Opinion
DOCKET NO. A-1838-10T2
04-09-2013
BI-COUNTY DEVELOPMENT OF JEFFERSON ASSOCIATES, Plaintiff-Appellant, v. THE NEW JERSEY HIGHLANDS WATER PROTECTION AND PLANNING COUNCIL, Defendant-Respondent.
Paul H. Schneider argued the cause for appellant (Giordano, Halleran & Ciesla, attorneys; Mr. Schneider and Afiyfa H. Ellington, on the briefs). Dean Jablonski, Deputy Attorney General, argued the cause for respondent (Jeffrey S. Chiesa, Attorney General, attorney; Melissa H. Raksa, Assistant Attorney General, of counsel; Mr. Jablonski, on the brief).
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
Before Judges Parrillo, Fasciale and Maven.
On appeal from the New Jersey Highlands Water Protection and Planning Council.
Paul H. Schneider argued the cause for appellant (Giordano, Halleran & Ciesla, attorneys; Mr. Schneider and Afiyfa H. Ellington, on the briefs).
Dean Jablonski, Deputy Attorney General, argued the cause for respondent (Jeffrey S. Chiesa, Attorney General, attorney; Melissa H. Raksa, Assistant Attorney General, of counsel; Mr. Jablonski, on the brief). PER CURIAM
At issue is whether respondent New Jersey Highlands Water Protection and Planning Council (Council) properly calculated the allocation of Highlands transfer of development rights (TDR) credits to appellant Bi-County Development of Jefferson Associates (Bi-County) under the New Jersey Department of Environmental Protection's (DEP) septic density requirements, based on the fact that Bi-County's property was not in an approved sewer service area on August 9, 2004. We are satisfied the Council correctly applied the law to the undisputed facts and therefore affirm its decision.
Since October 26, 1987, Bi-County has owned a 162-acre tract of undeveloped, vacant land situated in Jefferson Township in the Highlands Region, an area of nearly 800,000 acres across seven counties in New Jersey's northern tier that provides drinking water for all residents in that region as well as half the population of this State. In August 2004, the Highlands Water Protection and Planning Act (Act), N.J.S.A. 13:20-1 to - 35, was enacted to regulate land use in the Highlands Region. Significant for present purposes, the Act creates two areas within the Region: a Preservation Area, in which further development is strictly regulated, and a Planning Area, in which development consistent with the Act's goals is encouraged. See N.J.S.A. 13:20-7(b),(c); N.J.S.A. 13:20-10(b),(c). Bi-County's property is situated entirely within the Preservation Area.
The Act declares a
commitment to protecting the incomparable water resources and natural beauty of the New Jersey Highlands so as to preserve them intact, in trust, forever for the pleasure, enjoyment, and use of future generations while also providing every conceivable opportunity for appropriate economic growth and development to advance the quality of life of the residents of the region and the entire State.
[N.J.S.A. 13:20-2.]
The Act also establishes the Highlands Council, a state agency comprised of state and local officials and public citizens with responsibility for land use planning in the Highlands Region. N.J.S.A. 13:20-4 to -6. This includes adoption of a regional master plan (RMP), the basic land use planning document for the Highlands Region. N.J.S.A. 13:20-6(i), -8, -11. The Council adopted the current RMP on July 17, 2008, and it became effective September 8, 2008. 40 N.J.R. 5852(b) (Oct. 6, 2008).
As required by the Act, N.J.S.A. 13:20-13(a), the Council also created a market-based TDR program as part of its RMP. The TDR program established a right known as the Highlands Development Credit (HDC). The program allocates HDCs to eligible "sending zones" (areas the agency wants to preserve) where "reasonable future development expectations have been disproportionately limited by the provisions of the [Act] or implementation of the programs established by the RMP." Through the Highlands Development Credit Bank, sending zone landowners can sell or borrow against the value of their HDCs, and the purchasers can use them to build in "receiving zones" (areas that are more appropriate for growth) at a density greater than otherwise permitted under the applicable zone. In other words, sending zone landowners are compensated for the lost development potential of their land by purchasers who buy HDCs that entitle them to build in a receiving zone at a greater density than otherwise permitted by the underlying zoning.
The TDR program is a
land use tool that permits a public agency to use market forces to encourage the transfer of development potential from areas the agency wants to preserve (sending zones) to areas that are more appropriate for growth (receiving zones).
[OFP, L.L.C. v. State, 395 N.J. Super. 571, 588-89 (App. Div. 2007), aff'd o.b., 197 N.J. 418 (2008).]
A sending zone landowner also may sell his HDCs in advance of the establishment of receiving zones if the owner can establish hardship by demonstrating that (1) the owner's equity in his land is substantial in relation to his net worth; (2) the owner is experiencing an extenuating financial circumstance.
The Act mandates that "the council shall establish the initial value of a development right considering the [DEP] rules and regulations in effect the day before the date of enactment of this act[, August 9, 2004]." N.J.S.A. 13:20-13h(1). To that end, the Council has determined that the decision whether to allocate HDCs to a particular parcel of land
shall be based upon the development potential as of August 9, 2004, based upon municipal zoning and land use regulations then in effect; State and federal environmental laws and regulations then in effect; and a determination of whether development is precluded or severely constrained by the restrictions imposed pursuant to the [Act].A parcel of land that was zoned for residential use on August 9, 2004, is eligible for HDCs if it satisfies one of the following criteria:
[(1)] [t]he parcel of land has an area of at least five acres; [(2)] [t]he area of the parcel of land is at least three times the minimum lot size in effect on August 9, 2004; [(3)] [t]he parcel of land is undeveloped and the owner voluntarily
chooses not to develop the parcel pursuant to one or more exemptions under . . . the Act.
HDCs are allocated to residentially zoned eligible parcels "on the basis of lost development potential but adjusted for relative differences in land value occasioned by property location and the type of development that could have been constructed onsite prior to enactment of the [Act]." This is reflected in the formula for allocating HDCs: HDC Allocation = (Net Yield) x (Zoning Factor) x (Location Factor). Net yield is defined as "the number of residential lots that could have been situated on a parcel of land on August 9, 2004." The zoning factor is "a regional adjustment factor to recognize that the value of the land varies according to the end use to which the property could have been developed." The location factor is "an adjustment factor to recognize that per unit value of land varies by location within the Highlands Region."
Based upon an assessment of regional lot values and a detailed economic analysis of factors underlying TDR pricing, the Council established an initial HDC price of $16,000 per credit.
As noted, Bi-County's property is located entirely in the Highlands Preservation Area. It is currently zoned under Jefferson Township's land use ordinance for residential use with a minimum lot size of 5,000 square feet (approximately one-eighth of an acre). The property has been described as consisting of large contiguous areas of high integrity forests that sits within a flood hazard area with steep slopes, wetlands, and Highlands Open Waters, N.J.S.A. 13:20-3. According to the Council, the property provides suitable habitat for at least ten federal and/or state listed threatened and endangered species.
The property is designated under the Highlands Regional Master Plan (RMP) and Land Use Capability Zone Map as a Protection Zone, where development is extremely limited. Under the RMP, the Protection Zone consists of high natural resource value lands that are important to maintaining water quality, water quantity and sensitive ecological resources and processes. The property is similarly designated in New Jersey's State Development and Redevelopment Plan as an Environmentally Sensitive or Planning Area 5.
Some nine years before the Act's enactment, Bi-County and the Township of Jefferson entered into a settlement agreement resolving Bi-County's builder's remedy action against the Township. Under the settlement agreement, the Township authorized Bi-County to build up to 567 market-rate residential units on the property in exchange for the creation of 131 low-and moderate-income on-site and off-site housing units to fully satisfy the Township's Mount Laurel obligations. The Township rezoned the property as an Affordable Housing Zone and adopted a Housing Element and Fair Share Plan identifying the Bi-County property as an affordable housing site. On March 19, 1997, the Law Division entered an order granting the Township a judgment of repose for a six-year period to effectuate the terms of the settlement agreement.
Bi-County of Jefferson v. Twp. of Jefferson, No. W-032628-88 (Law Div. Sept. 29, 1985).
S. Burlington Cnty. NAACP v. Mount Laurel Twp., 92 N.J. 158 (1983).
The agreement also provided that within six months of its execution, the Township, if requested in writing by Bi-County, must amend its Wastewater Quality Management Plan (WQMP) to include the Bi-County property within a sewer service area and submit the WQMP for county and state agency approval. The Township agreed to
continuously, actively and vigorously pursue final approval of this [WQMP] or [WQMP] [a]mendment. . . .
The Township agrees to take such action as is reasonable and appropriate at Bi-County's request to assist Bi-County in obtaining access to sufficient wastewater treatment capacity and potable water supply
. . . .
Significantly, in spite of this provision, no amendment to the WQMP was ever obtained, and the property was not in an approved sewer service area as of August 9, 2004.
Fifteen years later, on February 17, 2010, Bi-County submitted a Highlands Development Credit Allocation application to the Council. In the application, Bi-County agreed to waive its right under the Act to apply for a single-family dwelling exemption.
Bi-County also sought to have its application reviewed under the hardship criteria. In support of that request, Bi-County stated the property was its only asset, and that it was a valuable piece of land zoned for 636 residential units that was "rendered worthless" by the Act. Bi-County indicated that it had expended millions of dollars of its investors' and lenders' capital in acquiring, rezoning, and holding the property, and that it still incurs expenses of tens of thousands of dollars per year in taxes, insurance, and other expenses related to holding the property. Bi-County stated that it was defunct as a result of having no income and worthless assets.
On April 1, 2010, the Council issued a determination finding that Bi-County's property was eligible for an allocation of 123.25 HDCs at a combined value of $1,972,000, based upon the HDC price of $16,000 per credit. The allocation was based on the Council's calculation for the property of a net yield of 80, a location factor of 2.2, and a zoning factor of 0.7.
While the location factor and zoning factor were predetermined by the RMP, the net yield of eighty was based on the existing state, federal and local land use laws, and environmental regulations in effect on August 9, 2004, which prohibited sewer service on the property. So measured, the Council determined that out of the property's 654 lots consisting of 162 acres, about thirty-nine acres across eighty lots were developable. The remaining lots were excluded because "the site was not located in an existing sewer service area (pre-act). Therefore[,] the density must be limited by septic system density requirements." The Council stated that
[a]s the property was not located in an existing sewer service area[,] the lot yield has been calculated on the maximum densities permitted for septic system development . . . . No reductions for access, configuration or efficiency factors were provided as the maximum density permitted by the use of septic systems will be the limiting factor. The small permitted lot size would allow the clustering of the site without requiring any overall lot reductions.The Council further limited development to single-family detached housing.
The Council also found that Bi-County did not satisfy the hardship criteria:
While the Highlands Act has affected the development potential of the subject property, Bi-County is not experiencing an extenuating financial circumstance beyond what would otherwise be borne by the inherent risk in land development such as a change in zoning. No information was submitted to suggest that the subject property had received any development approvals or was in the application process for such approvals at the time the Highlands Act was signed into law.
Thereafter, Bi-County filed an HDC Allocation Reconsideration Application with the Council, requesting, among other things, that the Council reconsider its reduction of the net yield to eighty from a base lot yield of 654 based on the Council's conclusion that the proposed development would not have qualified for inclusion within a public sewer service area. Bi-County argued that
[a]lthough the Bi-County Site was not within the sewer service at the time of the enactment of the Highlands Act, the development, as such, was never actually barred as a matter of law or regulation from being included in a sewer service area. Furthermore, the Bi-County Site was subject to a Mt. Laurel court ordered settlement agreement ("Settlement Agreement"), the terms of which required the Township of Jefferson to include the Bi-County site in a sewer service area as well as . . . to secure all approvals necessary for amendments to its WQMP in support of the development. In addition, the Township was required to actively and vigorously assist [Bi-County] in obtaining access to sufficient wastewater management treatment capacity.
Relying on the 1995 settlement agreement and other supporting documentation, Bi-County contended that
under the terms of the Settlement Agreement and the facts on [the] ground, the subject site, as a matter of right, would have been included in a sewer service area. There would be no justifiable reason for [DEP] to deny a request to amend the local WQMP to accommodate sewer service for the subject development.
Bi-County also requested that the Council reconsider its decision to deny Bi-County a net yield bonus. Bi-County argued that it was entitled to the bonus because its property was located in High Value and Moderate Value conservation priority areas, and Bi-County did not retain its right to apply for the single-family housing exemption in its application.
On June 17, 2010, the Council denied Bi-County's request to adjust the net yield of eighty units used in the HDC allocation determination, finding the Property was not in an approved sewer service area and therefore DEP's rules and regulations in effect on August 9, 2004, prohibited the extension of wastewater infrastructure to the property. The Council reasoned that while Bi-County's submitted documentation did
indicate that the Township of Jefferson was required to assist Bi-County in obtaining appropriate sewer and water service to the subject property given its identification as an inclusionary development, and that such services might be feasibly obtained, that does not mean that [DEP] would have granted the necessary permits and approvals for these utilities. The [Council] cannot assume that such services would have been provided, particularly where, at the time
the Highlands Act became law, the subject property was not located in an approved sewer service area.
The Council, however, granted Bi-County's request for reconsideration with respect to the net yield bonus, finding that Bi-County was entitled to the bonus under the terms of the TDR program because it did in fact decline to retain its right to any single-family dwelling exemption for the property, and the property was located in High Value and Moderate Value conservation priority areas. Accordingly, the Council applied the bonus to the net yield of eighty units, resulting in an adjusted net yield of ninety-six units. Using that figure, the Council recalculated Bi-County's HDC allocation, resulting in 147.75 HDCs with a total value of $2,364,000.
On August 10, 2010, Bi-County requested that the Council refer the June 17, 2010 revised HDC allocation determination to the Office of Administrative Law (OAL) for an evidentiary hearing as a "contested case" under the Administrative Procedure Act (APA), N.J.S.A. 52:14B-1 to -15, contending there were factual issues as to whether Bi-County could have secured approval from DEP for an amendment to Jefferson Township's wastewater management plan, which would require an increase of its net yield. The Council denied Bi-County's hearing request, finding the issue in dispute was purely a matter of law:
The [Council's] allocation of HDCs to Bi-County's Property was based on [DEP]'s Water Quality Management Planning Rules, N.J.A.C., 7:15, in effect on August 9, 2004 (the day before enactment of the Highlands Act). On August 10, 2004, the Highlands Act revoked designated sewer service areas in the Highlands Preservation Area for which wastewater collection systems had not been installed by the effective date of the Act. . . . Bi-County concedes that the Property is not in a sewer service area, and does not have an approval to extend sewer service to the Property. Thus, as a matter of law, Bi-County has no legal entitlement for extension of sewer service. Whether Bi-County can establish facts that could in the future permit extension of sewer service to support the development contemplated under the Settlement Agreement is not relevant to the [Council's] allocation determination as the matter is strictly an issue of law, not fact. The [Council] cannot presume the Property could be served by sewer infrastructure, but must rely on [DEP]'s regulations in effect on August 9, 2004 under the plain language of the [Act].
This appeal follows in which Bi-County raises the following issues:
I. THE HIGHLANDS COUNCIL'S DECISION THAT BI-COUNTY IS NOT ENTITLED TO AN ADJUDICATORY HEARING IS NOT ENTITLED TO DEFERENTIAL TREATMENT BY THIS COURT BECAUSE IT IS A LEGAL DETERMINATION SUBJECT TO DE NOVO REVIEW.
II. BI-COUNTY IS ENTITLED TO AN EVIDENTIARY HEARING AS A CONTESTED CASE UNDER THE ADMINISTRATIVE PROCEDURE ACT.
A. BI-COUNTY HAS A CONSTITUTIONAL RIGHT TO A HEARING.
1. Fundamental Fairness and Administrative Due Process warrant the grant of a hearing to Bi-County.III. THE HIGHLANDS COUNCIL'S ADOPTION OF A BLANKET POLICY TO BASE INITIAL TDR VALUATIONS ON WHETHER A PROPERTY WAS ALREADY IN A SEWER SERVICE AREA ON THE DATE OF THE ENACTMENT OF THE HIGHLANDS ACT, WITHOUT CONSIDERING WHETHER THE PROPERTY COULD SECURE SEWER SERVICE AREA APPROVAL PURSUANT TO DEP REGULATIONS, IS CONTRARY TO THE LEGISLATIVE MANDATE AND ARBITRARY, CAPRICIOUS AND UNREASONABLE.
2. There are disputed adjudicative facts requiring a trial-type hearing.
3. Bi-County has a constitutional due process right to a hearing.
4. Alternatively, Bi-County is entitled to an impartial hearing or review where an argument, either written or oral, may be presented.
As it did below, Bi-County argues that, as a matter of fundamental fairness, administrative due process as well as under the APA, it was entitled to a trial-type hearing based on disputed adjudicative facts as to whether it would have been qualified for inclusion within a public sewer service area on August 9, 2004. As did the Council, we disagree.
First, we assume without deciding that Bi-County has a protectible property interest in the Council's HDC allocation determination to warrant an agency hearing where there exists a legitimate contested factual issue. See Cunningham v. Dep't of Civil Serv., 69 N.J. 13, 23-26 (1975). No such entitlement arises here, however, because the matter before the Council was not a "contested case," N.J.S.A. 52:14B-9; N.J.S.A. 52:14B-2, with a genuine dispute over adjudicative facts. See, e.g., Jamgochian v. N.J. State Parole Bd., 196 N.J. 222, 248-49 (2008) (stating "[w]hen the material facts in dispute can only be resolved by credibility determinations, a hearing ordinarily would be in order"); In re Request for Solid Waste Util. Customer Lists, 106 N.J. 508, 520-21 (1987) (stating that "[b]ecause the proceeding did not involve any disputed facts, a full evidentiary hearing would have been unnecessary and burdensome, both fiscally and administratively, to the agency"). As such, because it was afforded the opportunity to present its arguments before the Council in written form, Bi-County received all the process it was due as well as a fair determination of its potential development rights under the TDR program. In re Registrant, C.A., 146 N.J. 71, 94 (1996); High Horizons Dev. Co. v. Dep't of Transp., 120 N.J. 40, 51, 54 (1990), superseded on other grounds by statute, N.J.S.A. 52:14B-3.3(a).
Whether the Council erred in failing to consider if Bi-County would have secured a WQMP amendment under DEP rules and regulations in effect on the day before the Act was enacted is strictly a legal question, not warranting a trial-type hearing. Thus, the fact that Bi-County submitted documentation — i.e., the settlement agreement and reports documenting feasibility of on-site and off-site treatment plants and disposal beds to service the property — that may have indicated the landowner could have qualified for sewer service by obtaining an amendment to the WQMP and securing DEP approvals, has no bearing on the threshold legal question of whether the Council was required under N.J.S.A. 13:20-13(h)(1) to consider such evidence where on the day before the Act became law, the property was not located in an approved sewer service area.
Moreover, we find the Council's ruling on that threshold legal question to be sound. Although not bound by an agency's determination on a question of law, In re Distribution of Liquid Assets Upon Dissolution of Union Cty. Reg'l High Sch. Dist. No. 1, 168 N.J. 1, 11 (2001), we give "'great deference'" to an agency's "'interpretation of statutes within its scope of authority and its adoption of rules implementing' the laws for which it is responsible." N.J. Ass'n of Sch. Adm'rs v. Schundler, 211 N.J. 535, 549 (2012) (quoting N.J. Soc'y for Prevention of Cruelty to Animals v. N.J. Dep't of Agric, 196 N.J. 366, 385 (2008)); see also In re Election Law Enforcement Comm'n Advisory Opinion No. 01-2008, 201 N.J. 254, 262 (2010). "This deference comes from the understanding that a state agency brings experience and specialized knowledge to its task of administering and regulating a legislative enactment within its field of expertise." Election Law Enforcement, supra, 201 N.J. at 262; accord Newark v. Natural Res. Council, 82 N.J. 530, 539-40, cert. denied, 449 U.S. 983, 101 S. Ct. 400, 66 L. Ed. 2d 245 (1980). Deference to an agency's discharge of its statutorily delegated responsibilities is "'especially appropriate' when an agency is responsible for administering 'new and innovative legislati[on]' such as the Highlands Act." In re Adoption of Highlands Reg'l Master Plan, 421 N.J. Super. 396, 402-03 (App. Div. 2011) (quoting Van Dalen v. Washington Twp., 120 N.J. 234, 246 (1990)). Thus, we will reverse an agency's determination only if it is "plainly unreasonable and violates express or implied legislative direction[,]" that is, if it "gives 'a statute any greater effect than is permitted by the statutory language[,] . . . alter[s] the terms of a legislative enactment[,] . . . frustrate[s] the policy embodied in the statute . . . [or] is plainly at odds with the statute." Patel v. N.J. Motor Vehicle Comm'n, 200 N.J. 413, 420 (2009) (quoting T.H. v. Div. of Developmental Disabilities, 189 N.J. 478, 491 (2007) ).
N.J.S.A. 13:20-13(h)(1) directs the Council to "establish the initial value of a development right considering the [DEP] rules and regulations in effect the day before the date of enactment of this act[, August 9, 2004]." The APA defines a "rule" as an "agency statement of general applicability and continuing effect that implements or interprets law or policy, or describes the organization, procedure or practice requirements of any agency[,] and the term "includes the amendment or repeal of any rule." N.J.S.A. 52:14B-2.
The relevant "rules and regulations" are DEP's Water Quality Management Planning (WQMP) rules, N.J.A.C. 7:15-1.1 to - 9.8, promulgated pursuant to the Water Quality Planning Act, N.J.S.A. 58:11A-1 to -16. These rules endow county boards, and in some instances municipalities, with responsibility for establishing wastewater management plans. N.J.A.C. 7:15-5.4, - 5.13. A wastewater management plan is "a written and graphic description of existing and future wastewater-related jurisdictions, wastewater service areas, and selected environmental features and treatment works." N.J.A.C. 7:15-1.5. After being approved by DEP, wastewater management plans are incorporated into the areawide WQMP as an amendment. N.J.A.C. 7:15-5.3(c). N.J.A.C. 7:15-5.25 provides criteria that must be met for a plan or plan amendment to be adopted.
Jefferson Township apparently has its own wastewater managemen plan. N.J.A.C. 7:15-5.13 provides that DEP may in some instances assign wastewater management plan responsibility to a municipality upon its request.
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Pursuant to N.J.A.C. 7:15-5.24, with certain exceptions, sewer service may only be provided to areas that are not identified as, among other things, environmentally sensitive areas. If a "planned development project is located outside the designated sewer service area of an areawide plan, the project must be developed using septic systems or the areawide plan must be amended to include the project in the sewer service area." In re Adoption of N.J.A.C. 7:15-5.24(b) & N.J.A.C. 7:15-5.25(e) , 420 N.J. Super. 552, 560 (App. Div.), certif. denied, 208 N.J. 597 (2011). "'In general, septic system development will occur at a lower density than development that would be supported by public sewers.'" Id. at 563 (quoting 40 N.J.R. 4113 (July 7, 2008)). DEP's Highlands rules establish maximum septic system densities for Highlands developments, which depend on factors such as the amount of forest on the land. N.J.A.C. 7:38-3.4.
Thus, because Bi-County's property was not in a designated sewer service area on August 9, 2004, DEP's rules required the Council to allocate HDCs considering DEP's septic density standards pursuant to the WQMP rules. Under these standards, then, the Council correctly calculated Bi-County's HDC allocation.
To be sure, areawide plans, which indisputably are considered administrative rules themselves, Toll Bros., Inc. v. N.J., Department of Environmental Protection, 242 N.J. Super. 519, 527 (App. Div. 1990), may be amended to add new sewer service areas. Consequently, Bi-County argues that the HDC allocation should have reflected the "certainty" of being placed in an approved sewer service area because it was "entitled" to an amendment to Jefferson Township's WMP as a matter of right. We disagree.
At most, the settlement agreement gave Bi-County an enforceable right to have Jefferson Township amend its WQMP within six months of execution and thereafter pursue final DEP approval of the WQMP amendment. The Township also agreed to "take such action as is reasonable and appropriate at Bi-County's request to assist Bi-County in obtaining access to sufficient wastewater treatment capacity and potable water supply."
Indisputably, Bi-County never applied for, much less obtained, an amendment to the Township's WQMP. Obviously then, neither Bi-County nor the Township ever sought to secure approval of a WQMP amendment from DEP. Because such an amendment, dependent ultimately on DEP authorization, was neither a certainty nor a matter of right, it would be entirely speculative for the Council to have determined whether Bi-County would have so qualified. Yet the plain language of N.J.S.A. 13:20-13(h)(1) requires the calculation of development rights under the "rules and regulations" in effect on August 9, 2004, and not whether those rules could have been amended.
Bi-County nevertheless posits that since amendments to the WQMP are not made through rulemaking, but through adjudication, by considering the possibility of a WQMP amendment, which is not a rule, the Council would not then be violating its statutory mandate to consider DEP rules and regulations in effect the day before the enactment of the Act. We reject this reasoning as unsound.
In the first place, WQM plans and their amendments are considered administrative rules and their adoption constitutes rulemaking. Toll Bros., supra, 242 N.J. Super. at 527. There, we considered whether WQMPs and amendments were rules for the purpose of deciding whether the forty-five day rule on appeals from final agency decisions or actions under Rule 2:4-1(b) was applicable. Id. at 528. We concluded, "[w]e have no doubt that the adoption of areawide WQM plans and amendments thereto constitutes quasi-legislative rule-making." Id. at 527. " An agency determination must be considered an administrative rule when all or most of the relevant features of administrative rules are present and preponderate in favor of the rule-making process." Ibid. (citing Metromedia, Inc. v. Dir., Div. of Taxation, 97 N.J. 313, 331 (1984)). The court enumerated the Metromedia factors that support a finding that an agency determination is a rule:
(1) is intended to have wide coverage encompassing a large segment of the regulated or general public, rather than an individual or a narrow select group; (2) is intended to be applied generally and uniformly to all similarly situated persons; (3) is designed to operate only in future cases, that is, prospectively; (4) prescribes a legal standard or directive that is not otherwise expressly provided by or clearly and obviously inferable from the enabling statutory authorization; (5) reflects an administrative policy that (i) was not previously expressed in any official and explicit agency determination, adjudication or rule, or (ii) constitutes a material and significant change from a clear, past agency position on the identical subject matter; and (6) reflects a decision on administrative regulatory policy in the nature of the interpretation of law or general policy.We found that all of these criteria apply to WQMPs and amendments thereto:
[Ibid. (quoting Metromedia, supra, 97 N.J. at 331-32).]
These plans govern sewer service within a large area affecting many property owners
and other members of the public; apply generally and uniformly within the area; operate prospectively; provide legal directives regarding access to sewer services that are not otherwise expressly provided by or clearly inferable from the enabling legislation; reflect in the case of a plan amendment a material and significant charge from a clear past agency position as to the parameters of the sewer service area and constitute an interpretation or application of general administrative regulatory policy.
[Id. at 527-28.]
Granted, as Bi-County points out, Toll Bros., supra, considered DEP regulations in effect in late 1985 and early 1986, id. at 524 n.2, prior to the adoption of N.J.A.C. 7:15-3.9, which provides a means of requesting an adjudicatory hearing before the OAL to contest DEP decisions on applications for WQMP amendments. However, this provision does not automatically render an agency determination on an amendment proposal an adjudication rather than a rulemaking. Indeed, the distinction between a rule and an adjudication can be blurry and in some cases the "inquiry can be further clouded because . . . an agency can promulgate a rule that is highly particularized, constituting, in effect, individualized rule-making." Metromedia, supra, 97 N.J. at 332 (internal quotation marks omitted). Although such an amendment would obviously have directly affected Bi-County's property, as we recognized in Toll Bros., supra, WQMPs do "provide legal directives regarding access to sewer services that are not otherwise expressly provided by or clearly inferable from the enabling legislation." Id. at 527. Moreover, we found that an amendment does "reflect in the case of a plan amendment a material and significant change from a clear past agency position as to the parameters of the sewer service area and constitute an interpretation or application of general administrative regulatory policy." Id. at 527-28. Accordingly, we do not view the weighing of the Metromedia factors as having been significantly altered by N.J.A.C. 7:15-3.9.
Even if the putative amendment at issue here could be better classified as involving an adjudicatory action rather than rulemaking, the Council reasonably considered the WQMPs in place the day before the Highlands Act became effective as "rules," and the relevant WQMP here simply did not include Bi-County's property in a sewer service area. While other rules provide for amending WQMPs, the Council reasonably construed the statutory directive to consider "rules and regulations in effect" as exclusive of possible or potential changes thereto.
In sum, the Council did not err in failing to assume that Bi-County would have effected a change to the WQMP, a rule that was clearly "in effect" on August 9, 2004. The Council's construction of the plain language of N.J.S.A. 13:20-13(h)(1) was reasonable and sound.
Affirmed.
I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION