Maryland and Virginia have long disputed control of the Potomac River (River). Of particular relevance here, Article Seventh of the 1785 Compact between those States provided: "The citizens of each state ... shall have full property in the shores of Potowmack river adjoining their lands, with all emoluments and advantages thereunto belonging, and the privilege of making and carrying out wharves and other improvements, so as not to obstruct or injure the navigation of the river." Because the 1785 Compact did not determine the boundary line between the two States, they submitted that question to an arbitration panel, which ultimately issued a binding award (hereinafter Black-Jenkins Award or Award) placing the boundary at the low-water mark on the River's Virginia shore. Although Maryland was thus granted ownership of the entire riverbed, Article Fourth of the Award further provided: "Virginia ... is entitled not only to full dominion over the soil to [its shore's] low-water mark ... , but has a right to such use of the river beyond the line of low-water mark as may be necessary to the full enjoyment of her riparian ownership, without impeding the navigation or otherwise interfering with the proper use of it by Maryland." Congress approved both the 1785 Compact and the Black-Jenkins Award pursuant to the Compact Clause of the Constitution. In 1933, Maryland established a permitting system for water withdrawal and waterway construction within her territory. For approximately 40 years, she issued, without objection, each of the numerous such permits requested by Virginia entities. The Maryland Department of the Environment (MDE) first denied such a permit when, in 1996, the Fairfax County, Va., Water Authority sought permission to construct a water intake structure, which would extend 725 feet from the Virginia shore above the River's tidal reach and was designed to improve water quality for county residents. Maryland officials opposed the project on the ground that it would harm Maryland's interests by facilitating urban sprawl in Virginia, and the MDE held that Virginia had not demonstrated a sufficient need for the offshore intake. Virginia pursued MDE administrative appeals for more than two years, arguing unsuccessfully at each stage that she was entitled to build the water intake structure under the 1785 Compact and the Black-Jenkins Award. Finally, Virginia brought this original action seeking a declaratory judgment that Maryland may not require Virginia, her governmental subdivisions, or her citizens to obtain a permit in order to construct improvements appurtenant to her shore or to withdraw water from the River. The Court referred the action to a Special Master, who issued a Report that, inter alia, concluded that the 1785 Compact and the Black-Jenkins Award gave Virginia the right to use the River beyond the low-water mark as necessary to the full enjoyment of her riparian rights; found no support in either of those documents for Maryland's claimed sovereign authority over Virginia's exercise of her riparian rights; rejected Maryland's argument that Virginia had lost her rights of waterway construction and water withdrawal by acquiescing in Maryland's regulation of activities on the River; and recommended that the relief sought by Virginia be granted. Maryland filed exceptions to the Report.

Held:

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