Opinion
DOCKET NO. A-2392-10T1
06-25-2012
ASDAL BUILDERS, LLC, ASDAL RENOVATIONS, LLC, and WILLIAM ASDAL, Individually, Petitioners-Appellants, v. NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION, LAND USE REGULATION, Respondent-Respondent. NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION, COASTAL AND LAND USE COMPLIANCE AND ENFORCEMENT, Petitioner-Respondent, v. ASDAL BUILDERS, LLC, ASDAL RENOVATIONS, LLC, and WILLIAM ASDAL, Individually, Respondents-Appellants.
Sokol, Behot & Fiorenzo, attorneys for appellants (Neil Yoskin, on the briefs). Jeffrey S. Chiesa, Attorney General, attorney for respondent (Melissa H. Raksa, Assistant Attorney General, of counsel; Daniel A. Greenhouse and Jason T. Stypinski, Deputy Attorneys General, on the brief).
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
Before Judges Cuff, Lihotz and St. John.
On appeal from the New Jersey Department of Environmental Protection, Agency Docket Nos. 1019-03-0003.1 FHA 040001 and 1019-03-0003.1 PEA 070001.
Sokol, Behot & Fiorenzo, attorneys for appellants (Neil Yoskin, on the briefs).
Jeffrey S. Chiesa, Attorney General, attorney for respondent (Melissa H. Raksa, Assistant Attorney General, of counsel; Daniel A. Greenhouse and Jason T. Stypinski, Deputy Attorneys General, on the brief).
The opinion of the court was delivered by LIHOTZ, J.A.D.
We examine challenges by appellants Asdal Builders, LLC (Builders), Asdal Renovations, LLC (Renovations), and William Asdal seeking to reverse the final decision of the Commissioner of the Department of Environmental Protection (DEP), regarding the renovation and construction of structures located in a floodway. Appellants portray the DEP's enforcement of various flood hazard and freshwater protection rules as arbitrary and capricious actions, quelling the restoration of civil war era structures which maintained their historic character while incorporating modern "green" technology.
The Commissioner's decision encompassed two matters consolidated by the agency. In the first, the Commissioner rejected the recommendation of the Administrative Law Judge (ALJ) and declined to grant Builders' application for a stream encroachment permit (SEP) nunc pro tunc or, alternatively, legalize renovations made to the property thereby relieving Builders from strict compliance with the regulations by granting a hardship waiver (the permit case). In the second, the Commissioner denied Builders' and Asdal's request to abate or reduce penalties imposed for environmental regulatory violations resulting from the development of the property (the penalty case).
On appeal, Builders argues the Commissioner's decision in the permit case arbitrarily disregarded findings and conclusions of the ALJ and misapplied the law. Asdal and Renovations contend the assessments imposed in the penalty case were excessive, unreasonable and unwarranted.
Following our review of the arguments advanced on appeal in light of the record and applicable law, we conclude the Commissioner's denial of the nunc pro tunc SEP application was incorrectly grounded on a determination that the property was abandoned and therefore, the Commissioner erroneously applied applicable regulations. In the penalty case, we conclude certain penalties must be modified and the personal assessment against Asdal must be vacated. Accordingly, we affirm in part, reverse in part, and remand the matter to the Commissioner for additional proceedings.
I.
A.
Asdal and his wife, as the sole shareholders of Renovations, purchased over twenty-four acres, split almost equally between Lot 2, Block 42 in Lebanon Township, Hunterdon County, and Lot 17, Block 55 in Washington Township, Morris County (the property). The South Branch of the Raritan River wraps around two sides of the property and a manmade "millrace"transects the parcel. While all the structures on the property are located within Lebanon Township, the entire property lies within the floodway of the South Branch of the Raritan River and is designated as a flood hazard area.
A millrace or raceway is a manmade channel typically supplying water for mills or manufacturing. Trenton Water Power Co. v. Donnelly, 77 N.J.L. 659, 659-60 (E. & A. 1909).
The property was once operated as the Lawrence Trimmer Millworks and had served as a working farm "perhaps as far back as two centuries to the original homestead in 1732." The DEP's Historic Preservation Office (HPO) lists the property among the sites on the State Register of Historic Places. It is not disputed that farming activities on the property ceased by 2000, when the farmland assessment was lost. In fact, at the time Renovations purchased the property, the buildings were in disrepair and the property was littered with debris and solid waste, including: "1,200 yards of debris, 4,000 yards of wood debris, and another 100 yards of garbage, including 14 tons of tires."
The HPO maintains an inventory of historic and cultural resources eligible for listing on the State and National Registers of Historic Places. The property is included in the 2008 Technical Report. N.J. Highlands Water Prot. & Planning Council, Historic, Cultural, Scenic, Recreation, and Tourism: 2008 Technical Report, 33 (Nov. 7, 2007), http://www.highlands.state.nj.us/njhighlands/master/tr_historic_ cultural_scenic.pdf.
We note Builders' submission also informed the DEP that it removed "hundreds of yards of scrap metal appliances, hundreds of yards of stumps, in addition to an [A]irsteam trailer and several old car frames."
Shortly after its purchase, Renovations removed the debris and engaged a farmer to re-establish the farm lands as historically operated. The farmer mowed the existing natural vegetation, then planted and cultivated orchard grass and hay on each side of the millrace.
Builders, which is also solely owned by Asdal and his wife, undertook the restoration of the structures erected on the property. As renovated, the property's main building is now known as the Raritan Inn, a zero-energy bed and breakfast, which
represents the first pre-existing, single-family residence that used a Civil War shell and achieved zero energy . . . through a combination of geothermal heating andA smaller residential cottage, a barn, and a woodshed were also restored. Other buildings, including a chicken coop, garage, and barn were removed. Finally, a new garage was constructed in a different location from the one razed, and a stone retaining wall was created using foundation stones from the removed structures.
cooling, insulation and insulating components, and solar panels. The house relies upon no fossil fuels for heat and uses bottled propane only in the kitchen.
Prior to the commencement of work, Builders engaged Stephen Parker, a professional engineer associated with Parker Engineering & Surveying, PC, to assist in obtaining local and county approvals for the proposed renovations. Parker, on behalf of Builders, applied to the DEP for a Stream Encroachment Jurisdiction Determination (SEJD) in order to replace the property's septic system. In the May 29, 2003 SEJD, the DEP advised "a Stream Encroachment Permit was not required" based on the drawings submitted to the DEP for review, which showed "[t]he proposed system will not require the placement of any fill above the existing grades."
We note the flood hazard regulations were significantly modified in 2007. 39 N.J.R. 4573(a) (Nov. 5, 2007). All regulatory sections cited in this opinion refer to the regulations which govern Builders' permit request, that is those effective March 20, 1995, through November 5, 2007. 27 N.J.R. 1245-64 (Mar. 20, 1995).
Under the prior regulations "fill" refers to "material placed or deposited within the flood plain or the watercourses that create them[,] which will displace floodwaters." N.J.A.C. 7:151.2.
Beginning in 2002, Lebanon Township issued construction permits for the renovation of the main residence, the adjacent cottage, and construction of the relocated garage. In a January 18, 2005 resolution, the Township approved the development, finding it complied with Lebanon Township's Flood Damage Prevention Ordinance, which required approval and issuance of a variance prior to the commencement of construction or development. The resolution stated Builders had
demonstrated good and sufficient cause for the grant of the variance, and ha[d] shown that failure to grant the variance would result in exceptional hardship. Also, granting the variance will not result in increased flood heights or threats to public safety . . . [or cause] any increase in flood levels during the occurrence of the base flood discharge.In September 2005, the Township issued certificates of occupancy for the two residential structures and a certificate of approval for the garage.
B.
On May 4, 2004, in response to a complaint regarding "development in the floodway," the DEP inspected the property, resulting in a notice of violation (NOV) of provisions of the Flood Hazard Area Control Act (FHACA), N.J.S.A. 58:16A-50 to - 68. The NOV, dated May 24, 2004, advised Builders that permit approval was required prior to construction of the garage and additions to the main house, because they caused "disturbance of approximately 1,176.5 square feet" of the floodway. The NOV also instructed remedial steps must be taken within thirty days, including applying for a SEP and submitting a restoration plan.
Parker, on behalf of Builders, applied for an "after-the-fact" SEP, seeking approval of the development within the floodway, or, alternatively seeking a hardship waiver of the strict enforcement of the flood regulations. Parker's letter outlined the benefits provided by Builders' activities on the property, maintaining the redevelopment "resulted in a significant improvement to the stream[']s flood carrying capacity, and an overall improvement to the site and surrounding areas." Appellants' submission suggested "[t]he net result of the activity . . . [was] an overall reduction in fill and obstruction to stream flow within the floodway, increased improvements in structural integrity of the structures, and restoration of a historically significant property." Further, although the original garage was destroyed, the new garage was built in compliance with the building code; anchored to prevent flotation, collapse, or lateral movement; built with flow-through openings; and located in the "shadow" of the cottage, thus "eliminating a significant obstruction to the direction of flow of the flood waters." Finally, appellants noted approval of the new stone retaining wall was sought in an amendment to the application, as DEP had requested.
On August 12, 2004, the SEP application was returned for deficiencies. The DEP issued a second NOV on October 19, 2004, adding additional violations of the FHACA regulations. Parker transmitted more material regarding the development to the DEP. However, a December 22, 2004 letter from the DEP rejected the SEP request because the "application d[id] not satisfy the requirements of the Rules." The violations were described as:
This NOV is not contained in the record.
The applicant has conducted a number of activities on this site without first obtaining a [SEP]. These include the enclosure of the rear porch of the smaller of the two dwellings, the construction of a porch and a patio for the larger dwelling, the construction of an 816 square foot frame garage, and the construction of a stone wall and driveway surrounding a portion of the perimeter of the entrance driveway located
in between the two dwellings. Also, a 100 square foot shed and a 1,350 square foot L-shaped garage were removed from the site. Whereas the two dwellings, barn and shed are pre-existing, the 816 square foot frame garage is a new structure. Also, in addition to this, a field inspection of the site showed that the septic field was built above existing grades, which is in violation of a Jurisdictional Determination letter issued by the [DEP].
Since the above referenced construction activities involved the placement of fill and structures within the floodway, this application is not in compliance with [the FHACA Rules].
Contrary to the plans Parker submitted to support the SEJD, the septic system "was constructed nine inches higher" than grade.
On September 26, 2005, a DEP inspection of the site prompted the issuance of a third NOV based on the New Jersey Freshwater Wetlands Protection Act (FWPA), N.J.S.A. 13:9B-1 to - 30. The NOV cited the disturbance of vegetation within the freshwater wetlands, stating:
Vegetation was observed to have been removed from approximately 12,500 square feet of land within 50' from the top of the bank along the South Branch [of the] Raritan River, and from approximately 33,750 square feet of land within 50' from the top of the bank along the raceway. Also, approximately 13,725 square feet of vegetation was observed to have been removed from within exceptional resource value freshwater wetlands and transition areas.
Builders was informed of the necessity to complete corrective measures and warned of the possible imposition of fines. In addition to these vegetation disturbances, the enumerated violations were delineated as:
1. The construction of an approximately 120.5 square foot addition to the cottage within the floodway;On June 16, 2006, the DEP recorded its notice of the wetlands violations as an encumbrance to the property's deed.
. . . .
2. The construction of an approximately 1,056 square foot garage within the floodway;
. . . .
3. The placement of fill material within the floodway in connection with the construction of a 120 foot retaining wall, patio and gravel drive associated with the main house;
. . . .
4. The placement of fill material within the floodway in connection with the construction of a raised-bed subsurface sewage disposal system[;]
. . . .
5. Re-grading around the cottage within the floodway;
6. The enlargement of the back porch on the main house within the floodway;
7. The removal of vegetation within 50' from the top of the bank along the raceway;
8. Disturbances at and below the top of the bank associated with the raceway in
connection with the construction of a storm water outfall structure from the parking area to the raceway;
9. The placement of fill material below the top of the bank along the raceway in connection [with the] construction of stone abutments below the top of the banks along the . . . raceway; and
10. Failure to properly anchor [a] propane tank associated with the main house.
Builders appealed the denial of the SEP application. Following an unsuccessful arbitration session, the case was transferred to the Office of Administrative Law (OAL).
C.
On August 28, 2007, while the permit case was pending, the DEP issued an Administrative Order and Notice of Civil Administrative Penalty Assessment (AONOCAPA) imposing a $66,000 penalty against Asdal and Builders. The AONOCAPA ordered "all regulated activities on the site" to cease immediately and required all disturbed areas to be stabilized. Because the South Branch of the Raritan River qualified as an exceptional resource, specifically, "a trout production, Category-1 watercourse[,]" Builders was instructed to remediate the disturbances caused when it replaced native vegetation with a lawn and hayfield. The DEP assessed $6,000 for each of the eleven FWPA violations it noted. Further, Builders was required to submit a "restoration plan" outlining "a list of all indigenous plant species . . . intended to replace those removed" and a time schedule for implementation and completion of the restoration work.
On May 26, 2009, nearly two years after the first AONOCAPA, the DEP issued an amended AONOCAPA against Asdal and Builders, citing FWPA violations resulting from the disturbance of 2.9 acres of the wetlands transitional area surrounding the millrace (the planted hayfield). The amended AONOCAPA also imposed penalties of $100,000 for continuing FHACA violations as appellants had not modified the structure pending the OAL hearing, and $75,000 for the FWPA violations observed during a recent inspection. It is noted that a portion of these assessments were imposed pursuant to the DEP's authority designated in the newly enacted Environmental Enforcement Enhancement Act (EEEA), L. 2007, c. 246.
Prior to the enactment of the EEEA, the DEP was required to pursue an injunction and penalties through an action filed in Superior Court. N.J.S.A. 58:16A-63(a) (2004).
Builders and Asdal challenged the imposition of these penalties and requested a hearing. The penalty case was transferred to the OAL. At appellants' request, the permit case and the penalty case were consolidated prior to the hearing.
D.
In proceedings before the OAL, the ALJ issued partial summary disposition in favor of the DEP. The ALJ concluded the property lost the benefit of a grandfathered wetlands farming exemption to the FWPA regulations because farming had been ceased for more than five years.
During the two-day plenary hearing, Asdal testified regarding each stage of construction. He admitted he knew the property was in a flood plain, which was why he "flood proofed"the renovated cottage and the new garage and changed the garage's location on the property. Further, he agreed the existing footprint of the main structure was slightly expanded by the enclosed porch; and a low stone wall and a garage were constructed. However, Asdal had not recognized the need for an SEP permit and challenged the DEP's claim that fill was added to the property. He asserted extensive debris and structures were removed, so the net effect was less fill on the property than there had been before construction.
See N.J.A.C. 7:13-1.2 (defining "flood proofing" as "any combination of structural and nonstructural design features, additions, changes, or adjustments to structures which reduce or eliminate flood damage to real estate or improved real property, structures and their contents").
Asdal also asserted the penalties were excessive, explaining the Raritan Inn does not make a profit and is sustainable only because farming activities result in a decreased realty tax assessment. Asdal acknowledged a portion of the property's vegetation was mowed to allow access to various areas, but it was not to destroy natural flora. Also, he noted the initial NOV cited disturbance of 225 square feet of wetlands, which had since regenerated negating any violation. Finally, Asdal questioned the accuracy of the amended AONOCAPA, which expanded the scope of violations to the wetlands transition area now farmed as hayfields.
Parker also testified. He acknowledged the septic system when measured was constructed above grade, contrary to the design approved in the SEJD, but explained this resulted because the angle of the effluent cleansing equipment needed to be seeded slightly higher than expected. In any event, he opined the depth remained within construction tolerance.
Parker claimed the overall disturbance presented by Builders' efforts was minimal. He reiterated the volume of fill removed from the property and advised some existing fill was actually reused in other areas, so overall a very small net increase in fill occurred. He characterized the change as insignificant and permissible under the rules.
On behalf of DEP, Peter DeMeo, a supervising engineer, stated Builders' SEP request was denied after the agency concluded the property's buildings were "abandoned," thus disqualifying any development as renovation of a pre-existing use. Also, despite the fact that the newly constructed garage was stabilized and flood proofed, DeMeo maintained it was noncompliant because its floor was 1.6 feet below the regulatory flood elevation. DEP considered the garage habitable space and noted in the event of flooding the noncompliant floor could result in damage to personalty stored in the garage.
DeMeo stated the septic bed was "mounded" rather than built to grade, contrary to the SEJD approved design. However, on cross-examination, he agreed he did not personally make that observation.
DeMeo also discussed the DEP's rejection of Builders' SEP application, stating it attempted to utilize a "net fill" calculation. He explained the DEP only permitted net fill calculations when measuring fill in "the flood fringe where floodwaters are stored and not in the floodway where floodwaters need to be conveyed." Finally, the DEP viewed Builders' cleanup efforts as a "correction" not an "improvement," for which no exception or credit applied.
David Sumba, a senior environmental specialist, testified regarding DEP's determination of the wetlands disturbances, which he explained were actually estimates derived from the differences in the appearance of aerial photographs taken between 2002 and 2007 that were compared using specialized computer software. He noted the majority of the hayfield fell outside of the area of DEP's jurisdiction, but concluded, based on computer calculations, rather than visual observations, there was encroachment within the fifty-foot riparian buffer.
Finally, Armand Perez, a DEP principal environmental specialist, testified regarding his inspections and the computation of the penalties. He also related the basis for imposing an individual assessment against Asdal; namely, his ownership of Builders and Renovations and the DEP's prior interactions with Asdal.
On May 17, 2010, the ALJ issued a lengthy initial decision. The ALJ reviewed each violation cited by the DEP. In viewing the totality of the development, the ALJ considered the total fill impact resulting from the activities on the property. She found the result "insignificant," and concluded the DEP's denial of the SEP to renovate and expand an existing use was arbitrary and capricious.
Regarding the penalty case, the ALJ rejected application of the EEEA's enhanced penalties as "all of [appellants'] actions . . . under the FHACA pre-dated the EEEA[,]" even if the violation continued after the EEEA's effective date. She recommended dismissal of the $100,000 enhanced penalty for FHACA violations, and after accounting for the "variance of the FWPA allegations over the course of [the] NOVs and AONOCAPAs; . . . the historic importance of the structures and agricultural property and millrace, . . . [and] the lack of pecuniary benefit or profit from the Inn or the farming[,]" the ALJ reduced the penalty assessment for the transitional FWPA violations to $50,000, comprising $10,000 per year of improper farming activities. Renovations was ordered to "reduce the size of its cultivated fields over the course of the next three growing seasons" to conform to the boundaries of the wetland transition areas and to "plant natural wetland transition area vegetation within that area."
Finally, the ALJ found Asdal did not knowingly violate the FHACA or the FWPA, and did not intentionally overlook the jurisdictional interests of the DEP. Rather, Asdal undertook the renovation project "for historical and renewable-energy purposes[,]" which had "public benefits." He obtained numerous permits and held "a good-faith belief that the property had a historic exemption for farming[.]" Therefore, the ALJ concluded the imposition of individual liability for the assessments was inappropriate.
The DEP filed exceptions to the ALJ's initial decision. The matter was transferred to the Commissioner for review.
E.
On December 9, 2010, the Commissioner issued his extensive decision, modifying some of the ALJ's factual findings and rejecting most of her conclusions. The Commissioner found Builders' request for an after-the-fact SEP did not seek to expand a pre-existing use because the structures were "abandoned." The Commissioner determined Builders should have "sought [a permit] for the restoration of the dilapidated and uninhabitable structures in the floodway" before any activities commenced, and "those activities [could not] be approved through a proceeding at the OAL [seeking] to challenge the denial of the application submitted." Further, the Commissioner noted the retaining wall, driveway, and garage were new structures that increased the prohibited fill in the floodway. He also rejected the ALJ's finding that these obstructions were insignificant. Moreover, the Commissioner reinforced DEP's rejection of the net fill concept for development in floodways. Based on these findings, he concluded the SEP was properly denied.
Rejecting Builders' alternative claim of hardship, the Commissioner concluded the difficulties were self-created because
Asdal had feasible and prudent alternatives, i.e., not purchasing the [p]roperty, not expanding the structures, and not building new structures. Asdal did not prove extraordinary or exceptional circumstances []or undue cost of strict compliance. Asdal offered no evidence, outside of the rejected net fill argument, which satisfies the criteria that the development will not substantially impair the appropriate use or development of adjacent property and will not pose a threat to the environment or public health, safety and general welfare.
Finally, the Commissioner reinstated the cessation order, partially reinstated $166,000 of the assessed penalties, and applied the corporate officer doctrine to reinstate individual liability against Asdal. This appeal followed.
II.
A.
The principles governing judicial review of administrative agency action are well established. A court will not reverse an agency's decision "unless: '(1) it was arbitrary, capricious, or unreasonable; (2) it violated express or implied legislative policies; (3) it offended the State or Federal Constitution; or (4) the findings on which it was based were not supported by substantial, credible evidence in the record.'" ZRB, LLC v. N.J. Dep't of Envtl. Prot., 403 N.J. Super. 531, 549 (App. Div. 2008) (quoting Univ. Cottage Club of Princeton N.J. Corp. v. N.J. Dep't of Envtl. Prot., 191 N.J. 38, 48 (2007)).
"[C]ourts ordinarily recognize that an agency's specialized expertise renders it particularly well-equipped to understand the issues and enact the appropriate regulations pertaining to the technical matters within its area." In re Stormwater Mgmt. Rules, 384 N.J. Super. 451, 465 (App. Div.), certif. denied, 188 N.J. 489 (2006) (internal quotation marks omitted). Accordingly, as a general proposition we accord administrative agency action "a 'strong presumption of reasonableness.'" Aqua Beach Condo. Ass'n v. Dep't of Cmty. Affairs, 186 N.J. 5, 16 (2006) (quoting City of Newark v. Natural Res. Council, 82 N.J. 530, 539, cert. denied, 449 U.S. 983, 101 S. Ct. 400, 66 L. Ed. 2d 245 (1980)), and we afford substantial deference to an agency's interpretation of the statute it is charged with enforcing, R & R Mktg., L.L.C. v. Brown-Forman Corp., 158 N.J. 170, 175 (1999).
Nevertheless, the judiciary must fulfill its function to assure the agency's exercise of regulatory authority comports with its legislative mandate. We are "'in no way bound by the agency's interpretation of a statute or its determination of a strictly legal issue.'" In re Taylor, 158 N.J. 644, 658 (1999) (quoting Mayflower Sec. Co. v. Bureau of Sec, 64 N.J. 85, 93 (1973)). "[I]f the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency's answer is based on a permissible construction of the statute." Matturri v. Bd. of Trs. of the Judicial Ret. Sys., 173 N.J. 368, 381-82 (2002) (internal quotation marks omitted). To be upheld, the agency's interpretation must be permissible, although it "need not be the only permissible one or even the one that the court would have chosen had the question been first presented to it." In re Aug. 16, 2007 Determination of NJDEP, 414 N.J. Super. 592, 601 (App. Div.), certif. denied, 205 N.J. 16 (2010).
In this matter, we are also presented with the Commissioner's modification and rejection of an ALJ's factual findings. In such instances, we focus our review on whether the Commissioner "state[d] with particularity the reasons for rejecting the [ALJ's] findings" when making his findings of fact from the OAL record, and whether the new or modified findings are supported by "sufficient, competent, and credible evidence in the record." N.J.S.A. 52:14B-10(c). The Commissioner may not reject findings based on the credibility of witness testimony unless he first determines the ALJ's findings were "arbitrary, capricious or unreasonable" or unsupported "by sufficient, competent and credible evidence in the record." Messick v. Bd. of Review, 420 N.J. Super. 321, 326 (App. Div. 2011). See also N.J.S.A. 52:14B-10(c).
B.
Flood control and waterway preservation have been identified as environmental priorities by both the Federal and State government. See 33 U.S.C.A. § 701b-11; N.J.S.A. 58:16A-50b. In this matter, our review examines whether appellants complied with the FHACA, the FWPA, and those regulations then in effect promulgated to effectuate these statutes.
"Under the [FHACA], the DEP is empowered to map flood hazard areas, adopt land regulations, control stream encroachments, coordinate the development, dissemination, and use of relevant information and integrate the control activities of municipal, county, state and federal governments." Am. Cyanamid Co. v. N.J. Dep't of Envtl. Prot., 231 N.J. Super. 292, 297 (App. Div.), certif. denied, 117 N.J. 89 (1989). The statutory authority granted to the DEP by the FHACA is designed to assure public safety and general welfare from the hazards of flooding and to "preserve the flood carrying capacity of natural streams." N.J.S.A. 58:16A-52a (2004).
Title 7 of the Administrative Code is devoted entirely to the DEP's comprehensive regulation of the State waterways under the State's police power. The flood hazard regulations "control development . . . in order to avoid or mitigate the detrimental effects of development upon the environment and the safety, health and general welfare of the people of the State." N.J.A.C. 7:13-1.1(a).
The parties do not dispute the property's elevation, which during a hypothetical regulatory flood, places the property under 2.9 feet of water, thus raising no question that the entirety of the property is a delineated flood plain under N.J.A.C. 7:13-1.1(b)1. A flood plain is determined using the "flood hazard area design flood," which relies on an abstract probability of the discharge from the regulatory "100-year flood" increased by twenty-five percent in the delineated areas. N.J.A.C. 7:13-1.2.
The "100-year flood" is also referred to as the "100-year storm." Am. Cyanamid, supra, 231 N.J. Super. at 300. "It is important to note that the 100-year storm is not based on any actual storm. Instead, a theoretical storm is constructed by using mathematical models. A hydraulic computer model is applied to generate the width and location of the floodway at each cross-section at which the stream is measured." Ibid.
The regulations, designed to prohibit uses that would cause injury to the community, separate a flood plain into two parts: the floodway and the flood fringe. A "floodway" is defined as
the channel and portions of the flood plain adjoining the channel which are reasonablyThe "flood fringe" represents "the portion of the flood plain outside of the floodway[.]" N.J.A.C. 7:13-1.2. The DEP's regulations restricting development activities in the floodway and flood fringe differ, presumably because they consider the "relative risk," which encompasses the "varying degrees of hazard to life and property in a flood hazard area which are occasioned by differences in depth and velocity of flood waters covering and flowing over it[.]" N.J.S.A. 58:16A-51(d) (2004).
required to carry and discharge the regulatory flood. For the purpose of this chapter the term floodway shall refer to both the delineated floodway on State Adopted Studies and the area between the encroachment lines located on both sides of a non-delineated watercourse.
[N.J.A.C. 7:13-1.2.]
The regulations also formulate land use restrictions imposed in flood plains. "In the floodway of a delineated stream . . . virtually all construction of structures and addition of fill is prohibited." Am. Cyanamid, supra, 231 N.J. Super. at 301. See also N.J.A.C. 7:13-2.2(a) (delineating prohibited uses in a floodway). Importantly, but for very limited exceptions set forth in N.J.A.C. 7:13-1.3(e), a SEP is required prior to undertaking any development in a floodway. N.J.A.C. 7:13-1.3(a)1.
An SEP is not required for activities, even though undertaken in a floodway that:
i. Do not further obstruct flood flow, or in any way reduce the cross-sectional area of the floodway open to the flow of water during the regulatory flood, unless the obstruction will be insignificant, such as the [sic] those activities listed in (e)2 below;
ii. Do not require the erection of structures, except as specifically noted in (e)2 below;
iii. Do not require channel modification or relocation;
iv. Do not alter the cross-sectional area of a water-control structure such as a bridge, culvert or dam that is open to flood waters during the regulatory flood;
v. Do not increase off-site flood damage potential by raising flood elevations off of the property on which the use is proposed by more than two-tenths of a foot or 2.4 inches;
vi. Do not adversely affect [the flood plain or protected areas];
vii. Do not cause or contribute to a violation of any applicable State water quality standard or otherwise adversely affect water quality; and
viii. Are undertaken with the land owner's express written permission.
[N.J.A.C. 7:13-1.3(e)1.]
The flood hazard rules, when originally adopted, included a clause grandfathering the imposition of the requirements of the new rules to "[l]and uses existing prior to March 20, 1995, which were in conformance with all relevant laws and regulations when the use commenced[.]" N.J.A.C. 7:13-2.2(b)1. Presumably, the regulations responded to the FHACA specification stating: "No rule or regulation adopted . . . shall prevent the repair or rebuilding within a flood hazard area of any lawful pre-existing structure which was damaged by a flood or by any other means." N.J.S.A. 58:16A-55.1 (2004).
A pre-existing use, although in a floodway, is permitted to be expanded or enlarged if:
i. No further obstruction to flow is created;
ii. The lowest floor elevation of any structure that is expanded is at or above the regulatory flood elevation;
iii. The structure is flood proofed or treated to minimize future flood damage;
iv. The owner submits an application for a permit under this chapter together with drawings of the proposed changes and the application is approved by the Department; and
v. Calculations are submitted to the Department which prove that new structures, alone or in combination with existing structures, are designed, connected and anchored to resist impact from debris, flotation, collapse or permanent lateral
movement caused by expected structural loads and stresses (including both hydrostatic and hydrodynamic loads) from flooding to the regulatory flood elevation. Calculations shall be certified as true and accurate by a New Jersey licensed engineer or architect.
[N.J.A.C. 7:13-2.2(b)1.]
Builders' compliance with these regulations is the focus of the parties' dispute.
III.
On appeal, appellants present several arguments addressing a number of issues in its challenge to the Commissioner's final decision. Initially, Builders challenges the denial of the SEP arguing the garage, the stone wall, and the modifications to the other existing structures located on the property, fall squarely within the grandfathered activities allowed by N.J.A.C. 7:13-2.2(b)1. Next, it argues its application for a hardship waiver should have been granted. Finally, Renovations and Asdal contend the imposed penalties must be vacated.
A.
We start with the denial of the SEP. Builders maintains the Commissioner's decision to deny the SEP was arbitrary, capricious and unreasonable. Builders argues the Commissioner erred in concluding the property was abandoned and in finding its activities did not fully comply with the regulations. Builders asserts renovations to existing structures are otherwise exempt from restrictions prohibiting the placement of fill in a floodway, if they comply with N.J.A.C. 7:13-2.2(b)1.
In our review, we first address the general question of whether the property falls outside the exception found in N.J.A.C. 7:13-2.2(b)1 because it was abandoned. Next, we generally analyze the arguments seeking reversal of the Commissioner's determination that Builders' activities in the floodway resulted in further "obstruction to flow" in violation of N.J.A.C. 7:13-2.2(a)1. Finally, we examine the specifically identified violations cited by the DEP regarding each renovated structure, in light of the applicable FHACA rules.
1.
The Commissioner premised denial of the SEP upon finding all buildings on the property were abandoned and, therefore, Builders' restorative activities could not qualify as an expansion or enlargement of a pre-existing use. We conclude the Commissioner erred in concluding the structures were abandoned.
Describing "the buildings on the [p]roperty [as] dilapidated and abandoned[,]" the Commissioner highlighted his reliance on the fact "Asdal stipulat[ed] that all of the buildings were uninhabitable when purchased" and had been vacant for "twenty-five to thirty years." The Commissioner concluded the grandfathered exception applied only when "the structures had been continually maintained[,]" as "[t]he ability to restore and expand may not be invoked in perpetuity."
The concept of abandonment is not discussed in the FHACA. The Commissioner considered Municipal Land Use Law, N.J.S.A. 40:55D-1 to -163, authority addressing abandonment of a non-conforming use as apt to this circumstance. See N.J.S.A. 40:55D-5. We agree this analogy is appropriate.
A non-conforming use is created "[w]hen a municipality adopts a zoning ordinance or when an existing zoning ordinance is changed," leaving "structures which do not conform with the bulk requirements." Bonaventure Int'l, Inc. v. Borough of Spring Lake, 350 N.J. Super. 420, 431 (App. Div. 2002). The test for whether non-conforming zoning is lost "is that the non-conforming use must be the same before and after the passage of the ordinance." Haulenbeek v. Borough of Allenhurst, 136 N.J.L. 557, 558 (E. & A. 1948). Accordingly, each case necessarily turns on its own facts. Ibid.
When examining whether a non-conforming use is abandoned, "[m]ere passage of time during a cessation of active use does not constitute abandonment. The length of time that passes is a factor in the overall circumstances to be considered." S & S Auto Sales, Inc. v. Zoning Bd. of Adj. for Stratford, 373 N.J. Super. 603, 617 (App. Div. 2004). Further, "[a] change in ownership or tenancy does not terminate a nonconforming use[.]" Id. at 614 (citing Arkam Mach. & Tool Co. v. Twp. of Lyndhurst, 73 N.J. Super. 528, 533 (App. Div. 1962)). Finally, "[p]eriods of interruption due to lack of demand, inability to get a tenant and financial difficulty d[o] not change the character of use." Haulenbeek, supra, 136 N.J.L. at 559.
[T]he passage of time must be considered in conjunction with all circumstances, including those that caused the cessation, the nature and quality of efforts being made to resume the use, and any other objective manifestations supporting or negating the owner's expressed intention to continue the use. And it must be remembered that the intention must be a continuing and definite one. To be meaningful to the analysis, the passage of time factor must be viewed in this context, not in isolation.
[S & S Auto Sales, supra, 373 N.J. Super. at 618.]
Contrary to the Commissioner's findings, cessation of active operation is not synonymous with abandonment. Id. at 617. A finding of abandonment necessitates an intention to abandon or discontinue the use. Borough of Saddle River ex rel. Perrin v. Bobinski, 108 N.J. Super. 6, 16-17 (Ch. Div. 1969). There must be a finding of "'some overt act or failure to act which carries a sufficient implication that the owner neither claims nor retains any interest in the subject matter of the abandonment.'" Berkeley Square Ass'n, Inc. v. Zoning Bd. of Adj. of Trenton, 410 N.J. Super. 255, 265 (App. Div. 2009) (quoting S & S Auto Sales, supra, 373 N.J. Super. at 613-14), certif. denied, 202 N.J. 347 (2010).
This record does not support a finding that Asdal's predecessors had any intention to abandon the property. Quite the contrary. We determine the facts do not support the Commissioner's finding that the buildings, albeit uninhabited, were abandoned. Two years prior to Renovations' purchase, the property's former owner submitted a request to develop the property. Moreover, the former owner who sold the property to Renovations was up-to-date on all taxes and assessments and no condemnation order or municipal ordinance violations were of record.
As an aside, we find the Commissioner's conclusion of abandonment ironic in light of positions expressed by different divisions of the DEP. For example, in 2003, prior to the completion of the renovations, the HPO, which is located within the DEP, issued a certificate of eligibility identifying the property as a coveted State historic treasure. See N.J. Dept. of Envtl. Prot., Historic Pres. Office, New Jersey and National Registers of Historic Places, 10 (Mar. 2, 2012), http://www.nj. gov/dep/hpo/1identify/nrsr_lists/hunterdon.pdf. The HPO sought to identify those "properties and historic districts [which] all meet the New Jersey and National Register criteria for significance in American history, archaeology, architecture, engineering or culture, and possess integrity of location, design, setting, materials, workmanship, feeling and association[.]" N.J. Dept. of Envtl. Prot., Historic Pres. Office, New Jersey and National Registers of Historic Places, http://www.nj.gov/dep/hpo/1identify/nrsr_lists.htm (last visited May 22, 2012). The property was among those listed, presumably possessing some of these described attributes.
Additionally, the Technical Report prepared by the New Jersey Highlands Water Protection and Planning Council, also within the DEP, included the property in the Highlands Regional Master Plan of Protection, stating "all of the [identified historic] resources would benefit from central planning and investment." N.J. Highlands Water Prot. & Planning Counsel, supra, at 4. In stark contrast to the Commissioner's findings suggesting demolition, these two DEP agencies emphasized the public benefit provided by the preservation of the property as a historic resource.
We conclude the Commissioner's denial of the SEP based on his finding that the property was abandoned was error and it is reversed. Consequently, we conclude the property's structures were eligible for renovation and expansion, subject to compliance with the remaining requirements of N.J.A.C. 7:13-2.2(b)1.
2.
Understanding that when renovating or expanding a pre-existing use, the provisions of N.J.A.C. 7:13-2.2(b)1i to v must be met, we next examine the Commissioner's conclusion that Builders' SEP application failed to satisfy these requisites. Because the Commissioner rejected or modified the factual findings of the ALJ in reaching his divergent conclusions, we must determine whether the Commissioner's findings are supported by the evidence of record. N.J.S.A. 52:14B-10(c).
Following our review we discern: certain aspects of the Commissioner's findings are unsupported; he erred by ignoring the credibility determinations made by the ALJ; certain conclusions insufficiently articulate supporting factual underpinnings; and the Commissioner erred in applying certain regulatory provisions. Accordingly, a remand is necessary.
(a)
Logically, we start with N.J.A.C. 7:13-2.2(b)1iv requiring the owner to submit an application for an SEP "together with drawings of the proposed changes" seeking the DEP's prior approval of the proposed activities. Without question, Builders failed to comply with this provision prior to undertaking development. Asdal suggested he understood the property status of a farm provided an exemption to an SEP. In hindsight, perhaps this assumption should have been verified, particularly in light of the required submissions to the federal, county and municipal authorities, which also regulate activities within a floodway. Nevertheless, the DEP authorizes a nunc pro tunc permitting process, thus allowing consideration of an after-filed permit request as if it had been submitted in the first instance. Builders' SEP must be viewed through such a lens, and the Commissioner's rejection of the SEP because it was not sought before work began is rejected.
The Commissioner also rejected the SEP application finding the request deficient because it failed to include all activities undertaken on the property. This finding is rejected as arbitrary and capricious.
On this issue, the Commissioner found the SEP addressed only "the expansion of the cottage, and construction of the new garage and stone retaining wall. No other activities or development at the [p]roperty can be approved through this proceeding." This statement is contradicted by Parker's initial submission seeking the SEP, as well as the DEP's December 22, 2004 letter, which enumerated the various changes made to the property's structures. Further, Builders' SEP application included reports and drawings regarding the overall project, including not only the areas listed in the Commissioner's decision, but also renovations of the main house, the driveway, and installation of the septic system. The SEP application's narrative rationally keyed on the areas of violation cited in the May 4, 2004 NOV. However, following the DEP's rejection of the SEP application and the second NOV on October 19, 2004, Builders provided additional documents and reports to the DEP including photographs depicting all structures before and after reconstruction.
Nothing suggests Builders attempted to hide its conduct from the regulators. Certainly, the scope of Builders' activities on the property was fully identified prior to the OAL proceeding. Further, both sides presented evidence regarding regulatory compliance or deviation in respect of each modification to the property.
Moreover, in this matter the ALJ, who was in the best position to assess the credibility of the witnesses, did not determine any omission was purposeful. Rather, Builders' after-the-fact application reinforces this fact as it shows Builders desired to conform its activities to the rules. So, too, Builders pointedly responded to the DEP's NOVs.
At this juncture we cannot sanction rejection of the SEP purportedly because Builders inartfully described its activities, which the DEP found objectionable. The Commission's finding that Builders improperly articulated the scope of the project is rejected as arbitrary. We conclude this submission satisfies the requirement of N.J.A.C. 7:13-2.2(b)1iv to request a permit.
(b)
We turn to the next provision of the regulation, allowing expansion of a pre-existing use if the activity creates "[n]o further obstruction to flow[.]" N.J.A.C. 7:13-2.2(b)1i. This issue has generated the greatest disagreement between the parties. Builders asserts it did not obstruct flow or increase fill, a conclusion it reaches by comparing the final state of the property following its renovations with the property's original condition.
As noted, areas inundated by floods create hazards not only for the property owners but owners adjacent -- upstream and downstream -- to the property, which may be adversely affected by obstructions carried by floodwaters or displacement of the floodwaters themselves. The Legislature directed the DEP to create regulations "concerning the development and use of land in any delineated floodway . . . designed to preserve its flood carrying capacity and to minimize the threat to the public safety, health and general welfare" in the event of flooding. N.J.S.A. 58:16A-55 (2004). The paramount public interest objectives in limiting development in a floodway are described in N . J . A . C . 7:13-1.1:
(c) The specific intent of this chapter is to minimize potential on and off site damage to public or private property caused by development which, at times of flood, subject structures to flooding and increase flood heights and/or velocities both upstream and downstream. These rules are also intended to safeguard the public from the dangers and damages caused by materials being swept onto nearby or downstream land[ and] to protect and enhance the public's health and welfare[.]Further, FHACA regulations aim to achieve overall environmental safety and public welfare. N.J.A.C. 7:13-1.1(a). These operative objectives must guide the DEP's exercise of its regulatory enforcement powers.
(d) Without proper controls, development in the flood plain and the watercourses that create them may adversely affect the flood carrying capacity of these areas, subject new facilities to flooding, reduce natural flood storage that the flood plain provides, increase the volume of storm water runoff, degrade the water quality of the receiving water body, and result in increased sedimentation, erosion or other environmental damage.
When Renovations took ownership, the property was littered with 5300 cubic yards of fill posing serious obstruction to the flow of flood waters. This debris could potentially cause untold damage to adjacent persons and property. Builders maintains the combined efforts of removing debris and structures damaged beyond reconstruction; renovation of the remaining structures including incorporating flood proofing measures; and repositioning existing fill into a stone wall, resulted in no additional displacement of flood volume, but instead created an overall net result that either reduced or insignificantly altered the property's obstruction to flow, fully satisfying N.J.A.C. 7:13-2.2(b)1i.
Builders asserts the Commissioner erred in rejecting the ALJ's finding that any increased obstruction to flow was "insignificant." The ALJ found "the before-and-after flood obstructions are so stark as to be evident[.]" The Commissioner rejected this global approach to the overall development and discretely examined each activity undertaken. In doing so, he found fill was increased by building materials brought on site to enclose the porch of the main house, expand the cottage, construct the cottage foundation, build the new garage, expand the driveway, assemble the retaining wall, and utilize a mounded septic system. Therefore, the Commissioner determined Builders placed or deposited large amounts of obstruction in the floodway in violation of N.J.A.C. 7:13-2.2 and, consequently, did not meet the requirements of N.J.A.C. 7:13-2.2(b)1i. Further, the Commissioner rejected Builders' suggestion that the overall net fill of the development was less. He concluded the regulations afford no credit when fill is removed from a floodway.
We pause to review various defined terms related to this issue. "Obstruction" means "any structure, fill or other material placed in the flood plain which may impede, retard, or change the direction of the flow of water either by itself or by catching or collecting debris carried by such water or that is placed where the flow of water might carry the same downstream and constitute a hazard to life or property." N.J.A.C. 7:13-1.2. "Fill" is "any material placed or deposited within the flood plain . . . which will displace floodwaters." N.J.A.C. 7:13-1.2. The regulations also define "net fill" as "the volume of fill which will displace flood waters left after the total volume of cuts, which will provide additional flood storage, made on the project site has been subtracted from the total volume of fill which will displace flood waters placed on the project site." N.J.A.C. 7:13-1.2. As applied, net fill is permitted "in the flood fringe area," such that "the volume of net fill to be placed on an applicant's property . . . is limited to 20 percent of the total volume of flood storage on that portion of the property[.]" N.J.A.C. 7:13-2.14(a)1. This section further precludes adding fill in the floodway. Ibid.
The Commissioner and the ALJ both rejected the application of the net fill regulation when measuring whether increased obstructions to flow resulted from Builders' activities, reasoning the inclusion of net fill in respect of development of the flood fringe and the corresponding exclusion of a similar provision in respect of the floodway was intentional. We agree.
We have located no authority actually addressing the application of net fill, finding only two cases mentioning the concept. See Am. Cyanamid, supra, 231 N.J. Super. at 301; Soc'y for Envtl. Econ. Dev. v. N.J. Dep't of Envtl. Prot., 208 N.J. Super. 1, 3 (App. Div. 1985). Nevertheless, generally held rules of construction support the Commissioner's interpretation that the net fill regulation applied only to development in the flood fringe, not the floodway. The interpretation also aligns with N.J.A.C. 7:13-2.2(a)1, prohibiting "virtually all construction of structures and addition of fill" in a floodway. Am. Cyanamid, supra, 231 N.J. Super. at 301. Moreover, the topographical differences between the flood fringe and the floodway have a direct effect on the nature of any flood hazard posed, thereby justifying the disparate treatment of development in these distinctly different regions of the flood plain. Id. at 311.
We conclude the Commissioner's denial of Builders' argument to apply the net fill concept set forth in N.J.A.C. 7:13-2.14(a)1 to this development in a floodway was "'valid and reasonable'" and will not be disturbed. N.J. Ass'n of Sch. Admins. v. Schundler, __ N.J. __, __ (2012) (slip op. 12) (quoting N.J. Soc'y for the Prevention of Cruelty to Animals v. N.J. Dep't of Agric., 196 N.J. 366, 385 (2008)). See also Pub. Serv. Elec. & Gas Co. v. N.J. Dep't of Envtl. Prot., 101 N.J. 95, 103 (1985).
Although we do not disturb the agency's interpretation of the net fill rules, appellants' position also suggests N.J.A.C. 7:13-2.2(b)1i allows the expansion enlargement and renovation of a pre-existing use, so long as the total fill obstructing flow on the property after renovation does not exceed the total obstruction to flow prior to the activities. Builders argues "no further obstruction to flow" was created by its activities on the property, satisfying this prong of the grandfather clause.
The Commissioner declined to consider the totality of the site renovations, but rather examined each individual aspect, stating appellants' could not offset an increase in the obstruction to flow from one structure with a decrease in obstruction to flow from another. While the regulations do not precisely mention the effect of removal of fill, see N.J.A.C. 7:13-1.3(e)2iii (allowing "hand removal of debris along a reach of the watercourse, or the removal of individual major obstructions in the channel . . . that cannot be removed by hand"), the Commissioner determined that any building materials brought onto the site were impermissible fill that increased the obstruction to flow. We reject the Commissioner's interpretation.
The Commissioner's outright rejection of fill in a floodway is premised on N.J.A.C. 7:13-2.2(a). This is error as it ignores N.J.A.C. 7:13-2.2(b)1. We emphasize, N.J.A.C. 7:13-2.2(b)1 provides an exception to the strict land use proscriptions of N.J.A.C. 7:13-2.2(a) when an owner seeks to expand a qualifying pre-existing use. Were the Commissioner's interpretation to be applied, that is, classifying additional building material as impermissible fill, properties covered by the grandfather provision would be precluded from expanding or enlarging. The result would impermissibly narrow N.J.A.C. 7:13-2.2(b)1, obviating its applicability. More important, such a reading would impinge upon the Legislature's expressed objective, "No rule or regulation adopted . . . shall prevent the repair or rebuilding within a flood hazard area of any lawful pre-existing structure which was damaged by a flood or by any other means." N.J.S.A. 58:16A-55.1 (2004).
Accordingly, permissive "enlargement and expansion" of pre-existing uses in a floodway may occur when the activity does not present further obstruction to flow. N.J.A.C. 7:13-2.2(b)1i (emphasis added). The reasonable reading of the enabling statute along with the regulations allows building materials to replace those removed, so long as the difference is insignificant and no further obstruction to flow is created.
Lastly, the Commissioner's finding that the driveway added fill was error. The Commissioner ignored the ALJ's factual findings, supported by the record, that the driveway was not impervious and that there was no evidence it was built above grade.
An agency's rulemaking must "further the policy goals of legislation by developing coherent and rational codes of conduct 'so those concerned may know in advance all the rules of the game, so to speak, and may act with reasonable assurance.'" General Assembly of N.J. v. Byrne, 90 N.J. 376, 385-386 (1982) (quoting Boller Beverages, Inc. v. Davis, 38 N.J. 138, 152 (1962)). Regulations may not be construed "in a manner that produces an absurd result" or renders a portion of the enabling statute meaningless. H.K. v. Div. of Med. Assistance & Health Servs., 379 N.J. Super. 321, 328 (App. Div.), certif. denied, 185 N.J. 393 (2005).
Here, when adopting strict flood regulation, the Legislature intended to allow the preservation of pre-existing uses. In that light, Builders' project should be viewed in its totality, not piece by piece. Any change in the obstruction to flow should compare the current structures against the former structures. Accordingly, the Commissioner erred when applying the regulations, as he failed to consider the property as a whole when assessing whether any increased obstruction to flow resulted from the reconstruction and restoration of the pre-existing use.
We reject any notion that this view of the Legislative intent deflates the expressed concern to protect the State's waterways or unreasonably curtails the DEP's charge to administer necessary floodwater control measures. See In re Stormwater Mgmt. Rules, supra, 384 N.J. Super. at 462. The exception for grandfathered pre-existing uses in N.J.A.C. 7:13-2.2(b)1, applies to a finite number of properties, severely limiting the possibilities for deviation from the general rule that prohibits development in a floodway.
Finally, we disagree with the Commissioner's outright dismissal of appellants' clean-up activities and his general conclusion they provided no positive consequence. The Commissioner unnecessarily diagnosed the general public benefit afforded by the efforts, by accepting DeMeo's position that "while the hydraulic character of the property may have been improved by the removal of debris, the debris was illegal and its removal simply restored the site to what it should have been" making the removal a "correction" not an "improvement."
Enforcement of the regulations does not necessitate discounting appellants' efforts. At all times, the governed should expect courtesy from governmental representatives. Admittedly, the debris should not have been placed on the property, but that begs the question of what result was secured by its removal. For years prior to Renovations' purchase, neither the DEP nor any local governmental agency took steps to rid the property of significant debris, which could cause the exact hazards sought to be prevented by the FHACA. Moreover, appellants did not place the prohibited fill on the property and its removal provided a public benefit and enhanced the statutory goals of protecting the public welfare from such hazards.
We recognize the ALJ's comments reflect a possible lapse in the agency's objectivity when considering the SEP application. She remarked: "Frankly, this matter appears to be one where all parties 'got their backs up' and communications and/or cooperation broke down, or the concerns or politics of third parties were elevated in importance over the environmental merits/demerits of the application." This circumstance is unfortunate and unacceptable. The public has a right to vigilant objectivity from its officials who wield the State's authority.
In summary, we conclude the Commissioner's finding that building materials equated to impermissible fill was error as he failed to consider the exception permitting restoration, expansion, and enlargement of pre-existing uses on the property. The Commissioner's piecemeal consideration of the sections of the project is also rejected as an arbitrary interpretation of the applicable regulation. See Matturri, supra, 173 N.J. at 381-82 (stating when a statute "is silent or ambiguous with respect to the specific issue," the court examines whether the agency's determination "is based on a permissible construction of the statute." (internal quotation marks omitted)). Rather, the Commissioner's consideration of the restoration activities when answering whether the obstruction to flow was increased must view the project as a whole. We remand for reconsideration of this issue.
(c)
The next two subsections of N.J.A.C. 7:13-2.2(b)1 require renovated structures to have an elevation above the regulatory flood elevation, N.J.A.C. 7:13-2.2(b)1ii, and to be flood proofed or treated to minimize flood damage, N.J.A.C. 7:13-2.2(b)1iii. The Commissioner rejected the ALJ's findings and determined the evidence insufficiently satisfied these provisions. The Commissioner noted the main house and cottage were built above the regulatory flood elevation and included some construction features to minimize flood damage. His focus when applying the regulation was on the garage, which had a low point below the regulatory flood elevation.
The Commissioner viewed the garage as a new habitable structure erected in a floodway, insisting its construction must meet the standards set forth in N.J.A.C. 7:13-2.13(a)1, which requires "[a]ll structures proposed to be located within the [floodway] shall be designed, connected and anchored to resist flotation, collapse or permanent lateral movement due to structural loads and stresses (including hydrostatic and hydrodynamic) produced by flooding equal to the regulatory flood elevation, and the freeze/thaw cycle of the soil."
Further, N.J.A.C. 7:13-2.13(a)(3) and (7) mandate the structure be elevated such that the lowest floor is at or above the regulatory flood elevation. We note the DEP is authorized to waive this requirement, upon written application of the owner or builder, provided that "all evidence needed for the [DEP] to reasonably conclude that raising the structure is economically or physically impracticable and that said structure is flood proofed up to the regulatory flood evaluation." N.J.A.C. 7:13-2.13(a)7(i).
Here, the Commissioner disallowed the garage because the lowest point of the floor was approximately eighteen inches below the regulatory flood elevation. The Commissioner stated that even if the garage were considered an expansion of a pre-existing use, its construction fails to meet N.J.A.C. 7:13-2.2(b)1ii, which also requires "the lowest floor elevation of any structure that is expanded is at or above the regulatory flood elevation." Finally, he noted Builders' evidence demonstrated the structure was not "wet" flood proofed, possibly exposing any contents to the effects of flooding.
In many of his determinations, the Commissioner specifically rejected the ALJ's findings, which included credibility determinations. Following our review of the record, we determine the Commissioner impermissibly ignored the ALJ's credibility determinations, and therefore, his opinion may not stand. Messick, supra, 420 N.J. Super. at 326.
On this issue, the ALJ credited Parker's testimony regarding the flood proofing of the structure. Parker explained the garage was smaller than its predecessor, reduced from 1350 square feet to 816 square feet. Its walls were anchored and incorporated flow-through vents and featured doors at each end to allow floodwater to easily move through the structure.
Moreover, the ALJ rejected DeMeo's testimony opining the structure must be considered "habitable" and that it posed a possible risk to life. The ALJ specifically stated the evidence disproved the structure was similar in kind to those listed in the regulation, which listed "hospitals, clinics, nursing homes, schools . . . , day care centers, hotels, private residences and similar buildings[.]" N.J.A.C. 7:13-2.13(a)3. The ALJ found there was no basis to determine the garage was habitable as it had "no bathroom, workshop, offices or other rooms" and merely functioned to provide "storage of cars and stuff."
The ALJ also noted DeMeo's acknowledgement that if a permit request had been made prior to the garage's construction, the structure as built would have been approved had it remained within the original footprint. Discussing the design of the new garage as opposed to its predecessor, DeMeo agreed the structure was relocated further from the river, in the shadow of the cottage, parallel to the flow of floodwaters. It was argued these elements provided a significant improvement to the flow of possible floodwaters. Finally, DeMeo conceded that Builders could have renovated the original, larger L-shaped structure that faced perpendicular to the flood flow -- a structure more likely to cause a hazard in the event of flooding -- without objection.
The Commissioner's decision impermissibly rejected the credibility determinations by the ALJ. Further, his findings which only could be based on DeMeo's rejected testimony makes the Commissioner's finding unsupported by "sufficient, competent, and credible evidence in the record" and, therefore, it must be set aside. N.J.S.A. 52:14B-10(c).
(d)
On several issues, the Commissioner rejected the ALJ's findings; however, he failed to set forth the factual underpinnings for his diverging conclusions. Therefore, we are not able to provide a meaningful review and must remand.
The first example of this relates to the construction of the seventeen-inch high retaining wall, built from foundation stones already on site. The Commissioner rejected the ALJ's finding that this fill was insignificant. However, he simply concluded the wall was a new "nonconforming use of the structures [that] had been continuously maintained and not abandoned." The question which should have been examined is whether the stones, as reconfigured into a wall, raised the existing grade of the receiving area or created an obstruction to flow in a floodway. See N.J.A.C. 7:13-2.2(a)1. We are unable to properly assess whether the wall increased the obstruction of flow because of the limited factual findings made on this issue. The record does not disclose whether the stone wall runs parallel to the direction of anticipated flood flow, which presumably would provide no increased obstruction, or whether it is perpendicular, possibly creating an obstruction. The Commissioner accepted the DEP's expert position that the wall was an obstruction, but included no factual analysis to support this point.
A second example relates to compliance with N.J.A.C. 7:13-2.2(b)1v. The ALJ's decision, principally crediting Parker's testimony, found the structures were flood proofed. The Commissioner found the structures were not properly flood proofed as necessary testing results had not been supplied.
Parker detailed Builders' flood proofing efforts and opined additional hydrostatic and hydrodynamic load testing was unnecessary, suggesting the evidence sufficiently proved the criteria. Further, he stated hydrology and hydraulics reports were submitted to the Federal Emergency Management Agency (FEMA). Unfortunately, there is no specific discussion of the content of this documentary evidence and the ALJ did not elaborate on that portion of Parker's testimony upon which she relied. The ALJ did state the calculations should have been provided to the DEP.
The Commissioner generally mentions the ALJ's finding, stating it was insufficient to satisfy N.J.A.C. 7:13-2.2(b)1v. The Commissioner concluded, absent the certified engineering calculations, the SEP application failed to prove "the structures will be able to resist impact from debris, flotation, collapse or permanent lateral movement associated with flooding."
If the evidence Parker testified to was available and satisfied the requisites of the regulation, the Commissioner is obligated to consider it, rather that rejecting the SEP application. Quite simply, if the construction of the renovated buildings satisfactorily shows the "new structures, alone or in combination with existing structures, are designed, connected and anchored to resist impact from debris, flotation, collapse or permanent lateral movement caused by expected structural loads and stresses," N.J.A.C. 7:13-2.2(b)1v, insisting on the performance of additional, unnecessary testing is arbitrary.
On remand, the Commissioner must evaluate the expert evidence, reports, and documentary proofs submitted in compliance with this regulation. See R.M. v. Supreme Court of N.J., 190 N.J. 1, 12 (2007) (stating proper factfinding is "fundamental to the fairness of the proceedings and serves as a necessary predicate to meaningful review"). After full evaluation of the evidence, the Commissioner must state the basis for any findings of noncompliance.
B.
Builders next argues the Commissioner erred in denying its request for a hardship waiver. The waiver sought to allow the cottage porch, septic system, garage and retaining wall. Based upon our discussion of the deficiencies in rejecting the SEP regarding the garage and the retaining wall, we have no need to address whether a hardship waiver applies. We examine whether the waiver applies to the septic system and the cottage porch.
A waiver from compliance with the strict application of the FHACA and applicable regulations is permitted under the following circumstances:
1. Cases in which the [DEP] determines that there is no feasible and prudent alternative to the proposed project, including the no-action alternative, which would avoid or substantially reduce any anticipated adverse effects and where the waiver is consistent with the reasonable requirements of the public health, safety and welfare;
2. Cases in which the [DEP] determines that the costs of strict compliance are unreasonably high in relationship to the benefits achieved by strict compliance; or
3. Cases in which the [DEP] and applicant agree to alternative requirements that, in the judgment of the [DEP], provides [sic] better protection to the public health, safety and welfare.
[N.J.A.C. 7:13-4.8(a).]
When requesting a hardship waiver, the applicant has the burden to demonstrate:
1. That by reason of the extraordinary or exceptional situation or condition of the property, the strict enforcement of this chapter would result in exceptional and undue hardship upon the applicant in question;
2. That the waiver will not substantially impair the appropriate use or development of adjacent property and will not pose a threat to the environment or public health, safety and general welfare; and
3. That the exceptional or undue hardship claimed as grounds for the waiver has not been created by the applicant or persons under his or her control.
[N.J.A.C. 7:13-4.8(d).]
The regulation does not define "hardship," however, it is settled "that claimed undue hardship 'need not result in the inability to make any use of the property.'" Mansoldo v. State, 187 N.J. 50, 61 (2006) (quoting Davis Enters. v. Karpf, 105 N.J. 476, 493 (1987) (Stein, J., concurring)).
Builders' hardship application was grounded on N.J.A.C. 7:13-4.8(a)1 alone, stating the unique nature of the property located entirely within the floodway eliminated alternatives for the proposed project. Consequently, the Commissioner declined to consider whether the remaining bases for a hardship waiver were applicable.
In his review, the Commissioner determined Builders and Renovations failed to marshal sufficient evidence showing the existence of an extraordinary situation, or that the structures posed no threat to the environment, public health, safety and general welfare. Finally, the Commissioner concluded the "no-action alternative" was available, as Renovations was not required to purchase the property.
We conclude a remand on this issue is necessary to determine whether a hardship waiver should have been granted regarding the septic system because Builders sufficiently "demonstrate[d] that the structures would not pose a threat to the public health, safety and welfare" as the septic system did not increase obstruction to flow, flood elevations, or impact resistance. Further, the Commissioner's failure to consider the cost of strict compliance with regard to the nine-inch nonconformity in the septic system based on the installation of the effluent cleansing mechanism should have been considered.
Again we highlight the credibility determination made by the ALJ rejecting DeMeo's claim that the septic system was mounded. Prior to the hearing, DeMeo neither made this observation nor conducted testing to verify such a contention, making it unsupportable.
In respect of the cottage porch, the waiver request may be unnecessary in light of the regulations grandfathering enlargement of pre-existing structures, as well as the statutory authorization permitting repair to existing structures. This too must be re-examined on remand.
C.
Builders and Asdal claim the Commissioner erred by arbitrarily applying the FWPA regulations. Appellants maintain the restoration of the millrace to active farming and the continued cultivation of the hayfields, even if within the wetlands transition area, was an exempt activity. See N.J.S.A. 13:9B-4 (2004).
The enabling statute in effect in 2004 provided:
The following are exempt from the requirement of a freshwater wetlands permit and transition area requirements unless the United States Environmental Protection Agency's regulations providing for the delegation to the state of the federal wetlands program conducted pursuant to the Federal Act require a permit for any of these activities, in which case theConstruing this grant of authority, NJDEP enacted regulations stating that if ongoing farming was abandoned and the property was idle for more than five years, the exemption is inapplicable. N.J.A.C. 7:7A-1.4. Appellants maintain the regulatory restriction is without basis.
department shall require a permit for those activities so identified by that agency:
a. Normal farming, silviculture, and ranching activities such as plowing, seeding, cultivating, minor drainage, harvesting for the production of food and fiber, or upland soil and water conservation practices; construction or maintenance of farm or stock ponds or irrigation ditches, or the maintenance of drainage ditches; construction or maintenance of farm roads or forest roads constructed and maintained in accordance with best management practices to assure that flow and circulation patterns and chemical and biological characteristics of freshwater wetlands are not impaired and that any adverse effect on the aquatic environment will be minimized[.]
[N.J.S.A. 13:9B-4 (2004).]
This five-year requirement is based upon federal regulations promulgated under statutory authority addressing wetland conservation. See 24 N.J.R. 975(b), 982 (Mar. 16, 1992); 40 N.J.R. 5581(a) (Oct. 6, 2008) (explaining the definition of "established, ongoing farming, ranching or silviculture operation . . . is consistent with the Federal definition for exempt farming activities"). For example, since 1987, federal regulations have sought to protect functions of wetlands considered previously farmed wetlands, defining the farming activities as "abandoned" as of "the end of five successive years during which there was no crop production[.]" 52 Fed. Reg. 35194 (Sept. 17, 1987) (codified at 7 C.F.R. § 12.33). This standard survives today. 7 C.F.R. § 12.33(c) (2012) ("Abandonment is the cessation for five consecutive years of management or maintenance operations related to the use of a farmed wetland or a farmed-wetland pasture.") Also, the Federal Clean Water Act, 33 U.S.C.A. § 1251 et seq., includes a permit exception for certain "farming, silviculture, and ranching activities[.]" 33 U.S.C.A. § 1344(f)(1)(A). However, areas converted to another use or those that have lain idle for more than five years lose the exemption. 40 C.F.R. § 232.3(c) (2004). Consequently, under both the federal and state regulations, resumption of previously abandoned farming activity constitutes newly undertaken farming, not exempt ongoing operations. Ibid; N.J.A.C. 7:7A-1.4.
Although we are not "bound by the agency's interpretation of a statute . . . [, courts] give considerable latitude when [the agency] construes the express and implied powers of a statute for the purpose of carrying out legislative intent." Lourdes Med. Ctr. of Burlington Cnty. v. Bd. of Review, 197 N.J. 339, 361 (2009) (internal quotation marks and citation omitted). Also important to note is generally, "[e]xemptions from statutes are strictly construed." M. Alfieri Co. v. N.J. Dep't of Envtl. Prot. & Energy, 269 N.J. Super. 545, 554 (App. Div. 1994), aff'd o.b., 138 N.J. 642 (1995).
We conclude the agency's interpretation of the enabling statute is rationally based. The property lost the exemption because farming was abandoned for a period greater than five years. Appellant's renewed farming efforts does not reinstate the exception.
IV.
Appellants also challenge the penalties assessed by the DEP and reinstated by the Commissioner. First, Asdal argues he has no individual liability. Second, Builders' maintains no penalties may be imposed under the EEEA. We examine these issues.
A.
Asdal seeks reversal of the Commissioner's imposition of individual liability for the FHACA and FWPA violations as a "responsible corporate officer" because of the reinstitution of farming activities within freshwater wetlands. Because the Commissioner misapplied the law, we agree.
The Commissioner erred in concluding "both before and after the [January 4,] 2008 amendments . . . both acts define a 'person' to include 'corporate officers.'" This is an incorrect statement of the law.
Prior to the 2008 amendments, the FHACA regulations stated: "[a]ny person who violates a provision of this chapter shall be subject to penalty and injunctive relief, as applicable, pursuant to N.J.S.A. 58:16A-63 and 58:10A-1 et seq." N.J.A.C. 7:13-5.4. The definition of "person" did not include "a responsible corporate official." N.J.A.C. 7:13-1.2; N.J.S.A. 58:16A-51 (2004). The regulation added the term "responsible officer" on October 2, 2006. 38 N.J.R. 3950(a) (Oct. 2, 2006). Similarly, under the FWPA, a "person" is defined without reference to a responsible corporate officer, N.J.S.A. 13:9B-3, and no separate provision imposes liability for a corporation's activities on its officers.
The Commissioner's reliance on N.J. Dep't of Envtl. Prot. v. Standard Tank Cleaning Corp., 284 N.J. Super. 381, 402-03 (App. Div. 1995), is misplaced. In that matter we addressed the responsible corporate officer doctrine in the context of environmental penalties under N.J.S.A. 58:10A-3(l) of the Water Pollution Control Act, N.J.S.A. 58:10A-1 to -43, which included "any responsible corporate official" in the definition of "person[.]" Id. at 401.
Since the statute did not impose individual liability on responsible corporate officers, we must vacate the Commissioner's individual assessment of penalties, as set forth in the August 28, 2007, and May 26, 2009 AONOCAPAs, for violations prior to October 2, 2006, predicated solely on Asdal's ownership of Builders and his supervision of its activities.
B.
Builders' next point argues the penalties assessed were arbitrary and capricious, noting the initial NOV was served on May 24, 2004, but an AONOCAPA was not issued for disturbing 45,000 square feet of wetlands until August 28, 2007. Two years later a second AONOCAPA was imposed. Both AONOCAPAs were issued after Builders appealed the denial of the SEP. Builders further objects to the assessments related to violations in 2004, prior to the enactment of the EEEA, with its enhanced penalties. The DEP argues the FWPA and FHACA violations are ongoing, making penalties under the EEEA appropriate because the assessments relate to continuing violations occurring after enactment of the EEEA.
In 2004, the DEP held the authority to pursue imposition of penalties for violations of the FWPA and FHACA, but only by filing an action in Superior Court. N.J.S.A. 58:16A-63 (2004) (allowing penalties for violations of FHACA); N.J.S.A. 13:9B-21 (2004) (allowing penalties for violations of FWPA). Also, the amount of recoverable penalties was restricted as follows:
(a) Any person who knowingly violates a provision of this act or a rule, regulation or order adopted pursuant to this act shall be subject to a penalty of not more than $2,500.00 for each offense and any person who otherwise violates a provision of this act shall be subject to a penalty of not more than $1,500.00 for each offense[.]See also N.J.A.C. 7:13-19.1(a)2 ("Any person who otherwise violates any provision of the Act or this chapter shall be subject to a penalty of not more than $1,500 for each offense."). The maximum penalties were reserved for those who knowingly violated the statutes. See N.J.S.A. 58:16A-63(a) (2004) (allowing higher penalty for knowing violations of the Act or regulations); N.J.A.C. 7:13-19.1(a)1 ("Any person who knowingly violates any provision of the Act or this chapter shall be subject to a penalty of not more than $2,500 for each offense[.]").
[N.J.S.A. 58:16A-63(a) (2004).]
The enactment of the EEEA eased the penalty assessment procedure by granting the agency direct authority to impose assessments without having to resort to the Superior Court. N.J.S.A. 58:16A-63 (2008). The EEEA also enhanced penalties for violations of the FHACA from $2500 to $25,000 per day. Ibid. In this matter, penalties were assessed under the EEEA for four days.
"When considering whether a statute should be applied prospectively or retroactively, our quest is to ascertain the intention of the Legislature. In the absence of an express declaration to the contrary, that search may lead to the conclusion that a statute should be given only prospective effect." N.J. Dept. of Envtl. Prot. v. Ventron Corp., 94 N.J. 473, 498 (1983).
We reject the Commissioner's conclusion that new enhanced penalties may be assessed under the EEEA for "ongoing violations" related to the renovation of the pre-existing structures on the property which concluded in 2004. Unlike ongoing pollution violations, the violations claimed here are because the renovated structures remain on the property. Appellants challenged the DEP's conclusions and, rightly, were entitled to a determination before being forced to remove the renovated structures. The "continuing violations" under the FHACA merely result because the buildings still exist.
The efficacy of any enhanced penalties for FHACA based on the 2004 construction activity is rejected as the EEEA may not be applied to pre-existing violations.
The continued wetlands disturbances resulting from current activities may be sustained. N.J.S.A. 13:9B-21.
--------
The ALJ found, and DEP did not contest, that Builders' did not knowingly commit the offenses. Typically, the highest penalties are reserved for knowing violations. See N.J.S.A. 58:16A-63(a) (allowing higher penalties for knowing violations of the FHACA or the flood rules). Absent such conduct the maximum assessments should be inapplicable.
We conclude the Commissioner failed to properly weigh the credibility determinations made by the ALJ when he rejected her findings regarding the assessments. Therefore, his conclusions must be vacated and the matter remanded for further review.
On remand, the Commissioner must review those findings and conclusions we have discussed in our opinion prior to finalization of applicable penalties.
V.
In summary, we reverse and remand this matter to the Commissioner for further consideration in light of our opinion. We join the comments of the ALJ, suggesting the injection of an objective view of the issues might assist in reaching a reasoned resolution. Again, we cannot condone appellants' failure to seek the requisite permit prior to undertaking the project. Nor are we critical of the DEP's objective to safeguard our waterways and assure individual activities proceed in a way that assures the overall public good, not singular satisfaction. On the other hand, appellants' lapses were determined not to be knowing or malevolent and the DEP, through its other divisions, has recognized the public benefit appellants have provided in removing the harmful debris, restoring the property to its former grandeur, and allowing this historic treasure to be enjoyed by future generations.
Upon remand, the Commissioner shall give specific consideration of the SEP application in light of our comments, and review whether the project as a whole has met the requisites of N.J.A.C. 7:13-2.2(b)1, as an expansion or enlargement of a pre-existing use. Further, consideration of a hardship waiver for the septic system, in light of the lack of feasible alternatives and the cost for modification, as well as the cottage porch as a pre-existing structure need be considered. The penalties against Asdal individually must be vacated and the applicable assessments recomputed once the scope of violations is determined.
The denial of the farmland exemption to the FWPA is affirmed. Any issues not otherwise challenged on appeal but determined by the Commissioner remain unaffected by this opinion.
Affirmed in part, reversed in part, and remanded for additional proceedings consistent with this opinion. We do not retain jurisdiction.
I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION