING, et al.,
Appellants in No. 86-3578.
Argued Feb. 17, 1987
Decided Feb. 26, 1987
Maria Tankenson Hodge, St. Thomas, V.I., Sanford C.
Miller (argued), Christopher G. Kelly, Haight, Gardner,
Poor & Havens, New York City, for appellee West Indian
Co., Ltd.
\
<0” Sa vN Ng) Towne ea
5la
David A. Bornn (argued), Edith L. Bornn, Judith L.
Bourne, Benjamin A. Currence, Veronica J. Handy,
Brenda J. Hollar, David W. Iverson, Aurelia O. Rashid,
Denise Reovan, St. Thomas, V.I., Gilbert L. Finnel, Jr.,
Houston, Tex., of counsel, for intervenors-appellants Helen
Gjessing, et al.
Rhys S. Hodge (argued), St. Thomas, V.I., for Legisla-
ture of the Virgin Islands.
Before GIBBONS, Chief Judge, SLOVITER, Circuit
Judge, and SCIRICA, District Judge.*
OPINION OF THE COURT
PER CURIAM.
The district court entered an order on September 30,
1986 enjoining the Government of the Virgin Islands, the
Virgin Islands legislature and the citizen intervenors in
this action from interfering with the rights of the Plain-
tiff, The West Indian Company, Ltd., under the 1973
Memorandum Agreement [entered into between WICO,
the United States Government and the Government of the
Virgin Islands], and Addenda thereto, pending a final
hearing in this case on the merits. App. at 460-61, 643
F.Supp. 869. The Legislature of the Virgin Islands, as
intervenor/appellant, and the citizens/intervenors have
appealed from that order. We have jurisdiction pursuant
to 28 U.S.C. § 1292 (a) (1).
A preliminary injunction may be granted if the moving
party demonstrates:
(1) a reasonable probability of eventual success in
the litigation and (2) that the movant will be irre-
parably injured pendente lite if relief is not granted.
Moreover, while the burden rests upon the moving
party to make these two requisite showings, the dis-
* Hon. Anthony J. Scirica, United States District Court for the
Eastern District of Pennsylvania, sitting by designation.
Neds Me Wa a A a OR a a ala RN S'S
a i a
Ay a Ye Ow th a ry
52a
trict court “should take into account, when they are
relevant, (3) the possibility of harm to other inter-
ested persons from the grant or denial of the injunc-
tion, and (4) the public interest.”
Professional Plan Examiners of New Jersey, Inc. v.
LeF ante, 750 F.2d 282, 288 (3d Cir.1984) (quoting In re
Arthur Treacher’s Franchisee Litigation, 689 F.2d 1187,
1143 (3d Cir.1982) ).
The grant or denial! of a preliminary injunction is com-
mitted to the sound discretion of the district court, which
must }yalance all of the relevant factors in making a deci-
sion. Kershner v. Mazurkiewicz, 670 F.2d 440, 443 (3d
Cir.1982) (in bane). Consequently, the scope of appellate
review of a trial court’s ruling on a motion for prelimi-
nary injunction is narrow, and the trial court’s judgment
is presumptively correct. Jd.
After full consideration of the matters set forth in the
briefs and at the oral argument, we cannot conclude that
the district court committed an error in applying the law
or that the grant of the preliminary injunction repre-
sented an abuse of discretion. We are confident that in
light of the respective interests at issue, the district court
will proceed as promptly as possible to a final disposition
in this matter.
For the foregoing reasons, we will affirm the order of
the district court.
53a
DISTRICT COURT, VIRGIN ISLANDS
D. ST. THOMAS AND ST. JOHN
Civ. No. 1986/293
THE WEST INDIAN COMPANY, LIMITED,
Plaintiff,
Ve
GOVERNMENT OF THE VIRGIN ISLANDS,
Defendant,
and
THE LEGISLATURE OF THE VIRGIN ISLANDS, HELEN W.
GJESSING, Individually and as President of Save Long
Bay Coalition, Inc., LEONARD REED, Individually and as
President of Virgin Islands Conservation Society, Inc.,
KATE STULL, Individually and as President of League
of Women Voters of the V.I., Inc., LUCIEN MOOLENAAR,
Individually and as President of Virgin Islands 2000,
Inc., and RUTH MOOLENAAR, Individually and as Direc-
tor of the St. Thomas Historical Trust, Inc.,
Intervenors.
Sept. 3, 1986
Maria T. Hodge (argued), St. Thomas, V.I., Sanford
C. Miller, New York City, for The West Indian Co., Ltd.
Rhys S. Hodge (argued), St. Thomas, V.I., for Legisla-
ture of the Virgin Islands.
Alexander A. Farrelly, Birch, deJongh & Farrelly,
David A. Bornn, Edith L. Bornn, Judith L. Bourne, Ben-
54a
jamin A. Currence, Pallme & Mitchell, Veronica J. Handy,
Stedmann Hodge, Brenda Hollar (argued), Aurelia
Rashid (argued), Birch, deJongh & Farrelly, Denise
Reovan, Law Offices of Desmond Maynard, St. Thomas,
V.I., for intervenors Gjessing, et al.
Hiram Abiff Rasool, Jackson Ins. Agency, St. Thomas,
V.I., amicus curiae.
MEMORANDUM OPINION AND ORDER
DAVID V. O’BRIEN, District Judge.
For 73 years The West Indian Company, Limited has
had rights of reclamation in the principal harbor of
St. Thomas. These rights were preserved in the 1917
treaty between Denmark and the United States whereby
the Virgin Islands became a United States possession.
They have been conceded and accepted by every terri-
torial elected governor, their attorneys general, and two
separately elected territorial legislatures. The issue be-
fore us is whether these rights, now contained in a con-
tract to which the territorial government is a party, may
be extinguished by the presently sitting legislature pur-
suant to its reserved power.
We find that they may not, and we will enter a pre-
liminary injunction to enjoin interference with the rights
contained in the original contract and its addenda.
I. FACTS
This controversy has its geneisis in a 1913 grant by
the Government of Denmark to the plaintiff herein,
(“WICO”’), of substantial rights to reclaim and fill des-
ignated portions of Charlotte Amalie harbor, St. Thomas.
These rights were specifically preserved in the 1917
treaty between the United States and Denmark which
ceded the Virgin Islands to the United States. The Treaty
provides at Section 3:
55a
4) The United States will maintain the following
grants, concessions and licenses, given by the Danish
Government, in accordance with the terms on which
they are given:
a. The concession granted to ‘Det Westindiske
Kompagni’ (The West Indian Company) Ltd. by the
communications from the Ministry of Finance of
January 18th 1913 and of April 16th 1913 relative
to a license to embark, drain, deepen and utilize cer-
tain areas in St. Thomas Harbor, and preferential
rights as to commercial, industrial or shipping es-
tablishments in the said Harbor.
The question whether the grant to WICO was in perpe-
tuity or whether it had a termination point, was cleared
up in advance of the treaty by communications from the
Government of Denmark to the United States in response
to the latter’s inquiry. Denmark made clear that the
grant to WICO was in perpetuity, without limitation as
to the time within which the license was to be exercised.
Notwithstanding the exchange of communications which
indicated that the grant to WICO was without a time
limitation, the United States initiated a civil action in
District Court, Division of St. Thomas, in 1968. (Civ. No.
1968/337). In it, the Justice Department sought to have
the District Court declare WICO’s rights terminated.
While the case was pending, the Danish Government sent
a diplomatic note dated June 17, 1970, to the Government
of the United States, requesting it to respect the WICO
concession.
Thereafter, the Hon. Warren H. Young, U.S. District
Judge assigned to the case, noted the obvious difficulty
the United States would have in terminating WICO’s
rights in the face of its knowledge, prior to the Treaty,
that they were without time limitations. He also viewed
the involvement of the Government of the Virgin Islands,
not then a party to the case, as a prime necessity in order
56a
to protect its own vital interests. The result of Judge
Young’s concerns was a letter to Governor Melvin H.
Evans, the territory’s first elected governor, urging him
to become personally involved in a settlement of the case.
Settlement negotiations involving the United States,
the territorial government, WICO and other parties to
the lawsuit resulted in a settlement proposal by WICO
which found favor with the territorial government.
Public hearings were held on the matter and the settle-
ment was referred to the Legislature of the Virgin Is-
lands for ratification and approval. On October 11, 1972,
the Legislature approved Act No. 3326, and the Governor
formally affixed his approval to this legislation on Oc-
tober 30, 1972.
The formal Memorandum of Understanding, (here-
after ‘“Memorandum’”’), dated nearly a year later, Oc-
tober 3, 1973, was signed by representatives of the
United States, the Virgin Islands, and WICO, among
others. One of the most significant aspects of the Memo-
randum is that the acreage of the concession granted
WICO was measurably reduced and the territorial gov-
ernment received rights to other lands it did not pre-
viously possess. These are only two of the major pro-
visions of the 35 page Memorandum.
There is no question that the Memorandum was a full
settlement of the litigation initiated by the United States
in 1968, since both-the Memorandum and Act No. 3326
ratifying and approving the settlement speak to that
point. It is also important to note that the Attorney
General of the Virgin Islands was required to approve
the Memorandum (and subsequent Addenda) relative to
the authority of the territorial officials to enter into such
agreement, and to determine that the documents were
legal, binding and valid.
The Memorandum contains an elaborate procedure for
transfer of the submerged lands to WICO once both
57a
parties, the Virgin Islands Government and WICO, ful-
filled certain preconditions. To date many of these con-
ditions remain unfulfilled awaiting completion of the
dredging and filling. One nuance of these procedures
which needs explanation is the transfer of the lands from
the United States.
In the Memorandum, the Justice Department took the
view that the settlement proposal encompassed important
matters outside the scope of the lawsuit and therefore
required any disposition of property to be made under
the then existing Territorial Submerged Lands Act. 48
U.S.C. § 1701 et seg. (Supp.1986) (See pg. 7 the Memo-
randum). At that time the United States held title to
all submerged lands surrounding the Virgin Islands, sub-
ject, of course, to WICO’s rights preserved in the Treaty.
The Memorandum, to recognize the United States’ claim
to these lands, included a two-step conveyance procedure,
(“transfer procedure’), to occur at closing. First, the
lands was to be conveyed from the Secretary of the In-
terior to the Virgin Islands Government and only then
reconveyed to WICO. (See §6(a) of Memorandum at
pg. 14). This procedure became moot as of October 5,
1974, because control of these submerged lands was trans-
ferred from the United States to the Government of the
Virgin Islands, subject to valid existing rights. 48 U.S.C.
Section 1704 et seg. (Supp.1986).
A First Addendum to the Memorandum of Understand-
ing was entered into on October 28, 1975, to reflect this
transfer of control to the territorial government over
submerged lands. A $45,000 annual payment, previously
made to the U.S. Department of Interior by WICO, was
from that time to go to the territorial government. The
attorney general determined that the First Addendum
need not be submitted to the Legislature. In effect this
addendum recognized there was no longer a need for
the two-step conveyance since the United States no longer
held title to the land. At this point in time the only
58a
thing preventing transfer of title pursuant to the Memo-
randum was completion of the various recognized precon-
ditions mentioned above.
Thereafter, the Virgin Islands enacted in 1977 the
Coastal Zone Management Act. 12 V.I. §§ 901-14 (1982).
To refiect a compromise concerning the application of the
Act to WICO’s previously existing concession rights, the
Government, WICO, and certain private parties entered
into a Second Addendum to Memorandum of Agreement,
dated September 22, 1981. That agreement further lim-
ited WICO’s rights of reclamation which, by virtue of
the various agreements, were reduced from 42 acres to
15 acres. A requirement of the Second Addendum was
that it be ratified and approved by the Legislature, which
took place on April 7, 1982, as Act No. 4700.
On April 12, 1984, in a yearly review of the status
of cases, this Court entered a dismissal of the 1968
action by the United States against WICO for lack of
prosecution.
In June, 1986, WICO commenced its dredging in the
Long Bay area of St. Thomas, having obtained the neces-
sary permits. This dredging is one of the preconditions
required of WICO in the Memorandum. The ensuing
publicity generated energetic citizen response, which in
turn generated a bill in the Legislature to repeal WICO’s
rights contained in Acts Nos. 3326 and 4700. This bill
(16-0607) was a repudiation not only of the prior legis-
lative ratifications of Acts Nos. 3326 and 4700, but a
disavowal of the territorial government’s prior approval
of the Memorandum of Understanding, the First Ad-
dendum and the Second Addendum. Bill No. 16-0607 was
approved by the Legislature on July 9, 1986, but vetoed
by Governor Juan Luis on July 21, 1986. On August 11,
1986, the Legislature overrode the veto by the Governor
and it became law as Act No. 5188.
On August 14, 1986, WICO promptly moved in this
Court for a temporary restraining order and a prelim-
ee or ae
59a
inary injunction against enforcement of the provisions
of Act No. 5188, and other relief. On August 19, 1986,
a hearing was held pursuant to this motion. At that
time we enjoined by temporary restraining order, any
interference with WICO’s right to dredge and scheduled
a hearing on the preliminary injunction for August 26,
1986.
At the August 19, 1986, hearing on a temporary re-
straining order, the attorney general of the Virgin Is-
lands informed the Court that the executive branch of
the government would not appear in the case, since it
considered the repeal of WICO’s rights to be invalid, and
any appearance on its part would be simply to affirm
WICO’s right to the relief sought.
We then permitted the Legislature of the Virgin
Islands to appear as an intervenor, along with certain
officers of interested citizen groups. We rejected a motion
by the intervenors to compel the executive branch to
appear in the case. We noted at the time that with the
grant of intervention to both the Legislature and the
citizen group representatives, the interests of those fa-
voring repeal of WICO’s rights would be well repre-
ented, even without the appearance of the executive
branch. This view was rewarded by the swift filing of
briefs by intervenors, and by the excellence of the briefs
and the oral presentations by intervenors’ counsel.
To summarize, as of August, 1986, three successive
elected governors, their respective attorneys general, and
two separate Legislatures of the Virgin Islands have
recognized WICO’s right to dredge and reclaim certain
defined submerged lands in the harbor of Charlotte
Amalie. The various officizls described above successfully
negotiated limits with respect to both acreage and time
as to WICO’s rights, and gained important concessions
in favor of the territory. The reason for this case is
that the Sixteenth Legislature, now sitting, takes issue
60a
with the validity of the actions undertaken by the terri-
torial officials above described.
II. DISCUSSION
The elements a moving party must show for a pre-
liminary injunction are: “a reasonable probability of
eventual success in the litigation and that the movant
will be irreparably injured pendente lite if relief is not
granted.” Professional Plan Examiners of N.J. v. Le-
fante, 750 F.2d 282, 288 (3d Cir.1984).
In addition to the above elements, a District Court
should consider two other elements when relevant. These
elements are the possibility of harm to other interested
persons from the grant or denial of the injunction, and
the public interest. Professional Plan Examiners, supra
at 288. Examining these four elements, we find WICO
has convincingly satisfied all four requisite elements.
i a
6 e § te eee +n
A) Reasonable Probability of Success
WICO’s strongest argument is that the Repeal Act
violates the contract clause of the United States Consti-
tution, Article I, Section 10 as contained in Section 3
of the Revised Organic Act of 1954.
The intervenors respond by challenging WICO’s con-
tract clause argument in two ways. First, they assert
the transfer procedure in the 1973 Memorandum Agree-
ment created additional conditions precedent necessary
for WICO’s rights, under the 1973 agreement, to mature.
They refer to the federal conveyance discussed earlier
and since these procedures were never followed, argue
WICO lost its right to the land. Second, they claim the
Repeal Act is a valid use of the Virgin Islands police
power—a power which cannot be limited by contract.
We take these arguments in sequence.
Lee
6la
1) WICO’s Right to Submerged Land
In tracing WICO’s rights, we find these rights orig-
inated in the Danish grants of 1913 and were recognized
and affirmed in the 1917 treaty between the United States
and Denmark. In this treaty both countries intended to
preserve WICO’s right, in perpetuity, to obtain these sub-
merged lands.’
The settlement to the 1968 litigation further defined
WICO’s rights to the 2ubmerged property. The Memo-
randum established specific conditions both the Virgin
Islands and WICO were required to complete prior to
closing on the land. Additionally, the transfer procedures
were established to pass title from the United States
through the Virgin Islands to WICO. These procedures
state in relevant part:
6 CONVEYANCES
(a) General. If the requirements of the Territorial
Submerged Lands Act are met, the Secretary of the
Interior shall convey to the Government of the Virgin
Islands, and the Government of the Virgin Islands
shall convey the Filled Lands and Submerged Lands
hereinafter described (and the right to reclaim the
same) in Long Bay, St. Thomas Harbor, in part to
WICO and in part to the Byers group.
1At oral argument, the attorney for the citizen intervenors
stated that the “license” granted WICO in 1913 did not amount to
a “fee simple” interest. The 1913 grant, however, states that “
when these land areas are reclaimed, the company will acquire free
and unrestricted ownership thereof ...” This certainly does provide
for what we term “fee simple” ownership. In any event, it is clear
that the Memorandum of Understanding and the addenda thereto
were intended to provide fee simple ownership to WICO of the
described lands. Finally, we note that even the complaint filed by
the United States in Civ. No. 1968/337 recognized that the license
granted WICO provided “ free and unrestricted exercise of
property rights.
62a
The intervenors interpret these transfer procedures, and
subsequent amendments to the Submerged Lands Act, in
an unusual way. They assert these transfer procedures
created additional conditions necessary for WICO’s recog-
nized preconditions, such as filling and dredging, they
argue the transfer procedure had to be fulfilled prior to
the 1974 amendments to the Submerged Lands Act. The
reason for this concerns the title the Virgin Islands
received in 1974.
The intervenors reason that prior to 1974, the United
States held title to all submerged lands around the Virgin
Islands, subject as we said, to WICO’s rights. After the
amendments to the Submerged Land Act in 1974, title to
these lands reverted to the Government of the Virgin
Islands to be held in trust for the people of the Virgin
Islands albeit still subject to WICO’s rights.2 Up to this
point WICO had not received title to these lands since
both the recognized preconditions of the Memorandum
Agreement, and the claimed preconditions from the trans-
fer procedure, remained unfulfilled. At this point, how-
ever, intervenors argue that the Virgin Islands no longer
had the ability to transfer title to WICO since it never
held these lands in fee simple but as trustee for the
people of the Virgin Islands. Since the Virgin Islands
2 The Submerged Lands Act states in relevant part:
Subject to valid existing rights, all right, title, and interest
of the United States in lands permanently or periodically cov-
ered by tidal waters up to but not above the line of mean high
tide and seaward to a line three geographical miles distant from
the coastlines of the territories of Guam, the Virgin Islands,
and American Samoa, as heretofore or hereafter modified by
accretion, erosion, and reliction, and in artificially made, filled
in, or reclaimed lands which were formerly permanently or
periodically covered by tidal waters, are hereby conveyed to
the governments of Guam, the Virgin Islands, and American
Samoa, as the case may be, to be administered in trust for
the benefit of the people thereof.
48 U.S.C. § 1705(a) (Supp. 1986).
63a
did not have title it could convey, any subsequent agree-
ment to convey title was ineffective. We disagree with
this analysis.
First, we disagree with the intervenors’ characteriza-
tion of section 6(a) of the Memorandum Agreement. This
section does not create additional preconditions. On the
contrary, it merely establishes ministerial acts which had
to be performed in order to properly convey title.
Second, since the transfer procedures are not precondi-
tions but ministerial acts, we also disagree with inter-
venors’ legal interpretation of the relationship between
1974 amendments to the Submerged Land Act and the
1973 Memorandum. Contrary to the intervenors’ assess-
ment, this relationship does not, through an unforeseen
series of events, create a situation which prevents WICO
from ever receiving title to these lands. Rather, this re-
lationship simply makes moot the transfer procedures.
Once the recognized preconditions are satisfied, WICO
will no longer seek title through the Virgin Islands from
the United States but will simply receive title direct from
the Virgin Islands. In effect, the transfer of title from
the United States to the Virgin Islands eliminated the
need for portions of section 6(a) of the Memorandum
Agreement.
Evidence for this position is contained in the First
Addendum to the 1973 Memorandum Agreement. The
changes made in the First Addendum to the 1973 agree-
ment are cosmetic and required only so the 1973 Memo-
randum Agreement comports with the Submerged Lands
Act.
Third, and of significant import, the Submerged Lands
Act makes its transfer in trust “[s]ubject to valid exist-
ing rights.” 48 U.S.C. §1705(a) (Supp.1986). WICO’s
rights were therefore preserved and recognized in this
act, notwithstanding the fiduciary nature of the transfer.
64a
Finally, we take issue with what we perceive are the
two ways the intervenors seek to assert the public trust
doctrine.* First, they claim prior elected officials did not
have the authority to enter into any agreement which
relinquished title to these lands, because these lands are
held in trust and may never be conveyed. WICO, there-
fore, allegedly has no right to the property in question.
Second, they seem to allege that the public trust doctrine
may be cited as a legitimate public purpose for supporting
the Repeal Act, to defeat WICO’s Contract Clause claim.
We feel compelled to address these contentions, if only
because they were pressed with such force and vehemence.
We note too that the same contentions permeated the
legislative debate on repeal of WICO’s rights.
a) Public Trust Doctrine
Land under tide waters has a special legal character.
State of Cal., Etc. v. United States, 512 F.Supp. 36, 40
(N.D.Cal.1981). This special character was described
by the Supreme Court in Jllinois Central R. Co. v. People
of the State of Illinois, 146 U.S. 387, 13 S.Ct. 110, 36
L.Ed. 1018 (1892) as:
“a title different in character from that which the
State holds in lands intended for sale. It is different
from the title which the United States holds in public
lands which are open to preemption and sale. It is a
title held in trust for the people of the State that they
may enjoy the navigation of the waters, carry on
commerce over them, and have liberty of fishing
%In the transfer of submerged lands from the United States to
the Virgin Islands, the statute states this land will be “administered
in trust for the benefit of the people thereof.” 48 U.S.C. $ 1705(a)
(Supp. 1986). An additional source for this authority is derived
from the power the Virgin Islands Government has as sovereign
over these islands. J. Sax, “The Public Trust Doctrine in Natural
Resource Law: Effective Judicial Intervention” 68 Mich. L. Rev.
471 (1970). For the early history of this doctrine in America see
Shively v. Bowlby, 152 U.S. 1, 14 S.Ct. 548, 38 L.Ed. 331 (1894),
65a
therein freed from the obstruction or interference of
private parties.”
lilinois Central, supra, 146 U.S. at 452, 13 S.Ct. at 118.
The principle described in Illinois Central has come
to be known as the public trust doctrine.*
In general, the public trust doctrine recognizes that
some types of natural resources are held in trust by a
government for the benefit of the public. W. Rogers Jr.,
Environmental Law, supra at 171 n.8. Historically the
doctrine applied to lands below the low-water mark in
the sea and great lakes, the waters over these lands, and
the waters within navigable rivers and streams. Sax,
“The Public Trust Doctrine in Natural Resource Law:
Effective Judicial Intervention,” 68 Mich.L.Rev. 471
(1970). We recognize that cases exist which support the
intervenors’ proposition that in general the trustee to
trust lands is prohibited from selling these areas to any-
one for a private purpose. International Paper Co. v.
Mississippi St. Hwy. Dept., 271 So.2d 395, 399 (Miss.
1972) cert. denied 414 U.S. 827, 94 S.Ct. 49, 38 L.Ed.2d
61 (1973). This prohibition however, is not absolute.
b) Situations where Courts Recognize a Private Party’s
Title to Trust Lands
In a number of situations courts have either upheld
conveyances of trust lands to private interests, free of the
4 Prior to describing the parameters of this doctrine, we note one
authority has commented that:
Any attempt at a shorthand statement of the principles of
public trust must come with a disclaimer: the constitutional
and legislative variations among the states approach the in-
finite, and many states fulfill some of the identical policy func-
tions under different doctrinal rubrics—prescriptive rights,
customs, dedication or other property theory.
W. Rogers Jr. Environmental Law, § 2.16 (1977). We agree with
this assessment concerning the law of public trusts and concur in
this disclaimer.
66a
trust, or have recognized title in a private party to trust
lands. The following situations are pertinent to the case
at bar.
[1] Improvement of Navigation or When Public
Trust is not Impaired
Submerged lands can be conveyed to the use and control
of private parties for the improvement of the navigation
and use of the waters or when the parcels can be disposed
of without impairment of the public interest in what
remains. Appleby v. New York, 271 U.S. 364, 394, 46
S.Ct. 569, 578, 70 L.Ed. 992 (1926) (Supreme Court
recognized title, free of the trust, in private persons to
filled trust lands) ; Illinois Central R. Co., supra 146 U.S.
at 453, 13 S.Ct. at 118. At least one state has held that
in the proper administration of the trust, they may find
it necessary to cut off certain tidelands from water access
and render them useless for trust purposes. In these cases
the State Legislature has the power to make this de-
termination and free the lands from the trust. When
such lands have been so freed, they may be irrevocably
conveyed into absolute private ownership. City of Long
Beach v. Mansell, 3 Cal.3d 462, 91 Cal.Rptr. 23, 36-38, 476
P.2d 423, 437-38 (1970) (in bank) (describing common
law trust doctrine as opposed to the California Constitu-
tional prohibitions against alienation of these lands) .°
[2] Settlement of Land Disputes
The second instance involves settlement of land dis-
putes. When title and boundaries to certain submerged
and reclaimed trust lands are in dispute, a settlement
between the local government and landowners will be
enforced and will not be set aside based on an assertion
that the settlement violates the public trust doctrine.
* For examples of other states which include versions of the
public trust doctrine in their respective constitutions see the state
constitutions of Pennsylvania and Wisconsin.
67a
City of Long Beach, supra. Groups not party to the
original settlement will also be prevented from raising the
doctrine to challenge titles granted pursuant to the settle-
ment. Amigos De Bolsa Chica v. Signal Properties, 142
Cal.App.3d 166, 190 Cal.Rptr. 798 (1983).
[3] International Duty
Governments may recognize title in private individuals
to trust property pursuant to an international duty, even
though the original alienation of submerged lands may
conflict with the public use doctrine. Summa Corp. v.
California ex rel. State Lands Comm’n, 466 U.S. 198,
206-207 n. 4, 104 S.Ct. 1751, 1756 n. 4, 80 L.Ed.2d 237
(reh’g den.), 467 U.S. 1281, 104 S.Ct. 2693, 81 L.Ed.2d
886 (1984); Montana v. United States, 450 U.S. 544,
552, 101 S.Ct. 1245, 1251, 67 L.Ed.2d 493 (reh’g den.),
452 U.S. 911, 101 S. Ct. 3042, 69 L.Ed.2d 414 (1981).
The facts in Summa, supra, are remarkably similar to
those before us. The petitioners’ title to the land in
question dated back to 1839 when the Mexican Governor
of California granted title to the property to the peti-
tioners’ successors in interest. This property became part
of the United States following the war between the United
States and Mexico which was formally ended by the
Treaty of Guadalupe Hidalgo in 1848. Under the terms
of this treaty the United States undertook to protect the
property rights of Mexican landowners. To both fulfill
its obligations under the treaty and to provide for an
orderly settlement of land claims, Congress passed the
Act of March 3, 1951, setting up a comprehensive claims
settlement procedure.
The succesors in interest followed the procedures pro-
vided in the Act and eventually the Secretary of Interior
approved their claim and issued them a patent confirm-
ing their title. The Supreme Court noted as significant
the fact that no mention of any public trust was made
68a
in the patent and that California did not assert this in-
terest during the confirmation hearings.
The precise issue before the Court was whether
“a property interest [public trust easement] so sub-
stantially in derogation of the fee interest patented
to petitioner’s predecessors can survive the patent
proceedings conducted pursuant to the statute im-
plementing the Treaty of Guadalupe Hidalgo.”
Summa, supra, 466 U.S. at 205, 104 S.Ct. at 1755.
In holding it could not, the Court stated:
“Patents confirmed under the authority of the
1851 Act were issued pursuant to the authority re-
served to the United States to enable it to discharge
its international duty with respect to land which,
although tideland, had not passed to the State.”
Summa, supra at 205, 104 S.Ct. at 1756.
As we hope is by now obvious, the Supreme Court has
approved recognition, by a government, of title in private
hands to trust lands. WICO’s original rights, like the
original grants in Summa, occurred under the auspices
of a foreign government and were subsequently recog-
nized in a treaty with the United States. Both treaties
predated that point in time when California and the
Virgin Islands had control over the respective tidelands.
The grants, therefore, occurred prior to the existence of
the public trust doctrine. Pursuant to the international
agreements, they should be upheld in the face of a chal-
lenge based on this doctrine.
The challenge to the 1973 settlement, like the chal-
lenges to the settlements in City of Long Beach, supra,
and Amigos, supra, must also be rejected. As in those
cases, in 1973 the United States, the Virgin Islands, and
WICO were in contention over the extent and validity
of WICO’s right to reclaim 42 acres of land. The com-
69a
promise at that time benefited both sides because it
clearly acknowledged and defined WICO’s rights to re-
duced portions of the submerged land. It is impermis-
sible for the Sixteenth Legislature to extinguish WICO’s
rights under the settlement, arguing that prior public
officials had no such authority to act. As we have seen,
the highest court in the land has found similar acts rea-
sonable and allowable.
Finally, we find that there is no impairment of the
public trust in the reclamation and development such as
proposed by WICO. See, ¢.9., Appleby, supra. In an
analogous case, City of Milwaukee v. State, 193 Wis. 423,
914 N.W. 820 (1927), the Wisconsin Supreme Court cit-
ing to Illinois Central, supra, reiterated the proposition
that title to submerged lands could be conveyed to pri-
vate interests for reclamation when the lands could be
disposed of without detriment to the public interest in
the lands and waters remaining. City of Milwaukee,
supra 214 N.W. at 882.
The Wisconsin Legislature granted submerged lands
‘n Milwaukee’s harbor to a steel company. The steel
company intended to fill these submerged lands and con-
struct docks and wharfs thereby creating employment
and economic development.* The issue before the Wis-
consin court was whether the State of Wisconsin, as a
sovereign state of the Union, had the power to cede to
Milwaukee, which in turn conveyed to the steel company,
property held in trust free of the trust. City of Milwau-
kee, supra at 821. In holding that Wisconsin could do
so, the court made a number of points relevant to
WICO’s situation.
Initially, the court recognized that normally these
lands could not be conveyed to a private person. Id. at
830. The court then reviewed a number of circumstances
6 In the record before us, WICO plans to construct docks off its
reclaimed lands for a marina, among other uses.
70a
in which such conveyances are permitted. First, these
lands would not damage any rights of other riparian
owners or the public. Jd. at 829. Second, the court de-
ferred to the Legislative enactment and “presumed the
Legislature had made an investigation of the entire sit-
uation” and concluded that other riparian owners or the
public would not be harmed but, on the contrary, would
benefit from the grant. Jd. at 829. Third, the court rec-
onciled the conveyance by stating it did not violate the
public trust doctrine but actually promoted it. Jd. at
830.7 Finally, the court noted that the steel company,
though ‘a private corporation operated for profit, ...
nevertheless is an important factor in the industrial life
of the city and state”. Jd. at 830. All of these factors
are relevant to our case.
The 7.5 acres to be reclaimed by WICO fronts land not
used for marine purposes but as a housing project and
park. The owners of this land are not utilizing their
riparian rights in any way. There is no public beach or
other particular form of public access—the original
waterfront is simply unused shoreline.
The Virgin Islands Legislature, in Act No. 3326, had
before it exhaustive studies of the issue and determined
the present compromise was in the best interest of the
Virgin Islands people. The intervenors consistently ig-
nore how the 1973 compromise with WICO was in fur-
therance of the public interest. This is described in the
Memorandum, to which Governor Evans affixed his sig-
nature and the seal of his office, the provisions of which
the legislature sitting at the time ratified. We do well
to recall the provisions.
™The Wisconsin Court implied that if the Legislature had not
allowed the conveyance, this failure would have amounted to “gross
negligence and a misconception of [the Legislature’s] proper duties
and obligations”. Jd. 214 N.W. at 830.
Tla
For the people of the Virgin Islands, the conveyances
to be made “satisfy a compelling public need” in the fol-
lowing respects:
(1) An additional 214 acres will be added by WICO
to the public recreation area near Pearson Gar-
den, thus doubling its size;
(2) Filled land for the waterfront highway to per-
mit widening from two to four lanes will be
provided by WICO.
(3) Dredging the harbor in Long Bay will be pro-
vided by WICO, thereby benefiting navigation
and promoting tourism;
(4) The reclamation will enlarge the area of level
land for development near the downtown area
of Charlotte Amalie now limited because of the
hilly terrain;
(5) The development contemplated on the reclaimed
lands for marinas, cruise ship berths, officers
and other like facilities will provide additional
employment for residents of St. Thomas and
enhance tourism facilities;
(6) Termination of the remaining WICO rights un-
der the Danish grant will eliminate a possible
cloud over the future of St. Thomas harbor,
enabling St. Thomas harbor to be developed on
a limited, planned basis, subject to specific time
limits.
Memorandum at pp. 7-8.
We find, accordingly, that there is ample precedent
and authority for the actions taken by territorial officials
in entering into the Memorandum and subsequent ad-
denda, even under the public trust doctrine. For that
further reason, WICO’s rights should not be impaired.
(2a
ae
2) Police Power v. Contract Clause
The parties, by asserting the Contract Clause and
state police power for support of their respective posi-
tions, have placed a constitutional dilemma squarely be-
fore us. This dilemma involves the tension between con-
stitutional protections offered to contracts, and the sov-
ereign power to protect the health and welfare of the
people.* This tension involves, on the one hand, a sover-
eign’s unfettered power to protect the welfare of its
people encountering the constitutional protections against
state action found in the impairment clause. When a
sovereign’s action, which impairs contract rights, is al-
legedly motivated by a legitimate public purpose, this
tension comes to a head.
Without question, it is settled law that states may
pass statutes for the promotion of the commonwealth or
for the good of the public, though they may impair the
obligation of contracts. Allied Structural Steel Co. v.
Spannaus, 438 U.S. 234, 241, 98 S.Ct. 2716, 2720, 57
L.Ed.2d 727 (reh’g den.), 439 U.S. 886, 99 S.Ct. 233, 58
L.Ed.2d 201 (1978). This reserved power “is an exer-
cise of the sovereign right of a Government to protect
the lives, health, morals, comfort and general welfare of
the people, and is paramount to any rights under con-
8 Police powers generally are those powers of sovereignty not
given to the Federal Government exclusively by the United States
Constitution, nor prohibited by that document to the states, nor
reserved to the people. 2 C. Antieau, Modern Constitutional Law,
$ 10:1 (1969). The Supreme Court has described this power in
Parker v. Brown, 317 U.S. 341, 359-60, 63 S.Ct. 307, 317-18, 87
L.F4 315 (1943) as follows:
The governments of the states are sovereign within their
territory save only as they are subject to the prohibitions of
the Constitution or as their action in measure conflicts with
powers delegated to the National Government, or with Con-
gressional legislation enacted in the exercise of those powers.
Corgress included police powers in its grant of power to the Virgin
Islands in the Revised Organic Act. Rev.Organ.Act of 1954 §3
(1967).
73a
tract between individuals” Allied, supra at 241, 98 S.Ct.
at 2721, citing Manigault v. Springs, 199 U.S. 473, 480,
26 S.Ct. 127, 130, 50 L.Ed. 274 (1905).
Juxtaposed against this sovereign power is the Con-
tract Clause which unequivocally states:
No State shall ... pass any . . . Law impairing
the Obligation of Contracts.”
U.S. Const., Art. I § 10.° As can be seen, a tautological
deadlock could easily ensue if a contract is impaired by
a statute that has a claimed public purpose. Resolution
of this deadlock is required because, as noted by the
Supreme Court, “[i]f the Contract Clause is to retain
any meaning at all... it must be understood to impose
some limits upon the power of a State to abridge exist-
ing contractual relationships even in the exercise of its
otherwise legitimate police power.” Allied, supra at 438
U.S. at 242, 98 S.Ct. at 2721. The Allied Court looked
to five of its prior opinions to help define these limits. A
brief review of these cases is warranted to determine
the parameters of this conflict.
In Home Building & Loan Asso. v. Blaisdell, 290 U.S.
398, 54 S.Ct. 231, 78 L.Ed 413 (1934) the Court upheld
Minnesota’s police power against Contract Clause attack.
There a mortgage moratorium statute was enacted to
provide relief for homeowners threatened with fore-
closure. This law conflicted with a lender’s contractual
foreclosure rights. The Court, however, acknowledged
that despite the Contract Clause, States retain residual
authority to safeguard the vital interests of their people.
Allied, supra 438 U.S. at 242, 98 S.Ct. at 2721; Blaisdell,
supra 290 U.S. at 434, 54 S.Ct. at 238. Five factors
were significant in upholding this law.
® This prohibition is also included in the Revised Organic Act.
Rev.Organ.Act of 1954 § 3 (1967).
10 Emphasis in the original.
74a
First, the state legislature had declared in the Act
itself that an emergency need for the protection of
homeowners existed. Second, the state law was
enacted to protect a basic societal interest, not a
favored group. Third, the relief was appropriately
tailored to the emergency that it was designed to
meet. Fourth, the imposed conditions were reason-
vable. And, finally, the legislation was limited to the
duration of the emergency.
Blaisdell, supra at 444-47, 54 S.Ct. at 242-43.
It is implied in the Blaisdell opinion that if the mora-
torium legislation had not possessed the characteristics
attributed to it by the Court, it would have been invalid
under the Contract Clause.
In three subsequent cases, the Supreme Court honed
its jurisprudence concerning contract clause limitations
of a state’s police power. In W.B. Worthen Co. v.
Thomas, 292 U.S. 426, 54 S.Ct. 816, 78 L.Ed. 1344
(1934), the Court held invalid under the Contract Clause
an Arkansas law that exempted the proceeds of a life
insurance policy from collection by the beneficiaries. The
Court stressed that the statute was not precisely and
reasonably designed to meet a grave temporary emer-
gency in the interest of the general welfare.
In W.B. Worthen Co. v. Kavanaugh, 295 U.S. 56, 60,
55 S.Ct. 555, 556, 79 L.Ed 1298 (1935), the Court held
invalid under the Contract Clause another Arkansas law
stating “{e]ven when the public welfare is invoked as
an excuse,” ... the security of a mortgage cannot be
cut down ‘without moderation or reason or in a spirit
of oppression.’” Allied, supra 438 U.S. at 243, 98 S.Ct.
at 2722; Kavanaugh, supra, 295 U.S. at 60, 55 S.Ct. at
557."
1! Similarly, in Treigle v. Acme Homestead Assn., 297 U.S. 189,
196, 56 S.Ct. 408, 410, 80 L.Ed. 575 (1936), the court, in holding a
T5a
Finally, in United States Trust Co. v. New Jersey, 431
U.S. 1, 97 S.Ct. 1505, 52 L.Ed.2d 92 (1977), the Court
held that legislative alteration of the rights and remedies
of Port Authority bondholders violated the Contract
Clause. Id. at 22, 97 S.Ct. at 1517. In its analysis the
Court recognized a number of principles helpful to us.
The Court again recognized that although the absolute
language of the clause must leave rvom for the state’s
police power, that power has limits when its exercise
effects substantial modifications of private contracts.
Allied Steel, supra 438 U.S. at 244, 98 S.Ct. at 2722,
United States Trust, supra 431 U.S. at 21, 97 S.Ct. at
1517.
Additionally, the Court recognized that despite the
customary deference courts give to state laws directed
to social and economic problems, legislation adjusting
contract rights must be reasonable and of a character
appropriate to the public purpose justifying its adoption.
Allied, supra 438 U.S. at 244, 98 S.Ct. at 2722; United
States Trust, supra 431 U.S. at 22, 97 S.Ct. at 1517.
With these parameters in mind, we turn to examine
WICO’s Contract Clause claim.
a) Substantial Impairment
The threshold inquiry for Contract Clause issues is
whether the statute has substantially impaired a contrac-
tual relationship. Allied, supra 438 U.S. at 244, 98 S.Ct.
at 2722; Keystone Bituminous Coal Assn. v. Duncan, 771
F.2d 707, 717 (3d Cir.1985). In general a statute is con-
sidered a contract when “the language and circumstances
evince a legislative intent to create private rights of a
contractual nature enforceable against the state.” United
States Trust, supra 431 U.S. at 17 n. 14 & 19-20 n. 17,
Louisiana law invalid under the Contract Clause stated, “[{s)uch
an interference with the right of a contract cannot be justified by
saying that in the public interest the operations of building associa-
tions may be controlled and regulated... .”
76a
97 S.Ct. at 1515 n. 14 & 1516 n. 17. Here, the original
settlement is clearly a contract and, following the above
stated principle, the legislative ratification of the Memo-
randum is also considered a contract. That this contract
has been impaired is a misnomer—it has been entirely
eliminated.
By repealing both Acts Nos. 3326 and 4700, the Legis-
lature repudiated prior approval of the Memorandum
and Addenda, and cancelled the authority of the governor
to enter into the agreements. This has the further effect
of repudiating the agreement and WICO’s rights recog-
nized therein by the Government of the Virgin Islands.
The Repeal Act also places WICO on the same footing
as any other entity in seeking development and occu-
pancy of submerged lands, giving WICO no greater rights
than provided in the Coastal Zone Management Act.
Thus, the seal of the Legislature is put on a repudiation
of WICO’s original grant from the Government of Den-
mark, and the recognition of that grant by the Govern-
ment of the United States. It is difficult to contemplate
how the legislative elimination of WICO’s rights could
be more comprehensive.
The first step, therefore, is satisfied.
b) Significant and Legitimate Public Purpose
That WICO’s rights have been completely eliminated
is significant in our next inquiry. We must determine
whether there is a significant and legitimate public pur-
pose behind the law such as remedying broad and gen-
erai social or economic problems. Energy Reserves
Group, Ine. v. Kansas Power and Light Co., 459 U.S. 400,
411, 103 S.Ct. 697, 704, 74 L.Ed.2d 569 (1983); Key-
stone, supra at 717, Troy Ltd. v. Renna, 727 F.2d 287,
297 (3d Cir.1984). The government has a difficult bur-
den to overcome at this second stage because “[t]}he sev-
erity of the impairment measures the height of the hur-
die the [territorial] legislation must clear.” Allied Steel,
77a
supra 438 U.S. at 245, 98 S.Ct. at 2722. Minor altera-
tions of contract rights may end the inquiry after the
first stage while severe impairments “push the inquiry
to a careful examination of the nature and purpose of
the [territorial] legislation.” /d. at 245, 98 S.Ct. at 2723.
Since the Legislature has completely eliminated WICO’s
rights, we must carefully scrutinize the nature and pur-
pose of the legislation.
Initially we note the existence of an important public
interest alone is not always sufficient to overcome the
Contract Clause limitation on legislative authority.
United States Trust, supra 431 U.S. at 21, 97 S.Ct. at
1517. Without doubt, protection of our islands’ sub-
merged lands is an important public interest which the
Legislature, through use of its police power, could pro-
tect by invoking the public use doctrine. That this is a
legitimate public use sufficient to overcome WICO’s con-
tract rights is an entirely different matter.
As stated in our prior analysis, WICO’s development
may in fact serve a greater public purpose than leaving
the submerged lands inviolate. At least, this has been
the assessment of every elected governor of the Virgin
Islands, and two elected legislatures. As stated earlier,
this development fits within those situations approved by
the Supreme Court, so it cannot be said that prior legis-
latures had no authority to make the agreements they
adopted." Additionally, the Repeal Act did not address
'2 The intervenors assert correctly that one legislature can neither
abridge the powers of a succeeding legislature nor bargain away
the police power of the state. United States Trust Co., supra 431
U.S. at 23, 97 S.Ct. at 1518. The Memorandum as amended, however,
does not limit the government's ability to gain title to the filled
lands. It specifically recognizes the right to exercise eminent
domain. The action in repealing WICO’s rights could be considered
a “taking” of private property without just compensation in viola-
tion of the Revised Organic Act. Rev. Organ. Act of 1954 §3
(1967). This is an alternative claim made by WICO in this law
suit, but since we find the repeal invalid, we do not reach this point.
78a
any broad and general social or economic problem.
Rather, it can be argued, the Repeal Act exacerbates
various existing problems.
Since the statute is solely directed at WICO, it can not
be characterized as addressing a broad and general
societal interest.'* As the Supreme Court cautions, a law
directed against a specific entity “can hardly be charac-
terized . . . as one to protect a broad societal inter-
est... .” Allied, supra 488 U.S. at 249, 98 S.Ct. at 2724.
The Repeal Act also fails to remedy an economic prob-
lem Rather, it contributes to the present economic dis-
tress in the islands by stifling development which would
create new employment."
Finally, unlike the situation in Blaisdell, where the
Supreme Court upheld Minnesota’s police power in the
face of a Contract Clause attack, there is no emergency
situation, similar to the Great Depression, here in the
islands which the Repeal Act intends to address. Addi-
tionally, even assuming an emergency existed which the
Repeal Act addressed, the act would still fail to pass
constitutional scrutiny because the act is not limited to
the duration of the emergency but purports to eliminate
WICO’s rights forever. Blaisdell, supra 290 U.S. at 434,
54 S.Ct. at 238.
3) Adjustment of Rights
Once a legitimate public purpose has been identified,
the court must determine whether the adjustment of the
13 Indeed, as we will discuss later, if the repeal is valid, it will
not have closed the door entirely on WICO, but conceivably will
serve to reinstate all the rights WICO enjoyed under the treaty,
thereby increasing the submerged lands subject to WICO’s control,
a result hardly intended by the Legislature.
14 WICO intends to develop the land in question by building a
hotel and marina. The Memorandum of Understanding in its
preamble, (pp. 7-8) recites the economic benefits the government
expects to reap by selling WICO’s claim.
79a
parties’ rights and responsibilities is based upon reason-
able conditions and is of a character appropriate to the
legislations public purpose. United States Trust, supra
431 U.S. at 22, 97 S.Ct. at 1517. Keystone, supra at 717.
For this third inquiry courts should defer to the legis-
lative judgment as to the reasonableness of the particular
measure if the state itself is not a contracting party.
United States Trust, supra at 431 U.S. 22-23, 97 S.Ct.
at 1517-18; Keystone, supra at 717. If the state is a
contracting party, however, the court need not defer to
the legislative judgment but is free to determine whether
a less drastic modification would be sufficient. United
Stutes Trust, supra 431 U.S. at 30-32, 97 S.Ct. at 1521-
23; Keystone, supra at 717; Troy, supra at 296. In
WICO’s case, of course, the government is a contracting
party.
The repudiation of WICO’s rights in the submerged
land is neither based upon reasonable conditions nor of a
character appropriate to the Legislature’s public purpose.
By repealing the prior settlement, the Government in
effect no longer recognizes WICO’s right to title in the
submerged lands. This adjustment is drastic and has
no reasonable basis. WICO intends to develop the new
land into a marina-hotel complex. We note that tourism
is a major industry in the Virgin Islands -and one of
the express goals of Acts Nos. 3326 and 4700, as well as
other legislation, is to promote and assure priority for
coastal-dependent economic development, such as hotels
and marine facilities. See also 12 V.I.C. § 903(b) (3)
(1982). Hotel and marine facilities are a common use
for coastal zone areas. By extinguishing WICO’s rights,
the Legislature acted unreasonably. Its position finds no
support in any hypothetical public policy, but it violates
the stated public policy of an act intended to address
the issues of coastal protection and development.
B) Irreparable Harm
WICO has demonstrated it will be irreparably harmed
should it be unable to continue dredging operations.
1) Constitutional Violation
Interference with constitutional rights is considered
irreparable injury. Planned Parenthood v. Citizens For
Com. Action, 558 F.2d 861, 867 (8th Cir.1977) ; Henry
v. Greenville Airport Commission, 284 F.2d 631, 633
(4th Cir.1960). The interference with WICO’s contrac-
tual rights in violation of the Contract Clause, standing
alone, is sufficient irreparable harm to support the result
we reach.
2) Economie Loss
The possibility of significant economic losses, in addi-
tion to the constitutional interference, strengthens
WICO’s argument that it will be irreparably harmed.
Normally, a defendant’s ability to compensate a plaintiff
with money damages precludes the issuance of a pre-
liminary injunction. Nuclear-Chicago Corp. v. Nuclear
Data Ine., 465 F.2d 428, 430 (7th Cir.1972). A court
may, however, look to the financial strength of a defend-
ant to determine whether or not a defendant could
compensate the petitioner with money damages. Eli Lilly
& Co. v. Premo Pharmaceutical Labs, 630 F.2d 120, 137
(3d Cir.), cert. denied, 449 U.S. 1014, 101 S.Ct. 573,
66 L.Ed.2d 473 (1980).
We have no difficulty taking judicial notice that the
Virgin Islands government is in difficult financial straits.
We have had numerous cases in front of us in which
persons with legitimate claims against the government
in the multiple millions of dollars have been unable to
obtain funds owing them. In each instance, government
attorneys have cited the lack of funds with which to
pay, and the debts remain unpaid to this day. Included
among the claims are those which would have the highest
8la
priority, i.e., payments to employees of the government
owing for several years. In addition, even if the funds
were available, the government could refuse to make pay-
ment. Being exempt from levy and execution, it could
not be forced to alter such a posture.
Additionally, WICO has already paid more than half
a million dollars on a dredging contract. More than
60,000 tons of fill are in place and at risk of being
washed away should a serious storm arise. There is no
question WICO would suffer irreparable harm even with-
out the constitutional violation.”
C. Other Relevant Elements
We have covered thus far the two central elements
necessary for a preliminary injunction under the holding
of Professional Plan, supra. They are the reasonable
probability of eventual success in the litigation, and that
the movant will be irreparably harmed if relief is not
granted. As our discussion began, we noted that Pro-
fessional Plan contemplated two additional elements when
relevant. These are the possibility of harm to other inter-
ested persons from the grant or denial of the injunction,
and the public interest.
We take these two elements together because they are
intertwined. The citizen intervenors have cited no direct
possibility of harm to themselves or others in the com-
munity, apart from the public interest which they seek
to protect. Our disagreement is whether the public in-
terest is served or harmed by permitting the continued
15 At this time the reclaiming work is not complete. A dredge
fill dike has been erected on the seaward side. Behind this is a
settling pond where the 60,000 tons of dredge spoil have been
deposited. Placement of rock armor has commenced but is incom-
plete. The rock armor is designed to protect the reclaimed land
from erosion from the ocean. Should a storm hit St. Thomas prior
to completion of the rock armor, there is a risk of the reclaimed
land being washed away.
82a
reclamation of land by WICO for the purposes contained
in the agreements.
The public interest sought to be implemented in the
Memorandum in favor of the people of the Virgin Islands
is substantial. We described the benefits to be gained by
the government and its citizens outlined in the Memo-
randum and will not repeat them here. To permit WICO
to assert its rights pursuant to the Memorandum and
Addenda serves the public interest. To adopt the inter-
venors’ arguments in favor of halting the dredging and
upholding the repeal of WICO’s rights, would invite
chaos.
We refer to a point touched on several times earlier
in this opinion. If the repeal is permitted, as we view
the law it would not, as an end result, eliminate WICO’s
rights in Charlotte Amalie harbor. Rather, it would
expand then [sic] back to the original rights contained in
the concession from the Government of Denmark in 1913.
These rights have been forcefully recognized by the sig-
natories to the 1917 Treaty, i.e., Denmark and the United
States. They include nearly triple the reclamation poten-
tial contained in the Memorandum and Addenda, and
the use of the reclaimed land would not be subject to the
restrictions contained in the Memorandum.
The public interest would not be served by the possi-
bility of a return to such a situation. For this reason,
we find that the granting of a preliminary injunction,
permitting WICO to exercise the limited rights agreed
to in the Memorandum, would better serve the govern-
ment and people of the Virgin Islands than the spectre
of reinstatement of the vastly enlarged rights contained
in the 1913 concession.
83a
III. CONCLUSION
We find that WICO has satisfied all of the conditions
necessary for a preliminary injunction. In reaching that
conclusion, we have covered the legal bases a court must
consider when confronting the issues presented herein.
But we cannot close without addressing the matter from
a larger perspective than the nuts and bolts of stare
decisis. We speak of questions of honor and the integrity
of one’s promises. They apply with no less force to gov-
ernment than to others. In this instance, the only three
elected governors the territory has ever had and their
respected attorneys general, acting with the men and
women elected to two separate legislatures, bound them-
selves and the government to promises solemnly given.
If what they did in good faith and in pursuit of their
vision of the public interest is to be lightly discarded
many years later, we ask: who would without trembling
and consternation, deal with such a government in the
future? And who, ultimately would be the loser? The
question answers itself. The people of the Virgin Islands
would suffer the loss of their government’s promises are
considered as will-o-the-wisp, to be kept when convenient,
and broken as desired.
We acknowledge that the citizen intervenors’ views are
honestly come by and sincerely held. Their promotion of
the public interest as they view it cannot be deprecated.
We only regret that on the issues in this case, our own
view of that public interest diverges from theirs.
All persons interested in this controversy would do
well to read United States v. 119.67 Acres of Land, 663
F.2d 1328 (5th Cir.1981). This case was cited at oral
argument and pursuasively supports our decision. Under
a subsection entitled “Binding the Government to its
Word,” there appear the following words:
The Government does not deny the words, or even
the agreement, which it, together with its adver-
84a
saries, importuned the District Court to approve. On
the contrary, acknowledging in the best Boy Scout
tradition the words spoken, the agreements made,
and the consensual judgment entered, the Govern-
ment, now claiming to be adorned with the protec-
tive armor against which neither equities nor ac-
cepted morality may penetrate, takes the simple, but
awesome position that what it agreed to was of no
moment because it was mistaken on the operative
facts.
119.67 Acres, at § 333.
Our attitude is similar to that of the Fifth Circuit
in discussing promises made by the United States. The
Legislature of the Virgin Islands should not be permitted
to ignore its word of honor pledged in the agreements
with WICO, carrying the entire Government of the Vir-
gin Islands along with it.
A preliminary injunction will issue enjoining inter-
ference with WICO’s rights under the Memorandum of
Understanding and Addenda thereto.
16 Emphasis in the original.
85a
IN THE DISTRICT COURT
OF THE VIRGIN ISLANDS
DIVISION OF ST. THOMAS AND ST. JOHN
Civil No. 337-1968
UNITED STATES OF AMERICA,
Plaintiff,
Vv.
THE West INDIAN COMPANY LIMITED, also known as
DET VESTINDISKI KOMPAGNI; JOSEPH BYERS II; MAJOR
BYERS INVESTMENT ASSOCIATES; FORD WRIGHT, JR.;
ADRIAN PEREZ-AGUDO; ALBERT B. POE; JORGE SOUSS;
JosE BLANCO LuGOo; ISLAND HOTELS, LTD. ;
Defendants.
ACTION TO QUIET TITLE
COMPLAINT
The United States of America, by Almeric L. Chris-
tian, United States Attorney, acting by and upon the
direction of the Attorney General of the United States,
complains of the defendants and alleges:
I
This is a civil action brought by the United States
of America, and the jurisdiction of the Court is based
upon 28 U.S.C. sec. 1345 and 48 U.S.C. sec. 1612.
II
Certain real property which is the subject of this action
is located in St. Thomas, Virgin Islands.
86a
III
By communications of January 18, 1913 and April 16,
1913, from the Danish Ministry of Finance, the West
Indian Company, Ltd., also known as Det vestindiski
Kompagni, was granted a license to embank, drain,
deepen and utilize certain areas in St. Thomas Harbor.
The license provided that, under certain circumstances,
when land areas are reclaimed, the Company shall have
free and unrestricted exercise of property rights over
them.
IV
The West Indian Company, Ltd. (hereafter referred
to as Company) did a limited amount of dredging, filling
and improvement in the area covered by the license in
1913 or 1914. The shoreline in the area covered by the
license after completion of this work is shown by a map,
U.S. Coast and Geodetic Survey Register No. T-3771.
V
The Company has not filled in any land so as to add
land to the shoreline in the area covered by the license
since 1914.
VI
The United States in accepting a cession of the Virgin
Islands from Denmark in 1917 recognized the license
granted to the Company. See 39 Stat. 1706 (1915-1917).
VII
In 1935 the U. S. Army Corps of Engineers added fill
land to the 1918 shoreline as a part of Federal Project
No. 70, which project on completion reclaimed certain
swampland and made the harbor of St. Thomas more
navigable. In the area covered by the license to the Com-
pany, this fill extended the shoreline and increased the
land area of that part of St. Thomas Harbor; as noted
below Lot. Nos. 4 and 5, Estate Thomas, King’s Quarter,
87a
Virgin Islands, have subsequently been treated as in-
cluding this fill land.
Vill
The Corps of Engineers prepared a map identified as
St. Thomas, V. I., Long Bay and Vicinity, Swamp Recla-
mation, Federal Project No. 70, dated June 17, 1935,
that showed the shoreline as it existed in the area cov-
ered by the Company’s 1913 license prior to the start of
Federal Project No. 70. Hereafter this map is referred
to as Pre-Government Fill Shoreline Map.
IX
By warranty deed dated August 18, 1956, the Com-
pany conveyed to Major Byers Investment Associates
certain uplands (identified as Lot No. 4, Estate Thomas,
King’s Quarter, St. Thomas, Virgin Islands) bordering
on the harbor area covered by the 1913 license. Included
within the description of lands conveyed are fill lands
created by the Corps of Engineers in connection with
Federal Project No. 70.
Xx
By warranty deed dated September 11, 1956, the Com-
pany conveyed to Joseph Byers II certain uplands (iden-
tified as Lot No. 5 Estate Thomas, King’s Quarter, St.
Thomas, Virgin Islands) bordering on the harbor area
covered by the 1913 license. Included within the descrip-
tion of lands conveyed are fill lands created by the Corps
of Engineers in connection with Federal Project No. 70.
XI
By warranty deed dated February 15, 1961, Joseph
Byers II and Ethe! F. Byers, husband and wife, conveyed
to the Government of the Virgin Islands certain uplands
(identified as Lot No. 5A Estate Thomas, King’s Quarter,
St. Thomas, Virgin Islands) which were included in the
deed of September 11, 1956, mentioned in paragraph 10
above.
88a
XII
By deed dated April 9, 1965, Joseph Byers II con-
veyed to Major Byers Investment Associates all of his
right, title and interest in certain uplands (identified as
Lot 5 Estate Thomas, St. Thomas, Virgin Islands) which
were included in the deed of September 11, 1956, men-
tioned in pargaraph 10 above.
XIII
By warranty deed dated October 19, 1966, Major Byers
Investment Associates conveyed to Ford Wright, Jr.,
Adrian Perez-Agudo, and Albert B. Poe certain uplands
(identified as Parcel No. 5 Estate Thomas, King’s Quar-
ter, St. Thomas, Virgin Islands) bordering on the harbor
area covered by the 1913 license. Included within the
description of the lands conveyed are fill lands created
by the Corps of Engineers in connection with Federal
Project No. 70, and fill lands created by the Government
of the Virgin Island in the 1964 period. The grantees
of this deed subsequently sold to Jorge Souss and Jose
Blanco Lugo a one-fourth share and undivided interest
in this same parcel of land.
XIV
The United States alleges that all fill land seaward
of the shoreline shown in the Pre-Government Fill Shore-
line Map, including that filled by the Government of the
Virgin Islands in the 1964 period, is owned by the United
States, and that the license granted to the Company in
1913 terminated prior to July 11, 1933, when the Gov-
ernor of the Virgin Islands noted in a memorandum to
the Assistant Secretary of the Interior that the harbor
had not been dredged for more than 20 years. Provided,
however, that this allegation only relates to the harbor
area covered by the 1913 license.
WHEREFORE, plaintiff prays:
89a
1. That it be adjudged that the defendants’ claims to
the filled lands seaward of the shoreline shown by the
Pre-Government Fill Shoreline Map, within the area cov-
ered by the 1913 license, are invalid, and that the plain-
tiff is the owner of said lands and is entitled to the quiet
enjoyment and peaceable possession thereof.
2. For plaintiff’s costs herein and for such other and
further relief as the Court deems proper.
s/ Almeric L. Christian
ALMERIC L. CHRISTIAN
United States Attorney
s/ David W. Miller
DAVID W. MILLER
Attorney, Department of Justice
Washington, D. C. 20530
Attorneys for the Plaintiff.
90a
DISTRICT COURT OF THE VIRGIN ISLANDS
OF THE UNITED STATES
September 19, 1972
Governor Melvin Evans
Government House
Charlotte Amalie, St. Thomas
Dear Governor Evans:
As you know, the United States Government is currently
litigating a case against the West Indian Company in this
court. The pretrial conferences have been held and the
ease is scheduled for trial next month. The purpose of
the suit is to quiet title to certain waterfront lands which
lie within the original concession area granted to WICO
and guaranteed by the 1917 treaty with Denmark. The
Government has, however, raised a number of contentions
tending to show that the concession has terminated.
I am writing to suggest that a compromise settlement
may be desirable. Although the Virgin Islands is not
formally a party to this action, it would be a principal
beneficiary of any Government victory. I therefore sus-
pect that if your views were conveyed to the Secretary
of the Interior they could substantially affect the conduct
of this litigation. I suggest the compromise for two rea-
sons. First, WICO’s settlement offer, presented at public
hearings last October 26th, appears generous and would
seem to give the Government all that it is seeking in
the suit. Secondly, I am inclined to believe that WICO
will prevail on the merits if this case is carried forward
to trial. I am enclosing a flow sheet showing the major
issues involved, with the darker line indicating how I
believe they may be resolved.
I must emphasize, of course, that this is only a pre-
liminary evaluation. I have not yet considered this case
in detail. More particularly, I have not heard the argu-
9la
ments of counsel or received specialized evidence on
Danish law. In consequence my opinion here cannot be
considered binding, and I might well have occasion to
revise it at trial.
I might, however, comment on one apparent obstacle to
settlement. WICO proposes to quitclaim to the Govern-
ment those tracts on which the Government now has a
claim, plus some others, but would retain the right to
create fill lands in the harbor at the base of Bluebeard’s
Castle. The proposal is illustrated on the enclosed ma
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