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Realty v. New Jersey Dep't of Environmental Protection


February 2, 2009


On appeal from the New Jersey Department of Environmental Protection, Docket No. 0267-05-0003.1 and FHA 05001.

Per curiam.


Argued November 19, 2008

Before Judges Parrillo, Lihotz and Messano.

Appellant ANM Realty (ANM) appeals from the August 3, 2007 decision of the Assistant Commissioner of the Department of Environmental Protection (DEP),*fn1 upholding the DEP's enforcement of stream encroachment regulations amended after ANM received site plan approval, but prior to the commencement of construction on its property abutting the Pascack Brook. ANM asserts the amended regulations were flawed and unenforceable. Therefore, DEP's attempted enforcement of the erroneous amendments exceeded the agency's jurisdictional power. ANM also argues the Commissioner's attempt to cure an error in the regulations, after the dispute was presented, constitutes ad hoc decision-making in violation of the Administrative Procedure Act. We disagree with ANM's positions and affirm.

ANM owns a 0.46-acre property in Westwood, which is adjacent to Pascack Brook. In July 2003, ANM submitted an application to Westwood's Zoning Board of Adjustment (Zoning Board) seeking site plan approval, a use variance and various bulk variances to tear down the existing structures and construct on its property a mixed-use office/residential building with parking. The Zoning Board adopted a resolution on January 5, 2004, memorializing its preliminary and final site plan approvals, variances, and waivers, conditioned on "approval from any other governmental agencies, if any" and compliance with "any and all State and Federal laws and applicable regulations."

The site plan included a proposal for construction of a 100-foot long, 17-foot high concrete retaining wall along Pascack Brook, set back more than twenty-five feet from the channel's bank, as required by the then Flood Hazard Area Control Rules, promulgated pursuant to the Flood Hazard Area Control Act, N.J.S.A. 58:16A-50 to 101, which regulated stream encroachment. Following ANM's commencement of construction of the retaining wall, DEP's Bureau of Land Use Compliance and Enforcement issued a field notice of violation. The DEP advised the surface water quality standards classification upgraded Pascack Brook to a Category One (C1) waterway, which required a stream encroachment permit and a buffer set-back of fifty feet. The notice specifically cited failure to construct the wall beyond fifty feet of the brook's bank, as required by N.J.A.C. 7:13-1.1.*fn2 The notice required ANM to submit to a jurisdictional determination. ANM objected to the application of the regulations, as they were adopted after its municipal approvals were issued. Moreover, ANM argued the flood hazard area control regulations applicable to its development do not require a permit.

The DEP administers surface water quality standards (SWQS) to protect the quality of the waters of the State pursuant to the Water Quality Planning Act, N.J.S.A. 58:11A-1 to -16; the Water Pollution Control Act, N.J.S.A. 58:10A-1 to -60; and in conformance with the requirements of the federal Water Pollution Control Act, 33 U.S.C.A. § 1251. In addition to preserving water quality, implemented stream encroachment rules protect the aquatic environs, including the unnecessary destruction of near-stream vegetation that anchors soil and filters pollutants from degrading water quality. The SWQS are found at N.J.A.C. 7:9B-1.1 to -1.15.

Additionally, the Flood Hazard Area Control Act Rules (flood hazard rules), N.J.A.C. 7:13-1.1 to -19.2, implement the Flood Hazard Area Control Act and set forth "requirements governing human disturbance to the land and vegetation" in the flood hazard area of protected waters. N.J.A.C. 7:13-1.1(a). The flood hazard rules include provisions governing development permits. N.J.A.C. 7:13-2.1. A common objective between the flood hazard rules and the SWQS is "to preserve the quality of surface waters, and to protect the wildlife and vegetation that exist within and depend upon such areas for sustenance and habitat." N.J.A.C. 7:13-1.1(c).

Pascack Brook is a feeder stream of the Oradell Reservoir.

In accordance with DEP's statewide "antidegradation policies," N.J.A.C. 7:9B-1.5, designed to improve and preserve water quality, New Jersey's bodies of water were classified based on major drainage basins.*fn3 Six tables were prepared in the SWQS, found at N.J.A.C. 7:9B-1.15(c) through (h). Pascack Brook is positioned in the Passaic River, Hackensack River and New York Harbor Complex drainage basins. N.J.A.C. 7:9B-1.15(e)(Table 3).

In 1995, SWQS classified the brook as "fresh-water, non-trout production" (FW2-NT). Ibid. For development adjacent to an FW2-NT water body, stream encroachment regulations required a permit for development within twenty-five feet "back from the top of the channel bank[.]" N.J.A.C. 7:13-1.3(a)(2).*fn4

In July 2003, when ANM filed its application to the Zoning Board, Pascack Brook was classified as FW2-NT. As required by this SWQS classification, ANM's site plan application stated a retaining wall would be built adjacent to the brook, more than twenty-five feet from the channel bank, without benefit of permit.

In November 2003, the DEP published proposed amendments to the SWQS "to upgrade the antidegradation designation for seven streams including both named and unnamed tributaries based upon 'exceptional ecological significance.'" 35 N.J.R. 4949(a), 4957-58 (Nov. 3, 2003). Included in the reclassification was the Oradell Reservoir, which was upgraded to protect its "exceptional water supply significance." Ibid. Pascack Brook's classification was changed to freshwater, non-trout production, category one, FW2-NT(C1). N.J.A.C. 7:9B-1.15(e).

The proposed amendment to the SWQS referenced the definition of "Category One waters" at N.J.A.C. 7:9B-1.4 as those waters designated in the tables at N.J.A.C. 7:9B-1.15(c) through (h), for purposes of implementing the antidegradation policies set forth at N.J.A.C. 7:9B-1.5(d), for protection from measurable changes in water quality characteristics because of their clarity, color, scenic setting, other characteristics of aesthetic value, exceptional ecological significance, exceptional recreational significance, exceptional water supply significance or exceptional fisheries resource(s).

[35 N.J.R. 4949(a) (Nov. 3, 2003).]

Adoption of the proposed amended regulations occurred on July 10, 2004, to take effect on August 2, 2004. 36 N.J.R. 5365 (Dec. 6, 2004).

ANM formally commenced construction of its development in January and February 2005. It reviewed the then published flood hazard rules. In the definition section, contained at N.J.A.C. 7:13-1.2, "Category One waters" were defined as "those waters designated in the tables in N.J.A.C. 7:9B-4.15(c) through (h) for the purposes of implementing the Antidegradation Policies in N.J.A.C. 7:9B-4." (Emphasis added.) Finding no regulations to correspond with N.J.A.C. 7:9B-4, ANM concluded no further obligations were imposed. ANM commenced removal of a tree and shore vegetation and built the retaining wall. In May, the structures located on the property were demolished. Then, Westwood's Construction Code official issued a construction permit for the footings and foundation of the new building.

Thereafter, as a result of neighbor complaints, the DEP inspected the site. The DEP determined it had jurisdiction over the development, cited ANM for violation of the stream encroachment rules, and required ANM to cease construction until it applied for a stream encroachment permit for removal of vegetation and construction within fifty feet of the brook's bank. ANM challenged the alleged violation and the DEP's asserted jurisdiction, both of which were ultimately affirmed by the Commissioner.

On appeal, ANM maintains no permits are required for its project and the DEP has no jurisdiction. Nevertheless, without prejudice to its appeal, it submitted a subsequent stream encroachment permit request, which included provision of numerous plantings to allay environmental and aesthetic concerns posed by the concrete retaining wall, and to boost the brook bank vegetation (the "Babylon Gardens" proposal). We were advised the permit request was denied by the Assistant Commissioner on January 8, 2009.*fn5

ANM does not challenge the procedures employed by the DEP in proposing and adopting the amendments to the SWQS. Also, it does not dispute Pascack Brook is classified as a C1 water body under the revised regulations, effective August 2, 2004. Instead, ANM's challenge focuses on a conflict in the flood hazard rules regarding development permit requirements. Specifically, N.J.A.C. 7:13-1.2 defined a C1 water body as stated in the classification tables found at "N.J.A.C. 7:9B- 4.15(a) to (h)" (emphasis added). To be clear, there were no regulations promulgated at N.J.A.C. 7:9B-4.15 or subsection 9B-4. The error occurred at initial publication in 1994, 26 N.J.R. 1009 (Feb. 22 1994) and was thereafter perpetuated, see e.g., 27 N.J.R. 1211 (Mar. 20, 1995), until recently.*fn6 The classification tables designating C1 water bodies are only found in the SWQS at N.J.A.C. 7:9B-1.15(c) through (h). ANM suggests that since there is no definition of C1 waters in the flood hazard rules (as the reference was to a non-existent regulation), then the DEP had no jurisdiction to regulate its development to require a stream encroachment permit. Moreover, the DEP could not retroactively correct the error. ANM argues the setback for development along the Pascack, pursuant to the flood hazard rules as published, was twenty-five feet because no waterways were explicitly classified as C1 waters. See N.J.A.C. 7:13-1.3(a)(3)(ii).*fn7

Agency regulations are presumed valid and are accorded a presumption of reasonableness. In re Petition of N.J. Am. Water Co., 169 N.J. 181, 188 (2001); N.J. State League of Municipalities v. Dep't of Cmty. Affairs, 158 N.J. 211, 222 (1999); Public Service Elec. & Gas Co. v. N.J. Dep't of Envtl. Prot., 101 N.J. 95, 103 (1985). Although we concede the vast breadth of regulation of New Jersey's waters may, at first blush, appear overwhelming, we are unpersuaded by the suggestion ANM was confused about the DEP's intention, when stating the flood hazard rules to cross-reference the SWQS tables and anti-degradation policies that define C1 waters.

The Chapters in Title 7 of the Administrative Code are devoted entirely to the DEP's comprehensive regulation of State waterways. Acceptance of ANM's argument requires the untenable finding that the DEP intended to categorize C1 water bodies one way for purposes of water quality at N.J.A.C. 7:9B-1.15, and another for flood hazard protection, also under Chapter 7:9B at section 4.15. The rules of statutory construction belie such an interpretation.

First, regulations should not be construed "in a manner that produces an absurd result or that renders a part of it meaningless." H.K. v. Div. of Med. Assistance & Health Servs., 379 N.J. Super. 321, 328 (App. Div.), certif. denied, 185 N.J. 393 (2005). Second, we must read regulatory schemes addressing the same subject, that is, protection of State bodies of water, in pari materia. See Essex County Welfare Bd. v. Klein, 149 N.J. Super. 241, 247 (App. Div. 1977) (administrative rules are subject to the same canons of construction as statutes); see also Saint Peter's Univ. Hosp. v. Lacy, 185 N.J. 1, 14-15 (2005) (statutes addressing the same subject matter should be read in pari materia). When the regulations of Title 7 are read as a comprehensive scheme to protect against the degradation of the State's waters, ANM's argument must be rejected.

The flood hazard regulations state an intent to reference existing classification tables, not those to be created. 27 N.J.R. 1219 (emphasis added). Moreover, ANM does not deny its search for regulations at subsection 4 of Chapter 9B turned up empty. Even now, no subsection 4 exists, as Chapter 9B of Title 7 starts at section 1.1 and ends at section 1.15.

The disingenuous nature of ANM's argument, suggesting the DEP deliberately intended to adopt new classification tables, is further highlighted by the fact that ANM's search for a definition of C1 waters within the antidegradation policies expressed in Title 7:9B should have easily ended with the designated definition section, N.J.A.C. 7:9B-1.4. ANM knew N.J.A.C. 7:13-1.2 discussed the definition of C1 waters and included a reference to certain classification tables. The listed definitions in N.J.A.C. 7:9B-1.4 include not only "C1," defined as "Category One waters," but also "Category One waters" meaning "those waters designated in the tables in N.J.A.C. 7:9B-1.15(c) through (h), . . . " -- a clear cite to the existing classification tables.

In a related argument, ANM suggests the regulatory history of the flood hazard rules proves the use of N.J.A.C. 7:9B-4.15 was not a typographical error as advanced by the DEP, but purposeful, and the DEP cannot modify the unclear regulations without complying with rulemaking procedures. We also reject this contention.

The Legislature expressed its concern that the exceptional characteristics of C1 waters required the State's special protection. In re Stormwater Mgmt. Rules, 384 N.J. Super. 451, 458 (App. Div.), certif. denied, 188 N.J. 489 (2006). The DEP, designated as the regulatory agency charged with safeguarding waterways, Society for Envtl. Econ. Dev. v. N.J. Dep't of Envtl. Prot., 208 N.J. Super. 1, 8 (App. Div. 1985), was expressly given in a variety of legislative measures, "a wide array of power to address water quality and pollution concerns beyond traditional floodwater control, and to promulgate rules to protect the waters of this State." In re Stormwater Mgmt. Rules, supra, 384 N.J. Super. at 462.

As evidenced by the 1995 reported comments and agency responses at the time of adoption of the codified flood hazard rules when delineating the need for stream encroachment permits, the DEP intended to apply the definition of C1 waters referenced at N.J.A.C. 7:13-1.2, by incorporating the SWQS classification tables found in N.J.A.C. 7:9B-1.15.*fn8 As newly advanced by ANM, nothing suggests the reference to N.J.A.C. 7:9B-4.15 signifies an intent to prepare and adopt a different set of water body classification tables. See 27 N.J.R. at 390, 1217 and 1219 (Mar. 20, 1995). It was an error.

Further, the certification of Richard C. Reilly, DEP Manager of the Bureau of Inland Regulation, Division of Land Use Regulation, explained the agency's past policy and practice of using only the water classification tables found at N.J.A.C. 7:9B-1.15, when enforcing the stream encroachment rules. Also, amendments to the stream encroachment regulations proposed on October 2, 2006, reiterated the DEP's existing policy: "[a] 50-foot buffer is currently established along Category One waters. . . ." 38 N.J.R. 3971 (Oct. 2, 2006). This remains the definition.

We recognize rulemaking allows an "agency to further the policy goals of legislation by developing coherent and rational codes of conduct 'so those concerned may know in advance all the rules of the game, so to speak, and may act with reasonable assurance.'" General Assembly of N.J. v. Byrne, 90 N.J. 376, 385-386 (1982) (citing Boller Beverages, Inc. v. Davis, 38 N.J. 138, 152 (1962)). Following our review, we concluded the reference to N.J.A.C. 7:9B-4.15 was easily understood as an error, clearly discernable by a review of the provisions of N.J.A.C. 7:9B. See In re Review of Admin. Promulgation of Health Care Admin. Bd., 83 N.J. 67, 82-83, appeal dismissed and cert. denied, 449 U.S. 944, 101 S.Ct. 342, 66 L.Ed. 2d 208 (1980) (regulations must only be sufficiently definite to inform those subject to them as to what is required).

The Pascack Brook was designated as a C1 water body on August 2, 2004. ANM's construction did not commence until January 2005. The DEP has jurisdiction to monitor ANM's development, construction, and vegetation removal within fifty feet of the banks of the Pascack Brook. We concur with the Commissioner's finding that the DEP validly exercised jurisdiction in this instance of waterway encroachment.

Finally, we find no merit in the contention that the date of issuance of municipal land use approvals dictates the applicable DEP permits. ANM's municipal approvals did not create a protected right against the DEP's regulatory changes.

M. Alfieri Co. v. State Dep't of Envtl. Prot. & Energy, 269 N.J. Super. 545, 561-62 (App. Div. 1994), aff'd, 138 N.J. 642 (1995). By the express terms of the Zoning Board's site plan approval, ANM's project was not shielded or exempted from having to comply with all other state laws, which included subsequent changes in the SWQS classifying Pascack Brook as C1 waters, triggering the fifty-foot-buffer requirements in N.J.A.C. 7:13-1.3(a)(3)(ii) and -3.2(a).

Additionally, the stream encroachment rules made it clear municipal development approvals were separate and distinct from stream encroachment permits. N.J.A.C. 7:13-5.1(b) stated:

In cases where the Department has not delegated authority under N.J.A.C. 7:13-5.3, no local agency or employee thereof shall grant any application for development as defined in the "Municipal Land Use Law" (N.J.S.A. 40:55D-1 et seq.) for an activity regulated under this chapter until an application for a permit under this chapter has been approved by the Department. The Department will consider this provision satisfied if the local approval is conditioned upon obtaining a permit under this chapter.

[27 N.J.R. at 1264 (Mar. 20, 1995).]

The January 5, 2004 resolution approving ANM's site plan preceded the August 2, 2004 reclassification of Pascack Brook. However, construction did not commence until January 2005, almost one year later. It is this date that governs the scope of necessary regulatory compliance.

As to the contention the development should be grandfathered, we note a grandfathering clause was included when the flood hazard rules were originally adopted. The clause stated the new rules were inapplicable to "land uses existing prior to March 20, 1995, which were in conformance with all relevant laws and regulations when the use commenced[.]"

N.J.A.C. 7:13-2.2(b)(1). This would include developments approved prior to the effective date of the proposed rules. ANM's development does not fall within the allowed parameters.

We reject ANM's remaining arguments, which we need not address. R. 2:11-3(e)(1)(E).


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