In the Matter of Adoption of Amendment to the Northeast Water Quality Management Plan

New Jersey Superior Court Appellate Division·Decided July 7, 2025·No. A-0198-23·Unpublished

Opinion

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION

DOCKET NO. A-0198-23

IN THE MATTER OF ADOPTION OF AMENDMENT TO THE NORTHEAST WATER QUALITY MANAGEMENT PLAN.

Submitted February 12, 2025 – Decided July 7, 2025 Before Judges Sumners and Bergman.

On appeal from the New Jersey Department of Environmental Protection, Docket No. PI 435442, WMP170001.

Connell Foley LLP, attorneys for appellant Bi-County Development Corporation (Kevin J. Coakley, of counsel and on the briefs; Herschel P. Rose, on the briefs).

Matthew J. Platkin, Attorney General, attorney for respondent New Jersey Department of Environmental Protection (Donna Arons, Assistant Attorney General, of counsel; Kristen D. Heinzerling, Deputy Attorney General, on the brief).

PER CURIAM

This appeal requires us to determine whether to uphold the New Jersey Department of Environmental Protection's final agency decision enacting a 2023 amendment to the Northeast Water Quality Management Plan (2023 WQMP Amendment),1 regarding the sewer service area to an Oakland Borough (Borough) property (the Property) in the Highlands Region, Highlands Preservation Area, owned by appellant Bi-County Development Corporation. The 2023 WQMP Amendment would significantly reduce Bi-County's plans to develop a 204-unit affordable housing project (the Project) on the Property. Bi- County argues the 2023 WQMP Amendment should be invalidated because: (1) the Department's action was arbitrary and capricious because it violated its own regulation, N.J.A.C. 7:15-4.4, which exempts Bi-County's property in the Highlands Region from its restrictions; (2) the 2023 WQMP Amendment violates a 2014 settlement agreement between Bi-County and the Department regarding the sewer service for the Project; and (3) the Department's action was not supported by sufficient credible evidence in the record. In the alternative, Bi-County seeks a hearing because the Department's action was adjudicatory

1 The parties interchangeably refer to the Northeast Water Quality Management Plan as the Water Management Plan or WMP. For clarity, unless otherwise indicated, we use only the term WQMP as an acronym for the Northeast Water Quality Management Plan.

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and Bi-County's hearing request was improperly denied. We reverse and invalidate the 2023 WQMP Amendment because it violates the parties' settlement agreement. We remand to the Department to revise the 2023 WQMP Amendment to include the entirety of the Property in the sewer service area .

I.

The Property is comprised of approximately 86 acres in the Highlands Region, thus making it subject to the Highlands Water Protection and Planning Act, N.J.S.A. 13:20-1 (the Highlands Act). The Department has designated the Property as having "exceptional resource value" because it is a habitat of the threatened Barred Owl species and contains wetlands. See N.J.A.C. 7:25-4.17. The Property has been the subject of an exhaustive history of disputes, legislative action, litigation, and settlements of which the parties are familiar and need not be rehashed here. For the sake of brevity, we limit our discussion to the history essential to resolve this appeal.

Following a Mt. Laurel 2 lawsuit between Bi-County, the Borough's Planning Board, and the Borough regarding the Borough's affordable housing obligations, the parties reached a settlement in 1991 (the 1991 Settlement Agreement). In pertinent part, the 1991 Settlement Agreement required the

2 S. Burlington Cnty. NAACP v. Twp. of Mount Laurel, 67 N.J. 151 (1975).

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Borough to diligently resolve future issues related to sewer services affecting the Property, stating:

The Borough agrees to the aforementioned proposals and that it will diligently and actively but in no event later than thirty (30) days after notice by Bi-County take whatever reasonable steps are necessary as requested by Bi-County, [the Department], the Township of Wayne or any other governmental agency that has jurisdiction or is a party to any agreement or arrangement in effectuating the provision of sewerage collection and treatment for the development contemplated in this Agreement.

The agreement also provided:

No party to this action shall amend, or seek to sever (judicially or otherwise) or otherwise change any of the terms and conditions of this Agreement, nor shall any land use ordinance affecting the Bi-County tract be amended without the written consent of the parties.

[(Emphasis added).]

The Department subsequently adopted the Borough's WQMP (1991 WQMP), which included the Property in the sewer service area. See 23 N.J.R. 910(b). Notably, "the Borough determined that [a sewer] treatment plant was not feasible and it was never built." 3

3 In 1998, Bi-County contracted to sell the Property to Pinnacle Communities, LTD. The parties terminated the contract in 2009, returning the Property to Bi- County. To avoid confusion, we do not detail actions taken by Pinnacle because its actions would affect decisions Bi-County took after it re-acquired ownership.

A-0198-23

In 2004, the Department reclassified the wetlands adjacent to the Property as having "exceptional resource value" and placed further restrictions on the Project's transition area. Consequently, the 313-housing unit proposal for the Project was reduced to 209 units and modified site plans were submitted to the Planning Board. That same year, the Highlands Act was passed authorizing the Highlands Water Protection and Planning Council to supervise developments in the Highlands Region. N.J.S.A. 13:20-1. The Highlands Act also exempts certain developments from its provisions, such as those subject to a settlement agreement, contingent on time restrictions. N.J.S.A. 13:20-28(a)(17).

In 2005, the Department determined Bi-County was exempt from the Highlands Act due to the 1991 Settlement Agreement. That aside, the Department noted, "[t]his determination does not eliminate the need for any permits, approvals, or certifications required by the Department or any [f]ederal, [s]tate, county or municipal review agency with jurisdiction over this project/activity." The Department also determined the Project was inconsistent with the 1991 WQMP, because it "is located outside of the sewer service area . . . in Wayne Township, which is the proposed recipient of the sewage."

Over the next several years, Bi-County and the Department engaged in extensive litigation before the Office of Administrative Law regarding the

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Property's access to sewer service in accordance with the 1991 WQMP. The litigation culminated in the 2014 Settlement Agreement which resolved that: (1) the 1991 WQMP remained in effect, and the Department erred by initially finding the proposal inconsistent with the 1991 WQMP; and (2) Bi-County's exempt status under the Highlands Act had not yet expired.

In response to its pending permits, Bi-County submitted a revised plan reducing the Project's housing units to 204. Bi-County was granted two general permits and a transition area waiver and agreed to revise its development plan and comprehensive conservation plan to confirm to the permitting plan. The Department agreed it would "recognize that the Project is consistent with the [1991] WQMP," and not adopt the 1991 WQMP amendments affecting the Project.

In addition, the 2014 Settlement Agreement, in pertinent part, states:

4. For so long as the Project remains exempt under the Highlands Act, the Department shall not adopt a WQMP amendment that does not provide sufficient [sewer service area] to serve the Project.

....

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