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In re Water Supply Critical Area No. 2 . Evesham Municipal Utilities Authority

Decided: April 18, 1989.


On appeal from the Department of Environmental Protection.

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


[233 NJSuper Page 281] This appeal is taken from an administrative order of October 24, 1986 issued by the Department of Environmental Protection (DEP). The order declared "the establishment of Water Supply Critical Area No. 2" and ordered "that the Procedures for Implementation of Water Supply Critical Area No. 2 . . . be followed by all affected purveyors and users of water within the critical area, effective this date." The implicated area encompassed most of Camden, Burlington and Gloucester Counties and smaller portions of five counties adjoining them.

DEP issued the order pursuant to the Water Supply Management Act of 1981 (Act), N.J.S.A. 58:1A-1 to -17, L. 1981, c. 262, and the rules enacted under it, N.J.A.C. 7:19-6.1 to -6.14 (reductions of use under "adverse conditions" requiring "special measures"), especially N.J.A.C. 7:9-6.10(a), (c) and (d). DEP asserts that excessive water use, salt-water intrusion and industrial waste discharges seriously threaten the Potomac-Raritan-Magathy (PRM) Acquifer System which underlies Critical Area No. 2. The order established two zones within the Critical Area. They were divided by the potentiometric contour line where the PRM Acquifer is 30 feet below main sea level. Within the inner area, the depleted area, water purveyors would have to reduce pumping from the PRM Acquifer by 35% of the 1983 water usage. Within the outer area, the so-called marginal area, purveyors were restricted to the amount of water drawn in 1983 from the acquifer. DEP ostensibly would disapprove any additional water withdrawals, with exceptions where the user had adopted plans for an alternate supply but the water would not be available in time to meet the need or the user would commit to purchasing water when alternate supplies became available.

DEP subsequently issued the finalized "Procedures for Implementation of Water Supply Critical Area No. 2" on October 31, 1986. DEP also issued a document summarizing the March and July 1986 public hearings. In December 1986 DEP sent a corrected version of the procedures to all affected users. As in the original procedures, the corrected version provided that the

mandatory reduction in ground water withdrawals will not be effective until an alternative source becomes operational unless the conditions of these procedures and/or of the permit are not met. However, fourteen months after written notification of a user's base allocation, each user, either connected or unconnected, will be required to develop an Alternative Water Supply Plan which must make firm and formal commitments for alternative water. As soon as proposals for water conservation plans and possible alternative sources are reviewed and verified, the user must sign a contract with a water utility or else contract for construction of the alternative source. Approval of the contracts by the Department may be required.

Evesham Municipal Utility Authority (EMUA) appealed on December 1, 1986. In March 1987 Mt. Laurel Township Municipal Utilities Authority (MLTMUA) filed a motion for leave to intervene which was granted. On October 13, 1987 we heard oral argument on DEP's cross-motion to dismiss the appeal and EMUA's motion for summary disposition. R. 2:8-3(b). On October 13, 1987 we denied EMUA's motion for summary disposition, denied DEP's cross-motion to dismiss the appeal, granted Maple Shade Township's motion to intervene, and consolidated EMUA's appeal (A-1560-86T1) with the companion appeal by Willingboro Municipal Utilities Authority (WMUA) (A-1790-86T1) filed on December 8, 1986. On February 3, 1988 we granted the motion by the Builders' League of South Jersey to appear amicus.

The appellants and the amicus stress that the water demands generated by population growth in the region conflict with DEP's proposed severe cutback in the water usage and that the order lacks legal authority. DEP maintains that the cutbacks are necessary and within its statutory authority.

Our general power to review agency action is carefully circumscribed. Administrative agencies are properly categorized as part of the government's executive branch because they "exercise executive power in administering legislative authority selectively delegated to them by statute." City of Hackensack v. Winner, 82 N.J. 1, 28 (1980). The administrative process involves aspects of all three branches of government. Gloucester Cty. Welfare Bd. v. N.J. Civ. Serv. Comm'n., 93 N.J. 384, 389 (1983).

The process has been described as a "concentration of powers" comprised of "an admixture of law-making, law enforcement and law-interpretation." J. Jacobs, "Administrative Agencies, their Status and Powers," in II State of New Jersey Constitutional Convention of 1947 1431, 1436 (S. Goldmann & H. Crystal eds. 1951). Similarly, Dean Landis characterized administrative power as the "full ambit of authority necessary for [the administrative agency] . . . to plan, to promote, and to police, [and] it presents an assemblage of rights normally exercisable by government as a whole." The Administrative Process 15 (1938). In the performance of its delegated responsibility an agency formulates policy and investigates and adjudicates controversies. In discharging its

specialized tasks the agency must gather and analyze relevant data and material. As a result, the administrative agency acquires expertise in technical matters and a comprehensive knowledge of its particular field. L. Jaffe, Judicial Control of Administrative Action 25-26 (1965). It is not surprising, therefore, that the "vast majority of public administrative theorists have argued persuasively that although general political controls should guide administrative decision making, daily and routine administrative work is best handled by objective and professional administrators." K. Warren, Administrative Law in the American Political System 200 (1982). [ Gloucester Cty. Welfare Bd., 93 N.J. at 389-390.]

Courts are "constitutionally-founded, independent and impartial adjudicative tribunals constituted to hold and exercise the judicial power which emanates directly from the Constitution." Gloucester Cty. Welfare Bd., 93 N.J. at 390. In recognition of the administrative agencies' executive function, courts "are aware that the judicial capacity to review administrative actions is limited." Pub. Serv. Elec. v. N.J. Dept. of Environ., 101 N.J. 95, 103 (1985). Our Supreme Court has stated the judicial role in administrative review:

Though sometimes subsumed in the search for arbitrary or unreasonable agency action, the judicial role is restricted to three inquiries: (1) whether the agency action violates the enabling act's express or implied legislative policies; (2) whether there is substantial evidence in the record to support the findings upon which the agency based application of legislative policies; and (3) whether, in applying the legislative policies to the facts, the agency clearly erred by reaching a conclusion that could not reasonably have been made upon a showing of the relevant factors. Campbell v. Department of Civil Serv., 39 N.J. 556, 562 (1963); see also Henry v. Rahway State Prison, 81 N.J. 571, 579-580 (1980) (court will reverse decision of administrative agency only if it is arbitrary, capricious, or unreasonable or if it is not supported by substantial credible evidence in the record as a whole). [ Pub. Serv. Elec., 101 N.J. at 103.]

We conclude that the Water Supply Management Act of 1981 does not give DEP the authority to order the holder of a diversity permit to reduce the quantity of water currently diverted without the Governor declaring a state of water emergency. Thus DEP's order of August 24, 1986 requiring reductions of present diversions to either 1983 levels or to 35% less in the marginal and depleted areas, respectively, was beyond the scope of the agency's authority and invalid. The Act does empower DEP's Commissioner to order, "during the duration of a state of water emergency" any user or distributor "to reduce

by a specified amount the use or distribution of any water supply." N.J.S.A. 58:1A-4(c)(1) and (2). We conclude that DEP's Commissioner may exercise this power only after the Governor acts by executive order and declares a state of water emergency. N.J.S.A. 58:1A-4(a) ("Upon a finding by the Commissioner that there exists or impends a water supply shortage of a dimension which endangers the public health, safety, or welfare in all or any part of the State, the Governor is authorized to proclaim by executive order a state of water emergency.") The Governor may limit the state of emergency to specific categories of water supplies or to specific areas. Ibid. The Act does not impose a time limit on the state of emergency. N.J.S.A. 58:1A-4(h) (emergency remains effective until terminated by executive order).

In the case before us, DEP did not ask for a declaration of a state of emergency by the Governor and none was declared. Instead, DEP issued the order pursuant to N.J.A.C. 7:19-6.10(c) and (d) of the Water Supply Management Act Rules which provide:

(a) Water supply critical areas are those areas in which it is officially determined by the Department, after public notice and a public meeting, that adverse conditions exist, related to the ground or surface water, which require special measures in order to achieve the objectives of the Act . . .

(c) Within water supply critical areas . . . the Department may reduce the privilege given to users to withdraw water, as previously allocated or authorized, and require those users to substitute water ...

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