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In re CAFRA Permit No. 87-0959-5 Issued to Gateway Associates

December 31, 1997

IN RE CAFRA PERMIT NO. 87-0959-5 ISSUED TO GATEWAY ASSOCIATES


On certification to the Superior Court, Appellate Division, whose opinion is reported at 290 N.J. Super. 498 (1996).

The opinion of the court was delivered by: Pollock, J.

Argued September 8, 1997

The basic issue is whether respondent, the American Littoral Society (ALS), is time-barred from appealing the grant of a permit issued by the Department of Environmental Protection (DEP) to develop a site in the coastal zone near Atlantic City. After initially approving a permit in 1989, the DEP modified the permit in 1993. We hold that the ALS is time-barred from pursuing this appeal.

The DEP concluded in 1986 that its recently enacted Bay Island Corridor Policy (the Policy) did not apply to a project proposed by Boardwalk Associates, Inc. (Boardwalk), a predecessor of appellant, Gateway Associates (Gateway). In 1989, the DEP issued to Gateway a development permit under the Coastal Area Facilities Review Act (CAFRA), N.J.S.A. 13:19-1 to -21.

Although the ALS opposed the application, it did not appeal from the issuance of the permit. Four years later, at the DEP's request, Gateway applied for a modification to the permit. The DEP approved the modification. On the ALS's appeal, the Appellate Division reversed the grant of the modified permit. The court held that the appeal was timely and that the DEP lacked authority to waive the Policy. 290 N.J. Super. 498 (1996).

We granted certification, 147 N.J. 260 (1997)and now reverse the judgment of the Appellate Division.

I.

In 1984, Boardwalk entered into an agreement with the City of Pleasantville for the acquisition and development of a 475 acre tract abutting the Atlantic City Expressway between Pleasantville and Atlantic City. The tract, a former dredge-disposal site, was zoned for multi-use commercial activities and public facilities.

Because the site was in the coastal zone, the project required a CAFRA permit. Throughout 1984 and 1985, Boardwalk met with representatives of the DEP's Division of Coastal Resources (the Division) to discuss the development of the project. The DEP encouraged Boardwalk to provide for "intercept-parking" for casino patrons and employees as a means of reducing air pollution and traffic congestion around Atlantic City.

Boardwalk originally proposed a mixed-commercial development on approximately 100 acres, including: (1) fourteen major non-casino hotels containing 4013 rooms; (2) a day-care center and other commercial facilities, including office and retail space; (3) a 115-acre wetlands mitigation site; and (4) a combination busing and public intercept parking facility.

On July 31, 1984, John Weingart, the Director of the Division, wrote a letter to Gateway stating that the project must address five conditions. The conditions included the ecological value of the project, its impact on redevelopment in Atlantic City, the positive impact of major bus parking, and the feasibility of intercept parking.

Nine months later, Boardwalk acquired the property and subsequently transferred it to Gateway Associates, a joint venture between Boardwalk and Hill International, a management consulting firm. To facilitate development of the project, Gateway entered into a number of agreements with the DEP, Pleasantville, a consulting firm, and the Atlantic County Transportation Authority. Gateway also surveyed the tract, inventoried the existing environmental conditions, and completed environmental impact studies. According to Gateway, by December 1988 its expenses for these preliminary activities totaled $4 million.

On February 4, 1986, Weingart sent to Gateway a letter in which he concluded "based on the materials submitted today, we are likely to be able to approve a CAFRA permit for the ACTA bus parking facility and privately developed hotels on the non-wetlands part of the site." The letter cautioned, "Please understand that in accordance with N.J.A.C. 7:7-3.5(c) this guidance is not a binding commitment by the Division to approve or deny any forthcoming coastal permit application for this site." Significantly, in February 1986, the DEP also adopted the Policy. N.J.A.C. 7:7E-3.24 (subsequently recodified at N.J.A.C. 7:7E-3.21); see N.J.R. 2990(a), 3046-47 (July 18, 1994). The Policy is one of several regulations promulgated under CAFRA, N.J.S.A. 13:19-1 to -21, which sets standards for economic development in coastal areas. See N.J.S.A. 13:19-2 (setting forth legislative findings concerning CAFRA), 13:19-5 (prohibiting construction in coastal area without permit), 13:19-6 (requiring persons proposing construction in coastal zone to file permit application).

Under CAFRA, the DEP may "adopt, amend and repeal rules and regulations to effectuate the purposes" of the Act. N.J.S.A. 13:19-17. Accordingly, the DEP enacted Chapter 7E of the Administrative Code, which embodied the Policy, to set forth the substantive rules regarding the development of coastal resources. N.J.A.C. 7:7E-1.1. The regulations target specific areas within the coastal zone, including Bay Island Corridors. See N.J.A.C. 7:7E-3.1 to -3.48 (describing "special areas" under CAFRA). In 1986, the regulations defined Bay Island Corridors as "non-oceanfront islands surrounded by tidal waters," N.J.A.C. 7:7E-3.24(a)(2), consisting of "that portion lying upland of wetlands and beach but including the filled water's edge." N.J.A.C. 7:7E-3.24(a)(3).

The Policy did not prohibit all development on Bay Island Corridors. Instead, it stated:

"[W]ater dependent development is discouraged on bay island corridors which do not abut a paved public road and [are] not served by a sewerage system with adequate capacity."

On Bay Island Corridors which abut a paved public road and sewerage system with adequate capacity, water dependent development is acceptable, and all other development is acceptable only at a low intensity (defined as 3% to 5% of the upland portion of the bay island). [N.J.A.C. 7:E-3.24(d).]

Application of the Policy would not prohibit Gateway's project, but would limit development to three to five percent of the property. If the Policy does not apply, Gateway could develop approximately twenty percent of the site.

Gateway continued to pursue its project. One early phase involved the "dedelineation" of tidal wetlands as uplands. On June 11, 1986, DEP held a public hearing on Gateway's proposal to dedelineate approximately ninety-six acres. At the hearing, D.W. Bennett, the Executive Director of the ALS, asked a number of questions, but did not mention the Policy. After the hearing, the DEP amended the coastal wetlands map and approved the proposed classification of the property as uplands.

At some point, a question arose concerning the applicability of the Policy to the site. On October 21, 1986, Gateway wrote to the DEP asserting that the site was neither an ocean-front island nor surrounded by tidal waters. On November 20, 1986, Weingart sent a letter to Gateway stating that the DEP would not apply the Policy to the development:

"I have concluded that the Division will not apply the Island Corridor Policy to this site of the combination bus-parking facility, intercept parking facility and hotel and commercial operation you have discussed with us. Although the policy took effect February 3, 1986 and you have not yet submitted a permit application for this site, you did initiate and successfully pursue a formal dedelineation of wetlands on the site while the policy was under public review and we never informed you that it might apply to your site. In addition, as Director of the Division, I outlined the criteria we would use to review the project in a letter I sent you July 31, 1984 and, again since we continued to regularly discuss the project and, again since we failed to notify you that the pending policy change could affect the terms of that letter, I feel it is only fair to you to not require you meet the Island Corridor Policy."

Since writing that letter in July 1984, DEP has concluded that a large part of the site then classified as Wetlands is not wetlands and is no longer subject to the Wetlands Act of 1970, and, as reflected in this letter, the combination bus-parking facility, intercept parking facility and hotel and commercial operation would not be subject to Island Corridor Policy.

I do not agree, however, with your Conclusions regarding the general applicability of the Island Corridor Policy to this site. Were it not for this administrative history, I would have concluded that the project had to comply with the Island Corridor Policy as well as all other Coastal Policies. Also, if the current proposal does not reach reality and a different ...


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