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In re North Jersey District Water Supply Commission

Decided: June 30, 1980.


On appeal from the decision of the Commissioner of the Department of Environmental Protection and from the decision of the Water Policy & Supply Council.

Matthews, Ard and Polow. The opinion of the court was delivered by Matthews, P.J.A.D.


On August 1, 1973 the North Jersey District Water Supply Commission (North Jersey) filed an application with the Water Policy and Supply Council (Council) for approval of plans to increase its diversion rights from the Ramapo River at Pompton Lakes by 25 million gallons a day (mgd), to increase its withdrawal limits from the Wanaque Reservoir and to construct a seven billion gallon reservoir on the Wanaque River at Monksville.

The Hackensack Water Company (Hackensack) and the Passaic Valley Water Commission (Passaic Valley) filed objections to the North Jersey application (commonly known as the Monksville Project) on November 28, 1973. Hearings commenced on December 10, 1973 and continued intermittently until July 22, 1974 for a total of seven days.

On June 19, 1974, after the fifth hearing session, Hackensack filed an application with the Council for permission to divert 3,100 million gallons a month from the Pompton and Passaic Rivers at or below the confluence of said rivers from stream flows in excess of 926 mgd. The Hackensack and North Jersey proposals were obviously in potential conflict and the Monksville hearings were adjourned on July 22, 1974 to allow the parties and staff from the Division of Water Resources to meet. The major parties to the proceedings, North Jersey, Hackensack and Passaic Valley, agreed to hold a conference on August 5, 1974 in an attempt to develop a mutually agreeable proposal.

As a result, amended applications were submitted by Hackensack and North Jersey on August 11, 1975 for a joint project known as the Two Bridges proposal. This project called for an increase in diversion rights in the Ramapo River as well as the diversion of a maximum of 3,875 million gallons a month from the confluence of the Pompton and Passaic Rivers. Hearings on these amended applications commenced on September 8, 1975. The City of Paterson (Paterson) and Passaic Valley appeared in opposition to the proposal. A formal resolution opposing the applications was entered into the record. After a total of 52 days of hearings, proceedings terminated on April 10, 1978.*fn1 Briefs summarizing the positions of the parties were submitted in May 1978. Subsequently, on August 25, 1978, the report of the members of the Council acting as hearing officers was completed. The hearing officers recommended approval of the joint application with modifications and, on September 25, 1978, the Council adopted their report with minor changes.

In the interim, on January 3, 1977, Paterson moved to: (a) dismiss the applications or compel the applicants to amend them to delineate the routes of pipelines; (b) dismiss the applications to compel their amendment to include a request for condemnation; (c) compel the Council to provide all parties with its current plans for the economic and comprehensive development of the Passaic River and service area of the applicants; (d)

require full disclosure on the record of the details of all private meetings between the applicants and state agencies prior to filing of the amended applications; (e) require the Council to decide immediately two legal issues raised by the Public Advocate -- "Does the doctrine of prior public use foreclose granting the applicants' condemnation powers?" and "Is the joint application . . . violative of New Jersey statutes and case law?" The Council denied parts (a) through (d) of the motion on January 24, 1977. It never specifically addressed part (e).

In a separate but related procedure before the Department of Environmental Protection (D.E.P.), North Jersey sought permission pursuant to N.J.S.A. 13:1B-15.131 to encroach upon an historic site. The Great Falls at Paterson was included in the State Register of Historic Places on April 17, 1970. The Historic Sites Council (H.S.C.) met on March 10, 1977 and recommended a minimum acceptable flow over the Great Falls and through the Society for Establishing Useful Manufactures raceway (S.U.M.). Thus, both the Council decision and the Historic Sites application came before the Commissioner in the fall of 1978.

On October 31, 1978 Paterson moved before the Commissioner of the D.E.P. asking that (1) the proceedings be stayed until the applicants filed a written acceptance of the Council's report of August 25, 1978; (2) a review by the Commissioner be stayed until the H.S.C. fully reviewed and held hearings on the applications; (3) the Commissioner disqualify himself from the H.S.C. proceedings pursuant to N.J.S.A. 13:1B-15.131 and name a hearing officer to act in his place; (4) the Commissioner undertake a de novo review of these applications should the H.S.C. grant its approval, and (5) an order issue permitting all parties to submit "exceptions, objections and arguments" on any aspect of the applications.

On December 11, 1978 the Chief of the Office of Regulatory Affairs, acting for the Commissioner, denied Paterson's motion except that the parties were permitted to submit exceptions to the amended Council report directly to the Commissioner. On February 23, 1979 Commissioner O'Hern issued an order approving the recommendation of the Council and permitting encroachment

on the historic site. The Council informed the applicants on March 12, 1979 of the terms and conditions of approval and required acceptance of such terms within 90 days. Both North Jersey and Hackensack complied.

On April 5, 1979 the City of Elizabeth, the Township of Wayne and the Town of Nutley filed a notice of appeal from that portion of the Commissioner's final decision excluding them from sharing in the diversion planned by the Two Bridges project. On April 16, 1979 Paterson and Passaic Valley filed a joint notice of appeal from the Commissioner's decision approving the project.

Two weeks after the filing of this appeal, on April 30, 1979, Paterson instituted an action in the Chancery Division, Passaic County, by a self-styled "complaint for declaratory judgment, injunctive and other relief," naming North Jersey and Hackensack as defendants. Defendants thereafter moved for an order transferring the action pending in the Chancery Division to this court. That motion was denied by the Chancery Division judge during early September 1979, substantially for the reason that he was too unfamiliar with the action to rule on the question of transfer. Defendants then asked for a leave to appeal the denial of transfer and we refused to review that denial, staying the Chancery Division action pending determination of this appeal. Paterson and Passaic Valley also moved before us to stay the determination by us of certain legal questions which had been raised in the first point of Passaic Valley's brief. We reserved decision on that motion until disposition of this appeal.

In its seven-count complaint filed in the Chancery Division Paterson claimed in the first count that the agreements between North Jersey and Hackensack were void since there was no statutory authority for their existence; the second count claimed that the joint project here under review violated N.J. Const. (1947), Art. VIII, § III, par. 3. The third count claimed that Paterson was the owner of the riparian (sic) rights to the waters of the Passaic River within the geographical confines of the city and that the approval of the diversion granted by the Council would violate those rights. The count then asked that

the court declare that Paterson has all of the rights and provisions of a riparian (sic) owner of the waters of the Passaic and that the diversions sought by defendants were unlawful. The fourth count made a bare allegation of a breach of fiduciary duties allegedly owed by North Jersey to Paterson by virtue of an agreement dated June 4, 1925, providing for the construction of the Wanaque Reservoir. The fifth count was claimed to be brought under the provisions of N.J.S.A. 2A:35A-1 et seq. , the Environmental Rights Act, and it alleged that the Two Bridges project under review here would cause pollution, and thus violate the provisions of the act. The sixth count was also brought under the Environmental Rights Act and it claimed that the United States Army Corps of Engineers had jurisdiction over the subject matter because the project would affect navigable waters. And the seventh count, also brought under the Environmental Rights Act, apparently asks the Chancery Division to review the Historical Sites decision made by the Commissioner of the Department of Environmental Protection which is under review here.

Disregarding the fact that the Chancery Division action was a transparent effort at delay, Paterson now claims that this court does not have jurisdiction to review the legal questions raised in the Chancery Division complaint for sundry reasons. We note at the outset that there are actually only two legal issues presently ripe for determination with respect to the proposed project which is the subject matter of this appeal and the Chancery Division action. Neither issue requires the development of a factual record since each is a purely legal issue. The first issue, which challenges the authority of North Jersey and Hackensack to enter into a joint venture, requires a determination as to whether there is any constitutional, statutory or decisional inhibition to the proposed arrangement. It is the basic concept of the joint venture that is challenged. We are not asked to pass upon specific contractual provisions of the venture since they do not presently exist. At this juncture we can only presume that if the relationship is valid, the parties will proceed in accordance with law. The second issue, that the joint

project violates N.J. Const. (1947), Art. VIII, § III, par. 3, by donating land or appropriating money to Hackensack Water Company, also involves a review of the core arrangement. If that arrangement is constitutional, there exist sufficient legal guidelines to cover the contractual relationship which may be entered into by the parties. See, e.g., Roe v. Kervick , 42 N.J. 191 (1964); Whelan v. N.J. Power & Light Co. , 45 N.J. 237 (1965); Bayonne v. Palmer , 90 N.J. Super. 245 (Ch.Div.1966), aff'd 47 N.J. 520 (1966), and again we must assume that they will be followed if the core arrangement is constitutional.

The questions dealing with Paterson's rights under its conveyance from the S.U.M. is premature since there is no showing, nor can there be, that the proposal as preplanned will violate any rights that Paterson has under the deed. Even if we accept Paterson's argument as correct, its remedy would be an action for damages and not for the remedy of injunction which is asked for in the Chancery Division action.

Paterson has also claimed in the Chancery Division that by designating the Great Falls a National Historic Landmark the Federal Government reserved the water rights to the Passaic River insofar as the Falls are effected. The short answer to this is that the Commissioner passed upon this issue in the proceedings below and, thus, it is clearly subject to review before us on this appeal. If, as Paterson claims, the joint venture will affect its rights under the National Historic Landmark designation, Paterson will not be foreclosed from instituting an appropriate action for compensation or such other relief as may be appropriate.

The argument with respect to jurisdiction of the United States Army Corps of Engineers is grossly premature and not ripe for adjudication. At the time of oral argument we were advised that engineers were being selected by defendants to engage in a feasibility study which will help establish the specifics of construction for the project. It is only after this information is gathered that a submission may be made to the Army Corps so that it may determine whether it should assert jurisdiction.

The bald claim that there is a violation of fiduciary relationship allegedly created under the Wanaque Reservoir contract of June 24, 1925 is also premature since there is no indication that Paterson has been injured, or will be for that matter, at this stage of the proceedings. We have before us the decision of the Council which ostensibly takes into account the fears and claims of Paterson. Our review may well dispose of the basis for this anxiety.

Finally, the issues with respect to the coverage of the federal statutes, 33 U.S.C.A. § 1342 and 42 U.S.C.A. § 4321 et seq. , assuming those statutes are applicable to this situation -- a question we need not here decide -- are premature. It is apparent that until the preliminary engineering studies are completed, no consideration can be given as to whether application to appropriate federal authorities should be made.

N.J. Const. (1947), Art. VI, § V, par. 3 gives this court original jurisdiction which it may exercise when appropriate. See, also, R. 2:10-5. The legal questions which are ripe for determination in this action are inextricably involved with the record review which we must perform on this appeal from the Council. R. 2:2-3(a)(2). For us to decide that the Council acted correctly and leave to another day the resolution of the validity of the acts approved would make no sense whatsoever. The Two Bridges project is clearly of major public concern and, accordingly, we deem it our obligation in the public interest that we pass upon those legal issues involved here by exercising our original jurisdiction. Compare Blasi v. Ehret , 118 N.J. Super. 501, 502 (App.Div.1972). In view of this determination, we deny the motion for partial stay of these proceedings made by Passaic Valley and proceed hereafter to the determination of the legal issues involved.

North Jersey is a public authority established pursuant to N.J.S.A. 58:5-2.

In its initial Monksville application North Jersey proposed to increase its diversion from the Ramapo River at Pompton Lakes in order to develop an additional water supply of 25 mgd. This proposal was deemed necessary due to the overdrafting of the Wanaque system and the anticipated growth in demand which would place additional strains on the system's safe dependable yield.

Several municipalities petitioned North Jersey for acceptance into the Monksville project pursuant to N.J.S.A. 58:5-9 as follows:

Bayonne 12.50 mgd

Bloomfield 2.75 mgd

Cedar Grove 2.50 mgd

Elizabeth 10.00 mgd

Kearny 5.00 mgd

Nutley 3.00 mgd

Wayne 10.00 mgd

North Jersey rejected Elizabeth's petition, taking the city's geographical location into account and the fact that Elizabeth could obtain water from the State's Raritan Valley project. The subscriptions called for 45.75 mgd and only 25 mgd was anticipated as a result of the Monksville project. North Jersey left it to the Council to determine which municipalities could demonstrate need and gain approval for admission into the project. See N.J.S.A. 58:1-20. As mentioned, a total of seven hearings were held before the Council concerning the Monksville project, beginning on December 10, 1973. Each municipality presented evidence concerning its need for a share of the Monksville water. When the revised Two Bridges proceedings began later,

the Council determined that testimony previously entered during the Monksville hearings would be considered a part of the record in the new proceedings.

Hackensack and Passaic Valley entered formal objections to the Monksville application at the initial hearing. The primary concern was that the upper Ramapo River, which had always been considered a prime source for long term expansion of water supplies following the full development of the Hackensack River and other local sources, would be depleted. Hackensack, which serves over 850,000 people in Hudson and Bergen Counties, urged that any proposed project more fully develop the 160 square mile drainage basis above North Jersey's diversion site in the Ramapo River to meet the needs of all northeastern New Jersey water consumers.

Passaic Valley objected to the construction of a dam and reservoir on the Wanaque River and to the inclusion of new non-Wanaque-Ramapo partner municipalities in the benefits of the project.

On June 19, 1974 Hackensack filed an application with the Council seeking to divert 3,100 million gallons during any month at or below the confluence of the Pompton and Passaic Rivers from stream flows in excess of 92.6 mgd, sufficient to develop an additional yield of approximately 46 mgd. This application was placed into evidence during the Monksville hearings on June 24, 1974. Since the Monksville application involved a diversion from the Ramapo River, a tributary of the Pompton River which is itself a tributary of the Passaic River, it would have ultimately diminished the water supply available for Hackensack's proposed diversion at Two Bridges. In view of the potential conflict in the two applications, North Jersey and Hackensack agreed with Passaic Valley to meet on August 5, 1974 to attempt to resolve conflicting issues and develop a modified mutually feasible project.

Further meetings followed, resulting in a proposed joint project between North Jersey and Hackensack which would effectively alleviate the anticipated problems of each applicant on a reasonably long-term basis. On August 11, 1975 North

Jersey and Hackensack each filed separate applications which the Council considered as amendatory to their original applications.

The Council commenced hearings on the two amended applications on September 8, 1975. Paterson entered objections to the pending applications on the record. Paterson feared that any diversion would adversely affect the aesthetic and cultural value of the Great Falls and the surrounding historic district, and would have an adverse impact on the quality of its water and the generating capacity of the hydroelectric facility it planned to construct. Passaic Valley's attorney announced it was ". . . not opposing and . . . not in concurrence" at that time. On January 26, 1976, however, Passaic Valley entered a resolution in opposition to the project. It had initially been proposed that Passaic Valley would join in the project by moving its water intake facility from Little Falls to Two Bridges, and the staffs of the three entities had initially reached a verbal agreement which would have resulted in such a move.

During the course of the hearings voluminous evidence was presented dealing with matters ranging from the aesthetics of the Great Falls to the concerns of Passaic Valley relating to the quality of water flowing downstream of the Two Bridges project. Early in the proceedings the Council announced its intention to produce an environmental impact statement of its own which was originally scheduled to be presented on January 9, 1976.

Between January 12, 1976 and January 26, 1976 the Council, after meeting with the Division of Water Resources, decided that the Division would not only prepare the impact statement but would also evaluate the various concerns raised by Paterson and Passaic Valley. In connection with this evaluation, the Council read into the record detailed questions prepared by the Division which it requested the applicants, Paterson and Passaic Valley, to answer by February 23, 1976. The parties all submitted answers to the Division's questions.

The Division decided that the best approach to the presentation of a comprehensive report would be to await the presentation of substantially all the evidence by the various parties before preparing a proposal which "would also substantially satisfy the valid concerns of all parties."

In April 1977 the Division's "Two Bridges-Ramapo Water Diversion Project Environmental Evaluation" was presented to the Council. The Division made two sets of recommendations, one based on the assumption that Passaic Valley would relocate its intake at Two Bridges and the other based on the assumption that it would not.

The Division concluded that the applicants had demonstrated a need for the water to be made available to the project but that the intake structure be changed to permit intake from two points, one where the Passaic River predominates and one where the Pompton River predominates. The numerous alternative projects proposed by Paterson were examined but none was found to be a viable alternative to the proposal made by the joint application of North Jersey and Hackensack.

The proceedings before the Council terminated on April 10, 1978. After receipt of briefs submitted by all the parties in May 1978, a six-member panel of the Council which had heard testimony and received evidence prepared a report for the full Council. That report was filed on August 25, 1978 and incorporated many of the suggestions of the Division's evaluation. The full Council met on September 25, 1978 and, with minor modifications, adopted the report.

While these proceedings had been proceeding, North Jersey made an application to the chairman of the H.S.C. for authorization to encroach on an historic site (the Great Falls and adjacent district). The facts relating to the Commissioner's final approval of the encroachment are set out in detail in Part III of this opinion.

On February 23, 1979 the Commissioner endorsed the Council's decision, approving the application of North Jersey and Hackensack and authorized the ...

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