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In re Appeal of Adoption of Rules Regarding Property Disposition of A Casino Licensee

Decided: March 30, 1988.


On appeal from New Jersey Casino Control Commission.

King, Gruccio and D'Annunzio. The opinion of the court was delivered by Gruccio, J.A.D.


The Casino Control Commission (Commission), recognizing that the growth of the casino industry in New Jersey is not limited to the boardwalk area in Atlantic City, enacted a regulation designed to give it greater oversight of the casino industry's real estate activities. Given the great control the casino industry has over the real estate in the Atlantic City metropolitan area and given the underlying policy of casino gambling to promote revitalization and growth of Atlantic City and tourism in general, the enacted regulation established monitoring procedures which enabled the Commission to gather information on real estate activity in the casino industry. We are asked to consider whether the Commission went beyond its regulating and policing authority by enacting this regulation, and whether it followed the proper procedure in enacting the regulation.

On October 21, 1985, the Commission published a notice of proposed rule N.J.A.C. 19:41-7.2A. The notice described the rule's intended purpose: "to provide the Commission with certain information, as specified, to enable the Commission to monitor, review and assess the effect of casino industry real estate activities on Atlantic City, particularly as those activities relate to real property acquisition, change of use, demolition, and relocation of tenants." Although the Commission saw no real significant social impact on the casino industry, its aim was to protect Atlantic City and its citizens from any adverse social impacts that unmonitored real estate activities could foster. The economic impact was seen as minor in that the proposed rule would only cause an economic burden on the casino industry requiring it to create a procedure to ensure the submission of the required information to the Commission.

The Commission published notice of adoption of N.J.A.C. 19:41-7.2A (See Appendix I for full text of the Rule) on January 6, 1986, which included responses to comments received by the Commission from the Public Advocate and appellant Atlantic City Casino Association (Association). The Association contended

there, as they do here, that the Casino Control Act does not vest in the Commission this regulatory authority and that the economic impact would be much greater because the disclosure of this information would dramatically affect real estate prices. The Association also contends that the Casino Reinvestment Development Act has preempted the Commission in casino-related real estate affairs.

The Association seeks appellate review of the legality of the adoption of N.J.A.C. 19:41-7.2A. Its basic contention is that the Commission acted beyond the regulatory scope of its delegated powers. The basis for evaluating a claim that an administrative agency's action is ultra vires is set forth in New Jersey Guild of Hearing Aid Dispensers v. Long, 75 N.J. 544 (1978), which states:

In determining whether a particular administrative act enjoys statutory authorization, the reviewing court may look beyond the specific terms of the enabling act to the statutory policy sought to be achieved by examining the entire statute in light of its surroundings and objectives. Id. at 303 and cases there cited. The purpose of this inquiry is to ascertain whether the requisite authority may be said to be implicitly supplied, as "[t]hat which is implied is as much a part of the law as that which is expressed." [ Id. at 562, citing and quoting In re Suspension of Heller, 73 N.J. 292, 303, 304 (1977)].

Central to our determination is the well-established rule that the agency's exercise of authority is entitled to a presumption of validity, Id. 75 N.J. at 563, and should not be invalidated unless it plainly transgresses the statute. Id. at 561.

Moreover, "the absence of an express statutory authorization in the enabling legislation will not preclude administrative agency action where, by reasonable implication, that action can be said to promote or advance the policies and findings that served as the driving force for the enactment of the legislation." A.A. Mastrangelo, Inc. v. Environmental Protec. Dept., 90 N.J. 666, 683-684 (1982). The grant of authority should be liberally construed so as to effectuate the legislative intent. See New Jersey Guild of Hearing Aid Dispensers, supra, 75 N.J. at 562. We find that the adoption of N.J.A.C.

19:41-7.2A is within the Commission's express and implied powers and affirm.

"The [Casino Control Act] . . . vests broad power over casino operations in the Commission which is authorized to adopt regulations, consistent with the policy and objectives of the act, as it deems necessary or desirable for the public interest in carrying out the provisions of the act. N.J.S.A. 5:12-69." Bally Mfg. Corp. v. N.J. Casino Control Comm'n, 85 N.J. 325, 328 (1981). The general policies of the act, set forth in N.J.S.A. 5:12-1b, are to permit properly regulated, controlled and developed casino gambling in an effort to rehabilitate and redevelop the existing tourist and convention facilities in Atlantic City along with the fostering and encouragement of new construction. The Legislature saw Atlantic City's resort, tourist and convention industries as critically important in the continued viability and economic strength of these industries throughout the State of New Jersey. N.J.S.A. 5:12-1b(2).

Since the development of casino gaming operations in Atlantic City will substantially alter the environment of New Jersey's coastal areas, and since it is necessary to insure that this substantial alteration be beneficial to the overall ecology of the coastal areas, the regulatory and investigatory powers and duties conferred by this act shall include, in cooperation with other public agencies, the power and the duty to monitor and regulate casinos and the growth of casino operations to respond to the needs of the coastal areas. [ N.J.S.A. 5:12-1b(10)].

These powers and duties have been delegated to the Commission. N.J.S.A. 5:12-63. "The commission may exercise any proper power or authority necessary to perform the duties assigned to it by law, and no specific enumeration of powers in this act shall be read to limit the authority of the commission to administer this act." N.J.S.A. 5:12-75. The Commission must also regulate where it sees that the act, by its rules and regulations issued therefrom is defective or deficient in some aspect. N.J.S.A. 5:12-72.

Specifically, the act provides that the Commission has the duty and power to "review architectural and site plans to assure that the proposal is suitable by law enforcement, aesthetic

and architectural standards." N.J.S.A. 5:12-1b(11). Additionally, the Commission is empowered to strictly regulate and control the casino industry in light of the act's policies and developmental goals. N.J.S.A. 5:12-1b(13).

Essentially, the challenged regulation, N.J.A.C. 19:41-7.2A, seeks information from casino licensees and casino license applicants regarding their real property holdings in Atlantic City. This information, once furnished, should enable the Commission to determine whether the proposed action of the licensee or applicant is consistent with its obligation to assure "the suitability of the casino and related facilities and its proposed location, and that the proposal will not adversely affect casino operations or overall environmental conditions." N.J.S.A. 5:12-84e. Subsection 84 of the act requires the applicant to supply documentation, information and assurances to the Commission necessary for that agency to properly determine the viability of the applicant. All applicants, licensees and registrants have a continuing duty to provide any assistance and information required by the Commission. N.J.S.A. 5:12-80d.

The Commission clearly has been empowered to request such information. The general policies of the Casino Control Act clearly address the redevelopment of the resort,*fn1 tourist and convention industry. The act expressly and impliedly covers real estate through encouragement of rehabilitation of existing facilities and the construction of new ...

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