On certification to the Superior Court, Appellate Division, whose opinion is reported at 182 N.J. Super. 445 (1982).
For affirmance as modified -- Chief Justice Wilentz and Justices Clifford, Schreiber, Handler, Pollock and Garibaldi. For reversal -- None. The opinion of the Court was delivered by Handler, J.
Historic Smithville Development Corporation (HSDC) sought to construct a large scale residential and commercial development in an environmentally sensitive area governed by the Coastal Area Facility Review Act, N.J.S.A. 13:19-1 to -21 (CAFRA). It applied to the New Jersey State Department of Environmental Protection (Department or DEP) for a permit authorizing the development. DEP ultimately granted a permit approving only the "concept" of the development. The permit did not authorize or allow any actual construction until all prescribed statutory and regulatory standards were met.
DEP's action was successfully challenged in the Appellate Division by commercial shell fishermen and several nonprofit entities concerned with the preservation of the environment and protection of the shell fishing industry (referred to here as "objectors"). The Appellate Division ruled that "conceptual approval" of the proposed development was not authorized by either CAFRA or any of the Department's regulations. 182 N.J. Super. 445 (App.Div.1982). It found that the indefinite nature of the approval further evidenced the lack of express or implied statutory authority. Id. at 451-52. The court concluded that the determination to approve the "concept" of the proposed development was deficient in essential findings of fact and, further, in the absence of necessary findings, the application for a permit could not be sustained under a special departmental rule relating specifically to large scale, planned residential developments.
Id. at 452-53. The Department of Environmental Protection and the Coastal Area Review Board (referred to here as "agencies") successfully petitioned this Court for certification. 91 N.J. 243 (1982). With certain modifications as set forth in this opinion, we now affirm the judgment of the Appellate Division.
The procedural history of this litigation must be presented in detail in order to understand fully the issues that are raised on appeal. On October 9, 1979 Historic Smithville Development Corporation applied to the DEP's Division of Coastal Resources (Division or DCR) for permits under the Coastal Area Facility Review Act. The application proposed a large-scale residential and commercial development in an area referred to as the Mullica-Southern Ocean region in the vicinity of the Great Bay-Mullica River estuary. This area is governed by CAFRA and is designated under regulations promulgated by the Department (N.J.A.C. 7:7E-5.7(b)(3)) as an environmentally sensitive limited growth region, generally allowing only infill development. The site is upstream from the Brigantine National Wildlife Refuge which is dedicated to the protection of wildlife and wetlands. It is situated over an aquifer and contains several water courses that form the estuary which is one of the last remaining commercially successful shell fishing areas in this part of the State. The proposal contemplated a 700-room hotel, 6,850 living units, 860,000 square feet of commercial and office space and a population of 20,000 people. Within 15 miles of Atlantic City and near several major highways, including the Garden State Parkway, the site is considered a premier location for development.
The submission of this application followed extended discussions between the Division and HSDC.*fn1 In the course of these discussions the Division decided that upon submission of a completed application "the project would be reviewed conceptually to determine whether growth at this scale could occur in this area without presenting adverse impacts to the environmentally sensitive features which led to the classification of the area's 'Land areas' as a 'low growth' region . . . ."*fn2
The DCR conducted a public hearing on the application on April 2, 1980. Opposition concerning the likely adverse environmental impacts of the project was expressed by the objectors and by several state and federal agencies, including the Division of Water Resources, the Bureau of Shellfish Control, the Office of Environmental Assessment, the Division of Fish, Game, and Wildlife, the United States Fish and Wildlife Service, and the United States Environmental Protection Agency. On September 8, 1980 the DCR in a written opinion conditionally approved the concept of HSDC's large-scale development and conditionally granted a CAFRA permit. However, HSDC was not authorized to commence any construction until it received additional permits. The Division described its action in these terms:
This approval is conceptual. It does not give the applicant the right to commence site clearing, preparation, or any other construction activities related to the project beyond the work on the model units released by letter of June 13, 1980 from Director Kinsey.*fn3 Every parcel of the project will require a complete submission under CAFRA as defined in the CAFRA Procedural Rules
and Regulations, (N.J.A.C. 7:7D-2 et seq.), with a normal application review process including the required fact-finding public hearing.
This approval, however, encompasses the concept of the development of a Large Scale Planned Residential Development in the proposed location of the portion of Galloway Township which has a "limited growth region" designation in the Land Area Location policies. Generally, the approval extends to the type of uses proposed and to the size of the proposed project in terms of the maximum number of units to be permitted, the maximum square footage of commercial and office space, and the minimum acreage of open space. In addition, this approval includes support of the general stormwater management plan, water supply plan, and wildlife/vegetation maintenance plan and controls.
The approval does not obligate any Department or Agency of the State of New Jersey to approve any parcel or component of the proposed development nor does it imply DEP approval under CAFRA of any subsequent submission for a construction permit application. The groundwater, surface water, traffic and air quality monitoring programs and data reporting specified as conditions to this approval shall be carried out as outlined, for the time periods specified. At some future date, if adverse effects develop which cannot be corrected, the size of the development will have to be restricted below that proposed in the Master Development Plan that is being granted a "conceptual" approval by this CAFRA permit decision. In addition, remedial measures may be required if significant adverse effects develop.*fn4
Objectors promptly appealed to the Commissioner of the Department of Environmental Protection, challenging the issuance of a CAFRA permit based on a conceptual approval. On December 15, 1980 the Department denied objector's request for a plenary hearing on the CAFRA permit, finding that they failed to challenge specific facts or conclusions of law and that the issues raised related to policy matters. The Department referred the appeal to the Coastal Area Review Board (CARB) for its review pursuant to N.J.S.A. 13:19-13 and N.J.A.C. 7:7D-1 et seq.
CARB conducted public hearings on January 9, February 9 and 20, and March 6, 1981. At its February 20 hearing, CARB concluded that DCR was the proper agency within DEP to review the HSDC application. However, it referred the questions of the statutory and regulatory authority of the agency to engage in conceptual review of a proposed project to the Office of the Attorney General for legal advice.*fn5
At its March 6 hearing, apparently armed with the Attorney General's advice,*fn6 CARB voted unanimously that DCR had both the statutory and regulatory authority to engage in conceptual review, subject to three conditions. These were: (1) that there must be a plan for continuing public review to assure compliance with the permit conditions; (2) that subsequent construction approvals be measured against the regulatory standards prevailing at the time of those approvals; and (3) that DCR, in the future, be "extremely judicious" in granting conceptual approval because of the danger that it be used as a bar to the deliberation of relevant ...