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East Cape May Associates v. State

April 29, 1997

EAST CAPE MAY ASSOCIATES, A FLORIDA LIMITED PARTNERSHIP, PLAINTIFF-RESPONDENT,
v.
STATE OF NEW JERSEY, NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION, AND ROBERT C. SHINN, JR., IN HIS OFFICIAL CAPACITY AS COMMISSIONER OF THE NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION, DEFENDANTS-APPELLANTS.



On appeal from the Superior Court of New Jersey, Law Division, Cape May County

Approved for Publication April 29, 1997.

Before Judges Havey, Brochin and Eichen. The opinion of the court was delivered by Brochin, J.A.D.

The opinion of the court was delivered by: Brochin

The opinion of the court was delivered by

BROCHIN, J.A.D.

Plaintiff East Cape May Associates, a limited partnership, owns approximately 100 acres of undeveloped land in the City of Cape May, New Jersey. Most of the property is freshwater wetlands, and both the State and East Cape May agree that it is of "exceptional resource value," a statutory designation which subjects the property to heightened protection against development. N.J.S.A. 13:9B-7, -10c; see Rossi v. Division of Coastal Resources, 92 N.J.A.R. 2d (Vol.5) 244 (Dep't of Envtl. Prot. & Energy). An application by East Cape May to develop the property for residential use has been denied. East Cape May does not dispute that the denial is consistent with the applicable statutes and regulations, and that they serve a legitimate state interest. See Dolan v. City of Tigard, 512 U.S. 374, 114 S. Ct. 2309, 2317, 129 L. Ed. 2d 304, 317 (1994) (property may be taken for public use only when an essential nexus exists between a legitimate state interest and the taking). It asserts, however, that its property has been the subject of a regulatory taking by the State of New Jersey acting through the Department of Environmental Protection. It therefore seeks to have the property formally condemned and to be paid fair compensation.

The 100-acre property which is the subject of East Cape May's claim for inverse condemnation is located on the east side of Pittsburgh Avenue, a county road. There is a parcel of approximately equal size on the west side of Pittsburgh Avenue. East Cape May's principals, Phillip Robinson and Thomas Brodesser, Jr., assert that, acting in their own names or through another partnership, they own or owned that other parcel and have constructed a substantial number of residential housing units on it. They allege that they always contemplated developing both parcels, but that planning and construction proceeded in stages because of the size of the property.

The first specific plans for the land on the eastern side of Pittsburgh Avenue appear to have been made in 1986. In December 1988, Robinson and Brodesser filed a CAFRA (Coastal Area Facility Review Act, N.J.S.A. 13:19-1 et seq.) application to construct ninety-six multi-family homes on a portion of the eastern parcel. On July 23, 1990, Robinson and Brodesser filed a new CAFRA application to build 366 single-family homes on that tract. In the course of a preliminary analysis of the new application, the DEP requested substantial information in addition to what had previously been submitted. The applicants declined to furnish the missing information because, they explained, providing the additional information would have been costly, and applicable regulations, including regulations relating to wetlands and wetlands buffers, would have prohibited development no matter what additional materials were supplied. They asked the DEP to waive some of the pertinent regulations, but the DEP refused and denied their application in an opinion of the DEP's Director of the Division of Coastal Resources.

The applicants appealed to the Commissioner of the Department of Environmental Protection, and the matter was transferred to the Office of Administrative Law. N.J.S.A. 13:9B-20. Prior to any hearing, the applicants stipulated that they had "no facts or law which dispute[] the findings and Conclusions" set forth in the Director's opinion. They withdrew their request for a hearing, and all parties consented to having the case returned to the DEP for final Disposition. The Director's decision denying the development application became final. His findings, which have not been appealed and which are undisputed, therefore establish the facts of the case.

The Director's opinion describes the property as a "tract . . . approximately 100 +- acres in size and consisting of wooded areas, forested freshwater wetlands, emergent wetlands, mosquito ditches and some small upland areas." Applying the criteria set forth in N.J.A.C. 7:7E-5.1 to -5.7, he determined that the site has a "Low Acceptable Development Intensity rating, which allows a maximum impervious site coverage limit of 3 - 5%." The Director's opinion also found that "freshwater wetlands have been identified on . . . . at least 90% of the site . . . . [as] shown on a map . . . prepared by the Army Corps of Engineers and submitted to the Division . . . by the applicants . . . [which] appears to be an accurate representation of the extensive wetlands on the project site." In addition, the Director determined that "the wetlands on the subject property are habitat for several threatened and/or endangered species. Therefore, the buffer required from the wetlands would be a minimum of 150 feet. This buffer, in most cases, encompasses the upland portions on the site." Finally, according to the Director's opinion, "The proposed project site contains Endangered and Threatened Species habitat and Critical Wildlife Habitat." Because "the proposed project would adversely affect this habitat, the proposed development is prohibited" by the regulations protecting endangered and threatened species and critical wildlife habitats.

Because the subject property is classified as "Low Acceptable Development Intensity," not more than five percent of the land area can be used for buildings, roads, and sidewalks. N.J.A.C. 7:7E-5.6(d). The Director's finding that "freshwater wetlands" comprise more than ninety percent of the site means that a permit to develop that ninety percent of the property can be issued only if there is no "practicable alternative to the proposed activity." N.J.A.C. 7:7A-3.1. For nonwater-dependent activities, a category that includes any use of the subject property because it does not abut on any body of water, there is a rebuttable presumption that there is some practicable alternative to the proposed regulated activity that would have less of an impact on the aquatic ecosystem. N.J.A.C. 7:7A-3.3(b). To rebut this presumption, the applicant must demonstrate, among other things, "that the basic project purpose cannot reasonably be accomplished utilizing one or more other sites in the general region that would avoid, or reduce, the adverse impact on an aquatic ecosystem . . . ." N.J.A.C. 7:7A-3.3(d)(1). An alternative will not be excluded from consideration merely because it includes or requires an area not owned by the applicant which could reasonably be obtained or utilized in order to fulfill the basic purpose of the proposed activity. N.J.A.C. 7:7A-3.3(c)(2). See N.J.S.A. 13:9B-10a. Cf. Stone v. Division of Coastal Resources, 92 N.J.A.R. 2d 148 (Dep't of Envtl. Prot. & Energy) (individual who purchased property to build single-family home must look to alternative wetland sites for building); Martin v. Department of Environmental Protection, 1991 WL 313688 (N.J. Dep't of Envtl. Prot. & Energy June 24, 1991); Rodman v. Department of Envtl. Protection, 1991 WL 313689 (N.J. Dep't of Envtl. Prot. & Energy Feb. 5, 1991); In re Freshwater Wetlands Permit Application, No. 1512-890884.1 IP, 1991 WL 313693 (N.J. Dep't of Envtl. Prot. & Energy July 15, 1991), all upholding the denial of permits for construction on freshwater wetlands because other, non-owned land could have been acquired to be used as the sites for the projects.

Furthermore, N.J.A.C. 7:7A-3.5 provides that a permit can be issued for development of freshwater wetlands only if the development

1. Will result in a minimum feasible alteration or impairment of the aquatic ecosystem including existing contour, vegetation, fish and wildlife resources, and aquatic circulation of the freshwater wetland and hydrologic patterns of the watershed;

2. Will not jeopardize present or documented habitat or the continued existence of a local population of a threatened or endangered species listed pursuant to "The Endangered

and Nongame Species Conservation Act" . . . .

11. Is in the public interest, as determined by the Department in consideration of the following:

vii. The ecological value of the freshwater wetlands and probable individual and cumulative impacts of the project on public health and fish and wildlife. . . .

See N.J.S.A. 13:9B-9b.

Because the subject property is the habitat of endangered or threatened species, development is "prohibited unless it can be demonstrated that endangered or threatened wildlife or vegetation species habitat would not directly or through secondary impacts on the relevant site or in the surrounding area be adversely affected." N.J.A.C. 7:7E-3.38(b). In addition, development on the site that would "adversely affect critical wildlife habitats is discouraged, unless . . . there is no prudent or feasible alternative location for the development . . . ." N.J.A.C. 7:7E-3.39(b). "Discouraged" is a defined term; it means that a proposed use of coastal resources is likely to be rejected or denied as the Department has determined that such uses of coastal resources should be deterred and developers should be dissuaded from proposing such uses.

[N.J.A.C. 7:7E-1.5.]

Prior to the Director's issuance of his formal opinion denying a development permit, the DEP provided informal advice and preliminary opinions to the would-be developers. Accurately reflecting the purport of the pertinent regulations, the substance of the advice was that no economically viable development of the property would be feasible. Mark Mauriello, the DEP's supervisor for the Cape May Region, informed Robinson and Brodesser in a June 26, 1990 letter that the proposed 366-unit development:

As proposed, . . . is not in compliance with the Rules on Coastal Resources and Development. The primary reasons for this are the extent of wetlands on the project site and the presence of threatened and/or endangered species. Therefore, as proposed, the project is not likely to be approved by the Department. Furthermore, because the on-site wetland areas are so extensive, it appears that even a more scaled back project would result in disturbance of these Special Areas, which is prohibited by the Division.

[Emphasis added.]

Shortly after the issuance of the Department's January 1991 formal opinion denying a development permit, Mauriello wrote to clarify the references in the opinion to missing information. He stated that the proposed project did not comply with the DEP's regulations primarily because of the presence of extensive freshwater wetlands and of endangered species habitat. Consequently, according to Mauriello, the DEP concurred with the applicants' view that "submission of all the requested information would not alter the prohibited status of the application, and would constitute a waste of time and money."

In an affidavit which the State submitted in opposition to East Cape May's motion for summary judgment, which is the subject of the present appeal, Mauriello sought to explain his June 26, 1990 letter. His affidavit states:

4. Because of the fragile and sensitive ecological nature of the project site, the letter indicated that the proposed 366 residential unit project would be strongly discouraged by the Division policies and the permit for that specific proposed project would most likely be denied. In addition, because of the extensive on-site wetlands, I noted that even a scaled back project of that design would result in disturbance to Special Areas, which is prohibited by the Division.

6. . . . My experience convinces me that the potential for approvable development on the site exists. However, due to the extensive sensitive areas limiting development, I believe it would be difficult though not impossible for the applicant to fashion an application which could be approved.

The State has not yet suggested, even in the briefs to our court, what development of the ...


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