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In Re Stream Encroachment Permit, Permit No. 0200-04-002.1 FHA

402 N.J. Super. 587, 955 A.2d 964 (App. Div. 2008)

DEVELOPERS; PERMITS — The Department of Environmental Protection may use a two-part approach to approving permits especially where it might be difficult to assess all potential future traffic impacts and air quality issues at one time and if the phased nature of a project makes it reasonable to do so.

Advocacy groups sought review of the New Jersey Department of Environmental Protection’s (DEP) approval of a developer’s application for a waterfront development permit, a water quality certificate, and a coastal zone consistency determination in connection with a mixed use development project. The project had entertainment, retail, office, and hotel components. The groups challenged the factual and legal findings that led to the grant of permits, and claimed the DEP impermissibly issued conditional permits.

The Appellate Division held that an appellate court may not second-guess judgments made by an administrative agency if the judgments fall squarely within the agency’s expertise. It recited that a court may only reverse a decision of an administrative agency if the decision was arbitrary, capricious or unreasonable. It also held that if substantial credible evidence supports an agency’s conclusion, a court may not substitute its own judgment for the agency’s even though the court may have reached a different result. In particular, the DEP is given great deference when it applies its considerable expertise and experience to the difficult balancing between development and conservation; therefore, a challenger to a DEP action must prove the action was arbitrary. In the matter at hand, it found that there were sufficient proofs presented to the DEP for its review to support its grant of the mixed use development permits. The Court noted that the developer had submitted not only its original application, but also numerous supplemental submissions, a traffic analysis, and a 2,500 page environmental impact statement. Additionally, there was a public hearing where comments were received.

The Court also found that the DEP’s two-part approach to approving the permits was neither arbitrary nor capricious given the phased nature of the project. According to the Court, the agency had noted it would be difficult to assess all potential future traffic impacts and air quality issues at one time. The Court also found the agency’s conditional approvals to be reasonable given that the development involved a highly complex project for which there would be a necessary progression. It also found the DEP had substantial credible evidence to exercise its discretion to permit a development that required the filling of less than eight acres of wetlands given that the agency had found: (a) the project to be in the public interest; and (b) that there was no feasible alternative on any non-wetlands site. It held that the wetlands area to be filled by the project was not a “waterway” because the area could not support water dependent use.

As a result, Court remanded the matter to the DEP for the DEP to establish a system for public access and comment on future project submissions related to the permit conditions the DEP had imposed.

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