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New Jersey Appellate Court Holds That Denial of Subdivision Approval was Arbitrary Where DEP Would Have Final Say on Key Issues



November 3, 2008

In a case as notable for its complex facts and procedural history as for its holding, the Appellate Division of the New Jersey Superior Court recently affirmed a trial court decision to order a land use board to grant conditional approval of a developer’s subdivision plan for a 315-unit residential development in Harmony Township. Acknowledging that under normal circumstances it would not have disturbed the Board’s decision to deny subdivision approval, the court, in Dowel Associates v. Harmony Township Land Use Board, — N.J. Super. –, Nos. A-5564-06T3/A-5650-06T3 (App. Div. Sept. 9, 2008), ruled that the Department of Environmental Protection (DEP), and not the Board, had the final say about the key disputed issues, and held that the board should have granted approval — conditioned on DEP’s approval — rather than rejecting the developer’s application.

The case had its genesis in 1990, when the township and the developer settled litigation over the township’s affordable housing obligation under the Fair Housing Act. Under the settlement, the township agreed to rezone the developer’s property to permit the development of an inclusionary project that would completely satisfy the township’s Mount Laurel obligation. After a delay of more than ten years owing to off-site issues, the township in 2002 obtained substantive certification from the Council on Affordable Housing (COAH), based on the developer’s planned project. The developer filed its application for subdivision approval the next year; hearings on the application did not conclude until the end of 2004.

The subsurface geology of the developer’s site rendered it susceptible to the formation of voids and sinkholes, such that the feasibility of a proposed on-site sewage disposal facility was a major focus at the hearings. Engineers and geologists for the developer and for the Board testified at length as to whether the wastewater from the development could safely be discharged into the ground. DEP also expressed concerns over the proposed system, as reflected in a number of letters it sent to the developer in connections with applications for required DEP permits and approvals. The Board ultimately voted to deny subdivision approval, citing concerns over the feasibility of the sewage disposal system and over the developer’s ability to comply with DEP’s stormwater management regulations. The developer brought suit in the Law Division.

The trial court took the unusual step of appointing three experts to advise the court on these technical issues. After hearing their advice and the arguments of the parties, the trial court reversed the Board’s decision, and remanded the matter to the board for continued hearings and for the entry of an order granting the developer conditional subdivision approval if it correct certain technical deficiences in its plans or obtain a DEP waiver of its stormwater management rules. The trial court further ordered that the approval be conditioned upon the issuance to the developer of a DEP permit for the discharge of its wastewater.

On appeal, the Appellate Division acknowledged that “under a normal scope of review, the record would support the Board’s resolution and denial of subdivision approval if the Board exercised exclusive jurisdiction.” However, the court continued, in this case DEP could, and indeed had expressed a willingness to, exercise primary jurisdiction over the key issues before the Board. Moreover, the court said, the township had already committed the site in question to fulfill its affordable housing obligation, and thus was not in a position to protect its “uniquely local interest” as a local planning board normally would. Reviewing the trial court’s findings, the court stated, “We agree with the bottom line that, in essence, the sewage disposal system issue should be resolved by the DEP, that the DEP has the expertise, interest and jurisdiction to resolve it, and that if the requisite [discharge] permit is ultimately granted by DEP, the interests of the Township and its citizens will be protected.” Making only passing reference to its normal standard of review — whether the Board’s decision was “arbitrary, capricious, or unreasonable” — the court instead noted that the trial court had questioned the Board’s reading of its own ordinance (a task as to which the Board was not entitled to special deference) and its requirement for the “feasibility” of the sewage disposal system, and had concluded that “feasibility” must mean something less than “permittability.”

Ultimately, though, the court rested its decision on the primary jurisdiction of DEP. The Municipal Land Use Law prohibits a municipal ordinance from permitting a sewage disposal system that is inconsistent with DEP requirements, and requires, in appropriate circumstances, that a municipal agency condition its approval of such a system on DEP’s approval. The court thus agreed with the trial court’s conclusion that DEP had primary jurisdiction, and went on to note that in the circumstances presented, deference to the expertise of DEP was “especially appropriate because the Board’s disapproval of this project effectively upended years of planning for the site to accommodate the municipality’s constitutionally required share of the region’s affordable housing needs.”

The Appellate Division seemed to realize that its decision could appear to wrest authority from the Board. “We do not dispute the appellants’ contentions regarding the jurisdiction and responsibilities of the defendant Land Use Board,” the court admitted. But under the particular facts and circumstances of the case — especially, as noted above, the affordable housing issue — the court focused on the reasonableness of the trial court’s action, rather than that of the Board’s decision. “[E]ven recognizing the traditional jurisdiction of the Board, whether primary or concurrent, we are satisfied that the trial court did not inappropriately deem that the circumstances of this case warrant the primary decision-making by the DEP.”

Dowel Associates makes no new law, and may be limited to its somewhat unusual facts. Nevertheless, it sends a cautionary message to local land use authorities that might be tempted to trust their technical expertise over that of DEP. Especially where larger public policy goals are in play, such as the provision of affordable housing, local boards may need to tread lightly.