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Holgate Property Associates v. Township of Howell

July 29, 1996


On certification to the Superior Court, Appellate Division, whose opinion is reported at 283 N.J. Super. 311 (1995).

The opinion of the Court was delivered by Handler, J. Justices Pollock, Garibaldi, Stein and Coleman join in Justice HANDLER's opinion. Justice O'hern filed a separate Concurring opinion.

The opinion of the court was delivered by: Handler

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).


Argued March 12, 1996 -- Decided July 29, 1996

HANDLER, J., writing for a unanimous Court.

The issue on this appeal is whether use of property involving a sludge-derived product (SDP) is eligible for exemption by the Department of Environmental Protection (DEP) from the formal permitting requirements of the Solid Waste Management Act (SWMA). A related issue is whether the SWMA, in its application to SDPs, preempts local zoning and other police power laws, and thus bars the exercise of municipal authority over activities involving SDPs.

Holgate Property Associates (Holgate) owned property in Howell Township that had been used as a sand and gravel quarry since 1930. Holgate operated the property for over ten years pursuant to a township soil-removal permit, issued in accordance with the local soil-removal ordinance. Holgate had used the property for both soil removal and clay and topsoil mixing, and had made large distributions of soil to a landfill in Monmouth County.

In 1989, Holgate transported composted sludge to its quarry from Philadelphia to use as soil conditioner to reclaim the land on a part of its property. The DEP authorized an NJPDES permit exemption for that activity. The DEP provided Howell Township with a copy of that exemption. The Township did not object at that time.

The Middlesex County Utilities Authority (MCUA) operates a sludge-processing facility. On February 26, 1991, the DEP issued a NJPDES permit authorizing the MCUA to process sludge and to distribute the resulting SDP. The DEP also issued a separate permit authorizing the MCUA to "Produce and Store Sludge-Derived Product Mixtures" at the Holgate property "for the Distribution to Landscapers and Other End Users." Pursuant to those permits, Holgate began to transport SDP from the MCUA facility to its quarry for use in mixing with sand and topsoil.

In July 1993, local residents complained of strong odors and contended that SDP-runoff was finding its way into nearby streams. Howell Township scheduled a meeting with Holgate to discuss its operations at the quarry. Immediately before the meeting was to begin, Howell Township served Holgate with a Stop Work Order that required Holgate to apply to the Zoning Board of Adjustment (Board) for an interpretation and/or use variance for this procedure within ten days. On August 18, 1993, Holgate filed an interpretation application with the Board, and a hearing was scheduled for September 21, 1993.

A day before the hearing was scheduled, Holgate filed a complaint in support of an Order to Show Cause, seeking to enjoin enforcement of the Stop Work Order and to obtain a declaration that the SWMA preempted Howell Township from enforcing its zoning and soil removal ordinance. After a hearing on the preemption issue, the court held that the SWMA generally preempts other local government regulations because it presents a comprehensive statutory and regulatory scheme that completely occupies the field of solid waste management, even though general statutory authority exists for local regulation of health and safety issues. The court then ruled that the Stop Work Order was an attempt to regulate sludge management that conflicted with the legislative scheme and obstructed the legislative objective of a comprehensive statewide approach to sludge management and, therefore, was preempted. The court restrained enforcement of the Stop Work Order and Howell Township appealed.

The Appellate Division reversed, framing the issues in terms of the procedural requirements that the DEP must fulfill for its decisions to have preemptive effect over municipal zoning laws in respect of the site used for the processing and distribution of SDPs. The Appellate Division essentially held that the SWMA does not by itself preempt local regulation; rather, it is the adoption of the district plan under the SWMA that gives the SWMA preemptive effect. Therefore, the court concluded that the DEP, though having the interim or transitional power, in the absence of a district plan, to approve a site for SDP processing, does not thereby preempt local authority over such activities unless it complies with the "basic planning procedures and criteria of the SWMA before approving a facility." Applying that interpretation to the facts, the court concluded that the DEP failed to conform with the SWMA because the MCUA's permit exemption application did not provide adequate information for the DEP to consider local concerns, and the DEP did not consult with Howell Township or the district's Advisory Solid Waste Council, or hold a public hearing as otherwise required under the SWMA.

The Supreme Court granted Holgate's petition for certification, which the DEP joined.


The approval of the permit exemption for the operation of a sludge-derived product (SDP) site does not require the public-notice procedures, under the Solid Waste Management Act, applicable to the approval of a solid waste facility. However, the DEP should give notice to affected municipalities and consider their public health and safety concerns and zoning and land-use regulations when deciding whether a facility using SDPs will be exempt from permitting requirements.

1. In passing the SWMA, the Legislature understood that the management of solid waste affects matters of public policy and important concerns relating to the public health, safety and welfare. The Legislature recognized that the management of solid waste should be coordinated as a statewide system but that it entails a degree of expertise beyond the capacities and interests of local government. Nevertheless, because of the significant impact that state-level decisions would have throughout the State, the management of solid waste was required to be effectuated at the local level and to involve maximum government and public participation at that level. The Legislature's scheme for sludge management contemplates that an SDP that meets certain requirements is essentially a beneficial product and, therefore, is not subject to extensive regulation. However, to protect ground and surface water, sites where SDPs are handled, stored or disposed are required to obtain a NJPDES permit. (pp. 7-10)

2. The Appellate Division misapprehended the critical difference between sludge and sludge-derived products. As a result, the court failed to stress the policies underlying the SWMA's treatment of sludge, and, particularly, the importance of SDPs as the means through which sludge can be effectively managed and ultimately disposed. The approval of the permit exemption for the operation of an SDP site does not require the public-notice procedures applicable to the approval of a solid waste facility. Under the SWMA, the individual-site approvals of SDP sites do not invoke, and should not be hampered by, the procedural requirements otherwise applicable to solid-waste facilities. Consistent with the legislative scheme of the SWMA, there should be substantial deference afforded to the DEP as the administrative agency charged with the regulation of the operations of the entities disposing of SDPs. The DEP's regulations are within its delegated authority under the statute and, thus, are to be afforded deference. (pp. 10-13)

3. Although the statute and regulations do not require formal public notice or participation in the approval process by local government and the public, there is an implied duty on the part of the DEP to consider local concerns that will be affected by the operation at the proposed site. An implied duty of the state administrative agency to give notice to the public may be recognized where the exercise of that agency's powers has a distinctive impact on a particular locality and its citizens. The statement of public policy by the Legislature in passing the SWMA places a burden on the DEP to consider local concerns in deciding whether to exempt a certain SDP-using facility from formal permitting requirements. The failure to give notice to affected municipalities raises the risk that the DEP's ultimate decision will not give sufficient weight to relevant matters affecting appropriate land uses in public health and safety. Such a decision would constitute an abuse of discretion. That requirement does not necessitate a plenary or general public hearing. It is sufficient that the local government and the public are duly notified and given the opportunity to express their views on a proposed use of the site. (pp. 13-17)

4. Because this opinion announces a new administrative rule that could potentially require DEP to revisit all outstanding permit exemptions, it shall ...

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