Opinion
DOCKET NO. A-3054-11T1
05-13-2014
JDME ACQUISITIONS, LLC, Petitioner, and SHAMROCK CREEK, LLC, Petitioner-Appellant, v. NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION, Respondent-Respondent.
Craig B. Johnson argued the cause for appellant. Jason T. Stypinski, Deputy Attorney General, argued the cause for respondent (John J. Hoffman, Acting Attorney General, attorney; Melissa H. Raksa, Assistant Attorney General, of counsel; Mr. Stypinski, on the brief).
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
Before Judges Sapp-Peterson, Lihotz and Maven.
On appeal from the Department of Environmental Protection, Agency No. 0246-04-0003.1.
Craig B. Johnson argued the cause for appellant.
Jason T. Stypinski, Deputy Attorney General, argued the cause for respondent (John J. Hoffman, Acting Attorney General, attorney; Melissa H. Raksa, Assistant Attorney General, of counsel; Mr. Stypinski, on the brief). PER CURIAM
Petitioner, Shamrock Creek, LLC, (Shamrock), appeals from the final agency decision denying stream encroachment and freshwater wetlands permits sought by JDME Acquisitions, LLC (JDME). JDME sought the permits as part of its proposed purchase of property owned by Shamrock. Once the Department of Environmental Protection (DEP) denied the permit application, JDME withdrew from the purchase agreement, which had been conditioned upon it obtaining the necessary permits. Shamrock appealed and the matter was transferred to the Office of Administrative Law (OAL) as a contested proceeding before an Administrative Law Judge (ALJ). The ALJ issued an initial decision recommending the permit denials be upheld. DEP adopted the ALJ's recommendation and denied the permits. We affirm.
In advance of the hearing before the ALJ, the parties submitted the following joint statement of facts. Shamrock is the owner of Block 7706, Lot 1, a thirty-five-acre piece of land located in Paramus Borough, Bergen County (the property). On July 16, 2003, pursuant to DEP's Voluntary Cleanup Program, Shamrock and DEP entered into a Memorandum of Agreement (MOA), in which Shamrock agreed to remediate the property, portions of which had previously been used as a municipal landfill. Shamrock retained an expert, Maser Consulting (Maser), which recommended the use of an engineering control or "cap" of the waste material as the preferred remedial action, at a cost of $829,400. DEP approved the cap method as proposed by Maser.
In August 2004 Shamrock entered into an agreement with JDME, in which JDME agreed to purchase the property subject to receiving all permit approvals. Two months later, Shamrock and its counsel participated in a non-binding, pre-application meeting with representatives of DEP's Land Use Regulation Division to address the proposed capping of the site and JDME's proposed construction of a 144-unit development on part of the remediated area.
In the fall of 2006, JDME submitted an application for a Stream Encroachment and Freshwater Wetland Permit. DEP denied the application by letter dated August 30, 2007. DEP based its denial upon several factors. First, JDME proposed to construct the project within the Special Water Resource Protection Area (SWRPA) adjacent to Solider Hill Brook, a tributary to a Category One Watercourse, without demonstrating that the functional value and condition of the SWRPA would be maintained to the maximum extent practicable. DEP reasoned this proposal was contrary to N.J.A.C. 7:8-5.5(h) because the currently wooded area would become impervious upon construction of the proposed development. Although JDME contended its proposed removal of the leaching solid waste fill from the site will improve the environment, DEP could not conclude "the impacts of allowing the historic fill material to remain onsite outweigh[ed] the permanent impacts of constructing the new residential development[.]" Second, DEP was unable to verify that the proposed stormwater discharge was in compliance with standards. Next, DEP determined the application showed that the lowest floor elevations for some of the proposed homes would lie below the 100-year surface water elevation mark, contrary to Flood Hazard Area Control Act (FHACA) rules, specifically, N.J.A.C. 7:13-2.13(a)(3). Additionally, according to the calculations provided by JDME, the post-construction peak runoff rate for a two-year storm event would exceed fifty-percent of the pre-construction rate, which was contrary to N.J.A.C. 7:8-5.4(a)(3)(iii). Finally, the project had not received a stream encroachment permit and, therefore, a freshwater wetlands permit could not be approved at the time.
JDME subsequently terminated its purchase agreement with Shamrock. On January 9, 2009, on behalf of Shamrock, Maser proposed a surface water sampling plan intended to evaluate the impact of known on-site contamination on Soldier Hill Brook. By letter dated June 25, 2009, DEP's Bureau of Northern Field Operations recommended that the proposed plan not be implemented.
Shamrock appealed and the matter was transferred to the OAL as a contested matter and a hearing was conducted before an ALJ on December 13, 2010. The ALJ issued his initial decision on September 12, 2011. He first determined the property was previously developed and disturbed. He noted the Stormwater Management Rules do not define "maximum extent practicable[,]" but DEP, in January 2007, issued an administrative order with an attached guidance document to assist the regulated community. He found DEP properly denied the permits because the proposed development would result in a loss of the functional values of habitat, pollutant reduction, temperature moderation and channel integrity. He also found Shamrock failed to show the encroachment was necessary to accomplish the project's purpose and could not be avoided with a project redesign or reduction in scope.
On January 12, 2012, DEP's Commissioner issued a final decision adopting the ALJ's initial decision. The Commissioner agreed the proposed development would result in loss of functional values of habitat, pollutant reduction, temperature moderation and channel integrity and that Shamrock failed to show the impacts to the SWRPA were unavoidable. Moreover, the Commissioner found the remedial action DEP approved in 2004 was not binding and that the correct means to evaluate the overall impact of the proposed development would be for the applicant to document the existing extent and character of the SWRPA. Further, the Commissioner found the remedial action would not maintain the SWRPA, and that the profitability of the project is not dispositive. Thus, he determined the project did not comply with DEP's regulations and requirements and, consequently, the permits "could not be approved pursuant to N.J.A.C. 7:7A-4.3(b)(9). The present appeal followed.
On appeal, Shamrock contends the decision denying the permit application was arbitrary, capricious, and unreasonable because DEP failed to properly apply N.J.A.C. 7:8-5.5(h)(1)(II) and withheld "notice to Shamrock of 'technical deficiencies' in its application, prior to its denial of the requested permits." We reject these contentions.
Once an agency has issued a final decision, "the Appellate Division's initial review of that decision is a limited one." In re Taylor, 158 N.J. 644, 656 (1999).
"We will not reverse an agency's decision unless: (1) it was arbitrary, capricious, or unreasonable; (2) it violated express or implied legislative policies; (3) it offended the State or Federal Constitution; or (4) the findings on which it was based were not supported by substantial, credible evidence in the record."
[Univ. Cottage Club of Princeton N.J. Corp. v. N.J. Dep't of Envtl. Prot., 191 N.J. 38, 48 (2007) (citing Taylor, supra, 158 N.J. at 656).]
"The fundamental consideration in reviewing agency actions is that a court may not substitute its judgment for the expertise of an agency so long as that action is statutorily authorized and not otherwise defective because [it is] arbitrary or unreasonable." In re Distrib. of Liquid Assets Upon Dissolution of the Union County Reg'l High Sch. Dist. No. 1, 168 N.J. 1, 10 (2001) (citations and internal quotation marks omitted). If, in reviewing an agency decision, we are satisfied there is sufficient credible evidence in the record to support the agency's conclusions, we will uphold the decision irrespective of our view that we may have reached a different result on the same set of facts. Taylor, supra, 158 N.J. at 657.
Moreover, we accord substantial deference to an agency's interpretation of a statute or regulation that it is charged to enforce. In re Freshwater Wetlands Gen. Permit No. 16, 379 N.J. Super. 331, 341 (App. Div. 2005); In re Adopted Amendments to N.J.A.C. 7:7A-2.4 , 365 N.J. Super. 255, 264 (App. Div. 2003). Our deference, however, is not unfettered and we are "'in no way bound by the agency's interpretation of a statute or its determination of a strictly legal issue.'" Univ. Cottage Club of Princeton N.J. Corp., supra, 191 N.J. at 48-49 (quoting Taylor, supra, 158 N.J. at 658). An appellate court should accord substantial deference to the agency's fact-finding and legal conclusions, while acknowledging the agency's "'expertise and superior knowledge of a particular field.'" Circus Liquors, Inc. v. Governing Body of Middletown Twp., 199 N.J. 1, 10 (2009) (quoting Greenwood v. State Police Training Ctr., 127 N.J. 500, 513 (1992)). Thus, "[a] reviewing court 'may not substitute its own judgment for the agency's, even though the court might have reached a different result.'" In re Stallworth, 208 N.J. 182, 194 (2011) (quoting In re Carter, 191 N.J. 474, 483 (2007)).
The burden of demonstrating that the agency's action was arbitrary, capricious, or unreasonable rests upon the person challenging the administrative action. McGowan v. N.J. State Parole Bd., 347 N.J. Super. 544, 563 (App. Div. 2002). The appellate role is merely to determine "whether the findings made could reasonably have been reached on sufficient credible evidence present in the record, considering the proofs as a whole, with due regard to the opportunity of the one who heard the witnesses to judge of their credibility." Taylor, supra, 158 N.J. at 656 (citations and internal quotation marks omitted).
The Stormwater Management Rules, N.J.A.C. 7:8-1.1 to -6.3, establish design and performance standards regulating the quantity and quality of stormwater runoff. See In re Stormwater Mgmt. Rules, 384 N.J. Super. 451, 454-60 (App. Div.), certif. denied, 188 N.J. 489 (2006). Stormwater runoff picks up pollutants from the land surface and affects the quality and quantity of water in New Jersey. Id. at 454. N.J.A.C. 7:8-5.5(h) requires increased safeguards for sensitive water bodies classified by DEP as "Category One" (C1), to which the State gives greater protection due to their exceptional ecological significance, exceptional recreational significance, exceptional water supply significance, or exceptional fisheries resources. N.J.A.C. 7:9B-1.4. Under DEP's Surface Water Quality Standards, C1 waters are to be protected from any measurable changes to water quality. N.J.A.C. 7:9B-1.5(d)(6)(iii).
The Stormwater Management Rules establish SWRPAs along C1 waters pursuant to N.J.A.C. 7:8-5.5(h), to protect them from measurable changes. The SWRPA is a best management practice designed to maintain existing water quality by filtering stormwater runoff prior to its introduction to C1 waters.
Special water resource protection areas shall be established along all waters designated Category One at N.J.A.C. 7:9B and perennial or intermittent streams that drain into or upstream of the Category One waters as shown on the USGS Quadrangle Maps or inThese rules only apply to "major development," which is development that would disturb one or more acres, or would add one-quarter acre or more of impervious surface. N.J.A.C. 7:81.2.
the County Soil Surveys, within the associated HUC 14 drainage. These areas shall be established for the protection of water quality, aesthetic value, exceptional ecological significance, exceptional recreational significance, exceptional water supply significance, and exceptional fisheries significance of those established Category One waters. These areas shall be designated and protected as follows:
1. The applicant shall preserve and maintain a special water resource protection area in accordance with one of the following:
. . . .
ii. Encroachment within the designated special water resource protection area under (h)1i above shall only be allowed where previous development or disturbance has occurred (for example, active agricultural use, parking area or maintained lawn area). The encroachment shall only be allowed where applicant demonstrates that the functional value and overall condition of the special water resource protection area will be maintained to the maximum extent practicable. In no case shall the remaining special water resource protection area be reduced to less than 150 feet as measured perpendicular to the top of bank of the waterway or centerline of the waterway where the bank is undefined. All encroachments proposed under this subparagraph shall be subject to review and approval by the Department.
[N.J.A.C. 7:8-5.5(h) (emphasis added).]
The phrase "to the maximum extent practicable" is not defined. However, in accordance with N.J.S.A. 13:1D-111, a technical manual for each class of permit must be developed as follows:
Within 12 months of the effective date of this section, the Department of Environmental Protection shall develop a technical manual for each class or category of permit . . . issued by the department. Each manual shall define the procedural and substantive requirements for the completion of an application for a class or category of permit and the review thereof, and shall clarify departmental policies and interpretations of any laws, rules, and regulations relating to the filing and review of the application. Each technical manual shall also:
a. Provide a detailed summary and explanation of any policy considerations not otherwise identified by law, rule, or regulation that are used in the department's review and consideration of the permit application;
b. Detail and clarify the department's interpretation of any standards or other requirements that do not have a fixed meaning or are not defined by law, rule, or regulation, including, but not limited to, identification or stipulation of state-of-the-art control technologies and best management practices; and
c. Include any other general information about department policies that would facilitate the preparation by an applicant,
and the review by the department, of an application.
Against this legal framework, and accepting DEP's purpose in establishing SWRPA is for the protection of water quality, aesthetic values and the other stated purposes, we first address Shamrock's contention that it does not make environmental sense to apply the SWRPA regulations when the lands bordering the protected waters is a registered brownfield site. We disagree.
In January 2007, the DEP found that the regulated community required guidance to meet the regulatory requirement of "demonstratr[ing] that the functional value and overall condition of the special water resource protection area will be maintained to the maximum extent practicable." DEP implemented
Administrative Order 2008-02 on April 11, 2008, replacing Administrative Order 2007-01, providing guidance for the functional value analysis of the SWRPA. See Administrative Order No. 2008-02. The manual "assist[s] the regulated community in analyzing whether the functional value and overall condition of the SWRPA are maintained." Id. at 1.
< http://www.njstormwater.org/docs/fva080124.pdf >.
Where it is determined under the first step of the test that there will be a loss of functional value in habitat, nonpoint source pollutant reduction, temperature modification, or channel integrity, as here, the analysis continues to determine whether the overall condition of the SWRPA is maintained to the maximum extent practicable. "This step shall include a demonstration that the encroachment is necessary to accomplish the project's purpose and cannot be avoided by project redesign, reduction in scope or alternative means of access, and may require a finding that the unavoidable disturbance has been minimized and mitigated." Ibid.
There is ample evidence in the record to support the Commissioner's decision to deny the permits. In addition to admitting that the proposed project would lie below the regulatory flood elevation, contrary to the requirements of N.J.A.C. 7:13-2.13(a)(3), it was not disputed that the proposed project would not conform with the post-construction runoff rate under N.J.A.C. 7:8-5.4(a)(3)(iii), that the application contained mistakes, and the proposal also failed to adequately protect the SWRPA under N.J.A.C. 7:8-5.5(h).
The Commissioner referenced the Technical Manual to guide his decision that the development would not preserve the functionality of the SWRPA to the maximum extent practicable, specifically with respect to the nonpoint source pollutant reduction, noting that "[a] loss in nonpoint source pollutant reduction functional value will occur, if as the result of the proposed land use conversion, the load of any pollutant increases from the overall buffer on the project site." Thus, the record supports the Commissioner's conclusion that the development would have increased the amount of human disturbance in the outer SWRPA. Further, Shamrock did not show that the overall pollutant boundary would remain the same or be reduced compared to the SWRPA's current condition. Shamrock's expert testified "there will be an increase in certain pollutants discharged from the site as a result of the development plan, but in our estimate the levels represented what could be controlled to the maximum extent practicable." The expert's opinion that the levels would be controlled to the maximum extent practicable was nothing more than an opinion adopting the language of the statute, which the ALJ was free to weigh in reaching his conclusion as to whether the SWRPA would be maintained to the maximum extent practicable.
Shamrock proposed to fully eviscerate the outer level of the SWRPA and did not consider reducing the size of the development because of the negative impact on the profitability of the project. The Commissioner found that profitability or financial feasibility of the proposed project is not the focus of DEP's analysis in determining whether Shamrock demonstrated that any specific functional value or the overall condition of the SWRPA would be maintained to the maximum extent practicable, but, rather, the loss must be unavoidable. The Commissioner found that Shamrock failed to submit evidence to support the argument that JDME was unable to redesign the project and found testimony about the inevitability or necessity of the proposed design and associated impacts unconvincing.
Giving deference to these findings, the Commissioner's resulting decision is based on ample evidence in the record, negating any claim that the decision to deny the permits was arbitrary or capricious. Moreover, we find no merit to Shamrock's claim the Commissioner ignored our decision in In re Riverview, 411 N.J. Super. 409 (App. Div. 2010). There, in the context of a challenge to a proposed high-rise development, local residents asserted the proposed high-rise project would block their views of the Hudson River and New York City skyline. Id. at 411. We found the high-rise regulations implicated in the matter "undoubtedly embrace[d] a goal of protecting scenic views of the waterfront," but that the goal of protection was qualified in N.J.A.C. 7:7E-7.14 by the phrase "to the maximum extent practicable." Id. at 435. We concluded that phrase was intended to reflect a balanced regulatory sensitivity to the physical, economic, and other pragmatic constraints that affect waterfront construction. Ibid. We do not view our construction of "maximum extent practicable" there, in the context of regulations governing high-rise structures, as binding in our interpretation of the same phrase in the context of an encroachment "within the designated special water resource protection area[,]" under N.J.A.C. 7:8-5.5(h).
Likewise, we reject Shamrock's claim the Commissioner applied the internal administrative order as if he had the force of law. When discharging its statutory duty, an agency may choose between formal action, such as rulemaking or adjudication, or informal action, provided the choice complies with due process requirements and the Administrative Procedure Act (APA), N.J.S.A. 52:14B-1 to -15. Northwest Covenant Med. Ctr. v. Fishman, 167 N.J. 123, 135 (2001) (citation omitted). Informal agency action, which makes up the bulk of administrative agency decision-making, "is any determination that is taken without a trial-type hearing[.]" Id. at 136-37 (citation omitted).
Administrative Order 2008-02 is a technical manual and is therefore exempt from formal rulemaking requirements under the APA. Enabling legislation requires the DEP to adopt technical manuals to define "the procedural and substantive requirements for the completion of an application for a class or category of permit and the review thereof, and shall clarify departmental policies and interpretations of any laws, rules, and regulations relating to the filing and review of the application." N.J.S.A. 13:1D-111.
Additionally, the manual does not implicate the APA under the six-part standard for determining whether rulemaking requirements apply to or govern any agency decision or particular action set forth in Metromedia, Inc. v. Director, Division of Taxation, 97 N.J. 313 (1984).
[A]n agency determination must be considered an administrative rule . . . if it appears that the agency determination, in many or most of the following circumstances, (1) is intended to have wide coverage encompassing a large segment of the regulated or general public, rather than an individual or a narrow select group; (2) is intended to be applied generally and uniformly to all similarly situated persons; (3) is designed to operate only in future cases, that is, prospectively; (4) prescribes a legal standard or directive that is not otherwise expressly provided by or clearly and obviously inferable from the enabling statutory authorization; (5) reflects an administrative policy that (i) was not previously expressed in any official and explicit agency determination, adjudication or rule, or (ii) constitutes a material and significant change from a clear, past agency position on the identical subject matter; and (6) reflects a decision on administrative regulatory policy in the nature of the interpretation of law or general policy.
[Id. at 331-32.]
The Commissioner's decision here in applying Administrative Order 2008-02 was applied to the specific facts before the Commissioner. Members of the regulated community are not required to follow Administrative Order 2008-02 and may use alternative methodologies to satisfy its requirements. The technical manual, as the Commissioner noted, guides the permit applicant to "document the existing extent and character of the SWRPA relevant to habitat value," and is thus not designed to operate prospectively. Nor does the Administrative Order 2008-02 mandate a "legal standard or directive that is not otherwise expressly provided by or clearly and obviously inferable from the enabling statutory authorization." See Coalition for Quality Health Care v. N.J. Dept. of Banking & Ins., 348 N.J. Super. 272, 297-98 (2002). While Administrative Order 2008-02 does identify the functional values of a riparian corridor and how they should be evaluated and mitigated, it does not establish a new or separate standard of evaluation, which is not expressly addressed in DEP's enabling legislation, rules or regulations. Lastly, Administrative Order 2008-02 implements policy established in underlying rules and alters no legal standard or DEP.
Finally, as the Commissioner determined, Shamrock and JDME were not entitled to notice from DEP of the deficiencies in the permit application, along with an opportunity to submit an amended application. Neither N.J.A.C. 7:13-4.7(c), applicable at the time DEP denied the permits, nor N.J.A.C. 7:13-9.3(d), which replaces N.J.A.C. 7:13-4.7(c), required DEP to notify permit applicants of deficiencies, or to afford applicants an opportunity to amend an application prior to issuing a decision on the application.
The remaining arguments raised by Shamrock are without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(D) and (E).
Affirmed.
I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION