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MCG Associates v. Department of Environmental Protection

Decided: December 12, 1994.

MCG ASSOCIATES, DAVE JACKSON HOMES, INC., FLM COMPANY, JOHN CORTESE, PHILCO, INC., J.S. HOVNANIAN & SONS, INC., MATERA DEVELOPMENT CORP., AND NEW JERSEY BUILDERS ASSOCIATION, PLAINTIFFS-APPELLANTS,
v.
DEPARTMENT OF ENVIRONMENTAL PROTECTION, *FN1DEFENDANT-RESPONDENT.



On appeal from the Department of Environmental Protection.

Before Judges King, Muir, Jr. and D'Annunzio. The opinion of the court was delivered by King, P.J.A.D.

King

The opinion of the court was delivered by KING, P.J.A.D.

I.

The New Jersey Builders Association and six individual developers challenge that portion of N.J.A.C. 7:7A-2.7(i) which invalidated transition area exemptions when the New Jersey Department of Environmental Protection (DEP) assumed jurisdiction over the federal government's program administering freshwater wetlands. These appellants claim that the regulation terminating transition area exemptions is inconsistent with that portion of the Freshwater Wetlands Protection Act, N.J.S.A. 13:9B-1 to -30 (Act), which immunized from transition area requirements those projects that received preliminary subdivision or site plan approval prior to July 1, 1989, when the transition area requirements took effect. See In re Adoption of N.J.A.C. 7:7A-1.4, 118 N.J. 552 (1990), rev'g, 240 N.J. Super. 224 (App. Div. 1989), on Judge Skillman's Dissent. While the regulation has been in effect in some form for several years, the exemptions were effective until March 2, 1994, when the federal government granted the State's application to assume jurisdiction over most of the freshwater wetlands in New Jersey.

We conclude that the regulation conflicts with N.J.S.A. 13:9B-4. Although that statute is less than a model of clarity, we read it as intending to exempt projects which have been approved by local planning or zoning boards prior to the effective date of the Act, unless federal regulations conditioned New Jersey's assumption of the federal program upon voiding those exemptions. In the official approval of New Jersey's application, the federal Environmental Protection Agency (EPA) made it crystal clear that the State had to void exemptions for construction in wetlands in order to assume the federal program; the EPA was equally clear that it had no interest in the State's transition area requirements, since the federal program does not regulate buffer areas. We reverse because the regulation conflicts with the statute.

II

Understanding the issue presented requires an overview of the Act and its pertinent regulations. Prior to the Act, wetlands were regulated by various State agencies and by the EPA and Army Corps of Engineers (Corps) under section 404 of the Clean Water Act of 1977, 33 U.S.C. § 1344. See United States v. Riverside Bayview Homes, 474 U.S. 121, 123, 106 S. Ct. 455, 457, 88 L. Ed. 2d 419, 424 (1985); A. R. Criscuolo & Associates v. D.E.P., 249 N.J. Super. 290, 295, 592 A.2d 313 (App. Div. 1991). The Act, adopted on July 1, 1987, and effective on July 1, 1988, provides a comprehensive scheme for the regulation and protection of New Jersey's freshwater wetlands. M. Alfieri Co., Inc. v. State of N.J., Dept. of Environmental Protection and Energy, 269 N.J. Super. 545, 548, 552, 636 A.2d 87 (App. Div.), certif. granted, 136 N.J. 30 (1994). The Legislature recognized the importance of wetlands for purifying water, preventing floods, retarding soil erosion and providing a habitat for wildlife, but also recognized the need to protect the rights of property owners in balance with environmental interests. N.J.S.A. 13:9B-2; Alfieri, supra, 269 N.J. Super. at 552.

Both the federal act and our Act regulate activities in wetlands but there are some important differences. The EPA and our own Legislature employ virtually identical definitions of freshwater wetlands, namely an area that is inundated or saturated by surface water or ground water at a frequency and duration sufficient to support vegetation adapted to life in saturated soil conditions. Compare 33 C.F.R. § 323.2, discussed in United States v. Riverside Bayview Homes, supra, 474 U.S. at 124, 106 S. Ct. at 458, 88 L. Ed. 2d at 424, with the Act's definition of freshwater wetland, at N.J.S.A. 13:9B-3. The relevant differences are: First, the federal statute authorizes federal regulation of wetlands which are adjacent to or part of the "waters of the United States" or wetlands the degradation of which might affect interstate commerce. See generally, United States v. Riverside Bayview Homes, supra; Hoffman Homes, Inc. v. Administrator, U.S.E.P.A., 999 F.2d 256 (7th Cir. 1993). No similar restriction appears in the Act, and thus DEP has the authority to regulate more wetlands.

Second, New Jersey's Act regulates more activities. The federal program requires a permit for the "discharge of dredged or fill material into the navigable waters" of the United States. 33 U.S.C. § 1344(a). Thus, while a developer needs a permit to fill in a wetland, no federal permit is required to take material out of a wetland, Salt Pond Associates v. U.S. Army Corps of Engineers, 815 F. Supp. 766, 778-79 (D. Del. 1993), or to drain a wetland. Save Our Community v. U.S.E.P.A., 971 F.2d 1155, 1167 (5th Cir. 1992). Our Act is much more comprehensive, requiring a permit to fill, drain, remove any soil, disturb the soil in any way, drive pilings, place obstructions, or destroy plant life which would alter the character of the wetland. N.J.S.A. 13:9B-3 (definition of "regulated activity").

Finally, as the December 22, 1993 approval document makes clear, the EPA and the Corps lack authority to regulate land adjacent to wetlands, such as a buffer area between the wetland and the adjoining upland. Our Act mandates buffers around wetlands, called transition areas, to protect wildlife and minimize

the impact of development. N.J.S.A. 13:9B-3, 7 & 16. The extent of the buffer depends on the wetland value. Wetlands where the water feeds into trout streams or which provide habitats for endangered species are exceptional; wetlands which are surrounded by a development or merely drainage ditches are ordinary. Everything else is intermediate. N.J.S.A. 13:9B-7. The Act requires transition areas of between 75 feet and 150 feet for wetlands of exceptional resource value; between twenty-five feet and fifty feet for wetlands of intermediate resource value, and no transition area for ordinary value wetlands. N.J.S.A. 13:9B-16b. Current DEP regulations impose the maximum buffers allowed by the Act. N.J.A.C. 7:7A-6.1(d) and (e).

The Clean Water Act authorizes states to assume the federal program. 33 U.S.C. § 1344(g). One of the principal purposes of our Act was to "provide the State with the statutory authority necessary to assume implementation" of the Federal 404 program. Matter of Freshwater Wetlands Rules, 238 N.J. Super. 516, 519, 570 A.2d 435 (App. Div. 1989). See N.J.S.A. 13:9B-2 (to achieve the goals of the Act it is important that the State expeditiously assume the freshwater wetlands permit jurisdiction currently exercised" by the Corps). Thus, our Act directs DEP and the attorney general to "take all appropriate action to secure assumption of the permit jurisdiction exercised" by the Corps pursuant to the federal act. N.J.S.A. 13:9B-27a.

In order to assume jurisdiction, "the state program must be as stringent as the federal program and must comply with all the requirements of the federal regulations. 33 U.S.C.A. § 1344(g), (h); 40 C.F.R. § 232-33." Matter of Freshwater Wetlands Rules, supra, 238 N.J. Super. at 520. While the State program is stricter in many respects, it is less stringent to the extent that it exempts from the permit requirement projects which had received preliminary site plan or subdivision approval prior to July 1, 1988. N.J.S.A. 13:9B-4d. See Alfieri, supra, 269 N.J. Super. at 552; Morich v. N.J.D.E.P., 269 N.J. Super. 240, 244 (App. Div.), certif. denied, 133 N.J. 428 (1992);

Matter of Freshwater Wetlands Rules, supra, 238 N.J. Super. at 528-29. Our Act also exempts projects which had submitted complete preliminary site plan or subdivision applications prior to June 8, 1987 and projects which had applications approved by the Corps prior to the effective date of the Act. N.J.S.A. 13:9B-4d(2) & (3). However, the federal government approval document does not recognize an exemption for projects which have received preliminary site plan or subdivision approval. Thus, our Act eliminates the statutory exemptions if EPA "regulations providing for the delegation to the state of the federal wetlands program conducted pursuant to the Federal Act require a permit for any of these activities, in which case the department shall require a permit for those activities so identified by that agency." N.J.S.A. 13:9B-4.

Finally, the Act's exemption section deals specifically with transition areas, stating that (1) upon renewal of a permit previously granted by the Corps, DEP shall not require a transition area, and (2) projects not subject to the jurisdiction of the Corps "and for which preliminary site or subdivision applications have been approved prior to the effective date of this Act shall not require transition areas." N.J.S.A. 13:9B-4d.

DEP first proposed comprehensive rules on December 21, 1987. 19 N.J.R. 2330 (Dec. 21, 1987). Proposed rule N.J.A.C. 7:7A-2.7 generally covered activities exempt from a permit requirement. 19 N.J.R. 2337 (Dec. 21, 1987). The proposed rule largely tracked the language of N.J.S.A. 13:9B-4, except that it provided that "projects not initiated within five years of enactment of the Act shall apply for a freshwater wetlands permit or open water fill permit." Proposed Rule N.J.A.C. 7:7A-2.7(a)(4)(i). The rule as proposed said nothing about terminating all exemptions when the State assumed the Federal 404 Program. Understandably, although DEP received 475 comments from approximately ninety-four commenters on the proposed rules, 20 N.J.R. 1235 (June 6, 1988), no one remarked on termination of exemptions upon assumption of the federal program (although seventeen commenters

protested the proposed five-year termination rule). 20 N.J.R. 1245 (June 6, 1988).

However, between proposal and adoption DEP modified the regulations by inserting an earlier version of the challenged regulation, N.J.A.C. 7:7A-2.7(i), which stated:

If the USEPA's regulations providing for the delegation to the State of the Federal wetlands program conducted pursuant to section 404 of the Federal Act require a permit for any of the activities exempted by this section, the Department shall require a permit for those activities so identified by the USEPA. The exemptions in (d) and (g) above shall be void as of the date of assumption by the Department of the Federal 404 program.

[20 N.J.R. 1269 (June 6, 1988).]

Among the exemptions in subsection (d) which would be void upon State assumption are projects which had obtained preliminary subdivision or site plan approval. Subsection (g) is not relevant here, since it refers to activities authorized by a Corps nationwide permit. Subsection (i) did not void the transition area exemption in subsection (f), which stated:

Projects not subject to the jurisdiction of the United States Army Corps of Engineers and for which preliminary site plan or subdivision applications have been approved prior to July 1, 1989 shall not require transition areas. [N.J.A.C. 7:7A-2.7(f) at 20 N.J.R. 1269 (June 6, 1988).]

The New Jersey Builders Association challenged the rules as adopted on May 16, 1988 and as published on June 6, 1988. One of the twelve issues raised on the appeal by that organization was "WHETHER THE REGULATIONS IMPROPERLY PROVIDE THAT STATUTORY WAIVERS SHALL BE VOID IF A PERMIT IS REQUIRED WHEN THE STATE ASSUMES THE FEDERAL WETLANDS PROGRAM." 238 N.J. Super. at 525. We deemed this particular issue, along with ten others, except the termination-after-five-years provision, as clearly without merit, citing R. 2:11-3(e)(1)(D). Id. at 525, 530.

After argument in Matter of Freshwater Wetlands Rules, supra, but before the decision in that case, DEP adopted comprehensive regulations addressing transition areas. 21 N.J.R. 1858 (July 3,

1989). Although the bulk of the regulations had no bearing on the issue here, N.J.A.C. 7:7A-6.2(c) stated:

Projects or activities which are exempt from the requirement of a freshwater wetlands permit pursuant to N.J.A.C. 7:7A-2.7(a),(b),(d), (f) and (g) shall also be exempt from transition area requirements. These transition area exemptions are subject to the same limitations as the corresponding freshwater ...


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