Carton, Kole and Larner. The opinion of the court was delivered by Carton, P.J.A.D.
Atlantic City Electric Company (Electric) appeals a determination of the Natural Resource Council of the Division of Marine Services of the Department of Environmental Protection (Council) to offer it a revocable license to lay submarine cable beneath the tideland waters of Great Egg Harbor Bay on condition that Electric pay a consideration of $40,851.
Electric is a public utility supplying electric energy throughout the southern part of the State. The Council is the administrative body charged with supervision over New Jersey's tidelands.
On January 13, 1975 Electric filed an application with the Council for a permit to install a 23,000-volt submarine cable and offered to pay a $2,000 permit fee based on estimated construction costs of $400,000. The proposed installation would extend across Great Egg Harbor between Ocean City and Upper Township, a distance of approximately 15,000 feet. Electric also filed an application for a revocable license to use and occupy the State's underwater land for the installation of the cable.
On March 5, 1975 the Council authorized the issuance of both the construction and the revocable license. The consideration for the issuance of the license was fixed at $40,851, computed in accordance with a fee schedule of $3 a lineal foot, adopted by the Council on March 14, 1974. In 1968 the fee had been set at $2 a lineal foot with a maximum of $5,000. The stipulation for a maximum charge was eliminated in the 1974 revision.
Following correspondence between the parties the applicant petitioned the Council for reconsideration of the license charges. The proposed charge for the construction permit was not contested. A hearing was held at which the applicant appeared through counsel, after which the Council voted to reaffirm its fee schedule and specifically the license fee of $40,851. No transcript was taken of what transpired at the hearing.
Appellant challenges the Council's determination on the grounds that the Council lacks power to issue revocable licenses; that there are no legislative standards or guidelines under which it operates, and that the fees imposed by it in this case are unreasonable, arbitrary and capricious. It also contends that the imposition of fees in effect constitutes a revenue-producing measure prohibited by N.J.S.A. 54:30A-49, and that the Council's action is invalid for failure to comply with the provisions of the Administrative Procedure Act (N.J.S.A. 52:14B-1 et seq.).
Although responding to each of these contentions specifically, the Council's basic position is that its action in this case constituted a proprietary function which is not subject to judicial review. Consideration of the issues thus raised requires a brief reference to the relevant statutory scheme and the cases interpreting it.
It is undisputed that the State is vested with absolute ownership of submerged lands within its boundaries to the extent that such lands have not been previously conveyed to others. In large measure, responsibility for overseeing and controlling tidelands has been delegated by the Legislature to what is now the Department of Environmental Protection. Within that Department the Natural Resource Council, formerly the Resource Development Council and the Planning and Development Council, has been authorized to negotiate leases and conveyances on behalf of the State. See N.J.S.A. 12:3-7, 12:3-9, 12:3-10, 12:3-16, 12:3-26 and 13:1B-13. See also, Bailey v. Driscoll , 19 N.J. 363
(1955), which contains a comprehensive review of the legislative history of these provisions.
Three relatively recent decisions have construed the statutory scheme dealing with the State's tidelands. In Taylor v. Sullivan , 119 N.J. Super. 426 (App. Div. 1972), certif. den. 62 N.J. 70 (1972), this court held that the Commissioner of Environmental Protection had absolute discretion to cancel and revoke, prior to the payment by the grantee and actual delivery of a deed, a prior ...