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In re Proposed Xanadu Redevelopment Project

September 17, 2008

IN THE MATTER OF THE PROPOSED XANADU REDEVELOPMENT PROJECT AND THE APPROVAL OF THE JOINT HEARING OFFICERS' REPORT BY THE NEW JERSEY MEADOWLANDS COMMISSION AND THE NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION PURSUANT TO N.J.S.A. 5:10 23 AND OF THE SECTION 5(X) CONSULTATION REPORT BY THE NEW JERSEY MEADOWLANDS COMMISSION PURSUANT TO N.J.S.A. 5:10-5(X) WITH RESPECT TO THE PROPOSED PROJECT.


On appeal from the Department of Environmental Protection and the Meadowlands Commission.

The opinion of the court was delivered by: Lyons, J.A.D.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

APPROVED FOR PUBLICATION

Argued January 30, 2008

Before Judges Wefing, Parker and Lyons.

This case concerns the New Jersey Sports and Exposition Authority's (NJSEA) proposed Xanadu Redevelopment Project (Xanadu), a massive multi-use development, to be constructed and operated in and around what is now known as the IZOD Center site in the Hackensack Meadowlands.*fn1 The Sierra Club, Environmental Defense, the New Jersey Public Interest Research Group Citizen Lobby, Inc., and the New Jersey Environmental Federation (collectively Sierra), and Hartz Mountain Industries, Inc. (Hartz) appeal from Resolution Number 04-60 of the New Jersey Meadowlands Commission (NJMC) adopting the consultation report and hearing officers' report for the proposed Meadowlands Xanadu Redevelopment Project, and the October 1, 2004, order of Commissioner Bradley M. Campbell (Campbell) of the New Jersey Department of Environmental Protection (NJDEP), adopting and revising the hearing officers' report and recommendations regarding the proposed Xanadu Redevelopment Project. Because we find both NJMC and NJDEP fulfilled their statutory mandate to consult with NJSEA concerning the Xanadu Redevelopment Project, we affirm.

I. FACTS AND PROCEDURAL HISTORY

Before addressing the arguments of Hartz and Sierra on appeal, it is necessary to set forth some of the pertinent facts and procedural history related to this matter. In 1971, the Legislature established in the Department of Community Affairs, a public body corporate and politic, to be known as the "New Jersey Sports and Exposition Authority." N.J.S.A. 5:10-4.

The Legislature found that the general welfare, health, and prosperity of the people of New Jersey would be promoted by the holding of athletic contests, spectator sporting events, trade shows, and other expositions in the State. N.J.S.A. 5:10-2.

It further found that the location of a sports and exposition complex in the Hackensack Meadowlands would stimulate needed development in the Meadowlands. Ibid. Therefore, it created NJSEA to provide for the establishment and operation of facilities to hold spectator sports, exhibitions, and other public events and uses in the Hackensack Meadowlands. Ibid. Among its powers, NJSEA was authorized

[t]o determine the location, type and character of a project or any part thereof and all other matters in connection with all or any part of a project, notwithstanding any land use plan, zoning regulation, building code or similar regulation heretofore or hereafter adopted by the State, any municipality, county, public body politic and corporate, including but not limited to the Meadowlands Commission, or any other political subdivision of the State . . . and further excepted that the [NJSEA] shall consult with the [NJMC] before making any determination as to the location, type and character of any project under the jurisdiction of the [NJMC] . . . . [N.J.S.A. 5:10-5(x) (emphasis added).]

The legislative history of the New Jersey Sports and Exposition Authority Law, N.J.S.A. 5:10-1 to -38, indicates that while NJSEA was exempt from certain development regulations as set forth in N.J.S.A. 5:10-5(x), the Legislature wanted to provide a mechanism for review of the environmental impact of an NJSEA project before it was actually undertaken. See N.J. Sports & Exposition Auth. v. McCrane, 61 N.J. 1, 31-32, appeal dismissed sub nom., E. Rutherford v. N.J. Sports & Exposition Auth., 409 U.S. 943, 93 S.Ct. 270, 34 L.Ed. 2d 215 (1972). Accordingly, it enacted N.J.S.A. 5:10-23, which provides that [i]t is the express intent of the Legislature that [NJSEA] in undertaking the meadowlands complex shall consult with the [NJMC] and [NJDEP] with respect to the ecological factors constituting the environment of the Hackensack meadowlands to the end that the delicate environmental balance of the Hackensack meadowlands may be maintained and preserved.

N.J.S.A. 5:10-5(x) and N.J.S.A. 5:10-23, therefore, require that before a project is undertaken by NJSEA, it must consult with the NJMC concerning the location, type, and character of the project, and it must consult with the NJMC and NJDEP with respect to any ecological impact to the Hackensack Meadowlands which may emanate from a proposed project.

In 1972, the Supreme Court addressed the statutory requirement that NJSEA consult with NJMC and NJDEP regarding its projects. McCrane, supra, 61 N.J. at 32. The Court found that an obligation has been imposed upon the [NJSEA] to present its proposal for site location to the [NJMC] and the [NJDEP], and seek their opinion that in using such site the "delicate environmental balance of the Hackensack meadowlands may be maintained and preserved." This presentation should be made after public notice of the time and place thereof, and actual notice to the parties in the present action. At such time the [NJSEA] and all interested persons should be permitted to present their views on the subject. Although [N.J.S.A. 5:10-23] speaks of the [NJMC] and the [NJDEP], we see no reason why the presentation could not be made to both agencies at the same time.

In our view the full record should be and can be made expeditiously at that time, to the end if any further review is sought it may be heard and disposed of upon that record. [Id. at 32-33.]

The Court found that informal conferences among the agencies would not satisfy the purpose of the statute. Id. at 33. The Court noted that the selection and approval of the complex site was a broadly discretionary matter and that a court would not interfere with the decision "unless it is palpably arbitrary." Ibid.

Following the Court's decision, the NJMC and NJDEP announced joint public hearings with respect to NJSEA's proposal to build Giants Stadium and the Meadowlands Racetrack. NJSEA's proposal was filed together with an environmental impact statement prior to the agencies' joint hearing. The hearings were conducted pursuant to the rules and procedures of the Administrative Procedures Act, N.J.S.A. 52:14B-1 to -24. Following the joint hearings, both the NJMC and the NJDEP adopted the 1972 hearing officers' report, which confirmed the selection of the site in question, but made numerous recommendations for changes to the project, primarily concerning environmental issues.

The Supreme Court then reviewed the matter again. In re Sports Complex Hackensack Meadowlands (In re Sports Complex), 62 N.J. 248, cert. denied, N.J. Citizens for Clean Air, Inc. v. N.J. Sports & Exposition Auth., 414 U.S. 989, 94 S.Ct. 291, 38 L.Ed. 2d 228 (1973). The Court reviewed the record of the hearing and noted that "the kind of hearing we suggested was held, and that all interested parties had a fair opportunity to present their views." Id. at 253. The Court went on to note that the decision approving the site's selection and proposed use "from the point of view of maintaining and preserving the delicate environmental balance of the Hackensack meadowlands has not been shown to be arbitrary." Ibid. The Court explicitly recognized that the consultation directed by the statute "was not itself a quasi-judicial process," rather it was a "quasi-legislative decision of the agencies." Id. at 252. The Court explicitly found that on "judicial review [of the agencies' decision], the attacking parties of course have the conventional burden of demonstrating, not that the agencies' action was merely erroneous, but that it was arbitrary." Ibid. The Court concluded that the hearing was satisfactory and that the parties were afforded due process. Id. at 253.

In 1978, NJSEA proposed what became known for a time as the Continental Arena. The NJMC and NJDEP conducted Section 23 and 5(x) proceedings as required by statute. A hearing officers' report was prepared following a hearing that was held jointly by NJMC and NJDEP. The 1978 hearing permitted any parties represented by counsel to cross-examine witnesses offered by NJSEA, and the hearing proceeded as a quasi-legislative hearing without any cross-examination of other witnesses. Following the 1978 hearing officers' report, specific recommendations were made and the Continental Arena proceeded to be constructed.

On June 28, 2002, NJSEA issued a public request for proposals seeking a master developer for "Redevelopment of the Continental Airlines Arena Site." As described in the introduction of the request, NJSEA was seeking to develop the approximately 104 acre arena site east of Route 21 by "creating a multi-use destination at the Arena site that capitalizes on existing uses at the Meadowlands and expands the product mix in a manner that is complementary to those uses, without materially competing with existing businesses in the Meadowlands district." There were a number of proposals submitted. Hartz submitted a proposal, as did The Mills Corporation and Mack-Cali Realty Corporation (collectively Mills). On February 12, 2003, NJSEA's Board adopted a resolution which authorized negotiations to commence regarding a development agreement with Mills for the development of Meadowlands Xanadu at the Continental Airlines Arena site.*fn2

As required by N.J.S.A. 5:10-23, NJSEA presented its Xanadu project redevelopment plans to NJDEP and NJMC in a public forum before hearing officers for the two agencies. NJDEP's Chief of Staff, Gary Sondermeyer, and the NJMC's Executive Director, Robert Ceberio (Ceberio), served as the consultation process hearing officers, with retired Judge Alvin Weiss serving as the presiding officer during the public hearings portion of the consultation process.

The hearing officers initially held a "scoping hearing" on March 3, 2004, to provide draft materials and accept public testimony regarding the proposed scope of an Environmental Impact Statement (EIS) that was needed for the consultation.

NJSEA presented an almost 3000 page preliminary EIS for public review in April 2004. It was this document that the interested parties were to comment upon during the April 2004 public hearings.

With only minor variations between them, the preliminary and final EIS, submitted in August 2004, both set forth a general description of the planned Xanadu project. Xanadu was planned as a "unique, visually compelling mixed-use development . . . that would provide a year-round venue of new and complementary uses at the Meadowlands Sports Complex." Xanadu aimed to provide "a multi-use attraction with diverse components of sports and entertainment, retail, select restaurants, hotel with conference facilities, and Class A offices that complement and enhance the NJSEA's existing Meadowlands attractions." The final EIS further provided:

Meadowlands Xanadu consists primarily of Entertainment/Retail, Office, and Hotel uses, with an emphasis on participatory sports and recreation venues. The Project components total approximately 4.96 million square feet of gross buildable area, with a total construction cost of over $1.3 billion.

The Entertainment/Retail component of the Project totals approximately 2.7 million square feet of gross buildable area, of which, 1.5 million square feet are related to participatory sports, entertainment, children's education and home-and-life activities, 700,000 square feet are related to fashion activities and the remaining 500,000 square feet are related to common space. The Entertainment/Retail Center is proposed to include several participatory sporting and recreational venues such as: the nation's first indoor alpine skiing facility with real snow, chair lifts, and lodge; an indoor wave machine for surfing; indoor-outdoor golf; outdoor-type fishing and archery classes; and an indoor mini-Formula One race track. An extreme wheel sports (BMX biking, skateboarding, and inline skating) skate park is also proposed, which will have a 2,000 - 2,500 seating capacity along with live television broadcasts. In addition, there will be an outdoor ferris wheel and roller coaster as part of the Entertainment/Retail Center. A Children's Education area will provide a variety of educational venues for children (and adults) of all ages. The Fashion area will include a related luxury spa, salon services, retailers, a cooking school, and fashion shows. A 6,000 - 8,000 seat stadium is also proposed to serve outdoor sports venues such as the Bergen Cliff Hawks minor league baseball team, the Bergen River Dogs professional lacrosse team, various Little League tournaments and Special Olympics events.

The Office component will consist of four office buildings (440,000 SF each) providing high-rise Class A space totaling 1.76 million square feet of gross buildable area.

The office buildings have been paired together, with each set of two buildings sharing common parking. The Hotel component will consist of a first-class hotel with 520 rooms and conference facilities, totaling 500,000 square feet. Minor improvements and extensions to existing sanitary sewers and water mains are proposed. Also as part of the Project, the Developer proposes to convey the Empire Tract, a 587-acre open space wetland area located just north of the Arena Site, to a State-designated entity.

The EIS also set forth off-site transportation improvements envisioned for the project including: realigning the entrance and exit ramps from northbound Route 120, and the ramp from Paterson Plank Road, accommodating a new parking deck for Xanadu; adding a new flyover ramp from the Route 3 service road to a new service road along northbound Route 120, widening southbound Route 120 to four lanes and adding a second lane to the ramp from there onto westbound Route 3, and re-striping the two-lane ramp from southbound Route 120 as it merges onto eastbound Route 3 to improve traffic flow on the ramp. The EIS referenced a "detailed Event Parking and Traffic Management Plan" that was "currently being developed by NJSEA and the Developer."

The EIS described four phases of construction. Phase I, projected for 2004-2005, involved constructing 1675 parking spaces, filling undeveloped areas, including 7.69 acres of wetlands, and modifying some of the existing interior road network and the ramp connections to Route 120. Phase II, projected for 2004-2006, involved constructing the "Entertainment/Retail Center," constructing parking decks for 6325 more parking spaces, relocating a portion of the interior roads, and "assuming favorable economic and marketing conditions," constructing a minor league baseball stadium. Phase III involved constructing the first office building and its 1125-space parking deck, the "Hotel component or portion thereof" and the associated office and hotel circulation roads.

Phase III and Phase IV, projected for 2006-2009, were to be constructed "based on an assumption of favorable economic and market conditions at that time." Phase IV involved constructing any part of the hotel component not completed during Phase III, and the second, third, and fourth office buildings with associated parking decks totaling 3375 parking spaces.

The EIS also listed the numerous regulatory reviews and approvals that would be needed for the Xanadu project. The EIS noted various contaminants associated with historic fill that were found on the Arena site, including some Polychlorinated Biphenyls (PCBs), benzyls (BNs), and metals at levels exceeding NJDEP's non-residential soil cleanup criteria. NJSEA asserted that no special wildlife habitat or threatened or endangered species habitat was identified on the site, except "the Black-crowned Night Heron (Nycticorax nycticorax), a state-listed endangered species for breeding populations only, that was observed on several occasions" in and near "Lagoon G (Lagoon No. 3)" in 2003. NJSEA proposed "[t]he preservation of an approximately 235-acre portion of the Empire Tract . . . as compensatory mitigation for the estimated 7.69 acres of wetlands" to be impacted by the Xanadu project, which would extend the amount of wetlands preservation by "an acreage ratio of approximately 30 to 1."

In the preliminary EIS, there is a review of the traffic issues arising from the project. The study was based upon a traffic impact study prepared for and submitted to the New Jersey Department of Transportation (NJDOT) as part of the major access permit and planning application. The report notes that it was prepared in accordance with current NJDOT regulations and criteria stated in the New Jersey State Highway Access Management Code, N.J.A.C. 16:47. The report goes on to note that, as part of the traffic impact study analysis, six locations were identified that required study under the NJDOT regulations. There were, however, an additional eighteen locations that did not require study under the regulations but were voluntarily studied by the developer to further examine potential traffic impact on the adjacent roadways. It appears from a map attached to the report that all twenty-four sites are within or near the vicinity of the arena site.

Public hearings on the preliminary EIS, as required by the Court in connection with a N.J.S.A. 5:10-23 consultation, took place over five days, from April 26 through April 30, 2004. Written public comments were accepted through May 31, 2004. After NJSEA submitted supplemental EIS information on June 1, 2004, the comment period was extended until July 9, 2004.

Numerous comments were submitted about various topics, including traffic and transportation, air quality, and stormwater issues.

In the final EIS submitted in August 2004, a stormwater management study was submitted. In addition, the final EIS contained updated information regarding traffic studies and air quality assessments. In its response to comments that the scope and geographic area of the traffic study was too small, NJSEA responded that it anticipated obtaining permits from NJDOT for access in order to construct the project. It advised that it would follow the guidelines set in the New Jersey State Highway Access Management Code in conducting studies regarding the scope and area of the traffic which needed to be studied. It noted that the traffic impact studies for those locations that were required to be studied by NJDOT met the NJDOT requirements. However, it went on to state that it had undertaken a study to examine the anticipated traffic route on regional roadways that provide access to the complex. NJSEA noted that a discussion regarding this additional ongoing study was contained in the final environmental impact statement.

The hearing officers prepared a report and recommendations dated August 19, 2004 ("the joint consultation report," sometimes also called "the section 23 report"). In NJMC and NJDEP's joint report, the agencies required compliance with the stormwater management rules recently adopted by NJDEP. It, therefore, provided that NJSEA had to revise and submit its stormwater management plan to NJDEP as part of the project's permanent application submission.

The agencies particularly pointed out that the traffic impact analysis did not address the impact on the regional road network. It, therefore, required a new traffic impact analysis, with a recommended minimum radius of four miles from the proposed project boundaries. It also recommended that there be a better breakdown of the amount of area associated with each type of use at the project in order to better estimate the traffic. The report also required corrections to the credits for pass-by trips contained in the traffic analysis.

The hearing officers also required that a revised air quality analysis be submitted to NJDEP. The hearing officers' report concluded the Meadowlands Xanadu Project may advance, provided the project complied with the numerous conditions contained in the report. The hearing officers required the submission of quarterly reports to NJDEP and NJMC to demonstrate compliance with the conditions set.

NJMC's Ceberio also separately served as a hearing officer regarding the review of the "location, type, and character" of development on the Meadowlands Sports Complex site, as part of NJSEA's required consultation process pursuant to N.J.S.A. 5:10-5(x). In that role, Ceberio issued another report, also dated August 19, 2004 ("the Commission's report," also called "the section 5(x) report").

According to both Hartz and Sierra, the joint consultation report and the Commission's report were not made available to the public until August 24, 2004. Two days later, at its August 26, 2004, meeting, NJMC approved its Resolution No. 04-60, adopting both the joint consultation report and the Commission's report.

On October 1, 2004, NJDEP Commissioner Campbell entered a four-page order "adopting and revising the Hearing Officers' Report and recommendations, while setting forth additional provisions to ensure compliance with, and enforcement of, the terms and requirements of the Report." Regarding compliance and enforcement, Campbell ordered and directed that the terms of the joint consultation report and of his order should be incorporated into a revised developers' agreement within sixty days of the order, unless the NJSEA and developer could show cause why that revision could not be completed.

On October 12, 2004, Hartz filed its notice of appeal from NJMC's Resolution No. 04-60 and from NJDEP Commissioner's October 1, 2004, order. On the same date, Sierra filed a notice of appeal from NJMC's Resolution No. 04-60; it later filed an amended notice of appeal to also appeal from NJDEP Commissioner's October 1, 2004, order. In January 2005, we entered an order consolidating these two appeals. Another appeal regarding these same issues, A-1001-04T1, had been filed by the Borough of Carlstadt and was consolidated with the present matters, but that appeal was dismissed by stipulation on May 10, 2006. Emergent applications were thereafter filed to stop construction activity; these all were denied.

In August 2005, Hartz filed a motion to supplement the record on appeal with an October 1, 2004, letter from the President of The Mills Corporation's Development Division, James F. Dausch (the Dausch letter). According to Hartz, the Dausch letter showed that the consultation hearing testimony by Mills' witnesses was "at best incomplete, more likely intentionally misleading, and now demonstrably false." By order filed on September 19, 2005, we granted Hartz's motion to supplement the appellate record with the Dausch letter and with other materials, leaving the parties free to argue whether those items were relevant to any issues on appeal.

II. POINTS OF APPEAL

On appeal, Sierra raises the following points for our ...


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