July 2, 2010
TOLL BROTHERS, INC., APPELLANT,
NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION, RESPONDENT.
On appeal from the New Jersey Department of Environmental Protection.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued April 26, 2010
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 had filed in January 2005.
Also in its cover letter, appellant reminded DEP that:
(1) Pohatcong "supports the Regency project and that there is no scarce resources [order] in effect constraining development in Pohatcong"; and (2) DEP had stated at their October 2005 meeting that "there were 'no environmental issues' for the DEP to review and, specifically, that no EO 109 analysis was required." Thus, "there [was] no reason that Toll's pending WQMP Amendment should not be declared complete for notice to be published in the New Jersey Register."
At its township meeting in February 2008, Pohatcong granted appellant's project preliminary subdivision approval.
On March 20, 2008, a Deputy Attorney General (DAG), on behalf of DEP, sent a letter to the judge in the EAI litigation, announcing that DEP was not going to approve either EAI's inclusion in the Phillipsburg plant's sewer service area or Phillipsburg's proposed multi-municipal WMP without a concurrent reduction in the sewer service area allocated to Pohatcong or a commitment of additional available flow to Pohatcong from the other municipalities. That is, Pohatcong's allocation of sewer capacity at the Phillipsburg plant (540,000 gpd), which included its current usage plus a full build-out capacity to serve those undeveloped properties already within its sewer service area, was insufficient to also include the flow from EAI's project. Therefore, DEP would only approve EAI's project if Pohatcong downzoned some of the undeveloped properties, purchased excess sewer capacity from any of the other four municipalities, or proved that the Phillipsburg plant could be expanded.
Specifically, DEP explained:
[I]t is a basic tenant [sic] of the water quality planning process that actual, committed and projected flows from the sewer service area must match existing capacity at the wastewater treatment facility. Further, if there is a proposal to increase flows to the treatment facility, necessary studies must demonstrate that permits to expand capacity at the treatment facility can be issued. The proposed Phillipsburg WMP does not do this.
... Instead of planning based upon the current treatment capacity of 3.5 MGD at the Phillipsburg plant, the WMP assumes a sewerage treatment capacity of 5.1 MGD at the Phillipsburg plant based upon the assumption that the Phillipsburg plant will be expanded at some point in the future. The WMP also depicts an expansion of the sewer service area in its region. However, Phillipsburg has presented no studies that demonstrate that such an expansion of the plant is possible or can be permitted by the appropriate regulatory authorities, including the Delaware River Basin Commission.
This approach impacts Pohatcong's portion of the WMP. Under the current allocation agreement with Phillipsburg, Pohatcong has been allocated flow in the amount of 540,000 gallons per day ("gpd") in the Phillipsburg plant. Currently, its actual and committed flow is 350,000 gpd. Based upon Pohatcong's build-out analysis of undeveloped tracts within the current sewer service area under current zoning, the additional flow from these tracts will be 160,000 gpd. Combining the actual and committed flow with the projected flow based on build-out, Pohatcong has already allocated 510,000 of its 540,000 gpd flow. The EAI project needs 120,950 gpd.
Therefore, in recognition of full-build out of the already existing and adopted Pohatcong sewer service area, the Phillipsburg plant cannot accommodate the additional flow from EAI under Pohatcong's current allocation.
Based upon the above, the Department cannot approve EAI's insertion into the sewer service area without a concurrent reduction in Pohatcong's sewer service area or commitment of additional available flow.
This could be done through a reduction in the sewer service area to free up capacity for the EAI project, through downzoning or through the purchase, by Pohatcong, of excess capacity from any of the other four municipalities within the Phillipsburg service area. Another alternative would be to wait to process the EAI site specific amendment until the necessary studies are conducted that show an expansion of the Phillipsburg plant can be permitted.
On April 2, 2008, DEP disapproved Phillipsburg's proposed multi-municipal WMP, because it was "based on a service area which exceeds the treatment plant's established capacity."
On April 3, 2008, appellant filed its notice of appeal with this court, challenging: (1) DEP's "unreasonable delay and inaction rising to the level of final agency action under R[ule] 2:2-3(a)(2) in failing to act upon or otherwise process [appellant]'s Application in the over three years that it has been before [DEP]"; (2) DEP's March 20, 2008, letter "announcing [DEP] policy that in calculating available sewer capacity it will include all undeveloped land within the existing sewer service area as having committed capacity, despite there being no regulatory basis for this full build-out analysis"; and (3) DEP's refusal, based on that policy, to "process [appellant]'s application... which has been pending before the NJDEP since January 2005," until Pohatcong "releases currently undeveloped land from its sewer service area."
On April 4, 2008, the judge in EAI ordered Pohatcong to adopt a resolution confirming its commitment to redraw its sewer service area by rezoning and eliminating specific sites in order to include EAI's project within its allocated capacity. Consequently, on April 15, 2008, Pohatcong adopted a resolution promising (1) to redraw its sewer service area to include EAI's project, and (2) to comply with DEP's proposed amendment to N.J.A.C. 7:15-5.25 as advertised in the May 21, 2007 New Jersey Register. Specifically, the Township shall employ build-out analysis of undeveloped areas within its proposed sewer service area and eliminate and/or re-zone, in whole or in part, undeveloped properties within its proposed sewer service area that are not currently connected to the public sewerage system such as to equalize potential waste-water generation with the Township's current contractual allocation from the Phillipsburg Sewerage Treatment Plant....
As previously noted, on April 15, 2008, DEP sent a letter to appellant describing their 2005 and 2007 meetings. In that letter, DEP also acknowledged its receipt of "another copy" of appellant's "January 2005 Pre-Application Request." DEP's letter continued:
In the course of discussion with [DEP], [appellant has] recently indicated that the previously submitted materials were intended to serve as an official application rather than a pre-application request. It should be noted that [DEP] receives numerous amendment applications and pre-application requests. In order to efficiently process these requests, [DEP] has established certain standards, both technical and administrative, which distinguish an application from a pre-application request. Technical standards include supporting environmental analysis. Administratively, the submitted documents should indicate that the materials are intended to serve as an application rather than a pre-application. [DEP] has previously notified [appellant] of the distinction between a Pre-application request and an actual WMP amendment application; however, as is evidenced by the January 2008 submission, no attempt has been made to revise the materials to conform to [DEP]'s established standards for a WMP amendment application.
Once the capacity issue has been resolved [that is, an approved Phillipsburg WMP], it will be necessary for an application which satisfies [DEP] standards to be submitted in order for [DEP] to consider a site-specific proposal for a sewer service expansion to include [appellant's site] in Pohatcong Township.
By letter to DEP dated April 23, 2008, appellant objected to DEP's "ludicrous" characterization that its January 2005 submission was a pre-application, and said that it had submitted everything DEP had asked for and "has always stood ready and willing to provide [DEP] with whatever additional information it sought." DEP had never asked for any environmental analyses, and had even said in a meeting in October 2005 that "there were 'no environmental issues' for [DEP] to review and, specifically, that no EO 109 analysis was required." Accordingly, appellant respectfully request[ed] that [DEP] withdraw [its] April 15, 2008 letter in its entirety and proceed immediately to process Toll's application to the next step, which should be publication in the New Jersey Register.
If this does not occur within a reasonable time from this letter, then Toll will have no choice but to continue to take all appropriate actions to protect its rights and interests.
In May 2008, we denied appellant's emergent application for summary disposition and a mandamus order to compel action by DEP. We found that appellant had "not demonstrated immediate and irreparable harm... or that the court will be unable to fashion an effective remedy... if appellant prevails on its merits appeal, assuming that the appeal is even ripe."
We first consider appellant's contention that DEP's failing to act within ninety days from its 2005 submission violated N.J.A.C. 7:15-3.4(g) and constitutes agency inaction appealable under Rule 2:2-3.
Rule 2:2-3(a)(2) states that appeals may be taken to the Appellate Division as of right "to review final decisions or actions of any state administrative agency..., except that review pursuant to this subparagraph shall not be maintainable so long as there is available a right of review before any administrative agency or officer, unless the interest of justice requires otherwise." The action must be of such a nature that it unmistakably marks the end of the agency's decision-making process and not the beginning of an agency proceeding. See Bennett v. Spear, 520 U.S. 154, 177-78, 117 S.Ct. 1154, 1168, 137 L.Ed. 2d 281, 305 (1997).
The court's jurisdiction also extends to agency inaction. N.J. Civil Serv. Ass'n v. State, 88 N.J. 605, 612 (1982); In re Failure by Dep't of Banking & Ins. to Transmit Proposed Dental Fee Schedule, 336 N.J. Super. 253, 261 (App. Div.), appeal dismissed and certif. denied, 168 N.J. 292 (2001). In fact, a mandamus type of remedy is appropriate where the right to an agency's performance of a ministerial duty is clear or to compel the agency to take a discretionary action. In re Comm'r's Failure to Adopt 861 CPT Codes, 358 N.J. Super. 135, 149 (App. Div. 2003). "An official duty is ministerial 'when it is absolutely certain and imperative, involving merely the execution of a set task, and when the law which imposes it prescribes and defines the time, mode and occasion of its performance with such certainty that nothing remains for judgment or discretion.'" In re Failure, supra, 336 N.J. Super. at 262 (quoting Case v. Daniel C. McGuire, Inc., 53 N.J. Super. 494, 498 (Ch. Div. 1959)).
When appellant filed both its 2005 and 2008 submissions, N.J.A.C. 7:15-3.4(g)2 listed DEP's WQMP amendment procedures and allowed DEP ninety days from receipt to review amendment applications. Similar to the version readopted by DEP in July 2008, that regulation stated between 2005 and July 2008:
2. Requests for amendments shall include, but need not be limited to, a detailed description of the proposed amendment, including documentation substantiating the need for the amendment and other documentation as determined by the Department. Within 90 days of receiving such requests, the Department shall review such requests and shall either:
i. Disapprove the amendment request, and return it to the applicant; or
ii. Return the amendment request to the applicant for additional information or other necessary changes. If the applicant then submits a revised amendment request, the Department shall, within 90 days of receiving the revised amendment request, review such request and render a decision under
(g)2i above, this subparagraph, or
(g)2iii below; or
iii. Decide to proceed further with the amendment request.
3. The Department shall notify the applicant and the applicable designated planning agency, if any, in writing of its decision under (g)2 above. If the Department's decision is to proceed further with the amendment request under (g)2iii above, then this notification shall include the public notice that shall be given for the proposed amendment.... The public notice shall also be published in the New Jersey Register. [N.J.A.C. 7:15-3.4(g) (1996).]
While appellant acknowledges that it had "exchanged numerous correspondence" with DEP over the years and "had several meetings and/or conversations" about its submission, it claims that it has now exhausted all administrative remedies and DEP has still not processed its amendment application under N.J.A.C. 7:15-3.4(g). Appellant alleges that its 2005 submission was a valid and complete application not technically or administratively deficient. That is, the checked box on the form was only one part of its 2005 submission, and its cover letter and six copies were "irrefutably clear" that the entire submission was a WQMP amendment application and not a request for a pre-application meeting, and DEP has never indicated otherwise.
Appellant also claims that DEP never required it to submit any environmental assessment or EO 109 analysis. It asserts that, at the time of its initial submission, there was no regulatory requirement that such an assessment had to be included for an amendment application to be deemed complete and that even DEP's Guidance Document only provided that environmental analyses "may" be required. Indeed, relying on documents outside the record, appellant also points out that DEP never required EAI to submit an environmental assessment before processing its WQMP amendment application; instead, DEP required EAI to submit that assessment later in the review process. Thus, appellant asserts that it is entitled to mandamus relief compelling DEP to process its 2005 application, as there are no issues within the scope of DEP's discretion justifying further delay.
In response, DEP admits that it never followed N.J.A.C. 7:15-3.4(g) because it never considered appellant's submission as an actual amendment application; rather, appellant's submission only requested a pre-application meeting, which the agency conducted pursuant to N.J.A.C. 7:15-3.1(d) and (g). In fact, DEP was not surprised that appellant had requested an informal meeting, because there was "no question" that appellant's project was inconsistent with the WQMP, and that DEP had to give priority to EAI's project. Thus, DEP argues that appellant's arguments are unripe as it has failed to exhaust its administrative remedies.
Similar to the version readopted by DEP in July 2008, N.J.A.C. 7:15-3.1 (1993) stated between 2005 and July 2008:
(d) At the request of any person who intends to apply for a Department permit, the Department shall informally discuss with such person the consistency of such person's proposed project or activity with WQM plans and this chapter. Information provided by the Department in such discussions is for guidance only, and is not binding on the Department.
(g) At the request of any applicant whose proposed project or activity has been found by the Department to be inconsistent with a WQM plan or this chapter, the Department may informally discuss with that applicant the possible actions which that applicant might take to attempt to resolve the conflict. Such actions may include... seeking an amendment to the WQM plan under N.J.A.C. 7:15-3.4.... The applicant may take such actions without regard to the existence or absence of a discussion or a request for a discussion under this subsection. Information provided by the Department in such discussions is for guidance only, and is not binding on the Department or the designated planning agencies.
In its appellate brief, DEP asserts that appellant's submissions could not have been deemed complete as an amendment application because of the following technical and administrative deficiencies: (1) appellant never included the environmental information required in an actual amendment application; (2) appellant did not use the proper application forms or follow the agency's instructions; (3) appellant's submissions "lacked an environmental build-out analysis that was necessary to demonstrate that adequate wastewater treatment capacity exists at the Phillipsburg [plant], or an assessment of the project's impact on threatened and endangered species, nonpoint source pollution, and water supply"; and (4) appellant never mentioned that its site was located within the Alpha Grasslands, a home to threatened and endangered species.
Although DEP, in its April 2008 letter, mentioned having technical and administrative standards that distinguish an application from a pre-application request, which "[t]echnical standards include supporting environmental analysis," DEP had not formally told appellant prior to April 2008 that such an assessment was required for completeness or that it had used improper application forms. In fact, according to the record, DEP told appellant at an October 2005 meeting that "there were 'no environmental issues' for [it] to review and, specifically, that no EO 109 analysis was required." And, DEP never actually reviewed the merits of appellant's submissions and now inappropriately asserts, for the first time on appeal, that appellant also had to submit information on its project's impact on threatened and endangered species, nonpoint source pollution, and water supply.
Nevertheless we reject appellant's arguments because it is clear that it has not exhausted its administrative remedies, which makes this court's review not maintainable under Rule 2:2-3.
It does not matter whether we consider that either of appellant's submissions were "[r]equests for amendments" under N.J.A.C. 7:15-3.4(g), or requests for informal discussions with DEP under N.J.A.C. 7:15-3.1(b) or (g). If, as DEP asserts, appellant's submissions were requests for informal discussions, then appellant clearly has not exhausted its administrative remedies. If, as appellant asserts, its submissions were actual requests for amendments, the key date for analysis is January 21, 2008, the day appellant filed its revised amendment application with DEP. Indeed, until that time, it is undisputed that DEP and appellant had been working together, that appellant had never objected to any inaction, even submitting additional relevant documents to DEP in November 2007, and that appellant had only asked DEP to declare its amendment application "complete" in its January 2008 cover letter. That appellant never complained of DEP's inaction during the three years following its January 25, 2005 submission and that it continued to furnish information through its intermittent informal contacts with DEP is strongly indicative that it did not, during that time, consider its submission a complete application that would start the running of DEP's ninety-day response obligation.
By applying the January 2008 date to DEP's ninety-day-review requirement in N.J.A.C. 7:15-3.4(g)2 for amendment requests, it is clear that appellant had not exhausted its administrative remedies when it filed its notice of appeal on April 3, 2008. Ninety days from its revised amendment request submitted on January 21, 2008 was April 20, 2008. Appellant's notice of appeal challenging DEP's inaction and requesting mandamus relief predated the expiration of the ninety-day period.
"Exhaustion of administrative remedies before resort to the courts is a firmly embedded judicial principle." Garrow v. Elizabeth Gen. Hosp. & Dispensary, 79 N.J. 549, 558-59 (1979). "This principle requires exhausting available procedures, that is, 'pursuing them to their appropriate conclusion and, correlatively... awaiting their final outcome before seeking judicial intervention.'" Id. at 559 (quoting Aircraft & Diesel Equip. Corp. v. Hirsch, 331 U.S. 752, 767, 67 S.Ct. 1493, 1500, 91 L.Ed. 1796, 1806 (1947)). In doing so, three purposes are served: (1) the administrative body with the requisite expertise will hear the matter; (2) the necessary factual record for meaningful appellate review will be developed; and (3) judicial resources are potentially preserved through the avoidance of unnecessary judicial intervention. Bd. of Educ. v. Bernards Twp. Educ. Ass'n, 79 N.J. 311, 317 (1979).
Though neither jurisdictional nor absolute, relief from the exhaustion requirement is by no means automatic. Indep. Realty Co. v. Twp. of N. Bergen, 376 N.J. Super. 295, 304 (App. Div. 2005). Our courts have recognized a number of exceptions to the exhaustion requirement:
"While ordinarily administrative remedies must be exhausted before resort is had to the court, exhaustion... may be dispensed with where the interest of justice requires, or if there is a need for prompt decision in the public interest or where there is no question as to administrative discretion or judgment and only a question of law is involved or where further resort to administrative recourse would be futile....
"... Moreover plaintiff must demonstrate that irreparable harm would be caused by the delay in determination attendant upon exhaustion of the administrative remedy."
[41 Maple Assocs. v. Common Council of City of Summit, 276 N.J. Super. 613, 619 (App. Div. 1994) (quoting Pressler, Current N.J. Court Rules, comment 6 on R. 4:69-5 (1995) (citations omitted)).]
Nevertheless, there is "a strong presumption favoring the requirement of exhaustion of remedies." Brunetti v. Borough of New Milford, 68 N.J. 576, 588 (1975).
Although DEP's letter of April 15, 2008 could be read as disapproving appellant's revised amendment request under N.J.A.C. 7:15-3.4(g)2i, it is clear that DEP gave no reason other than telling appellant to submit an application after the capacity issues at Phillipsburg's plant had been resolved. However, this does not meet the futility exception to the exhaustion requirement, as the fact that appellant may not have prevailed administratively was not a basis to forego that process. What is contemplated by the question of whether exhaustion of an administrative remedy would prove futile, is whether the administrative remedy is "certainly available, clearly effective and completely adequate to right the wrong complained of." Baldwin Constr. Co. v. Essex County Bd. of Taxation, 24 N.J. Super. 252, 274 (Law Div. 1952), aff'd, 27 N.J. Super. 240 (App. Div. 1953). Accord Brunetti, supra, 68 N.J. at 589 n.12 (1975).
Furthermore, events concerning the Phillipsburg plant and Pohatcong's capacity may have changed. Pohatcong may have rezoned, allowing specific capacity for appellant's project. Also, the following events have occurred after appellant filed its notice of appeal: (1) in July 2008, the Highlands Council adopted its RMP; (2) in October 2008, Pohatcong filed its notice of intent to petition the Highlands Council for plan conformance with the RMP; and (3) in November 2008, the Council on Affordable Housing (COAH) imposed a scarce resource order on all development approvals and wastewater allocations in municipalities in the Highlands Region under its jurisdiction, which restrains development and remains "in full force and effect" until the municipality receives substantive certification from COAH or demonstrates that appropriate measures have been taken to preserve scarce land, water and sewer resources on a priority basis for use by affordable housing.
We therefore reject appellant's argument that DEP's inaction constituted appealable final agency action. We accordingly conclude that appellant is not entitled to a writ of mandamus. Because appellant has not exhausted its administrative remedies, we remand this matter to DEP.
Appellant contends that the DAG's letter of March 20, 2008, to the EAI court constituted final agency action appealable under Rule 2:2-3(a)(2). In related arguments, appellant claims that DEP's full-build-out policy enunciated in that letter: (1) constituted de facto rule-making in violation of the Administrative Procedure Act (APA), N.J.S.A. 52:14B-1 to -15, as explained in Metromedia, Inc. v. Director, Division of Taxation, 97 N.J. 313, 331-32 (1984); (2) violates the Mount Laurel*fn1 doctrine by impairing Pohatcong's ability to meet its constitutionally required fair share housing obligations; and (3) allowed DEP to refuse to process appellant's application, which then violated the Alpha court's September 2005 order by treating appellant differently from other developers (EAI and Alpha 519) requesting site-specific amendments to the Phillipsburg WMP and the Upper Delaware WQMP. In response, DEP argues that the March 20 letter is not a final decision ripe for appellate review and that its full-build-out policy is not new or unconstitutional. We agree with DEP.
The March 20 letter merely clarified the agency's position as to why it could not approve the addition of EAI's project to the Phillipsburg sewer service area despite a court-approved agreement requiring such inclusion. See In re Application of Twp. of Jackson, 350 N.J. Super. 369, 372 (App. Div. 2002) (ordinarily, there will be no review of an agency's advisory opinion "given in order to guide the Law Division in a pending declaratory judgment action."). Furthermore, appellant was not a party in EAI, and DEP has never taken any official action as to appellant's amendment application based on that letter. Thus, the letter itself does not constitute final agency action under Rule 2:2-3(a)(2) for purposes of this appeal, as it has not yet affected appellant's rights.
As to whether DEP's policy expressed in its March 20 letter violated the APA, we acknowledge that a person can challenge any de facto rule as improperly promulgated under the APA, N.W. Covenant Med. Ctr. v. Fishman, 167 N.J. 123, 134-36 (2001), especially in a situation such as this because DEP's policy could affect the Phillipsburg WMP applicable to appellant's site. However, we are satisfied that the policy did not violate the APA.
In exercising discretion when discharging its statutory duty, an agency may choose between formal action, such as rulemaking or adjudication, or informal action, provided its choice complies with due process requirements and the APA. Id. at 136-37; Deborah Heart & Lung Ctr. v. Howard, 404 N.J. Super. 491, 503 (App. Div.), certif. denied, 199 N.J. 129 (2009). Thus, if an agency action constitutes a rule, it must comply with the APA requirements. The APA defines a rule as follows:
"Administrative rule" or "rule", when not otherwise modified, means each agency statement of general applicability and continuing effect that implements or interprets law or policy, or describes the organization, procedure or practice requirements of any agency. The term includes the amendment or repeal of any rule, but does not include: (1) statements concerning the internal management or discipline of any agency; (2) intraagency and interagency statements; and (3) agency decisions and findings in contested cases. [N.J.S.A. 52:14B-2(e).]
In Metromedia, Inc., supra, 97 N.J. at 331-32, the Supreme Court identified six circumstances that will render an agency's determination an administrative rule:
[A]n agency determination must be considered an administrative rule... if it appears that the agency determination, in many or most of the following circumstances, (1) is intended to have wide coverage encompassing a large segment of the regulated or general public, rather than an individual or a narrow select group; (2) is intended to be applied generally and uniformly to all similarly situated persons; (3) is designed to operate only in future cases, that is, prospectively; (4) prescribes a legal standard or directive that is not otherwise expressly provided by or clearly and obviously inferable from the enabling statutory authorization; (5) reflects an administrative policy that (i) was not previously expressed in any official and explicit agency determination, adjudication or rule, or (ii) constitutes a material and significant change from a clear, past agency position on the identical subject matter; and (6) reflects a decision on administrative regulatory policy in the nature of the interpretation of law or general policy.
Each factor need not be present to find an agency action is actually a de facto rule. "These relevant factors can, either singly or in combination, determine in a given case whether the essential agency action must be rendered through rule-making or adjudication." Id. at 332. A de facto rule will be held invalid unless the agency complied with the rulemaking requirements of the APA. Id. at 328, 331.
When DEP sent its letter to the judge in March 2008, it had already proposed, but not yet formally adopted, a regulation setting forth that exact full-build-out policy. Indeed, the new rule at N.J.A.C. 7:15-5.25(d)2 was not adopted until July 2008.
N.J.A.C. 7:15-5.25(d)2 states:
Potential wastewater generation from each sewer service area shall not exceed the permitted capacity for each facility. Where the sewer service area encompasses more than one municipality, the potential wastewater generated in each municipality shall be compared to the amount of capacity allocated to that municipality. Where potential wastewater generation from any contributing municipality calculated in accordance with (d)1 above exceeds the flow allocated to that contributing municipality or if the total wastewater generation potential exceeds the permitted flow for each domestic or industrial treatment works, the WMP agency and/or affected municipalities shall either:
i. Reduce the sewer service area;
ii. Change zoning to reduce the wastewater generation potential in the sewer service area;
iii. Identify new or expanded domestic or industrial treatment works sufficient to address the difference between the permitted flow and wastewater generation potential calculated in accordance with (d)1 above; or
iv. Submit a plan, including a commitment by the owner of the affected facilities to implement the plan and approved by the Department, to eliminate excessive infiltration and inflow sufficient to accommodate the increase in wastewater flow.
As DEP points out, its WQMP regulations have always had some form of full-build-out requirement for WMPs to ensure that current and future growth does not exceed the capacity of the available wastewater treatment facilities. At the time appellant sent DEP both its January 2005 and January 2008 submissions, DEP's build-out requirement was based on all current zoning in the sewer service area, regardless of whether the properties were vacant or had been developed. N.J.A.C. 7:15-5.18(b) (1996) (emphasis added) reads:
7:15-5.18 Future wastewater jurisdictions, service areas, and domestic treatment works
(b)... [W]astewater service areas and DTW [domestic treatment works] shall, to the maximum extent practicable, be identified in such a manner as to provide adequate wastewater service for:
1. Land uses allowed in zoning ordinances that have been adopted and are in effect under N.J.S.A. 40:55D-62; or
2. Future land uses shown in municipal or county master plans that have been adopted and are in effect under N.J.S.A. 40:55D-28 or N.J.S.A. 40:27-2. If such master plans are used, wastewater service areas and DTW shall, to the maximum extent practicable, be identified in a manner consistent with any sewerage provisions in such master plans.
Further, N.J.A.C. 7:15-5.1(d) (1996) allowed DEP to adopt a site-specific amendment to a WQMP only in the absence of a current WMP if the proposed site-specific amendment did "not involve the identification of a new or expanded treatment works that discharges sanitary wastewater effluent to surface waters," and DEP "determines that the proposed project-specific amendment shall not result in significant adverse environmental impact or foreclosure of reasonable wastewater management planning options."
Additionally, the build-out policy in N.J.A.C. 7:15-5.18(b)1 (1996) was readopted in DEP's July 2008 amendments along with N.J.A.C. 7:15-5.25(d)2. Thus, applying the Metromedia standards, even though DEP's policy enumerated in its letter would have wide coverage and be generally applied, the agency had not set forth a policy that was so different from its WQMP regulations that were already in effect at the time. Indeed, no commenter complained about the new rule during DEP's adoption process.
As to the constitutionality of DEP's build-out policy enunciated in its March 20 letter, it is premature to address whether that policy will impair Pohatcong's ability to meet its fair share housing obligations. There is nothing in the record to support appellant's allegations that Pohatcong will not be able to meet its constitutional Mount Laurel obligations if DEP denies its amendment application. There is also nothing in the record to suggest that appellant will be barred from constructing its project because Pohatcong will refuse to remove some of its other undeveloped properties from its WMP.
We find unpersuasive appellant's reliance on Dynasty Building Corp. v. Borough of Upper Saddle River, 267 N.J. Super. 611 (App. Div. 1993), certif. denied, 135 N.J. 467 (1994), and Samaritan Center, Inc. v. Borough of Englishtown, 294 N.J. Super. 437, 455 (Law Div. 1996). In those cases, courts specifically directed municipalities to make existing sewer capacity available to inclusionary development sites, which has not occurred here as to appellant's project.
Finally, we reject appellant's assertion that the policy enunciated in DEP's March 20 letter allows the agency to treat appellant differently from the other developers. There is nothing in the record to show that DEP refused to process appellant's application because of its full-build-out policy, or that the agency violated the court's September 2005 order in Alpha by treating appellant differently than EAI or Alpha 519. As we have explained, appellant has not exhausted its administrative remedies and DEP has never actually applied this policy to appellant's development.
Nevertheless, in its reply brief, appellant points to "further evidence" of DEP's unfair and disparate treatment of its amendment application, that is, DEP's issuing a public notice in March 2009 that it had adopted a site-specific WQMP amendment application, requesting inclusion of a development in the Milford Borough sewage plant's sewer service area, based on that developer's proposal to construct affordable housing units. Appellant's reliance on this "evidence" is misplaced, because appellant never gave DEP a chance to rule on its application before filing this appeal.
Appellant urges us to order DEP to process its revised amendment application under the WQMP regulations in effect at the time of its 2005 submission, instead of under the new amendments and rules adopted in July 2008.
N.J.A.C. 7:15-3.8 (2008) states:
(a) No WQM plan amendment or revision hereafter adopted by the Governor or his or her designee is valid unless adopted in substantial compliance with this chapter.
(b) Proposed site specific WQM plan amendments for which notice has been filed for publication or published in the New Jersey Register pursuant to N.J.A.C. 7:15-3.4(g)3 or 3.4(g)5 as of July 7, 2008 shall be subject to the rules in effect on July 6, 2008. Where the Department disapproves or returns the proposed amendment pursuant to N.J.A.C. 7:15-3.4(g)8, and the applicant submits a new or modified site specific plan amendment, the new or modified proposed plan amendment shall be subject to the rules in effect at the time of the subsequent submittal.
(c) Proposed WQM plan revisions that have been submitted to the Department but not adopted pursuant to N.J.A.C. 7:15-3.5(e)1 as of July 6, 2008 shall be subject to the rules in effect as of July 7, 2008.
(d) Site specific amendments and revisions adopted prior to July 7, 2008 shall be valid for six years from the date of adoption or until the sewer service or wastewater service area is revoked under N.J.A.C. 7:15-8.1, whichever is later.
(e) Site specific amendments or revisions adopted after July 7, 2008 shall be valid for six years from the date of adoption, unless a wastewater management plan updated in accordance with N.J.A.C. 7:15-5.23 includes the site specific amendments or revision.
We deem it premature to address any issue as to which version of DEP's WQMP regulations would be applicable to DEP's possible review of appellant's submissions. Any decision would be advisory, and "[w]e will not render advisory opinions or function in the abstract; nor will we decide a case based upon facts which are undeveloped or uncertain." Zamboni v. Stamler, 199 N.J. Super. 378, 383 (App. Div. 1985). Accord N.J. Ass'n for Retarded Citizens, Inc. v. N.J. Dep't of Human Servs., 89 N.J. 234, 241 (1982).