On appeal from and on certification to the Superior Court, Appellate Division.
Handler, Wilentz, Clifford, O'Hern, Garibaldi, Stein
The opinion of the Court was delivered by
In this case a municipality enacted an ordinance regulating quarries. The ordinance imposed a licensing requirement for quarry operations and limited the depth below which property could not be quarried. The owner of a quarry contends that the application of the ordinance to its property effectively prohibits its use as a quarry, and therefore constitutes a governmental taking of its property. That contention poses the major issue on this appeal.
Plaintiff, Bernardsville Quarry, Inc. (BQI), purchased property, referred to as the Ferrante Quarry, located in the Borough of Bernardsville (Bernardsville, borough, or municipality), for $3,825,000 at a foreclosure sale on March 2, 1987. The land had been used as a quarry since 1931. The rock formation of the quarry consists of basalt trap rock formations. In addition to quarrying, the owner also used property to crush stone and to produce bituminous concrete.
Bernardsville adopted its first land-use ordinance in 1949. In 1963, the quarry operation was declared a nonconforming use by the Superior Court, subject to limitations stipulated to by the owner. The owner continued to operate the quarry until 1985, when economic problems forced him to stop quarrying and crushing stone. The bituminous concrete facility was shut down in 1986.
Following the owner's bankruptcy, BQI acquired the property and applied to the Borough for a Continued Certificate of Occupancy (CCO), stating its intention to continue to use the property to quarry and process stone as had its prior owner. In a letter dated March 11, 1987, the borough denied the application. The stated reasons were that the only current use of the property was as a bituminous concrete plant and not a quarry, that BQI had failed to submit a site plan as required by Bernardsville's Land Use Ordinance, and a number of serious environmental concerns, including the potential for pollution of subsurface aquifers from which drinking water is drawn. The borough's fear of pollution was based on its belief that parts of the land had been used, illegally, for asphalt production, as a transfer station for consolidating garbage, and as a landfill containing machine parts leaking contaminants.
The borough council discussed the quarry situation a number of times between March 1987 and April 1988. The borough issued BQI a Temporary Certificate of Occupancy (TCO) on June 23, 1987, providing only for the operation of the concrete
plant. However, BQI furnished additional information through outside consultants, and on July 20, 1987, Bernardsville issued a second TCO permitting the crushing of loose stone and a limited amount of blasting. At the same meeting at which the borough granted the second TCO, it also adopted a new ordinance, referred to as the Quarry Licensing Ordinance. The ordinance limits the depth of quarrying operations, restricts hours of operation, requires buffer zones, and imposes a license requirement. The second TCO was made contingent on BQI's filing an application in compliance with the new ordinance.
Thereafter, on August 4, 1987, the borough ordered the suspension of all blasting at the quarry. That action was based on a determination by the borough's engineers that at some time in the past asbestos had been disposed of on the property.
BQI filed a detailed application for a quarry license on February 29, 1988, in which it sought authorization to quarry below the level allowed by the quarry ordinance and in areas in which quarrying was prohibited by both the ordinance and the limitations contained in the 1963 judgment. BQI's request would expand and deepen the quarry pit so that it would extend over approximately forty-five acres and have a floor at seventy-five feet above sea level. The removal of stone would take twenty years and would create a lake of almost forty-five acres with an average depth of over two-hundred feet. The distance from the top of the quarry area to the floor of the lake would be approximately three hundred and seventy-five feet, one hundred and seventy-five feet from the top of the cliff face to the lake itself.
The borough formally adopted a resolution denying BQI's application, without prejudice, on April 11, 1988. It gave several reasons for the denial, including: the violation of the limitations set in the 1963 nonconforming use judgment; the asbestos contamination; the finding by the New Jersey Department of Environmental Protection that BQI's surface-water discharge plan was unacceptable, as were the number and depth of
monitor wells; failure to provide sufficient rock mass information; failure to guarantee compliance with the New Jersey Pollution Discharge Elimination System permit; failure to evaluate groundwater flow; and failure to provide hydrogeologic characterization for the development of a database for groundwater monitoring wells.
BQI filed a complaint in lieu of prerogative writ on May 25, 1988. The multi-count complaint included allegations that the Quarry Licensing Ordinance was invalid because several of its conditions on quarry operations were unreasonable, and, in particular, its depth restrictions effected an unconstitutional taking of property. It also alleged that the borough could not validly require licenses for quarrying and that the denial of the license in this case was improper. The complaint also charged that the borough had acted with "unclean hands," that the ordinance had not been lawfully passed, and that the acts of the borough constituted a violation of federal civil rights under 42 U.S.C. § 1983.
After an eleven-week trial, the trial court in an unreported opinion ruled against BQI on its challenge to the depth limitation provision of Bernardsville's Quarry Licensing Ordinance, concluding that the ordinance had effected no unconstitutional taking. The court also ruled that licensing of quarries was within the scope of a municipality's authority and that the denial of a Certificate of Occupancy was valid. It further determined that BQI was time barred from alleging a violation of the Open Public Meetings Act. The court ruled, however, that the ordinance's limitation on the quarry's hours of operation was invalid and that the borough's denial of BQI's application was arbitrary and capricious in that it was based on an inadequate record. The court remanded the application to the borough council for reconsideration of BQI's application.
On appeal, the Appellate Division in an unreported opinion affirmed the trial court's decision. It slightly modified the
decision to allow BQI to file a revised application instead of requiring Bernardsville to reevaluate the former one.
This Court granted the petition and cross-petition for certification filed by the respective parties. 127 N.J. 545 (1991).
We deal first with the general power of a municipality to license and regulate the operations of quarries.
BQI concedes that municipalities have the general authority to regulate quarries pursuant to the State's grant of police power in N.J.S.A. 40:48-1 and -2. It argues, however, that a municipality does not have the specific power to license a quarry. BQI contends that a municipality's power to license businesses derives only from N.J.S.A. 40:52-1, and quarries are not enumerated as an activity subject to licensure nor are they similar to the types of businesses contemplated by that statute.*fn1
A municipality may require a license in order to help it regulate under its general police power. In Daniels v. Point Pleasant, 23 N.J. 357 (1957), this Court observed that "inherent in the power to regulate and control is the power to charge license fees primarily to defray the costs of
such control." Id. at 361; see also Middletown Township v. Stover Cable Communications, 206 N.J. Super. 572 (App. Div. 1985) (recognizing that municipality may apply license fees to defray costs and expenses collected during performance of regulatory authority). The fees generated by licenses must be related to regulatory expenditures and may exceed regulatory costs only within reasonable limits. Automatic Merchandising Council v. Township of Edison, 102 N.J. 125 (1986).
N.J.S.A. 40:52-1 is simply a grant of power allowing municipalities to use licenses ancillary to its powers to regulate. See Holmdel Builders v. Township of Holmdel, 232 N.J. Super. 182, 192 (App. Div. 1989). The trial court here found that N.J.S.A. 40:52-1g expressly authorizes municipalities to enact and enforce ordinances to license and regulate both specifically enumerated businesses and activities and "all other kinds of business conducted in the municipality other than herein mentioned" and that quarries should be treated as a type of business subject to license fees. The Appellate Division agreed with the trial court that N.J.S.A. 40:52-1g grants municipalities the power to license. It found that "the authority to license . . . goes hand-in-hand with the authority to regulate," citing Salomon v. Jersey City, 12 N.J. 379, 388 (1953).
The cases cited by BQI to support its contention that the license requirement is ultra vires involve municipal attempts to use licenses as a means of raising revenues or are unrelated to proper regulatory concerns. See, e.g., Absecon v. Vettese, 13 N.J. 581, 588 (1953) (recognizing that municipality lacks power to impose licensing fees on the "privilege of publishing newspapers"). The distinction was pointed out in Nelson Cooney & Sons v. Township of South Harrison, 57 N.J. 384 (1971):
N.J.S.A. 40:52-1 covers a large number of business and instrumentalities used therein as the permitted subjects of municipal licenses. Essentially all are also proper subjects for police power regulatory ordinances, authorized by
N.J.S.A. 40:48-1 and 2. But the latter power does not include the right to require a license; and the inherent right to charge a fee in connection with a purely regulatory non-licensing ordinance has been said to be limited to an amount primarily designed to defray the costs of regulation.
Similarly, in Salomon v. Jersey City, supra, 12 N.J. 379, the Court determined that the licensing ordinance was enacted solely for the purpose of raising revenues, not for the purpose of regulation. However, the Court determined that the
primary and overriding purpose of the Legislature in enacting [N.J.S.A.] 40:52-1 and [N.J.S.A.] 40:52-2 was to authorize municipalities to license and regulate, as police measures for the public health, safety, morals or welfare, the local businesses described therein, and only incidentally to impose on the business thus licensed and regulated license ...