Two recent events, one that involved an affordable housing lawsuit and the other that memorialized the legislature's nullification of the Highlands septic system density rule, underscored the challenges that landowners and developers have confronted in the 859,358 acre Highlands region. While protection of the Highlands as a source of drinking water is paramount, the economic and social implications also need to be taken into account since nearly 20 percent of the state's land area is located within the region delineated by the 2004 Highlands Preservation and Planning Act (the Highlands Act). N.J.S.A. 13:20-1 et seq. For additional discussion of the adoption and implementation of the Highlands Act, see L. Goldshore and M. Wolf, “Highlands Preservation Bill a Priority,” 176 N.J.L.J. 549 (May 17, 2004); L. Goldshore, “Court to Decide Highlands Act Exemption Case,” 224 N.J.L.J. 163 (Jan. 15, 2018) and L. Goldshore, “Highlands Septic System Density Rule,” 224 N.J.L.J. 294 (Jan. 29, 2018).

The Highlands Exemption Case

On Dec. 13, 2018, the New Jersey Supreme Court issued a decision in a case that had its roots in a 1987 Mt. Laurel action to construct a development that included an affordable housing component. N.J. Highlands Coalition v. N.J. Dept. of Environmental Protec., 2018 WL 6539897, aff'g 2017 WL 3318305 (App. Div.). Securing approval of such projects has rarely been easy or quick due to community opposition frequently punctuated by overstated environmental concerns. After more than 31 years, the court's observation that this matter had “an extended history” constituted something of an understatement.

The subject property comprised some 85+ acres in the Borough of Oakland, Bergen County (“the Borough”). The builder's remedy lawsuit sought approval to construct 700 units on the site. A 1991 settlement with the Borough resulted in the project being scaled back to 370 units. But it did not end there.

In 1998, an application for a 313-unit development was filed with the Borough's planning board to accommodate a 50-foot transition area from intermediate value wetlands on a portion of the property. Following other litigation, in 2004 the DEP determined that the wetlands were of exceptional value due to the presence of barred owl habitat and required a 150-foot transition area. A new planning board application was filed that complied with the revised wetlands classification and also set aside 16 acres of forested uplands for habitat purposes. The project's intensity was further reduced so that only 209 units could be constructed on the site.

On Aug. 10, 2004, the Highlands Act was approved and took effect. The Borough was assigned to the preservation area, the inner core of the Highlands, where development was strictly regulated. Those restrictions were obviated by an exemption that was a perfect fit in this situation. N.J.S.A. 13:20-28(a)(17) [Exemption 17] exempted:

a major Highlands development located within an area designated as Planning Area 1 … or Planning Area 2 … that on or before March 29, 2004, has been the subject of a settlement agreement and stipulation of dismissal filed in the Superior Court, or a builder's remedy issued by the Superior Court, to satisfy the constitutional requirement to provide for the fulfillment of the fair share obligation of the municipality in which the development is located.

Exemption 17 was subject to what appeared to be a limited duration: it would “expire if construction beyond site preparation does not commence within three years after receiving all final approvals required pursuant to the 'Municipal Land Use Law,'….”

In 2005, the DEP determined that the proposed development qualified for Exemption 17. The Borough's planning board granted preliminary and final site plan approval in 2007 that was subject to 57 conditions. In 2014, DEP reconfirmed the project's exemption status based on the planning board's approval not constituting a final approval until the conditions were satisfied and the need to amend the site plan to reflect the department's approvals.

The appellate division rejected the argument advanced by the N.J. Highlands Coalition and the Sierra Club, N.J., staunch objectors to Highlands development, that the planning board's 2007 decision was final approval because it conveyed vested rights. The appeals court reviewed the MLUL's definition of the term “final approval” and reasoned that the planning board's approval was subject to conditions, several of which were outstanding including county planning board approval and DEP approvals. Additionally, an amended site plan was required to reflect the DEP-imposed reduction in the yield to 204 units. The DEP's determination that the project qualified for Exemption 17 was upheld.

In a succinct opinion, the Supreme Court affirmed the appellate division's holding that the project was covered by Exemption 17 and that the qualification had not expired. It drilled down on the statute's “all final approvals” language and modified the appeals court's ruling in one respect:

The Legislature used the plural form when referencing “approvals” and further emphasized that there is not just one “final approval” for purposes of Exemption 17 by adding the word “all” to underscore that point. We do not see in Exemption 17's distinctly different language a legislative intent to import the MLUL definition of “final approval.”

One has to wonder whether the result in this case reflected the drafter's actual intent or was the product of imprecise drafting.

The Rule Nullification

On Dec. 6, 2018, the DEP provided notice that it was officially rescinding the Christie/Martin administrations' 2017 amendments to septic system density standards for the Highlands preservation area. It was a housekeeping measure that conformed the DEP's rules to the Legislature's nullification of the amendments as being inconsistent with legislative intent. N.J. Const. art. V, §4, ¶6.

The original and now restored rules limit forested lots to one septic system per 88 acres and non-forested lots to one septic system per 25 acres. The affected landowners questioned whether these extremely restrictive measures were needed to protect water quality or whether their unspoken purpose was to prevent the development of private property without triggering the obligation to pay just compensation. N.J.S.A. 13:20-32(e); N.J. Const. art. I, ¶20.

The nullified amendments linked septic density to land use capability (LUC) zones and were purportedly based on sound science. While they reduced the lot sizes needed for an individual subsurface sewage disposal system, very large areas continued to be required. In the Protection LUC, the requirement for a septic system was 23 acres; in the Conservation LUC, the requirement was 12 acres; and in the Existing Community LUC, the requirement was 11 acres. The amendments would have permitted up to 1,145 additional septic systems, an increase of about 12 percent, over the 414,900 acre preservation area.

On Jan. 12, 2018, outgoing Commissioner Bob Martin sent a letter to the Legislature in which he advised that the amendments would not be withdrawn because he believed that the nullification was constitutionally flawed. As a result of DEP's recent action, Martin's “final stand” was not the final word on the subject.

Comments

The spokesmen for the N.J. Highlands Coalition and the N.J. Sierra Club were deeply disappointed by the Supreme Court's decision. Their comments indicated that this controversy is not over,  and they will continue to object to the project by other means.

According to coalition policy director Elliott Ruga, his group will continue its opposition at every turn: “This land has extraordinary [environmental] value that wasn't considered by the Supreme Court or the appeals court. It's going to be a tremendous loss for New Jersey's natural resources and biodiversity.” NJ Spotlight, Dec. 14, 2018. Similar views were expressed by Sierra Club director Jeff Tittel: “This is now Gov. Murphy's mess and he needs to prioritize this piece of land for acquisition. This land is why the Highlands Act was created in the first place.” North Jersey Record, Dec. 13, 2018.

In contrast, the environmentalists welcomed the DEP's action concerning septic system density. According to Doug O'Malley, director of Environment New Jersey, it was “a long time coming to turn the page from the Christie era … and the final nail in his attempt to usurp [the Highlands Act's] legislative intent.” The ever aggressive Tittel warned: “if they're still looking for a compromise, we're still going to fight. The legislation was very clear … they must maintain water quality.” NJ Spotlight, Dec. 10, 2018.

Lewis Goldshore practices in Princeton. His practice is devoted to environmental, land use and municipal law. He is the author of New Jersey Environmental Law (ICLE 2010).