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Crema v. New Jersey Department of Environmental Protection

Decided: January 3, 1984.


On appeal from the Department of Environmental Protection.

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


This appeal is a companion case to Crema v. Environmental Protection Dep't., 94 N.J. 286 (1983) (Crema I). Appellants are individuals and groups who oppose the plan of the Historic Smithville Development Company (HSDC) to develop a 2,375-acre residential and recreational community in an environmentally sensitive area near Atlantic City, New Jersey.

HSDC proposed a three-phased construction project that would include 6,850 residential units, 310,000 square feet of commercial space, 550,000 square feet of office space, a 700-room hotel, a hospital, a golf course and a school. The site is some 2,000 feet upstream from the Brigantine National Wildlife Refuge, a 20,564-acre preserve dedicated to the protection of wildlife,

birds and saltwater wetlands. The site is part of the aquifer that flows into the Mullica River-Great Bay estuary, one of the last remaining areas in New Jersey where shellfish may be commercially harvested.

Development in the area of the proposed project is regulated by the Department of Environmental Protection (DEP) pursuant to the Coastal Area Facility Review Act, N.J.S.A. 13:19-1 et seq. (CAFRA). In compliance with that act, HSDC submitted a CAFRA permit application to the DEP's Division of Coastal Resources (DCR) in October 1979. DEP ultimately granted a "conceptual permit" which approved the concept of a development of the type and at the location proposed, but did not give HSDC the right to begin construction until the standards set forth in CAFRA and the regulations promulgated thereunder were met. This conceptual permit was successfully challenged by the individuals and groups who are appellants here. In Crema I this court held the conceptual permit to be invalid because: (1) CAFRA does not authorize either explicitly or implicitly the granting of a conceptual permit; (2) the permit granted was devoid of the "carefully documented findings" necessary to justify development in such an environmentally sensitive area, and (3) the reliance upon the large-scale planned residential development rule was misplaced. 182 N.J. Super. 445 (App.Div.1982). The Supreme Court, in Crema I, while substantially affirming the opinion of the Appellate Division, modified our holding with respect to the authority to issue conceptual approval. Although agreeing that CAFRA contains no express statutory provision for the issuance of a conceptual permit and that likewise the implementing regulations did not authorize such action, the Court concluded that the authority for such conceptual approval could "reasonably be implied" from the statutory scheme. Crema I, supra 94 N.J. at 303. The Court determined, however, that the power to exercise this implied authority must be established by administrative rulemaking, rather than by adjudication, and on this basis invalidated the conceptual permit. Ibid. The alternative holding of the Appellate

Division, that the lack of essential findings on the issue of secondary impacts foreclosed application of the large-scale planned residential development rule, was affirmed by the Supreme Court. Id. at 305-306.

While the appeal in Crema I was pending, HSDC submitted a CAFRA permit application for phase 1A of construction. Discussions between the applicant and DCR began in July of 1980. On December 5, 1980, DCR declared the 1A application to be "complete for review," but requested further information on issues of continuing concern. DCR granted the permit on January 27, 1981.*fn1 During this same period, HSDC submitted an application for a construction permit for phase 1B of the project. After extensive discussion between the applicant and DCR, the 1B permit was issued on November 2, 1981.*fn2

Immediately after the Appellate Division's decision in Crema I, appellants wrote the Attorney General asking that the DCR issue no further permits and that it rescind the 1A and 1B permits. On January 26, 1982, David Kinsey, the Director of DCR, refused the request, reasoning that the 1A and 1B permits had been independently evaluated and approved by DCR and therefore stood on their own merits unaffected by Crema I 's reversal of the conceptual permit. In a letter dated February 2, 1982, appellants strongly disagreed, contending that the 1A and

1B permits failed to meet the requirement of "careful documented findings" articulated in the Crema I opinion, and so should be reconsidered in light of this standard. The Attorney General responded simply that he disagreed with appellant's contentions and did not consider any further response appropriate given the pending petition for certification, but was willing to meet to discuss the issue. Instead, appellants took their case to the Director of the Attorney General's Division of Law, who reasserted the position that the 1A and 1B permits rested on independent review and analysis and were not dependent on the conceptual permit.

Appellants subsequently filed a motion with this court seeking to compel DCR to reconsider permits 1A and 1B. On March 3, 1982, we denied appellant's motion "on the ground that the subject matter [was] beyond the scope of this appeal." However, this denial was made without prejudice to appellant's right to bring a separate appeal from the two permits. A motion for leave to appeal this order and for an order directing DEP to reevaluate the 1A and 1B permits was denied by our Supreme Court on June 16, 1982. Appellants then filed the present appeal.

In essence, appellants contend that DEP acted arbitrarily and abused its discretion by refusing to reconsider its grant of the 1A and 1B permits following this court's decision in Crema I. We agree and reverse. Permits 1A and 1B are not conceptual permits and therefore are not rendered ineffective by the Crema I court's holding that conceptual permits are not authorized by CAFRA. Nevertheless, they share the stark absence of crucial factfinding that marred the conceptual permit overturned in Crema I. This flaw is best illustrated by a discussion of the 1A and 1B permits in the light of DEP's role under CAFRA.

The function of DEP is to "formulate comprehensive policies for the conservation of the natural resources of the State, the promotion of environmental protection and the prevention of pollution of the environment of the State." N.J.S.A. 13:1D-9.

In addition, DEP has the power to "[e]nforce the State air pollution, water pollution, conservation, environmental protection, waste and refuse disposal laws, ...

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