On appeal from the New Jersey Department of Environmental Protection.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Lisa, Baxter and Alvarez.
Appellant, Toll Brothers, Inc., accuses the Department of Environmental Protection (DEP) of inaction by not timely processing its 2005 application for a site-specific water-quality-management-plan amendment to add appellant's proposed development to the applicable sewer service area, which would assist Pohatcong in meeting its affordable housing obligations. Appellant also claims that DEP improperly conducted de facto rulemaking by applying a new full-build-out policy to the sewer service area, which required available capacity to include an allocation for all undeveloped land within the sewer service area. Appellant asks this court to invalidate DEP's policy and issue a writ of mandamus directing DEP to deem appellant's 2005 application complete and then review it by applying the regulations in force at the time of submission.
Synthesizing and summarizing the arguments raised in appellant's five point headings, its arguments are: (1) DEP's inaction in processing its amendment application constituted final agency action, entitling appellant to a writ of mandamus; (2) DEP's March 2008 letter setting forth a new full-build-out policy for sewer service areas constituted final agency action and that policy is unconstitutional, ultra vires, or resulted in DEP's disparate treatment of appellant's amendment application; and (3) DEP should process appellant's amendment application using regulations in effect at the time of original submission (2005).
We reject the first two arguments. We conclude that appellant has not exhausted its administrative remedies and we accordingly remand the matter to DEP. We find the third argument premature and decline to address it.
Appellant proposed constructing a 313-unit age-restricted housing development on eighty-four undeveloped acres, identified as Block 95, Lots 2 and 2.06, on the tax map of the Township of Pohatcong, Warren County. The project, named "Regency at Pohatcong," would contain no affordable housing units; rather, appellant would help fund Pohatcong's fair share housing obligations "in lieu of actually constructing affordable housing units."
Appellant estimated the project's total wastewater flow as 62,720 gallons per day (gpd). Thus, before construction could begin, appellant needed a Treatment Works Approval (TWA) from DEP pursuant to the Water Pollution Control Act, N.J.S.A. 58:10A-1 to -20, to extend the municipal sewer lines to the site. N.J.A.C. 7:14A-22.3(a).
However, the site, which is on the border of the Borough of Alpha directly to the east and south, with Interstate 78 directly to the west, is outside the boundaries of the sewer service area for the Phillipsburg Sewage Treatment Plant (Phillipsburg plant), a 3.5-million-gallon-per-day (MGD) multi-municipal wastewater treatment plant that serves Pohatcong, Alpha, Lopatcong Township, Greenwich Township, and the Town of Phillipsburg. Pohatcong, which had no plant of its own, had contracted a sewer capacity allocation of 540,000 gpd of the total permitted flow at the Phillipsburg plant. Thus, before getting a TWA, appellant needed to (1) reserve capacity at the Phillipsburg plant for the project's total estimated flow, (2) place the site into the plant's sewer service area by amending Pohatcong's wastewater management plan and Phillipsburg's multi-municipal wastewater management plan (which included Pohatcong's plan), and (3) submit an application for DEP's approval of a corresponding site-specific amendment to the regional Upper Delaware Water Quality Management Plan, pursuant to the Water Quality Planning Act (Act), N.J.S.A. 58:11A-1 to -16, and DEP's regulations at N.J.A.C. 7:15.
Under the Act, which was enacted in 1977, DEP is charged with: (1) implementing a continuing planning process to supervise areawide water quality planning; (2) incorporating regional water quality management plans (WQMPs) into a statewide plan; and (3) coordinating WQMPs with federal, state and local land use and planning activities. N.J.S.A. 58:11A-2. The Act calls for the development of DEP-approved areawide wastewater management plans (WMPs) that are based on "county boundaries" and "consistent with the Statewide continuing planning process."
N.J.S.A. 58:11A-4, -5. In accordance with N.J.S.A. 58:11A-5, these WMPs must, among other things, (1) identify "treatment works necessary to meet the anticipated municipal and industrial waste treatment needs of the area over a twenty-year period"; (2) be "annually updated"; and (3) regulate "the location, modification, and construction of any facilities" within the area which may result in any discharge. "All projects and activities affecting water quality in any planning area shall be developed and conducted in a manner consistent with the adopted areawide plan." N.J.S.A. 58:11A-10.
In January 2000, Governor Whitman issued Executive Order #109, requiring DEP, until it "repealed and replaced" its existing WQMP regulations, to determine "what, if any, alternative analyses must be conducted prior to [its] making a final decision on an application for approval of a [WMP]... amendment... including, but not limited to, an evaluation of depletive and consumptive water use, detailed land use, environmental build-out and pollutant loading."
By 2002, DEP was concerned that the Phillipsburg plant was "reaching its design capacity." Also, the Phillipsburg WMP, which identified the plant's sewer service area, had not been updated since March 1988. DEP organized meetings with Phillipsburg and the other four municipalities to update the multi-municipal WMP. As we will discuss, this work was continuing in 2007.
Meanwhile, the Law Division issued an order in 2002 giving EAI Investments (EAI), a developer whose proposed project was adjacent to appellant's site, priority as to Pohatcong's allocation of contracted capacity at the Phillipsburg plant. EAI Invs., LLC v. Twp. of Pohatcong (EAI), Docket Nos. HNT-L-507-90, HNT-L-1244-01, HNT-L-625-04. Although Phillipsburg, Pohatcong and EAI signed an agreement reserving sewer allocation for EAI's project "to the exclusion of all other connectors," and amending the Pohatcong and Phillipsburg WMPs to include the project within the sewer service area, the court retained jurisdiction to enforce that agreement. Accordingly, Pohatcong applied to DEP in 2003 for a site-specific amendment to Phillipsburg's WMP and to the Upper Delaware WQMP to expand the plant's sewer service area to include EAI's project.
In January 2004, appellant secured a reservation of 62,720 gpd at the Phillipsburg plant for its project's full estimated flow. Specifically, it had reserved: (1) Pohatcong's extra allocation unused for EAI's project (18,000 gpd), plus an additional capacity promised by Pohatcong for the duration of appellant's preliminary approval process (10,220 gpd); and (2) an assignment of capacity from Alpha (34,500 gpd). In fact, Pohatcong fully supported appellant's project, agreeing to endorse any future WMP and WQMP amendment applications and all other permit applications, to amend the site's zoning regulation, and to complete a review of preliminary and final site plan applications regardless of whether DEP had approved the WQMP/WMP amendments.
In August 2004, Pohatcong (and appellant's site) became subject to the Highlands Water Protection and Planning Act, N.J.S.A. 13:20-1 to -35 (Highlands Act). The Highlands Act required the Highlands Water Protection and Planning Council "[t]o adopt a regional master plan [(RMP)] for the Highlands Region." N.J.S.A. 13:20-6i. The RMP would limit or prohibit development in "the preservation area" while encouraging development in the planning area that conformed to the RMP. N.J.S.A. 13:20-10. Pohatcong is located in both the preservation and planning areas. N.J.S.A. 13:20-7a(7).
Nevertheless, because appellant had reserved sufficient capacity at the Phillipsburg plant, it stated by cover letter to DEP dated January 25, 2005, with copies to Phillipsburg, Alpha, and Pohatcong, that it was submitting "six copies of an application for a [WQMP] Amendment" to add its project site to the Phillipsburg plant's sewer service area. According to that letter, appellant attached a "Completed Pre-Application Form," site utility plans, the agreements showing that appellant had reserved sufficient capacity from Pohatcong and Alpha for all of its project's estimated wastewater flow, and various maps showing the location of the project, surface water classifications, existing land use and land cover, the Highlands Planning and Preservation Area, and the Phillipsburg service area.
However, although appellant's cover letter used the word "Amendment," the preprinted DEP form that appellant actually submitted was entitled, "New Jersey Department of Environmental Protection, Water Quality Management Plan Amendment & Revision, Pre-Application Form." At the top of that form's first page were three alternatives and appellant "checked" only the first one:
~ This is a request for a Pre-Application meeting; three copies of the request are attached.
~ This submittal is part of a complete Amendment application, six copies (or other number as directed at the pre-application meeting) of the request are attached.
~ This submittal is part of a complete Revision application, six copies (or other number as directed at the pre-application meeting) of the request are attached. [Emphasis added.]
According to the form, appellant was requesting an "Expansion" of the sewer service area by eighty-four acres and by increasing the wastewater flow to the plant.
Meanwhile, in July 2005, another developer, Alpha 519, submitted to DEP its own site-specific amendment to the Upper Delaware WQMP, proposing to place its entire property in the Phillipsburg sewer service area. DEP refused to process the application, Alpha 519 sued, and the Law Division ordered in September 2005 that (1) Phillipsburg submit an updated multi-municipal WMP to DEP for approval within six months, and (2) DEP review all applications for changes to the Phillipsburg WMP for projects, like appellant's, not currently in the sewer service area. Alpha 519, LLC v. Borough of Alpha, Docket Nos. HNT-L-209-01 and SOM-L-623-04 (Alpha).
During the summer of 2005, appellant and DEP exchanged various emails, which never specifically referred to a "pre-application." For example, appellant asked DEP "for a meeting... to discuss [its] site-specific WMP/WQMP amendment application." In response, DEP agreed to schedule a "meeting at the earliest date possible to discuss this amendment application."
On October 11, 2005, DEP met with appellant. DEP later described this meeting in an April 2008 letter to appellant.
According to that letter, DEP had expressed concerns at the meeting that Pohatcong would not have enough available sewer capacity to accommodate appellant's project, especially since Pohatcong was obligated to give EAI priority to any of its available capacity, and had told appellant that agency action on the EAI project needed to be finalized before it could evaluate appellant's application. The letter stated that "[t]his guidance was reaffirmed by [DEP] at meetings [with appellant] on November 29, 2005 and October 30, 2007."
In December 2005 and August 2006, respectively, appellant received a freshwater wetlands general permit and stream encroachment permit for its project.
However, in April 2007, Pohatcong denied appellant's formal application for sewer allocation. Although it still agreed to reserve the promised 28,220 gpd for the project, Pohatcong declared "[a] formal allocation of capacity to a property that is not yet within a designated sewer service area is not within the discretion of the [Township] Council to undertake," and it made its reservation contingent upon DEP's approval of a WMP amendment. "The Township shall reserve the right to modify or revoke the reservation should the same become necessary in order to comply with any requirement imposed by [DEP] with respect to the reservation of capacity for the existing sewer service area."
Pohatcong further noted that appellant had not "submitted the requisite application fee such as to make [its allocation] application complete." "If and when [appellant] is successful in processing its site specific [WMP] amendment, the Township will require that [appellant] resubmit a formal application for allocation and pay the requisite application fee."
In May 2007, DEP proposed far-reaching changes to N.J.A.C. 7:15, which were adopted as amendments, repeals and new rules on July 7, 2008. 40 N.J.R. 4000(a) (July 7, 2008) (adoption); 39 N.J.R. 1870(a) (May 21, 2007) (proposal).
In October 2007, DEP informed Phillipsburg that it was "no longer process[ing]" any plan amendments for the Phillipsburg plant, because N.J.A.C. 7:15-5.1(a) currently prohibited its authorizing substantive amendments to WMPs that were not otherwise in compliance with DEP's WQM planning regulations, and the Phillipsburg, Pohatcong, Lopatcong, Greenwich and Alpha individual WMPs were out of compliance with N.J.A.C. 7:15-5.23, which required a WMP update every six years.
In November 2007, Phillipsburg submitted a proposed multi-municipal WMP to DEP for approval and incorporation into the Upper Delaware WQMP. Specifically referring to Pohatcong, the WMP proposed a "major expansion of [the] existing sewer service area of the Phillipsburg [plant] to include... [appellant's project]."
On January 21, 2008, appellant sent DEP a revised form entitled, "New Jersey Department of Environmental Protection Water Quality Management Plan Amendment & Revision Pre-Application Form" with the second pre-printed alternative "checked," which read, "This submittal is part of a complete Amendment application, six copies (or other number as directed at the pre-application meeting) of the request are attached." Appellant's cover letter explained that it was enclosing a copy of a revised WQMP Amendment Pre-Application Form,... which is to be included as part of Toll's WQMP Amendment that was submitted to the Department in January 2005.
Although the Pre-Application Form that was submitted with the original WQMP Amendment requested a Pre-Application meeting, that form was just one aspect of Toll's complete Amendment application package.
Appellant submitted no other documents, relying on the six copies of the package that it ...