American Dredging Co. v. State, Dept. of Environmental Protection

• Citation: 391 A.2d 1265,161 N.J.Super. 504
• Parties: AMERICAN DREDGING COMPANY, Plaintiff, v. STATE of New Jersey, DEPARTMENT OF ENVIRONMENTAL PROTECTION, Richard J. Sullivan; Thomas O'Neill; and George F. Kugler, Jr., Defendants.
• Decision Date: 31 July 1978
• Court: Superior Court of New Jersey

Page 504

161 N.J.Super. 504

391 A.2d 1265

AMERICAN DREDGING COMPANY, Plaintiff, v. STATE of New Jersey, DEPARTMENT OF ENVIRONMENTAL PROTECTION, Richard J. Sullivan; Thomas O'Neill; and George F.

Kugler, Jr., Defendants.

Superior Court of New Jersey, Chancery Division.

July 31, 1978.

Grover C. Richman, Haddonfield, for plaintiff (Richman, Berry, Ferren & Tyler, Haddonfield, attorneys).

Keith A. Onsdorff, Deputy Atty. Gen., for defendants (John J. Degnan, Atty. Gen., attorney).

LOWENGRUB, J. S. C.

This is a case of first impression. Plaintiff American Dredging Company (ADC) seeks to have this court declare that the prohibition from placing dredged material on an 80-acre tract of its land in Logan Township, N. J., pursuant to an order promulgated by the Commissioner of the Department of Environmental Protection (DEP), is a taking of its property without payment of just compensation and therefore void. I do not agree. The order of the DEP is a valid exercise of governmental authority.

ADC owns approximately 2500 acres of land in Logan Township. It is in the business of dredging various parts of the Delaware River for both private and governmental entities. Since the 1890s it has placed dredged materials from the Delaware River on its land. On August 13, 1973 DEP, pursuant to the Coastal Wetlands Act of 1970, N.J.S.A. 13:9A-1 Et seq., designated approximately 159 acres of ADC's land as wetlands and subject to DEP regulatory authority. Of that portion DEP has heretofore issued permits allowing ADC to deposit dredge spoils on all but approximately 80 acres which surround a rehandling basin of approximately 23 acres. The land of ADC is zoned maritime-industrial. An expert called on behalf of ADC testified that without the restriction imposed by DEP the land had a value of $10,000 an acre, and $1,000 an acre with the restriction imposed by the wetland designation. ADC alleges that the 80-acre tract has no other use than for the deposit of dredge material. On the lands remaining, ADC will be able to deposit dredge spoils for about 15-20 years before the fill deposits reach the maximum height allowed by local ordinance. If ADC were allowed to use the additional 80 acres, it is anticipated it would take more than 20 years to fill its lands.

At the outset we must distinguish between a taking in the constitutional sense for government use, for which compensation is compelled, and restrictions imposed on the use of land through governmental exercise of the police power, for which no compensation is mandated. Sax, "Takings and the Police Power," 74 Yale L.J. 36 (1964); Sax, "Takings, Private Property and Public Rights," 81 Yale L.J. 149 (1971). Troublesome as that dichotomy may be, the issue here is further clouded by the legislative mandate that if the court finds an order promulgated by DEP to be "an unreasonable exercise of the police power, the court shall enter a finding that such * * * shall not apply to the land," and that the method for the determination of the issue "shall be exclusive." N.J.S.A. 13:9A-6. Therefore, were the court to determine that the exercise of the police power in this case was unreasonable, it would have to nullify the order; it could not find the restriction unreasonable and order the payment of just compensation.

A taking may occur by the direct acquisitional act of a governmental entity or it may occur through excessive regulation under the police power. Yara Engineering Corp. v. Newark, 132 N.J.L. 370, 40 A.2d 559 (Sup.Ct. 1945). Mr. Justice Holmes in Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 415-16, 43 S.Ct. 158, 160, 67 L.Ed. 322, 326 (1922) stated:

The general rule at least is that while property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking. . . . We are in danger of forgetting that a strong public desire to improve the public condition is not enough to warrant achieving the desire by a shorter cut than the constitutional way of paying for the change.

The determination of whether the effect of governmental action vis-a-vis private property is such as to constitute a "taking" for which compensation must be made is to be determined by consideration of fairness and justice in each case. It is not susceptible of a set formula. In Penn Central Transp. Co. v. City of New York, --- U.S. ----, ----, 98 S.Ct. 2646, 2659, 57 L.Ed.2d 631 (1978), Justice Brennan stated that:

In engaging in these essentially ad hoc, factual inquiries, the Court's decisions have identified several factors that have particular significance. The economic impact of the regulation on the claimant and, particularly, the extent to which the regulation has interfered with distinct investment backed expectations are of course relevant considerations. * * * So too is the character of the governmental action. A "taking" may more readily be found when the interference with property can be characterized as a physical invasion by Government * * * then when interference arises from some public program adjusting the benefits and burdens of economic life to promote the common good. (Citations omitted).

Mere diminution in economic value caused by the governmental restriction on the free use of land has not mandated a determination of taking as an excessive use of the police power. See Consolidated Rock Products Co. v. Los Angeles, 57 Cal.2d 515, 20 Cal.Rptr. 638, 370 P.2d 342 (Sup.Ct.1962); app. dism., 371 U.S. 36, 83 S.Ct. 145, 9 L.Ed.2d 112; Village of Euclid v. Ambler Realty Co., 272 U.S. 365, 47 S.Ct. 114, 71 L.Ed. 303 (1926) (75% Loss); Hadacheck v. Sebastian, 239 U.S. 394, 36 S.Ct. 143, 60 L.Ed. 348 (1915) (87.5% Loss). In addition to the diminution in value, the court must consider the other uses of the affected lands permitted under the restrictive governmental order. See Goldblatt v. Hempstead, 369 U.S. 590, 82 S.Ct. 987, 8 L.Ed.2d 130 (1962). The use restriction must be reasonably necessary to the effectuation of a substantial public purpose or the restriction may constitute a taking. See Nectow v. City of Cambridge, 277 U.S. 183, 48 S.Ct. 447, 72 L.Ed. 842 (1928).

In Morris Cty. Land Improv. Co. v. Parsippany-Troy Hills Tp., 40 N.J. 539, 193 A.2d 232 (1963), the court had before it the determination of the constitutional validity of portions of defendant township's zoning ordinance. The enactment restricted the use of swamp land and had for its prime object the retention of the land substantially in its natural state, essentially for public purposes. The court found the ordinance was intended to benefit the public in two inter-related aspects: first, as a water-detention basin in aid of flood control, and second, preservation of the land as open space. It also found that the effect of the public uses practically prevented the exercise by a private owner of any worthwhile rights or benefits in the land. It concluded that the zoning plan was invalid as a taking of property without payment of just compensation. The effect of that zoning law caused a private individual to sustain a detriment to legally acquired existing economic values as a consequence of governmental enterprise in short, a taking for which just compensation is due. See Sax, "Takings and the Police Power," Supra. See also, Sax, "Takings, Private Property and Public Rights," Supra. Penn Central Transp. Co. v. City of New York, supra. The thrust of the Wetlands Act is the prevention of harm to the public, not the enhancement or improvement of a governmental activity or purpose. I have concluded that the distinction is basic and distinguishes Morris Cty. Land Improv. Co. v. Parsippany-Troy Hills Tp. from this case. I respectfully find that the law of that case is not controlling in the case at bar. Where the effect of the governmental prohibition against use is not in the furtherance of a governmental activity, such as flood control or preservation of land for a park or recreational area, but rather to preserve the land for ecological reasons in its natural environment without change, the consideration of reasonableness of the exercise of the police power must be redetermined. The issue then presented is a determination of which interest shall prevail, the public interest in stopping the despoilation of natural resources or the right of an individual to use his property as he wishes. The focus of the reason for that specific governmental action changes the concept of legislation for the public good to legislation to prevent public harm, which prevention must then be weighed against the owner's undiminished right to use his property.

Although the Wetlands Act was enacted to prevent public harm, the restraints authorized on the use of property must be nevertheless reasonable and not arbitrary. Davidow v. South Brunswick Tp. Bd. of Adj., 123 N.J.Super. 162, 302 A.2d 136 (App.Div.1973).

The legislative purpose giving rise to the statutory enactment may be examined in an effort to ascertain the reasonableness of the governmental action. The Legislature has set forth the purpose of the Wetlands Act as follows:

The Legislature hereby finds and declares that one of the most vital and productive areas of our natural world is the so-called "estuarine zone," that area between the sea and the land; that this area protects the land from the force of the sea, moderates our weather, provides a home for water fowl and for 2/3 of all our fish and shellfish, and assets in absorbing sewage discharge by the rivers of the land; and that in order to promote the public safety, health and welfare, and to protect public and private property, wild life, a marine fisheries and the natural environment, it is necessary to preserve the ecological balance of this area and prevent its further deterioration and destruction by regulating the dredging, filling, removing or otherwise altering or polluting thereof, all to the extent and in the manner provided herein. (N.J.S.A. 13:9A-1).

In accordance with the mandate of ...