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K. Hovnanian Companies of North Central Jersey, Inc. v. N.J. Dept. of Environmental Protection

379 N.J. Super. 1, 876 A.2d 847 (App. Div. 2005)

ENVIRONMENTAL PROTECTIONS; LAND USE PERMITS; ADMINISTRATIVE REMEDIES — A land owner may not file an action against the New Jersey Department of Environmental Protection in the Superior Court of New Jersey without first exhausting its administrative remedies.

A company specializing in land development purchased property on which it planned to construct over two hundred homes, several of which were designated “Mt. Laurel” units. Prior to construction, the company sought approval from the New Jersey Department of Environmental Protection (NJDEP) for a wastewater treatment facility. NJDEP issued a permit allowing installation of an on-site treatment facility which would discharge the treated water to a nearby brook along the edge of the property. In addition, NJDEP issued a freshwater wetlands and stream encroachment permit for the project. Shortly thereafter, the owners of property located adjacent to the brook appealed the grant of the permit on the basis that the treated water posed a risk to bog and wood turtles located near the brook. The developer contested the appeal and prevailed.

The property owners then petitioned the NJDEP, requesting that the permit be revoked on the basis that the discharge of the treated water into the brook endangered the turtle habitat. In response, NJDEP directed the land developer to perform an analysis of the effect that the discharged water would have on the brook. Its analysis revealed that discharge of the treated water would result in a very slight change to the water quality of the brook. NJDEP then issued another permit to the developer. It increased the limitations previously imposed on the developer for the installation of the treatment facility. NJDEP then changed the classification of the brook to a category one stream which prevented the developer from discharging any water or materials into the brook. NJDEP did not revoke its prior permits, but the change in the classification of the brook prevented the company from proceeding with the construction. As a result, the company filed an action against NJDEP in Superior Court of New Jersey. The adjacent property owners, along with a citizens rights group, intervened. NJDEP and the interveners moved to dismiss the developer’s complaint alleging it was not yet ripe by asserting that the developer failed to first exhaust its administrative remedies as required. The lower court granted NJDEP summary judgment and dismissed the developer’s complaint for failure of the developer to exhaust its administrative remedies. The company appealed.

On appeal, the developer argued that the lower court erred in concluding that the doctrine of exhaustion of administrative remedies applied to this case. The Appellate Division affirmed the lower court’s determination ruling that the matter was not ripe. It held that the developer’s filing of the action was premature because the matter had not been resolved at the agency level because NJDEP had not revoked any of its prior permits. It further ruled that the company had an option to request that the property be exempted from the new classification standards governing the use of the brook, which it had not done. In addition, at the time the developer filed the complaint in Superior Court, the matter was already pending before the Office of Administrative Law and the NJDEP. As a result, the Court affirmed the dismissal of the developer’s complaint for failure to exhaust its administrative remedies.

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