Court: New Jersey Superior Court Appellate Division; August 1, 2011; New Jersey; State Appellate Court
The court opinion delivered by SKILLMAN, J.A.D. addresses the Highlands Water Protection and Planning Act, enacted in August 2004, which regulates land use in the Highlands Region of New Jersey by designating planning and preservation areas. The Act includes exemptions for certain major development projects that had received specific municipal approvals and DEP permits before March 29, 2004.
Appellants, affiliated companies owning land in the preservation area, had obtained municipal land use approvals for their developments prior to this date. Mountain Lakes was approved for a 130-acre site with 128 single-family homes, while Lakeside Manor received approval for 47 townhouses on a 10.801-acre site. They also secured DEP permits for sanitary sewer and water services, including treatment works approvals and water main extensions, by 2001.
Lakeside Manor constructed its sewer and water lines and began building townhouses, while Mountain Lakes constructed sewer lines and extended water service to several homes. The exemption from the Highlands Act became effective on March 29, 2004, just prior to the Act's passage, confirming that appellants had met the necessary requirements for their projects before the Act was enacted.
On July 28, 2005, appellants submitted a combined application to the DEP for a Highlands Applicability Determination, asserting that their development projects were exempt from the Highlands Act's regulations under N.J.S.A. 13:20-28(a)(3). They provided evidence of having obtained necessary municipal land use approvals and DEP permits for water and sewer services prior to the March 29, 2004 exemption cut-off date. However, the DEP denied the application on January 25, 2006, citing that the necessary permits had expired and questioning the validity of the municipal approvals.
In response, the appellants requested an adjudicatory hearing, which was conducted by an Administrative Law Judge (ALJ). During the hearing, Jacinto Rodriguez testified about significant expenditures on project approvals and construction. The ALJ found that appellants had completed the construction of the sanitary sewer systems and water main extensions before the cut-off date. The ALJ also dismissed the DEP’s argument that construction was unlawful due to a lack of wetlands map approval and ruled that the water extensions did not expire before the cut-off as they were completed but not yet connected to residences.
Ultimately, the ALJ concluded that the appellants were entitled to the exemption. However, following exceptions from the DEP, the Commissioner of the DEP, in a final decision on September 4, 2009, rejected the ALJ's findings, determining that Mountain Lakes did not provide sufficient evidence of current validity for its subdivision approval as of the cut-off date and that neither appellant had a valid water extension permit as required by statute.
The Commissioner found that the appellants did not meet condition ten of their permits, which mandated that water mains be 'put into service' within three years of the permit issuance, despite the construction of these mains occurring before March 29, 2004. Furthermore, the Commissioner ruled that Mountain Lakes and Lakeside Manor lacked valid treatment works approvals (TWAs) as required by N.J.S.A. 13:20-28(a)(3)(b)(iv) because they failed to obtain a revision of wetlands mapping or an EPA waiver prior to constructing sewer lines. This failure could not be remedied retroactively, resulting in the TWAs being rendered 'null and void' from the start of construction.
Appellants appealed this decision, during which a supplemental final decision was issued by the current Commissioner of the DEP. The appeal addressed whether Mountain Lakes was exempt from the Highlands Act, concluding it did not provide sufficient documentation of the validity of its land use approvals granted on October 21, 1999. Although the DEP's counsel stipulated to the continuing validity of these approvals, the record does not support that this stipulation was limited to Lakeside Manor. Testimony indicated that Mountain Lakes had received building permits for multiple houses, suggesting that Wanaque would not have issued these permits if there were doubts regarding the land use approvals' validity. Therefore, the Commissioner erred in determining that Mountain Lakes did not prove the necessary conditions for the Highlands Act exemption.
Lastly, the Commissioner mistakenly concluded that the appellants did not establish that they had received at least one of the DEP permits listed under N.J.S.A. 13:20-28(a)(3)(b) before the cut-off date. It was undisputed that the DEP had issued TWAs on September 7, 2000, for the construction of sewer lines for the appellants’ developments, fulfilling the permit requirement.
Appellants constructed sewer lines prior to the March 29, 2004 cut-off date for an exemption under N.J.S.A 13:20-28(a)(3), yet the Commissioner determined that they lacked 'valid' Treatment Works Approvals (TWAs) as they did not obtain EPA approval for wetlands mapping revisions or waivers. This failure led the Commissioner to declare the TWAs 'null and void' as of the construction start date, suggesting that the qualifying approval would expire before the cut-off date. Both the Lakeside Manor and Mountain Lakes TWAs required such approvals before construction. Although the TWAs were issued to the Sewerage Authority, appellants were responsible for constructing the sewer mains under agreements with Wanaque and did not request the necessary EPA revisions or waivers prior to construction. Despite recognizing the violation of TWA conditions, the Commissioner incorrectly concluded that the TWAs automatically 'expired' upon the violation. Revocation of a permit due to a violation requires a formal notice and administrative hearing, as outlined in the Water Pollution Control Act (WPCA). The Commissioner cannot declare a permit 'null and void' due to violations without following these procedural protections. Therefore, the TWAs did not automatically expire upon the commencement of construction, and any actions taken based on those permits prior to revocation remain valid.
The Commissioner misinterpreted the appellants' violations of TWA conditions regarding wetlands mapping, which should have been seen as a potential ground for revocation rather than a reason to retroactively invalidate the TWAs. It is established that the sewer lines constructed by the appellants do not encroach on federal wetlands, acknowledged by DEP staff prior to TWA issuance. If appellants had sought EPA approval for revised wetlands mapping, it likely would have been granted, indicating that their violations were technical with no environmental harm. Thus, revocation of the TWAs based on these violations was arbitrary. The Commissioner could have required compliance through appropriate EPA applications instead.
Furthermore, the Commissioner’s reference to the Water Quality Planning Act and the associated rules failed to justify denying the exemption under the Highlands Act for the appellants. The decision stated that designated sewer service areas were revoked and TWAs expired due to lack of legal installation before August 10, 2004. However, the conclusion that the appellants were not entitled to an exemption contradicts prior findings affirming their entitlement. As such, the Water Quality Planning Act and WQMP Rules do not independently support the Commissioner's decision. Consequently, the determination that the appellants' developments are not exempt from the Highlands Act is reversed. Additionally, earlier rulings dismissed claims that applying this exemption retroactively violated constitutional due process, affirming the ongoing validity of land use approvals for the Lakeside Manor development.
