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In Re NJPDES PERMIT NO. NJ0025241 Issued to Asbury Park City

185 N.J. 474, 888 A.2d 454 (2006)

DISCHARGE PERMITS; HEARINGS—Prospectively, the Department of Environmental Protection must issue an integrated hearing denial setting forth the reasons for denial of a hearing request.

A municipality held a New Jersey Pollutant Discharge Elimination System (NJPDES) permit allowing the city’s wastewater treatment facility to discharge treated and disinfected wastewater into the Atlantic Ocean. Consistent with N.J.S.A. 7:14A-15.10, upon the municipality’s application for renewal of the permit, the DEP issued a draft permit which began a thirty day period of public comment. A private organization devoted to environmental concerns submitted lengthy negative comments. After considering the public comments, the DEP renewed the NJPDES permit. The private organization submitted a request for an adjudicatory hearing. The DEP Commissioner denied the request. In issuing its ruling, the DEP Commissioner concluded that the private organization failed to demonstrate the existence of any fact or law likely to affect the decision of the DEP to issue the NJPDES permit. The issues raised by the private organization in its application for an adjudicatory hearing were the same issues raised during the period of public comment. Since those issues had been considered by the DEP in issuing the permit renewal, the DEP Commissioner stated in its ruling that those same issues would be unlikely to affect the decision to grant the renewal of the permit. Thus the Commissioner denied the private organization party status and denied its request for an adjudicatory hearing.

The private organization appealed to the Appellate Division and sought to have the matter transferred to the Office of Administrative Law either for an adjudicatory hearing or for a determination by an administrative law judge that the organization met the requirements for entitlement to a hearing. The Appellate Division rejected both arguments, ruling that the DEP Commissioner’s denial of the request for an adjudicatory hearing was neither arbitrary nor capricious. The Appellate Division found that because the private organization relied on the same arguments submitted during the period of public review as grounds for an adjudicatory hearing, the DEP acted reasonably in concluding that submission of the same arguments would not affect the decision to issue the permit renewal. The Appellate Division also reviewed and denied each of the bases set forth by the private organization for a hearing, concluding that none required alteration of the DEP’s permitting decision. The organization appealed to the Supreme Court.

As an initial matter, although the Administrative Procedure Act establishes the process for adjudicatory hearings for “contested cases,” the right to such a hearing is limited to license revocations and renewals in accordance with N.J.S.A. 52:14B-11. The right to a hearing may exist for a party which is not the permit applicant, if that non-applicant party can demonstrate a direct effect on a particularized property interest of constitutional significance. In this case, the legislature had expanded the class of persons entitled to a hearing by removing the need to demonstrate an effect on a property interest, provided the party seeking the hearing satisfied the other statutory requirements. By operation of statute, all decisions by the DEP to issue or renew a discharge permit qualify as contested cases under the Administrative Procedure Act, and any party to the action has a right to an adjudicatory hearing. To obtain “party” status, the entity requesting such status must have raised its objections during the period of public review and comment, and in its application for a hearing the entity must present a significant issue of law or fact likely to affect the permit determination. The entity requesting the hearing must also present treatment alternatives to those authorized by the DEP permit. The Supreme Court interpreted all of the conditions imposed on the entity seeking the hearing as evidence of legislative intent to narrow the bases upon which an entity may be permitted to an adjudicative hearing. To merit an adjudicatory hearing, there must exist a dispute about facts worthy of adjudication. Issues of law, policy or discretion are not suitable for adjudication. Arguments about policy or discretion are entitled to reasoned consideration during the period of public comment, but are not worthy of adjudication.

Although the Supreme Court ruled that henceforth the DEP must issue an integrated hearing denial setting forth the reasons for the denial of the hearing request, the denial of the hearing in the present case and the decision of the Appellate Division, were affirmed. Finding no adjudicative facts in dispute, the Supreme Court held the DEP Commissioner acted reasonably in denying the request for an adjudicatory hearing.

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