Opinion
DOCKET NO. A-2480-08T1 DOCKET NO. A-2513-08T1 DOCKET NO. A-2597-08T1
09-25-2012
IN THE MATTER OF GLOUCESTER COUNTY UTILITIES AUTHORITY WASTE WATER MANAGEMENT PLAN.
Richard M. Hluchan argued the cause for appellant Silvergate Associates (Hyland Levin, attorneys; Mr. Hluchan, of counsel and on the brief). Paul H. Schneider argued the cause for appellant OHI NJ, Inc. (Giordano, Halleran & Ciesla, attorneys; Mr. Schneider, of counsel; Michael D. Pawlowski, on the brief). Kenneth A. DiMuzio argued the cause for appellant Elk Township Municipal Utilities Authority (Hoffman DiMuzio, attorneys; Mr. DiMuzio, on the brief). Helene P. Chudzik, Deputy Attorney General, argued the cause for respondent New Jersey Department of Environmental Protection (Paula T. Dow, Attorney General, attorney; Lewis A. Scheindlin, Assistant Attorney General, of counsel; Valerie Anne Gray, Deputy Attorney General, on the brief). Steven D. Weinstein argued the cause for respondent Gloucester County Utilities Authority (Florio Perrucci Steinhardt & Fader, attorneys; Mr. Weinstein, on the brief).
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
These three appeals were consolidated by an order in motion No. M-4320-08 (App. Div. Apr. 16, 2009).
Before Judges A. A. Rodríguez, Sabatino and Ashrafi.
On appeal from the Department of Environmental Protection.
Richard M. Hluchan argued the cause for appellant Silvergate Associates (Hyland Levin, attorneys; Mr. Hluchan, of counsel and on the brief).
Paul H. Schneider argued the cause for appellant OHI NJ, Inc. (Giordano, Halleran & Ciesla, attorneys; Mr. Schneider, of counsel; Michael D. Pawlowski, on the brief).
Kenneth A. DiMuzio argued the cause for appellant Elk Township Municipal Utilities Authority (Hoffman DiMuzio, attorneys; Mr. DiMuzio, on the brief).
Helene P. Chudzik, Deputy Attorney General, argued the cause for respondent New Jersey Department of Environmental Protection (Paula T. Dow, Attorney General, attorney; Lewis A. Scheindlin, Assistant Attorney General, of counsel; Valerie Anne Gray, Deputy Attorney General, on the brief).
Steven D. Weinstein argued the cause for respondent Gloucester County Utilities Authority (Florio Perrucci Steinhardt & Fader, attorneys; Mr. Weinstein, on the brief). PER CURIAM
Silvergate Associates (Silvergate), OHI NJ Inc. (OHI) and the Elk Township Municipal Utilities Authority (Elk-MUA) (collectively "appellants"), filed separate appeals from the December 10, 2008 final decision by the Department of Environmental Protection (DEP) approving the Wastewater Management Plan (WMP) submitted by the Gloucester County Utilities Authority (Authority). We affirm in part, and reverse and remand in part for reconsideration of one aspect of the DEP's decision that appears to have been based on incorrect factual information.
Silvergate and OHI are landowners who seek to develop their respective properties in Elk Township's Planned Unit Development (PUD) district. The basis of this dispute is Silvergate's and OHI's claims that by approving the WMP, the DEP removed portions of their properties from the Authority's sewer service area. Silvergate and OHI assert that their properties had been in the sewer service area since 1991 and that they had secured development approvals from State, county, and municipal agencies and boards for mixed residential and commercial uses.
We provide a summary of relevant facts and events in order to give a context to our discussion. The Authority operates a regional wastewater treatment plant and associated conveyance facilities for treating the wastewater from sixteen out of the twenty-four municipalities in Gloucester County. Thirteen of the municipalities entered into a Service Agreement and have been core members of the Authority since its inception in 1971. Those thirteen municipalities committed to funding the facilities and operations of the Authority, including by issuance of bonds. The Authority guarantees to its thirteen member municipalities the capacity to treat their wastewater flow. Parts of three other municipalities receive wastewater treatment services from the Authority by contract for specifically designated developments. The thirteen core member municipalities and the additional properties of the other municipalities subject to contractual agreement are referred to as the Consolidated District.
Elk Township is one of the three municipalities that has contracted to receive some wastewater treatment services but has never committed to funding the Authority's general costs and expenses. Elk Township does not have alternative wastewater treatment facilities or contracts. Most of the Township's properties rely upon individual septic systems to treat wastewater. Because Elk Township chose not to be a member municipality, it is a customer of the Authority rather than a core member with a guarantee of future service.
The Authority's sewage treatment plant is located in West Deptford Township and is authorized by the DEP to treat up to a maximum of 24.1 million gallons per day (gpd) of wastewater. The Authority planned upgrades in order to increase this capacity to 38.6 million gpd. The Water Quality Planning Act (WQMA), N.J.S.A. 58:11A-1 to -16, requires a process for wastewater management planning, which must identify and plan for anticipated wastewater treatment needs over at least a twenty-year period.
N.J.S.A. 58:11A-5(a).
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Silvergate owns 662 acres in Elk Township. It intends to construct a large-scale planned unit development, consisting of residential and commercial facilities, with a need for 391,570 gpd of wastewater treatment services. OHI owns approximately 442 acres in Elk Township, which are located in the PUD district. OHI's proposed development consists of residential units and commercial buildings, and would produce an estimated flow of 224,216 gpd.
Since 1990, the Elk-MUA began planning for the accommodation of wastewater and sewer service to Silvergate, OHI, and other developments within the Elk Township borders. In 1991, the Elk-MUA prepared a water management plan (Elk Plan) to include the Township's PUD district. This proposed twenty-year plan would expand the boundary of the Elk-MUA's sewer service area to include its entire PUD district with a 1,307,438 gpd flow estimate.
The Authority advised the Elk-MUA that it would agree to the expanded service area; however the Authority could only guarantee a treatment capacity for up to 250,000 gpd. The Authority indicated that, "[t]reatment of wastewater in excess of 250,000 gpd, arising in the Elk Township proposed service area, will be addressed at a future date in accordance with the finding of the Authority's ongoing future facilities need study." The Authority formally endorsed the Elk-MUA's water management plan, but it did not commit to the allocated capacity.
In 1991, the DEP officially adopted the Elk Plan as an amendment to the Tri-County WQMP, noting that the Elk Plan "is only intended to be a 20 year planning document" and that "[a]doption of this [Plan] should not be construed to mean that the municipal infrastructure needed to carry out the plan already exists." The DEP further noted that "[t]he issue of capacity will have to be addressed by the [Elk-MUA] and [the Authority] prior to application for permits for all new infrastructure."
On July 27, 1994, the Authority and Elk-MUA entered into a service agreement whereby the Authority agreed to allow Elk-MUA to connect to its sewage system and to accept a maximum of 250,000 gpd of sewage from Elk Township. Pursuant to the agreement, the Authority, at its discretion, would implement construction to accommodate the additional flow from Elk, in excess of 250,000 gpd. The service agreement with Elk-MUA did not change the Township's status as a customer of the Authority.
Despite the absence of a guarantee from the Authority of future service for its development, Silvergate expended more than $20 million to construct sewerage infrastructure on its property for anticipated connection to the Authority's wastewater facilities. Silvergate contends that the Authority and the DEP approved its plans to construct the infrastructure.
DEP APPROVAL PROCESS.
On October 19, 2007, the Authority submitted the WMP, which proposed the elimination of its sewer service area to portions of Elk Township that had long been designated by Elk Township for sewer service. Notice of the proposed plan was published in the New Jersey Register. Appellants submitted comments, documentation and other data to the DEP opposing the WMP.
At the DEP's direction, the Authority calculated residential build-out flow for its WMP "by determining the maximum number of dwelling units based on the current zoning." The Authority conducted a full build-out analysis of the areas it serves. The DEP acknowledged that the analysis was done in conformance with DEP guidance.
The Authority conducted an analysis of both current flow and future flow projections. Current flow, based on a monthly average from the municipalities served by the Authority, was determined to be 22.528 million gpd. The total projected flow for the Authority upon full build-out was estimated to be 38.6 million gpd, including 8.648 million gpd from potential residential development and 7.428 million gpd from potential commercial and industrial sources.
After accommodating the anticipated needs of its core members and its other contractual obligations, the Authority determined that it had the capacity to provide up to 458,350 gpd of wastewater treatment services to Elk Township, that is, 208,350 gpd more than the amount it had committed to provide in 1994. According to appellants, this amount falls short by 350,196 gpd from the amount that is needed to accommodate all of approved developments in Elk Township in the sewer service area, including the properties of Silvergate and OHI.
According to the Authority, the commitment to provide 458,350 gpd accounts for parts of the development plans of Silvergate and OHI, as well as several other properties to which the Authority has made prior commitments. It also includes a balance of 81,850 gpd that is currently unallocated and that can be designated in the future for additional development in Elk Township, such as by one or both appellants. The Authority contends it has neither the wastewater treatment capacity nor the obligation to provide additional service to appellants or other property owners in Elk Township.
Silvergate employed an independent expert to conduct its own build-out analysis for its residential areas included in the Authority's Consolidated District and the additional sewer service area of Elk Township and the other contracting municipalities. The expert analyzed the data utilized by the Authority and concluded that the Authority's analysis was flawed. The expert determined that, excluding the 458,350 gpd of committed capacity to Elk Township, the total estimated flow from the Authority sewage service area based on full build-out is 6,599,421 gpd. This figure is 1,590,603 gpd less than the Authority estimate of 8,190,024 gpd for the same area. Silvergate's expert opined that an analysis of the anticipated future commercial and industrial flow rates would reveal a similar overestimate by the Authority.
The DEP approved the WMP on December 10, 2008 (41 N.J.R. 2345(b)), addressing objections and comments by appellants in a written decision of that date. These appeals followed. Silvergate and OHI submitted briefs raising several issues, and Elk-MUA provided a summary letter brief adopting the legal position, legal arguments and a supporting appendix submitted by Silvergate.
DEP REGULATION IS NOT ULTRA VIRES.
We reject Silvergate's argument that "DEP's regulation requiring wastewater management plans to be based upon full build-out conflicts with the statutory mandate requiring a 20 year build-out, and is ultra vires." Specifically, Silvergate argues that this requirement exceeds the authority granted by the Water Quality Planning Act (WQPA), N.J.S.A. 58:11-1 to -16. In addition, Silvergate argues that DEP's guidance to the Authority to create a WMP based on a full build-out analysis was contrary to the DEP's own regulations because the municipalities within the Authority are not "urban areas" as defined by pertinent statute.
The WQPA requires "[e]very designated planning agency and the [DEP] for all areas of the State without a designated planning agency, shall conduct an area wide waste treatment management planning process and submit an area wide plan for that area to the Governor for adoption" N.J.S.A. 58:11A-5. In addition "[e]very county planning board may also conduct a countywide waste treatment management planning process and prepare a county water quality management plan." Ibid. The statute provides that the "area wide plan shall include, but not be limited to . . . [t]he identification of treatment works necessary to meet the anticipated municipal and industrial waste treatment needs of the area over a twenty-year period, annually updated." N.J.S.A. 58:11A-5 (emphasis added).
The DEP promulgated N.J.A.C. 7:15-5.18, titled, "Future wastewater jurisdictions, wastewater service areas, and domestic treatment works" pursuant to the authority granted by N.J.S.A. 58:11A-1 to -16. N.J.A.C. 7:15-5.18 states in part, that "each wastewater management plan shall include a description of wastewater service areas and [domestic treatment works] necessary to meet anticipated wastewater management needs over a 20-year period for urbanized municipalities or at build-out for all other municipalities." N.J.A.C. 7:15-5.18(a). Prior to the 2008 amendment, the DEP required a twenty-year build-out for all municipalities. See 20 N.J.R. 4000(a).
Here, Silvergate argues that the DEP requirement, that the plans include a full build-out analysis in this case for non-urban areas, exceeds the statutory grant of authority. As noted above, N.J.S.A. 58:11A-5 requires area wide plans to include an analysis of a municipality's wastewater treatment needs twenty years into the future. However, Silvergate's interpretation of the authorizing statute is mistaken. The statute's clause specifying a twenty-year build-out analysis is prefaced by a phrase stating that an "areawide plan shall include, but not be limited to." N.J.S.A. 58:11A-5(a) (emphasis added). This language indicates that the Legislature was setting a base level requirement for the DEP to establish its regulations, not a limit on its power to do so. In addition, the requirement of a full build-out analysis is clearly consistent with the purpose of the statute. As noted above, the stated purpose of the statute is to protect the state's water resources from pollution and to ensure that wastewater treatment plans advance this goal. See N.J.S.A. 58:11A-2(b). Modification of DEP regulations to accommodate the state's evolving environment should be expected.
In response to comments on the WMP, the DEP noted that, "[o]n January 11, 2000, then Governor Christine Todd Whitman signed Executive Order 109 which directed the [DEP] to require certain analyses, including detailed land use, environmental build-out and pollutant loading." The executive order was based on a concern for the "drinking water for residents of the State as well as habitat for numerous species of fish and wildlife" and a recognition of the effects of increased population density and growth that the state was expected to experience in the near future. The order further noted that the DEP "may, under existing authority, require an alternatives analysis, including an evaluation of critical economic, social, environmental and institutional factors, before making a final decision on an application for approval of a wastewater management plan or an amendment thereto."
Silvergate also argues that DEP's direction to Authority to prepare its WMP based on a full build-out analysis, rather than a twenty-year build-out, is contrary to N.J.A.C. 7:15-5.18(a), which only requires a full build-out analysis for non-urbanized areas. Silvergate notes that the DEP has defined urbanized municipalities as "those where 90 percent of the municipality's developable land area appears as 'Urban Lands' as designated in the New Jersey Department of Environmental Protection's 1995/97 and 2002 Land Use/Land Cover geographical information systems database." N.J.A.C. 7:15-1.5. Silvergate contends that, based on the "Policy Map of the New Jersey State Development And Redevelopment Plan Gloucester County," the urban municipalities subject to the twenty-year build out requirement in Gloucester county do not include Elk Township. Respondents do not directly address this point. Instead, respondents note that overestimates in gpd requirements of the municipalities included in WMP are permissible because they will protect the future interests of the full members of the Authority. The DEP reasons that any overestimate prevents potential overreaching by accepting flow beyond the Authority's capacity.
Silvergate further argues that the WMP should have been evaluated under DEP regulations existing at the time that the plan was submitted, rather than under the amended rules that require a full build-out analysis. The Authority submitted the WMP on October 19, 2007, nine months prior to DEP's adoption of the new rules requiring full build-out analysis on July 7, 2008. Silvergate notes that N.J.A.C. 7:15-5.2(b) provides that "[p]roposed [WMP's] that have been filed with the Department as of July 7, 2008 shall be subject to the rules in effect on July 6, 2008." Thus, Silvergate contends that the Authority should have been subject to the earlier rules requiring only a twenty-year build-out analysis. Again, respondents do not directly address this point.
The DEP had the discretion to direct the Authority to prepare it's WMP under the full build-out analysis. As stated previously, the Governor's January 11, 2000 executive order permitted "an alternative analysis," including from the twenty-year time frame provided in the DEP's regulations. The Authority's refusal to accommodate additional wastewater from Elk Township is based on its concerns about accommodating the needs of its core members, the municipalities that have funded its facilities and operations since the Authority's inception in 1971. In recognition of those concerns and in anticipation of the regulation it adopted several months after submission of the Authority's WMP, the DEP could modify the planning time frame to full build-out rather than twenty years.
APPROVAL WAS NOT ARBITRARY, CAPRICIOUS
NOR CONTRARY TO REGULATIONS.
Silvergate and OHI contend that, "DEP's approval of [the Authority] [WMP] is arbitrary and capricious and contrary to DEP regulations." We disagree.
"Agencies acting in an adjudicative capacity review evidence, make findings of fact, and exercise discretion in applying the law to those facts." In re Issuance of Permit by Dep't of Envtl. Prot. to Ciba-Geiga Corp., 120 N.J. 164, 171 (1990). Thus, "[a]n agency must engage in fact-finding to the extent required by statute or regulation, and provide notice of those facts to all interested parties." Id. at 173. "This requirement is 'far from a technicality and is a matter of substance.'" Ibid. (quoting N.J. Bell Tel. Co. v. Commc'n Workers of Am., 5 N.J. 354, 375 (1950)).
"Courts have only a limited role to play in reviewing the actions of other branches of government. In light of the executive function of administrative agencies, judicial capacity to review administrative actions is severely limited." In re Musick, 143 N.J. 206, 216 (1996). "Arbitrary and capricious action of administrative bodies means willful and unreasoning action, without consideration and in disregard of circumstances. Where there is room for two opinions, action is [valid] when exercised honestly and upon due consideration, even though it may be believed that an erroneous conclusion has been reached." Worthington v. Fauver, 88 N.J. 183, 204-205 (1982) (alteration in original) (quoting Bayshore Sewerage Co. v. Dep't. Envtl. Prot., 122 N.J. Super. 184, 199 (Ch. Div. 1973)) (internal quotation marks omitted).
Here, the record belies these arguments. DEP provided extensive explanations for its decision in response to the numerous comments submitted by appellants.
VESTED RIGHTS.
Silvergate and OHI contend that "by virtue of [their] vested rights, [they are] entitled to continue [their] sewer service area designation and [are] entitled to an allocation of flow into [the Authority's] sewage system." We are not persuaded.
First, we note that OHI acknowledges in its reply brief that it was not guaranteed capacity at the Authority's treatment plant. Further, the concept expressed by the term "vested right" is:
that of a present fixed interest which in right reason and natural justice should be protected against arbitrary state action -- an innately just and imperative right that an enlightened free society, sensitive to inherent and irrefragable individual rights, cannot deny.The Supreme Court has also held that "where the permit is regularly issued in accordance with the zoning ordinance, it may not be revoked after reliance." Tremarco Corp. v. Garzio, 32 N.J. 448, 456 (1960).
[Pennsylvania Greyhound Lines, Inc. v. Rosenthal, 14 N.J. 372, 384-85 (1954).]
Silvergate and OHI note that they were issued numerous approvals and permits on which they relied by expending funds towards their planned developments, and the loss of the sewer district designation renders their properties unsuitable for building. OHI argues that it should not be deprived of the designation of its property as within the Authority's sewer service area, even if there is inadequate capacity at this time to dispose of its anticipated wastewater. It argues that the modification of the sewer service area in the Authority's WMP will hinder its ability to develop the property in the future if the Authority's capacity expands or is otherwise made available. Silvergate similarly argues that it received State, county, and local permits and approvals, and because its entire project is located in a sewer service area, it is entitled to use the Authority's treatment plant. It argues that it has expended about $20 million in anticipation of connecting to the Authority's wastewater facilities.
The DEP responds that appellants' properties have not been removed from the sewer service area designated by Elk Township. As a result of new regulations and extensions of deadlines, Elk Township had until an unspecified date in 2011 to update its WMP to indicate how it intends to provide wastewater services to properties designated in its sewer service area that are not under contract for wastewater treatment by the Authority. The DEP contends further that the Authority may not include in its sewer service area properties that are neither in the Consolidated District nor committed to wastewater treatment services by contract. The DEP argues that, if the Authority obtains capacity in the future to service appellants' properties, an amendment must be made to its WMP and its sewer service area.
In response to appellants' arguments as to vesting, the Authority argues that neither appellant's property was ever in the Authority's service area. At the time the Elk-MUA Plan was approved, there was no Authority sewer service area because there was no Authority WMP at that time. Silvergate's and OHI's properties are located within the Elk Township service area, and that designation was not changed by adoption of the Authority's WMP.
The Authority emphasizes that Elk Township and appellants were repeatedly notified over the years that the Authority was making no guarantee to provide wastewater treatment services beyond 250,000 gpd. Not only did the Authority's 1991 endorsement of the Elk Plan expressly provide that it did not constitute a commitment to provide future capacity, but the Authority's May 10, 2000 resolution approving connection to its system by Elk Township properties under the 1994 service agreement specifically warned:
The ETMUA and/or other private entities developing and/or constructing the ETMUA System are aware and cognizant of the limitations contained in the Service
Agreement . . . and proceed at their own risk in constructing structures and/or facilities with the capabilities of collecting and transmitting volumes of wastewater in excess of the 250,000 gpd limitation . . . .
[Emphasis added.]
The Authority argues and we agree that Elk Township is responsible for providing sewer capacity for service areas within its borders beyond the amount it has contracted with the Authority to provide. As it is not an Authority member, Elk Township is solely responsible for its municipal sewer service. In 1994, the Authority agreed to service a specific area of Elk Township for a maximum flow of 250,000 gpd. This area was reflected in Elk's Plan as falling within a Authority sewer service area. The remainder of the Township and any flow from the designated area that exceeds 250,000 gpd and other commitments the Authority has made by contract remain wholly Elk Township's responsibility.
The 458,350 gpd the Authority committed to Elk Township by its 2008 WMP more than meets the Authority's obligations. It provides partial services to appellants' properties and leaves a balance of 81,850 gpd that can be designated for further development of those properties. The prior approvals did not commit the Authority to provide full services to appellants or to Elk Township according to its wastewater management plan.
DEP'S FACT FINDINGS.
Finally, as we have stated, we reject appellants' contention "the DEP failed to make adequate findings of fact and account for comments made on the WMP which requires reversal of its decision or remand for an evidentiary hearing". The December 10, 2008 written decision of the DEP addresses the relevant factual disputes by means of detailed responses to comments made by representatives of appellants and others.
Appellants also contend, however, that "DEP's failure to address infiltration and inflow renders its approval of [the Authority's] [WMP] invalid." Silvergate argues that infiltration and inflow (I/I) accounts for 3.553 million gpd of the total flow into the Authority's wastewater treatment plant. It contends that, by regulation, N.J.A.C. 7:14A-22.16(a), the DEP is required to demand as part of the Authority's WMP that measures be taken to reduce I/I so that capacity can be increased for treating actual wastewater. It argues that Elk Township's current shortfall of 350,196 gpd to accommodate the development plans of Silvergate and OHI represents less than a ten percent reduction of I/I that the Authority has an obligation to remedy.
Although we disagree that the DEP failed to address I/I, it appears that it may have relied on a factual error in addressing the issue of whether the Authority is required by regulation to take action to reduce I/I that affects its wastewater treatment capacity. In its December 10, 2008 decision, the DEP stated that existing I/I is 353,000 gpd. That figure represents approximately two percent of daily flow and was found by the DEP to be an acceptable level of I/I. In fact, if the I/I is ten times that amount and represents about fifteen percent of the daily flow that passes through the Authority's treatment plant, as Silvergate contends, perhaps the DEP would require that the Authority take action to reduce I/I as a means of increasing the Authority's wastewater treatment capacity. Such an increase in capacity may alter the figures upon which the WMP was based and allow additional capacity to be allocated to Elk Township.
Our record does not include information about the specific causes of the existing I/I, the time frame and capital expenditures required to address the issue, and the feasibility of mandating corrective action by the Authority. We cannot determine on this record whether the DEP would have taken different action as to approval of the Authority's WMP if it had considered accurate I/I figures as represented by Silvergate rather than the vastly understated figure of 353,000 gpd. We are constrained to remand this matter to the DEP to determine whether the I/I factual information it relied upon was accurate and, if inaccurate, whether correction of that data affects its approval of the Authority's WMP.
With the exception of this one aspect of the DEP's December 10, 2008 decision that seems to be based on factual error, we conclude that the DEP's approval of the WMP is supported by sufficient credible evidence on the record as a whole and was not based on legal error or otherwise arbitrary or capricious.
Affirmed in part, reversed and remanded in part. 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