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New Jersey Natural Gas Co. v. Borough of Red Bank

Superior Court of New Jersey, Appellate Division

October 28, 2014


Argued March 4, 2014

Approved for Publication October 28, 2014.

On appeal from the Superior Court of New Jersey, Law Division, Monmouth County, Docket No. L-1196-12.

Daniel J. O'Hern, Jr., and Joseph J. Colao, Jr., argued the cause for appellants ( Byrnes O'Hern, L.L.C., attorneys for appellant Borough of Red Bank; Lindabury, McCormick, Estabrook & Cooper, P.C., attorneys for appellant Red Bank RiverCenter Special Improvement District; Mr. O'Hern and Mr. Colao, on the joint brief).

Kevin H. Marino argued the cause for respondent (Marino, Tortorella & Boyle, P.C., attorneys; Mr. Marino, on the brief).

Before Judges MESSANO, HAYDEN and ROTHSTADT. The opinion of the court was delivered by MESSANO, P.J.A.D.

Page 1203

[438 N.J.Super. 166] OPINION


The Borough of Red Bank (" Red Bank" ) and the Red Bank RiverCenter Special Improvement District (" RiverCenter," and collectively, " defendants" ) appeal from the October 17, 2012 order of the Law Division that granted plaintiff, New Jersey Natural Gas Company (" NJNG" ), summary judgment and denied defendants' cross-motions for summary judgment.[1] The order provided NJNG with declaratory relief, as well as relief in the nature of mandamus against Red Bank, specifically requiring the borough to issue construction permits so that NJNG could " remove all underground [gas] regulators located in . . . Red Bank and replace them with above-ground regulators."

Defendants contend that the trial judge erred by concluding that, pursuant to N.J.S.A. 48:9-17, NJNG's installation of above-ground gas regulators in public sidewalks was largely exempt from municipal control. That statute provides:

[438 N.J.Super. 167] Every [gas] company may lay conductors and install related facilities for conducting gas through the

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streets, alleys, squares and public places in any municipality or municipalities in which it may lawfully operate, having first obtained the consent by resolution or ordinance of the governing body of such municipality for the furnishing of gas therein and the approval of such consent by the Board of Public Utility Commissioners. The consent may be subject to reasonable regulations with respect to the opening of streets, alleys, squares and public places, not inconsistent with the provisions of this article.
[ Ibid. (emphasis added).]

Defendants further argue that because the judge misconstrued this statute, he erred in not granting defendants summary judgment and dismissing NJNG's complaint in lieu of prerogative writs. They contend that NJNG was required to exhaust its administrative remedies, first by submitting a development application pursuant to Red Bank's planning and development regulations. If NJNG remained dissatisfied with the result, Red Bank contends the utility's remedies were set forth in the Municipal Land Use Law (" the MLUL" ), N.J.S.A. 40:55D-1 to-163, a section of which provides:

If a public utility . . . is aggrieved by the action of a municipal agency through said agency's exercise of its powers under this act, . . . an appeal to the Board of Public Utilities . . . may be taken . . . without appeal to the municipal governing body pursuant to [ N.J.S.A. 40:55D-17][2] unless such public utility . . . so chooses. . . . A hearing on the appeal of a public utility to the Board of Public Utilities shall be had on notice to the agency from which the appeal is taken and to all parties primarily concerned, all of whom shall be afforded an opportunity to be heard. If, after such hearing, the Board of Public Utilities shall find that the present or proposed use by the public utility . . . of the land described in the petition is necessary for the service, convenience or welfare of the public . . . a finding by the board that the present or proposed use of the land is necessary to maintain reliable . . . natural gas supply service for the general public and that no alternative site or sites are reasonably available to achieve an equivalent public benefit, the public utility . . . may proceed in accordance with such decision of the Board of Public Utilities, any ordinance or regulation made under the authority of this act notwithstanding.
. . . .
[438 N.J.Super. 168] Nothing in this act shall be construed to restrict the right of any interested party to obtain a review of the action of the municipal agency or of the Board of Public Utilities by any court of competent jurisdiction according to law.
[ N.J.S.A. 40:55D-19.]

Alternatively, defendants argue that the judge should have declined jurisdiction over the dispute and referred the parties to the Board of Public Utilities (the " BPU" ) pursuant to the doctrine of primary jurisdiction. See, e.g., Curzi v. Raub, 415 N.J.Super. 1, 20, 999 A.2d 1182 (App.Div. 2010) (quoting Borough of Haledon v. Borough of N. Haledon, 358 N.J.Super. 289, 301-02, 817 A.2d 965 (App.Div. 2003) (" Under the doctrine of primary jurisdiction, a 'court declines original jurisdiction and refers to the appropriate body those issues which, under a regulatory scheme, have been placed within the special competence of an administrative body.'" )).

NJNG contends the trial judge properly determined that, pursuant to N.J.S.A. 48:9-17 and binding Supreme Court precedent, a municipality -- under the guise of exercising its zoning powers -- may not dictate the manner in which gas service is provided, and that all Red Bank may require is compliance with " reasonable regulations with respect to the opening of

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streets, alleys, squares and public places." Ibid.

We have considered these arguments in light of the record and applicable legal standards. We reverse.



Much of the record evidence is undisputed. In 1969, Red Bank passed a resolution authorizing NJNG to " to lay, maintain and operate its conductors, mains, and pipes, together with the appurtenances thereto, in all the public streets, alleys, squares and public places" in the municipality. The resolution included the condition that

[NJNG] shall agree that, in all cases in which street openings or excavations are made for the purposes aforesaid, the pavement and the surface of the streets, [438 N.J.Super. 169] alleys, squares or roadways shall be restored to the same condition as existed prior to the opening thereof, and in accordance with Borough [o]rdinances.
[(Emphasis added).]

RiverCenter was established in 1991 to revitalize Red Bank's downtown business district, which had suffered decline. One of its signature efforts was a $1,800,000 streetscape project, completed in 1998, that installed brick sidewalks, decorative street lights and benches, substantially upgrading the appearance of the downtown area. A second streetscape project was completed in 2002.

In March 2011, NJNG obtained a construction permit to open the street and sidewalk in front of a restaurant on Broad Street in RiverCenter's special improvement district. NJNG thereafter removed a gas regulator from the underground pit in the street and reinstalled it on the sidewalk in front of the restaurant. Red Bank's borough administrator, Stanley Sickels, certified that although NJNG's representative had tried to schedule a meeting with him, no meeting had occurred before NJNG installed the new regulator, and Red Bank was unaware of NJNG's intentions when it issued the permit.

The new regulator protruded approximately 15 inches from the front of the building, through the sidewalk pavers and into the public right of way, i.e., the sidewalk. Sickels, who also served as Red Bank's construction code official and fire marshal, was concerned that the newly installed regulator was a potential safety hazard for pedestrians, would interfere with maintenance of the sidewalks and building facades and was subject to impact damage and vandalism.

On March 22, 2011, Sickels met with NJNG's representatives, Howard Brey and Holly McGovern. There is a factual dispute as to what exactly occurred at the meeting.

In its verified complaint, NJNG claimed that following a system-wide survey of its underground regulators, it had concluded that replacement with above-ground regulators would be necessary because of corrosion problems that compromised safety. At the March 22, 2011 meeting, NJNG representatives showed Sickels [438 N.J.Super. 170] and Nancy Adams, RiverCenter's executive director, pictures of corroded underground installations in another town. According to NJNG, " the Red Bank officials were uniformly receptive to the idea of moving the regulators above ground to address safety concerns and indicated that NJNG would be permitted to proceed with the relocation project."

Sickels certified that he recommended NJNG's representatives meet with RiverCenter's representatives to discuss the issue, and he called Adams, who arrived for the last ten minutes of the meeting. Brey

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and McGovern advised that NJNG intended to replace all underground regulators in Red Bank with above-ground installations. Sickels did not recall seeing any pictures, and both he and Adams certified that plaintiff's representatives made no mention of safety concerns. Adams suggested NJNG perform surveys to determine if the regulators could be moved to the side or rear of buildings, as opposed to sidewalks in ...

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