Cape May County Mun. Utilities Authority, Matter of

• Decision Date: 11 July 1990
• Citation: 577 A.2d 840,242 N.J.Super. 509
• Parties: In the Matter of CAPE MAY COUNTY MUNICIPAL UTILITIES AUTHORITY.
• Court: New Jersey Superior Court — Appellate Division

Page 509

242 N.J.Super. 509

577 A.2d 840

In the Matter of CAPE MAY COUNTY MUNICIPAL UTILITIES AUTHORITY.

Superior Court of New Jersey,

Appellate Division.

Argued May 23, 1990.

Decided July 11, 1990.

Richard M. Hluchan, Marlton, for appellant Stone Harbor Boulevard Corp. (Drinker, Biddle & Reath, Princeton, attorneys).

Harley A. Williams, Deputy Atty. Gen., for respondent Dept. of Environmental Protection (Robert J. Del Tufo, Atty. Gen.).

Joseph J. Slachetka, for respondent Cape May County Mun. Utilities Authority (Higgins, Slachetka & Long, Laurel Springs, attorneys).

Bruce M. Gorman, Rio Grande, for respondent Tp. of Middle.

Before Judges DREIER, SCALERA and D'ANNUNZIO.

The opinion of the court was delivered by

D'ANNUNZIO, J.A.D.

Pursuant to the Coastal Area Facility Review Act (CAFRA), N.J.S.A. 13:19-1 et seq., the Cape May County Municipal Utilities Authority (the Authority) received a Department of Environmental Protection (DEP) permit to construct two pumping stations and a force main "to transmit sanitary wastewater from Stone Harbor Manor and Stone Harbor Boulevard to the Seven Mile Beach/Middle Regional Wastewater Treatment Plant." The project's purpose was to provide sewers and treatment facilities to existing development serviced by malfunctioning individual disposal systems. A March 1980 ¹ report commissioned by the Authority estimated that the Stone Harbor Manor and Boulevard areas had 170 individual disposal systems all of which were malfunctioning. The malfunctioning systems contributed to environmental degradation of an environmentally sensitive area. ²

CAFRA prohibits construction of "a facility in the coastal area" without a CAFRA permit, N.J.S.A. 13:19-5. Only a "facility" as defined in N.J.S.A. 13:19-3 is subject to CAFRA. Waste treatment plants and pipelines designed to transport sanitary sewage are CAFRA facilities. N.J.S.A. 13:19-3c(5) and (12). The project in question is within CAFRA's "coastal area." N.J.S.A. 13:19-4.

An application for a CAFRA permit must include an environmental impact statement. N.J.S.A. 13:19-6 and 7. N.J.S.A. 13:19-10 (§ 10) specifies the findings which the DEP must make before a permit can issue. However, N.J.S.A. 13:19-11 (§ 11) provides:

Notwithstanding the applicant's compliance with the criteria listed in section 10 of this act, if the commissioner finds that the proposed facility would violate or tend to violate the purpose and intent of this act as specified in section 2, or if the commissioner finds that the proposed facility would materially contribute to an already serious and unacceptable level of environmental degradation or resource exhaustion, he may deny the permit application, or he may issue a permit subject to such conditions as he finds reasonably necessary to promote the public health, safety and welfare, to protect public and private property, wildlife and marine fisheries, and to preserve, protect and enhance the natural environment. [Footnotes omitted.]

Thus, the Legislature has granted DEP substantial authority to regulate development in the coastal area including the authority to grant a permit subject to conditions found to be "reasonably necessary to promote the public health, safety and welfare ... and to preserve, protect and enhance the natural environment." See Matter of Egg Harbor Associates, 94 N.J. 358, 364, 464 A.2d 1115 (1983) ("the delegated powers require DEP to regulate land use within the coastal zone for the general welfare"). ³

The Authority's CAFRA permit contained five administrative and five physical conditions. This appeal concerns physical condition one (the condition). As originally imposed the condition provided:

No connections (sewer hook ups) may be made to the force main or pump stations, or to a collection system tying into the force main or pump stations, to service new development or redevelopment, including the addition of residential units, which is not in compliance with applicable Rules on Coastal Resources and Development. Applicable policies include but are not limited to Island Corridor, Wetlands, Wetlands Buffers, Endangered or Threatened Species Habitat. The CMCMUA is responsible for enforcing this condition, either individually or through an agreement with Middle Township when a collection system is constructed. The CMCMUA must pass a resolution prior to construction agreeing to enforce this restriction of hook ups.

Facially, the condition required all new development, including development which would not constitute a "facility" subject to CAFRA, to comply with the full panoply of CAFRA requirements as a prerequisite to connection with the sewer line. DEP imposed the condition because of its concern that the sewer line would attract and "promote new and/or expanded development along the bay island corridor." DEP Summary Report, August, 1988, p. 2; see N.J.A.C. 7:7E-3.24 for the definition of "bay island corridor" and the severe development restrictions applicable to it.

The Authority and Stone Harbor Boulevard Corporation (SHBC) appealed from imposition of the condition to the Coastal Area Review Board (CARB). N.J.S.A. 13:19-13. The CARB substantially modified the condition by requiring only a DEP determination that a proposed development or redevelopment will not create "adverse secondary impacts" before the Authority accepts its additional sewage flow. As a result of CARB's action the condition now reads:

CMCMUA shall not accept any additional flow to service new development or redevelopment, including the addition of residential units, until it has received from Division of Coastal Resources a determination that the proposed development or redevelopment will not create adverse secondary impacts. This condition shall not apply to additions to or alterations of single or two-family dwelling units that do not increase the number of dwelling units or dwelling unit equivalents.

Division of Coastal Resources shall receive a conceptual plan from any applicant proposing to connect a new development or redevelopment into the facility. Within five days of receipt of the plan, Division of Coastal Resources shall hold a preapplication conference with the applicant to determine the nature and level of information necessary to determine whether adverse secondary impacts as defined in N.J.A.C. 7:7E-6.3(a) would result from the proposal. Within ten days after the prehearing conference, the Division shall send to the applicant a letter specifying the nature and level of documentation to be submitted by the applicant. Within ninety days after receiving all of the submittals specified, the Division shall issue a determination of whether or not the proposal will result in any unacceptable secondary impacts. Any unacceptable secondary impacts as well as the rationale for any conditions imposed on the determination of no adverse secondary impacts shall be clearly set forth in the determination. Failure of the Division to respond within ninety days from receipt of a complete submittal by the applicant shall be deemed equivalent to a finding of no adverse secondary impacts.

SHBC appeals from CARB's amended condition. It owns a developed lot on Stone Harbor Boulevard accessible to the proposed sewer line. The lot was a lumberyard site, but currently it is used as a storage area for a construction business. Approximately 76% of the 1.93-acre lot is in buildings or other impervious cover. SHBC professes that it intends to build a 24-unit hotel on the site, a permitted use under the local zoning ordinance. A 24-unit hotel is not a "facility" subject to CAFRA. ⁴ Consequently, appellant contends that the condition is beyond DEP's authority because it is an attempt to regulate indirectly "that which it has no legal authority to regulate directly."

The condition applies to projects not otherwise subject to CAFRA. Indeed, since any project involving a CAFRA "facility" is already subject to CAFRA, it can be argued that the condition's primary purpose was to reach non-CAFRA projects. Though we are mindful of the need to scrutinize any attempt by DEP to exceed its statutory authority, see Last Chance Development Partnership v. Kean, 119 N.J. 425, 575 A.2d 427 (1990), affirming 232 N.J.Super. 115, 556 A.2d 796 (App.Div.1989) (Waterfront Development Act does not authorize DEP regulation of upland tracts in the coastal area), we conclude that the condition, as modified by CARB, was within DEP's power.

CAFRA grants broad authority to the DEP to protect the environment and to regulate land use within the coastal area for the general welfare. Matter of Egg Harbor Associates, supra; cf. Crema v. New Jersey Dept. of Environmental Protection, 94 N.J. 286, 463 A.2d 910 (1983) (DEP had implied authority under CAFRA to engage in conceptual review and approval but was required to exercise that authority through rule making). The statute requires certain findings by DEP before a CAFRA permit issues. Nevertheless, DEP has residual authority to deny the permit despite § 10 findings if "the proposed facility would violate or tend to violate the purpose and intent of this act as specified in [ N.J.S.A. 13:19-2], or if the [DEP] finds that the proposed facility would materially contribute to an already serious and unacceptable level of environmental degradation or resource exhaustion...." N.J.S.A. 13:19-11. Alternatively, § 11 authorizes a CAFRA permit subject to conditions "reasonably necessary to promote the public ... welfare ... and to preserve, protect and enhance the natural environment." Ibid.

DEP recognized that the Authority's application presented a dilemma. The sewer line was consistent with CAFRA's purpose because it would substitute for many malfunctioning individual sewage disposal systems, thereby eliminating a source of serious water pollution. On the other hand, DEP recognized that sewer lines attract additional development. The capacity of particular projects to generate additional development is...