NJ App. Div. addresses exemption under the Highlands Act for grandfathered approvals.
SteveK March 12th, 2013
In a recent decision, Intellect Real Estate Development v. NJDEP, the Appellate Division addressed a provision of the Highlands Water Protection and Planning Act which provides an exemption for permits gaining certain approvals before a specified date.
Intellect Real Estate Development (“Intellect”) is the purchaser and prospective developer of a plot of land in Bloomingdale, New Jersey. The nature of the intended development required Intellect to submit applications to both DEP and the Bloomingdale Board of Adjustment. After some disputes between the Board and the municipal council, the proposed development was reduced from an eight-lot subdivision to only five lots, which was approved, but the approval was “expressly subject to and conditioned upon approval . . . by the Highlands Council.”
Simultaneously, Intellect sought DEP approval for its proposed development project. After several submissions which DEP denied, new stormwater management regulations were enacted resulting in Intellect’s water quality calculations no longer being in conformance. After Intellect submitted revisions, DEP stated that these new submissions “[met] storm water rules” and were ready for approval, pending certain other formal requirements being met. At this point, Intellect went ahead with some site preparation on the property, drilling a well and constructing an access road.
On August 10, 2004, the Highlands Water Protection and Planning Act (the “Act”) went into effect. Shortly thereafter, DEP sent Intellect a letter explaining that, based upon its preliminary review, the new law would affect the pending application. Intellect was given two options: either resubmit the application “in accordance with the environmental standards contained in the new law,” or submit written documentation that “the proposed activity is exempt under the new law.” Intellect notified DEP that it would not withdraw its application, and DEP later informed Intellect that its application was cancelled.
The matter was brought before an ALJ, who determined that “the Legislature intended that to be exempt from the [Act], major Highlands developments . . . must have received certain municipal approvals prior to March 29, 2004, regardless of what DEP approvals were applicable to the development,” and so “[Intellect’s] development is not exempt from the regulations imposed by” the Act. The Commissioner of the DEP adopted the ALJ’s decision, and this appeal followed.
On appeal, Intellect argued for a construction of the Act by which Intellect would be eligible for an exemption on account of its timely-filed FWP application, which “should have been approved” before March 29, 2004, the date used in the Act to accord “grandfathered” status. DEP, on the other hand, argued that such an exemption was not appropriate because Intellect failed to obtain municipal approvals by the relevant date, and accordingly it was irrelevant whether the FWP application was properly cancelled.
The court first noted that the stated purpose of the Act was to set forth “a comprehensive approach to the protection of the water and other natural resources of the New Jersey Highlands” through adoption of “stringent water and natural resource protection standards, policies, planning and regulation,” as well as “stringent standards governing major development” in the preservation area. Toward that end, the Act “established a state agency, called the Highlands Protection and Planning Council . . . , which was delegated responsibility for land use planning in the Highlands Region” in various counties in the State.
N.J.S.A. 13:20-28a provides exemptions “from the provisions of th[e] act,” including subsection (3), which “grandfathered” certain developments by way of an exemption with various requirements. Intellect argued that it was exempt from the Act if its application for a FWP was approved prior to March 29, 2004, regardless of whether it received municipal approvals before that date. However, it being undisputed that municipal approvals were not received by that date, the court agreed with the DEP.
In reaching that conclusion, the court cited to two prior Appellate Division decisions for the proposition that “in order to qualify for a ‘grandfathered’ exemption, a development must have received a municipal approval under N.J.S.A. 13:20-28a(3)(a) and a DEP approval under either N.J.S.A. 13:20-28a(3)(b) or (c) if applicable, prior to March 29, 2004.” In Lakeside Manor v. State, Dept. of Envtl. Prot., 421 N.J. Super. 362, 364 (App. Div. 2011), the court noted that the Act “contains a number of exemptions from its regulatory provisions, including one for any major Highlands development project that received one of a specified list of municipal land use approvals under the Municipal Land Use Law . . . and at least one of a specified list of permits issued by the [DEP] before March 29, 2004.” In OFP, LLC v. State, 395 N.J. Super. 571, 590-91 (App. Div. 2007), the court explained that “N.J.S.A. 13:20-28(a)(3) provides an exemption from the . . . Act for any major development project that received the land use and environmental permits specified therein on or before March 29, 2004.”
N.J.S.A. 13:20-28a(3)(b) requires that the applicant secure DEP permits in the stated categories, if applicable, and, if those permits were not required, then, under subsection (c), the applicant must secure one of those two listed permits, but only if they are applicable. Thus, if none of the listed DEP permits applied, the applicant would be eligible for an exemption only if the municipal approvals had been secured prior to March 29, 2004. The court made note that a developer who secures municipal approval of its project is inured with “important vested rights” under the Municipal Land Use Law, and the above-cited statutory provisions reflect recognition of this fact. Accordingly, the Legislature intended only projects that received municipal approvals before March 29, 2004 to be eligible for “grandfathering” under the Act.
DiFrancesco, Bateman, Coley, Yospin, Kunzman, Davis, Lehrer & Flaum, PC (www.dbnjlaw.com ) is a full service law firm in New Jersey which provides a broad range of legal services, including the representation of clients in environmental and defense of toxic exposure matters. For additional information about the matters in this bulletin or in the firm’s environmental practice, please contactSteven A. Kunzman, Esq. who heads our Environmental and Latent Injury Litigation Department.
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