N.J. Stat. § 58:21B-4
Where in connection with the acquisition of such real property, it shall be necessary to acquire lands, portions of which are deemed by the Commissioner of Environmental Protection to be in excess of the State's needs, the commissioner, on behalf of the State, is authorized to enter into agreements of exchange and to convey, such excess portions of land, as part or all of the consideration for the purchase of other lands herein authorized and directed to be acquired. The commissioner may permit municipalities in which the acquisition of lands is authorized by this act the first option to purchase for recreational purposes any lands in said municipalities acquired under section 1 of this act which may be subsequently determined to be in excess for the anticipated water supply facility. In the event such excess portions of lands in the judgment of the commissioner cannot feasibly be so exchanged or sold as aforesaid, the commissioner, on behalf of the State, is authorized to enter into agreements of public sale and to convey such excess portions of lands after public advertisement to the highest bidder therefor, the proceeds of such sale to be applied to the purchase of other lands herein authorized and the balance of proceeds, if any, to be returned to the Water Conservation Fund.
N.J.S. § 58:21B-4