On appeal from the New Jersey Department of Environmental Protection, Agency Docket Nos. 1019-03-0003.1 FHA 040001 and 1019-03-0003.1 PEA 070001.
The opinion of the court was delivered by: Lihotz, J.A.D.
Before Judges Cuff, Lihotz and St. John.
The opinion of the court was delivered by LIHOTZ, J.A.D.
We examine challenges by appellants Asdal Builders, LLC (Builders), Asdal Renovations, LLC (Renovations), and William Asdal seeking to reverse the final decision of the Commissioner of the Department of Environmental Protection (DEP), regarding the renovation and construction of structures located in a floodway. Appellants portray the DEP's enforcement of various flood hazard and freshwater protection rules as arbitrary and capricious actions, quelling the restoration of civil war era structures which maintained their historic character while incorporating modern "green" technology.
The Commissioner's decision encompassed two matters consolidated by the agency. In the first, the Commissioner rejected the recommendation of the Administrative Law Judge (ALJ) and declined to grant Builders' application for a stream encroachment permit (SEP) nunc pro tunc or, alternatively, legalize renovations made to the property thereby relieving Builders from strict compliance with the regulations by granting a hardship waiver (the permit case). In the second, the Commissioner denied Builders' and Asdal's request to abate or reduce penalties imposed for environmental regulatory violations resulting from the development of the property (the penalty case).
On appeal, Builders argues the Commissioner's decision in the permit case arbitrarily disregarded findings and conclusions of the ALJ and misapplied the law. Asdal and Renovations contend the assessments imposed in the penalty case were excessive, unreasonable and unwarranted.
Following our review of the arguments advanced on appeal in light of the record and applicable law, we conclude the Commissioner's denial of the nunc pro tunc SEP application was incorrectly grounded on a determination that the property was abandoned and therefore, the Commissioner erroneously applied applicable regulations. In the penalty case, we conclude certain penalties must be modified and the personal assessment against Asdal must be vacated. Accordingly, we affirm in part, reverse in part, and remand the matter to the Commissioner for additional proceedings.
Asdal and his wife, as the sole shareholders of Renovations, purchased over twenty-four acres, split almost equally between Lot 2, Block 42 in Lebanon Township, Hunterdon County, and Lot 17, Block 55 in Washington Township, Morris County (the property). The South Branch of the Raritan River wraps around two sides of the property and a manmade "millrace"*fn1 transects the parcel. While all the structures on the property are located within Lebanon Township, the entire property lies within the floodway of the South Branch of the Raritan River and is designated as a flood hazard area.
The property was once operated as the Lawrence Trimmer Millworks and had served as a working farm "perhaps as far back as two centuries to the original homestead in 1732." The DEP's Historic Preservation Office (HPO) lists the property among the sites on the State Register of Historic Places.*fn2 It is not disputed that farming activities on the property ceased by 2000, when the farmland assessment was lost. In fact, at the time Renovations purchased the property, the buildings were in disrepair and the property was littered with debris and solid waste, including: "1,200 yards of debris, 4,000 yards of wood debris, and another 100 yards of garbage, including 14 tons of tires." *fn3
Shortly after its purchase, Renovations removed the debris and engaged a farmer to re-establish the farm lands as historically operated. The farmer mowed the existing natural vegetation, then planted and cultivated orchard grass and hay on each side of the millrace.
Builders, which is also solely owned by Asdal and his wife, undertook the restoration of the structures erected on the property. As renovated, the property's main building is now known as the Raritan Inn, a zero-energy bed and breakfast, which represents the first pre-existing, single-family residence that used a Civil War shell and achieved zero energy . . . through a combination of geothermal heating and cooling, insulation and insulating components, and solar panels. The house relies upon no fossil fuels for heat and uses bottled propane only in the kitchen.
A smaller residential cottage, a barn, and a woodshed were also restored. Other buildings, including a chicken coop, garage, and barn were removed. Finally, a new garage was constructed in a different location from the one razed, and a stone retaining wall was created using foundation stones from the removed structures.
Prior to the commencement of work, Builders engaged Stephen Parker, a professional engineer associated with Parker Engineering & Surveying, PC, to assist in obtaining local and county approvals for the proposed renovations. Parker, on behalf of Builders, applied to the DEP for a Stream Encroachment Jurisdiction Determination (SEJD) in order to replace the property's septic system. In the May 29, 2003 SEJD, the DEP advised "a Stream Encroachment Permit was not required" based on the drawings submitted to the DEP for review, which showed "[t]he proposed system will not require the placement of any fill above the existing grades."*fn4
Beginning in 2002, Lebanon Township issued construction permits for the renovation of the main residence, the adjacent cottage, and construction of the relocated garage. In a January 18, 2005 resolution, the Township approved the development, finding it complied with Lebanon Township's Flood Damage Prevention Ordinance, which required approval and issuance of a variance prior to the commencement of construction or development. The resolution stated Builders had demonstrated good and sufficient cause for the grant of the variance, and ha[d] shown that failure to grant the variance would result in exceptional hardship. Also, granting the variance will not result in increased flood heights or threats to public safety . . . [or cause] any increase in flood levels during the occurrence of the base flood discharge.
In September 2005, the Township issued certificates of occupancy for the two residential structures and a certificate of approval for the garage.
On May 4, 2004, in response to a complaint regarding "development in the floodway," the DEP inspected the property, resulting in a notice of violation (NOV) of provisions of the Flood Hazard Area Control Act (FHACA), N.J.S.A. 58:16A-50 to -68. The NOV, dated May 24, 2004, advised Builders that permit approval was required prior to construction of the garage and additions to the main house, because they caused "disturbance of approximately 1,176.5 square feet" of the floodway. The NOV also instructed remedial steps must be taken within thirty days, including applying for a SEP and submitting a restoration plan.
Parker, on behalf of Builders, applied for an "after-the-fact" SEP, seeking approval of the development within the floodway, or, alternatively seeking a hardship waiver of the strict enforcement of the flood regulations. Parker's letter outlined the benefits provided by Builders' activities on the property, maintaining the redevelopment "resulted in a significant improvement to the stream[']s flood carrying capacity, and an overall improvement to the site and surrounding areas." Appellants' submission suggested "[t]he net result of the activity . . . [was] an overall reduction in fill and obstruction to stream flow within the floodway, increased improvements in structural integrity of the structures, and restoration of a historically significant property." Further, although the original garage was destroyed, the new garage was built in compliance with the building code; anchored to prevent flotation, collapse, or lateral movement; built with flow-through openings; and located in the "shadow" of the cottage, thus "eliminating a significant obstruction to the direction of flow of the flood waters." Finally, appellants noted approval of the new stone retaining wall was sought in an amendment to the application, as DEP had requested.
On August 12, 2004, the SEP application was returned for deficiencies. The DEP issued a second NOV on October 19, 2004, adding additional violations of the FHACA regulations.*fn5 Parker transmitted more material regarding the development to the DEP. However, a December 22, 2004 letter from the DEP rejected the SEP request because the "application d[id] not satisfy the requirements of the Rules." The violations were described as:
The applicant has conducted a number of activities on this site without first obtaining a [SEP]. These include the enclosure of the rear porch of the smaller of the two dwellings, the construction of a porch and a patio for the larger dwelling, the construction of an 816 square foot frame garage, and the construction of a stone wall and driveway surrounding a portion of the perimeter of the entrance driveway located in between the two dwellings. Also, a 100 square foot shed and a 1,350 square foot L-shaped garage were removed from the site. Whereas the two dwellings, barn and shed are pre-existing, the 816 square foot frame garage is a new structure. Also, in addition to this, a field inspection of the site showed that the septic field was built above existing grades, which is in violation of a Jurisdictional Determination letter issued by the [DEP*fn6 ].
Since the above referenced construction activities involved the placement of fill and structures within the floodway, this application is not in compliance with [the FHACA Rules].
On September 26, 2005, a DEP inspection of the site prompted the issuance of a third NOV based on the New Jersey Freshwater Wetlands Protection Act (FWPA), N.J.S.A. 13:9B-1 to -30. The NOV cited the disturbance of vegetation within the freshwater wetlands, stating:
Vegetation was observed to have been removed from approximately 12,500 square feet of land within 50' from the top of the bank along the South Branch [of the] Raritan River, and from approximately 33,750 square feet of land within 50' from the top of the bank along the raceway. Also, approximately 13,725 square feet of vegetation was observed to have ...