Hackensack Water Co. v. Borough of Upper Saddle River & Village of Ridgewood

Citations: 88 N.J. Super. 362; 212 A.2d 394; 1965 N.J. Super. LEXIS 364

Court: New Jersey Superior Court Appellate Division; July 8, 1965; New Jersey; State Appellate Court

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The court opinion, delivered by Judge Kilkenny, addresses an appeal by the Borough of Upper Saddle River and the Village of Ridgewood regarding the Division of Water Policy and Supply's approval of Hackensack Water Company’s application to divert up to two million gallons of water daily from two newly constructed wells. The proposed diversion site is located along the west bank of Saddle River in Upper Saddle River, Bergen County. The borough and village argue that the Council's decision did not comply with statutory requirements, neglected public and private interests downstream, and violated procedural due process.

Key facts include that Hackensack serves over 750,000 residents across 58 municipalities and required the additional water supply due to increasing demand. During a public hearing, Hackensack presented expert testimony, including from geologist R. M. Leggette, who asserted that the wells would not contaminate existing water supplies and that the water source is sustainable. Leggette's analysis indicated that the river flow at the well site consistently exceeded the proposed diversion rate, suggesting adequate water availability.

Conversely, objecting municipalities presented evidence indicating that past river flows had been significantly lower, particularly during dry seasons, raising concerns that the proposed diversion could severely impact river levels. An expert for the objectors expressed that the wells could draw up to 50% of their water from the river, potentially leading to detrimental effects on river flow, especially during low water conditions. Thus, the appeal centers on the balance between Hackensack's water supply needs and the environmental impacts on the Saddle River.

Objectors presented evidence underscoring the necessity of maintaining adequate water flow in the Saddle River, highlighting its significance for municipalities downstream, particularly Ridgewood, which operates five municipal wells in the basin, and Saddle River, which relies on the river for fire fighting. The fire insurance ratings in Saddle River depend on maintaining a minimum flow of 500 gallons per minute. The hearings initially involved two Council members, later expanding to three, with the Chairlady indicating that findings would be submitted to the full Council for determination.

The hearing panel concluded that public necessity justified utilizing the proposed wells and affirmed that their construction complied with safety and health standards. However, concerns were raised about potential reductions in Saddle River flow and impacts on existing water supplies. Consequently, approval was recommended with specific conditions: a maximum diversion of 2 million gallons per day, cessation of diversion if flow drops below 1.5 million gallons per day, and periodic reviews by the Council for public interest.

The full Council accepted the panel's recommendations and granted the application to Hackensack, although it did not specifically address the impact on river flow. The Council's resolution confirmed that the diversion would not unduly harm public or private interests and was contingent on the panel's conditions. The Council's actions were evaluated against R.S. 58:1-20 requirements, which necessitate public necessity justification, safe construction, contamination prevention, and assurance of no adverse effects on water flow impacting public interests. The Council's broad discretionary powers mean its decisions will stand unless proven arbitrary or unreasonable, as established in precedents.

Substantial evidence supports the Council’s determination on four of the five statutory requirements, with the primary dispute focused on the fourth requirement related to the dry-season flow of Saddle River. The hearing panel found that the proposed diversion would adversely affect the river's flow and recommended approval contingent upon maintaining a minimum flow of 1.5 million gallons per day (MGD) upstream of the diversion point. However, the Council’s resolution did not address the evidence concerning the river flow, instead only asserting that the diversion "will not unduly injure public or private interests." Despite this omission, the Council's action mirrored the hearing panel's recommendation, indicating implicit agreement with the panel's findings, thus remedying any formal defects in the decision.

Objectors argued that the conditions set by the Council would not protect downstream municipalities. The approval was conditioned on maintaining 1.5 MGD upstream, but downstream municipalities depend on water from Saddle River. Evidence suggested that a notable portion of water for the wells comes from the river, highlighting the importance of minimum flow below the diversion point. During oral arguments, an attorney for Hackensack agreed to modify the resolution to require maintaining 1.5 MGD at a point immediately downstream of the wells, ensuring adequate water supply for Saddle River and addressing Ridgewood's needs as well. This modification aims to prevent potential harm to downstream communities, referencing a precedent where similar conditions were successfully imposed. Lastly, objectors raised concerns about the allowance for Hackensack to divert an "average" of 2 MGD monthly, suggesting this could theoretically permit a diversion of up to 62 million gallons without a daily limit.

On any given day, water diversion may exceed two million gallons, potentially impairing river flow. However, a requirement for maintaining a 1.5 million gallons per day (MGD) flow mitigates the risk of injury, as it guarantees a safe flow at all times. The application forms from the Division of Water Policy and Supply indicate that "average" monthly measurements are the most practical for water distribution approval. The Council's approval of the application remains subject to public interest review, allowing objectors to seek redress if new issues arise, thereby preventing permanent harm.

Hackensack will equip each well with a 1 MGD pump, suggesting that the 2 MGD variation will be manageable. The statutory requirements for approving Hackensack’s application are deemed satisfied, and the imposed conditions align with statutory policy.

Objectors claim procedural errors, arguing that the Council's reliance on a confidential report from the hearing panel denied them due process. The hearings were conducted by a panel of Council members, which compiled findings and recommendations shared with the full Council, who subsequently granted the application. Objectors contend they did not receive the panel's findings prior to the Council's decision, limiting their ability to contest the findings. They assert this omission constituted a denial of procedural due process, similar to the precedent set in Mazza v. Cavicchia, where failure to provide a report to a licensee was deemed a constitutional violation by the Supreme Court.

Chief Justice Vanderbilt, leading a 4-2 majority, determined that the Director's use of the examiner's report constituted unlawful reliance on extraneous evidence not shared with both parties, undermining due process. The judge's decision relied partially on findings from a hearing officer that the appellant could not challenge, posing a risk of unsubstantiated conclusions. In dissent, Justice Jacobs argued that the Director's approach was akin to appellate judges relying on law clerks' analyses, asserting that the hearer’s report merely synthesized existing evidence rather than introducing new material. 

The case cited, Fifth St. Pier Corp. v. City of Hoboken, illustrated distinctions from the Mazza doctrine where the hearing panel's report, although not disclosed prior to the decision, was released publicly with the ruling, allowing for judicial review of any errors. The Supreme Court ultimately reversed the Appellate Division's ruling, emphasizing the necessity for complete fairness within the agency and asserting that due process mandates that parties engage meaningfully with decision-makers. The Supreme Court found the distinctions between the cases insufficient to justify different treatment, reinforcing the relevance of the Mazza rationale. Notably, while Professor Davis criticized the Mazza ruling, he acknowledged the general consensus on the importance of providing report access to parties, although he questioned whether this should be a due process requirement.

Concerns arose regarding the court's ruling that no factual or legal analysis may benefit the deciding authority unless shared with the parties, allowing them to critique it prior to the final decision. One of the seven significant flaws identified by Davis in the Mazza case was the court's misinterpretation of "extra-record facts," as highlighted by Justice Jacobs' dissent. A crucial distinction exists between using new, undisclosed extrinsic evidence and conducting a legal analysis of already presented facts. The appellate court refrains from assessing the competence of Davis's opinion and must adhere to Supreme Court rulings while determining if the current case aligns with them.

Hackensack seeks to differentiate this case from the Mazza precedent on several grounds, notably that the "secret" report was public and thus subject to judicial review, countering past arguments from Fifth St. Pier Corp. Additionally, Hackensack argues that the hearing officers were part of the deciding authority rather than mere subordinates. Unlike Fifth St. Pier Corp., where the authority relied solely on the hearers’ report without a transcript available to the Division of Tax Appeals members, in the current case, all Council members had access to the hearing transcript and the report, reducing concerns about potential undiscovered errors. 

Furthermore, the Council's resolution permitted review and modification of the approval if public interest warranted it, allowing objectors to petition for redress if improprieties were found in the public report. The objectors' due process claim centers on their right to review the hearers’ report and submit objections before the Council, a right guaranteed by the Council's resolution. An administrative error in relying on external evidence is not prejudicial if the aggrieved party can address such evidence in review proceedings. The objectors failed to present compelling reasons to overturn the Council's decision. Thus, procedural due process requirements were satisfied, leading to the affirmation of the Council's decision, with a modification concerning the minimum flow requirement in the Saddle River.