On certification to the Superior Court, Appellate Division.
For affirmance -- Chief Justice Wilentz and Justices Clifford, Handler, Pollock, O'Hern, Garibaldi and Stein. For reversal -- None. The opinion of the Court was delivered by Stein, J.
This case primarily concerns the validity of the administrative procedures followed by the New Jersey Department of Environmental Protection (DEP) in issuing a permit that authorized Ciba-Geigy Corporation (Ciba-Geigy) to discharge an average of 5.9 million gallons per day of chemically-treated effluent into the Atlantic Ocean. On appeal, petitioners challenged the permit on several grounds, including whether DEP had made findings on the record to satisfy statutory criteria that are prerequisites to the issuance of a permit. In an unreported opinion, the Appellate Division sustained the permit, holding that the agency's actions were not arbitrary or capricious. We granted certification. 115 N.J. 69, 556 A.2d 1214 (1989). During argument before this Court, the parties acknowledged that the issues raised before the Appellate Division are essentially moot because the permit was to expire on June 30, 1990. Nonetheless, we consider and decide the procedural challenges addressed to the issuance of the permit in view of their significance and the likelihood that the issues presented will recur. In re Geraghty, 68 N.J. 209, 212, 343 A.2d 737 (1975).
The Federal Water Pollution Control Act Amendments of 1972 (the Clean Water Act), 33 U.S.C. §§ 1251 to 1387 (1978),
prohibit the discharge of any pollutant into the nation's waters without a permit. 33 U.S.C. §§ 1311(a), 1342. In September 1974, the Environmental Protection Agency (EPA) issued a National Pollutant Discharge Elimination System (NPDES) permit to the Toms River Chemical Corporation, which allowed the company to discharge effluent into the Atlantic Ocean, approximately 3,500 feet offshore.
Respondent Ciba-Geigy (Ciba-Geigy) purchased a controlling interest in the Toms River Chemical Corporation before the permit expired. In June 1981, Ciba-Geigy applied to the EPA for a renewal permit for its Toms River plant.
In April 1982 the EPA approved New Jersey's request to permit DEP to administer the federal NPDES program in this State. See 33 U.S.C. § 1342(b); EPA v. State Water Resources Control Bd., 426 U.S. 200, 96 S. Ct. 2022, 48 L. Ed. 2d 578 (1976). New Jersey administers its program under the New Jersey Water Pollution Control Act ("the State Act"). L. 1977, c. 74, § 2 (codified at N.J.S.A. 58:10A-1 to -43). Like its federal counterpart, the State Act prohibits the discharge of pollutants into any state waters without a New Jersey Pollutant Discharge Elimination System (NJPDES) permit. N.J.S.A. 58:10A-6a.
By the time New Jersey had obtained EPA approval to administer its own program, the data in support of Ciba-Geigy's application had become outdated. In July 1984, Ciba-Geigy submitted a revised application for a NJPDES permit. DEP issued a draft permit to Ciba-Geigy in September 1984 and invited public comment. Hundreds of local residents attended a public hearing in October 1984.
In May 1985 DEP issued a final permit to Ciba-Geigy, effective July 1, 1985. The permit had a five-year duration and allowed Ciba-Geigy to discharge an average of 5.9 million gallons of treated effluent per day from the Toms River facility into the Atlantic Ocean.
Two communities near the point of discharge, petitioners Borough of Lavallette and Borough of Seaside Park, as well as an environmental-protection group and several concerned citizens, appealed the DEP decision to the Appellate Division. Petitioners claimed that DEP violated the Clean Water Act and the State Act. Specifically, they argued that DEP failed to comply with the Ocean Discharge Criteria (ODC), see 40 C.F.R. § 125 Subpart M (1985), before issuing the permit. Petitioners also alleged that the permit violated New Jersey's antidegradation policy, N.J.A.C. 7:9-4.5(d), because the agency allowed Ciba-Geigy to discharge effluent in which the level of seven pollutants was higher than that permitted by statute.
The Appellate Division affirmed in an unreported opinion. The court concluded that the ODC requirement relied on by petitioners, 40 C.F.R. § 125.122(a) (1985), was "not federally mandated to be part of New Jersey's regulation." In addition, the court determined that the presumption of no unreasonable degradation, 40 C.F.R. § 125.122(b) (1985), satisfied any ODC obligation. The court also found no violation of New Jersey's antidegradation policy, observing that Ciba-Geigy's 1985 permit imposed discharge restrictions at least as stringent as those under the 1977 permit.
Before us, petitioners argue that the court's conclusions concerning the Ocean Discharge Criteria and New Jersey's antidegradation policy are unsupported by the record because DEP failed to make the factual findings required under the applicable statutory and regulatory provisions.
Although administrative agencies generally act either through rulemaking or adjudication, Texter v. Department of Human Servs., 88 N.J. 376, 384, 443 A.2d 178 (1982) (citing Bally Mfg. Corp. v. New Jersey Casino Control Comm'n, 85 N.J. 325, 338,
426 A.2d 1000 (Handler, J., concurring), appeal dismissed, 454 U.S. 804, 102 S. Ct. 77, 70 L. Ed. 2d 74 (1981); Boller Beverages, Inc. v. Davis, 38 N.J. 138, 154, 183 A.2d 64 (1962)), DEP's permitting process does not fit precisely into either category. See Texter, supra, 88 N.J. at 384, 443 A.2d 178. See generally 2 Davis, Administrative Law § 10:5 at 321-25 (2d ed. 1979) (noting inappropriateness of strict classification of agency action as adjudication or rulemaking because both procedures involve plurality of tasks). Rulemaking is a legislative-type function that usually involves policy judgments of widespread application within the agency's regulatory sphere. Texter, supra, 88 N.J. at 385, 443 A.2d 178; Metromedia, Inc. v. Director, Div. of Taxation, 97 N.J. 313, 329, 478 A.2d 742 (1984). Rulemaking may also "originate with and involve a specific party," Bally Mfg. Corp., supra, 85 N.J. at 342, 426 A.2d 1000 (Handler, J., concurring), and in that context the agency would tailor its procedure in order to "account for the individualized effect of its proposed action." Id. at 345, 426 A.2d 1000 (citations omitted). An ...