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B&J Realty, L.L.C. v. New Jersey Department of Environmental Protection

381 N.J. Super. 52, 884 A.2d 815 (App. Div. 2005)

CAFRA; PERMITS—An agency’s determination as to whether a CAFRA permit applies to, or is required for development of, a particular site is afforded deference by the courts unless the decision is arbitrary, capricious or unreasonable, but an agency can’t deny an applicant a hearing on whether the agency has jurisdiction in the first place.

A developer owned forty-eight acres of land on a bay island that was one of a series of “stepping stone” islands in an area on which existed a causeway linking two barrier islands. It received preliminary subdivision approval from the municipality’s planning board, originally for seventeen building lots for the construction of seventeen single-family homes. The plans were later modified to provide for fourteen homes on fourteen building lots. Planning board approval was conditioned upon receiving necessary approvals, “including a CAFRA ‘letter of approval or letter of non jurisdiction.’” The developer’s engineering plans showed that there would be no development “between the mean high water line of any tidal waters ... and a point 150 feet landward of the mean high water line,” ..., and the development was “a residential development having less than twenty-five dwelling units.” The developer applied to the New Jersey Department of Environmental Protection (DEP) for a “no jurisdiction” letter stating that “a CAFRA permit was not required for its development.” DEP responded by transmitting an applicability determination prepared for a prior owner for a different proposed development. When the developer submitted that response to the planning board, it was found unacceptable because it didn’t pertain to the developer’s proposed development. “Further, it was at best ambiguous, stating generally CAFRA non-applicability for a residential subdivision of this size located more than 150 feet from the mean high water line, but expressing regulatory authority by virtue of a previously-issued CAFRA permit prohibiting sewer connection by residential structures” in a generalized area on the island.

The developer requested a clarification when it reduced the project size from seventeen homes to fourteen homes. It again wrote to DEP pointing out that the initially referenced CAFRA permit had been amended “to specify specific lots to which its sewer connection prohibition applied, rather than [a] general reference to properties” in a generalized area. It also pointed out that its own lot was not included. The DEP responded, again by making reference to the original CAFRA permit (before its amendment). It also rejected the method by which the high water line had been located by the developer’s engineer. When the developer “requested an adjudicatory hearing in the [Office of Administrative Law], disputing that [the DEP] had jurisdiction ... and that its engineering plans were deficient,” DEP denied the request under the theory that “its jurisdictional determination ‘constitute[d] the final agency action and [was] not a contested case for which a hearing may be granted in the [Office of Administrative Law].’”

The developer went to the Appellate Division. The Court recognized that the initial sewer connection restriction may have been intended to cover an area of the island where the developer planned to build homes. The initial CAFRA permit issued to the municipality with respect to sewer connections was twice amended, eventually to “more specifically define its scope by designating by block and lot numbers the properties to which it applied.” As a consequence, the developer’s property was not included in the sewer line tie-in restriction of the CAFRA permit as amended. The Court understood that to be “consistent with the reason the restriction was imposed in the first place.” Even though the decision of an administrative agency carries a presumption of reasonableness, a court will reverse such a decision if it is found to be arbitrary, capricious or unreasonable or if it is “not supported by substantial credible evidence in the record as a whole.” In fact, “[a]n agency decision that is manifestly erroneous is not entitled to judicial deference and must be set aside.” Here, the DEP relied on the original provision of the subject CAFRA permit. “It ignored the fact that the permit was thrice amended since its [original issuance].” As amended, the permit certainly did not apply to the developer’s property. Consequently, DEP’s “finding that it possessed jurisdiction requiring issuance of a CAFRA permit based upon [the unamended, earlier CAFRA permit was not supported by the record and [was] clearly erroneous.” For that reason the Appellate Division reversed the DEP’s determination.

As to the issue of whether the developer’s engineering plan accurately located the mean high water mark, the Court looked at the two specific deficiencies alleged by the DEP. One was an alleged failure to use the National Ocean Service benchmark and the failure to mark the benchmark and tide station used on the survey. The second deficiency was that DEP wanted the information to be updated “to reflect the recently updated National Tidal Datum Epoch (1983-2001).” The developer contended that a note on its survey contained the required benchmark and station information. It also contended that it, in fact, used the proper Epoch. This was a factual dispute on the record where the DEP was taking “the position that its jurisdictional determination ‘constitute[d] final agency action and [was] not a contested case for which a hearing may be granted in the [Office of Administrative Law].” The Court rejected that position. It held that “[w]here material disputed facts pertaining to jurisdiction exist, the agency must grant a plenary hearing for resolution of those facts. ... To rule otherwise would subject to the caprice of the agency the rights of individuals who make a prima facie showing of facts which, if established, would result in jurisdiction or lack of it, whichever the case may be, if this agency simply rejects those facts.”

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