The Pennsylvania Supreme Court convenes in Philadelphia this morning to settle yet another casino-related squabble - this one between the owners of the planned SugarHouse Casino, the city and the state legislature.

The bone they're fighting for is land underneath the Delaware River - the state owns all of it from the shore to the river's midpoint, which is the border of New Jersey.

The legislature has traditionally been in charge of leasing this land to developers who want their riverside projects built partially onto the water. But last year the administration of Mayor John Street, trying to get the casino under construction before he left office, issued SugarHouse a lease based on a 1907 law that authorized the city to act as an agent of the state.

A group of state legislators sued the city and SugarHouse in the Supreme Court, which was given jurisdiction over all casino-related matters in the 2004 slots law as a way to speed up the development of slot-machine gambling in the state. The legislators argued that only the state has the authority to give away so-called "riparian rights," and want the issue as leverage against SugarHouse to demand concessions including possible relocation from its Delaware Avenue site in Fishtown/Northern Liberties.

Soon after arriving in office in January, Mayor Nutter revoked the SugarHouse license. Now city lawyers say the city never had the authority to issue the license in the first place. SugarHouse, now without the city's support, argues that it now has a vested interest in the state property and neither the city nor state has a right to revoke its license.

Since casino licenses were awarded in December 2006, the Supreme Court has had to decide appeals to the selection of the two casinos in Philadelphia, SugarHouse and Foxwoods (Foxwoods says it doesn't need to build over water). It has squelched a City Council referendum to move the casino sites farther from neighborhoods, saying on the state Gaming Control Board could decide where casinos are located. It also found that City Council unfairly delayed the zoning process, and ordered that each casino be granted all city zoning, building and other necessary permits to build.

SugarHouse owns only 10 of the 22 acres it wants to build on; company officials concede that any casino built without those rights will be a considerable downgrade from the waterfront promenades presented to the Gaming Control Board when SugarHouse was competing with SugarHouse and three other operators for the licenses available for Philadelphia.

Contact staff writer Jeff Shields at 215-854-4565 or jshields@phillynews.com.