When Deep-Sea Treasure Is Found, Who Owns It?

Battling 30-foot seas off the northern California coast in 1865, the Brother Jonathan, a wooden, side-wheel paddle steamer loaded down with 244 passengers, freight, and a rumored cache of gold, smashed into a submerged rock and sank into the chilly waters off Crescent City, Calif.

Nearly 132 years later, the ship is at the center of another storm, one far removed from the churning waves of the mighty Pacific.

The fate of the Brother Jonathan now lies in the hands of the United States Supreme Court, which recently decided to hear a case on whether the ship belongs to the private company that found it, or the state of California. The court's scrutiny will affect similar dramas unfolding around the country as states try to assert title over the estimated 5,000 historic shipwrecks lying in coastal waters, the Great Lakes, and navigable rivers.

"States should have legal authority, without interference by the federal government or salvors, to deal with cultural resources that lie within their territorial sea," says Peter Pelkofer, senior counsel who represents the California State Lands Commission in the suit - also joined by 15 other states. "If not, there would be unrestricted access to maritime cultural resources by whoever wanted to find them and collect them."

The concern is that private salvage efforts driven by profit are inherently suspect. "We believe that they're only interested in the extraction of valuable materials and are giving lip service to their plans for an archaeological excavation," says California Deputy Attorney General Joseph Rusconi, who is arguing the case for the state before the Supreme Court.

And because many sunken ships, like the Brother Jonathan, can provide a priceless window on a region's history, preserving them is of the utmost importance.

"This ship has a multifaceted history with broad implications not only for San Francisco and the Pacific Coast but for the entire nation," says James Delgado, former head of the federal Maritime Preservation Program in Washington who now runs the Vancouver Maritime Museum. Delgado wrote the nomination, recently accepted, that made the vessel eligible for listing in the National Register of Historic Places.

"The baggage and freight being shipped in its final voyage from San Francisco to Puget Sound is sitting there on the bottom of the ocean as a virtually intact archaeological site," he says. The hull's copper plating as well as the "fittings, furnishings, fastenings, and machinery" are also on the ocean floor, he says, creating a "time capsule" of gold-rush days.

But Deep Sea Research, the San Diego-based company that found the wreck after 20 years of searching, bristles at the notion that they would simply pillage the ship for economic gain.

"The state is arrogant in its conviction that only they can do this right," says San Francisco lawyer Fletcher Alford, who represents Deep Sea Research. "But the state has conceded no funds to recover the wreck or safeguard it from pillagers. Meanwhile, my clients have not seen a penny return on their investment. They've only seen their money bleeding out."

While some 45 known projects have searched for the exact location of the Brother Jonathan since its disappearance, only Deep Sea Research's James Wadsley and his three fellow directors solved the riddle by scouring the historical records. One hundred and four investors - "common, ordinary people" - have so far contributed $1.2 million to the recovery of the shipwreck, with the hope of seeing a return on their investment. Afterwards, they plan to donate artifacts to museums, assisted all the while by archaeologists and supervised by a federal court judge.

As Deep Sea Research's success indicates, ever-improving technology is opening the way for more commercial salvaging - and states are wary of the fallout. More than 40 states have programs for the recovery of shipwrecks, and at least 27 states have passed laws to claim shipwrecks within state waters.

But California's claim to the Brother Jonathan is based largely on the 1987 federal Abandoned Shipwrecks Act. The act, intended to apply to the country's most important shipwrecks, gives states title of abandoned, embedded, or historic vessels in state waters.

Both a federal judge in San Francisco and the Ninth Circuit Court of Appeals found that Deep Sea Research has sole rights to the vessel. Yet to the dismay of the salvagers, the Supreme Court agreed to hear the state's appeal. The high court's ruling, expected early next year, will be the first time it has examined the Abandoned Shipwrecks Act.

A KEY element of the case pivots on whether the Brother Jonathan was legally abandoned. Deep Sea Research maintains it was not. After locating the ship, the four partners bought the ownership rights from two San Francisco insurance companies that had paid claims on a portion of the missing cargo in the 1860s. The insurers had not officially abandoned the wreck, they argue, and under the provisions of the federal law, the state has no right to the shipwreck.

Initially, the state tried to negotiate a deal with the company. The state would allow the explorers to salvage the ship if the state netted half of the proceeds from the recovery. But a compromise could not be reached.

"The basic issue is control and money," says Mr. Wadsley. "In the swing of a door we went from partners to pillagers."

In the end, though, observers say that private divers and states need to find ways to recover and preserve shipwrecks that would benefit all involved. States generally do not have the funds or resources to do the risky work of recovering historic shipwrecks such as the Brother Jonathan. They instead depend on private divers to locate the wrecks and then they step in to supervise the efforts with state archaeologists. The private salvagers of Black Beard's ship in North Carolina, for example, were awarded the intellectual property rights to the recovery and the vessel.

"The push and pull between historic preservation and property interests is very wrong-headed," says Emory University law professor David Bederman, a specialist in admiralty law. "What's best is to recognize that the state's nautical archaeologists and commercial salvors can work together."