IN THE MATTER OF THE CHALLENGE TO THE DENIAL OF THE REQUEST FOR ADJUDICATORY HEARING AND THE GRANT OF CAFRA PERMIT REGARDING MORDECHAI STERNSTEIN, ETC. (NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION)

• Court: New Jersey Superior Court Appellate Division
• Decided: June 22, 2021
• Docket: A-3561-18
• Status: Unpublished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NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court ."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-3561-18

IN THE MATTER OF THE CHALLENGE TO THE DENIAL OF THE REQUEST FOR ADJUDICATORY HEARING AND THE GRANT OF CAFRA PERMIT REGARDING MORDECHAI STERNSTEIN C/O GDMS HOLDINGS, LLC CAFRA INDIVIDUAL PERMIT, FRESHWATER WETLANDS GENERAL PERMIT NO. 6, AND WATER QUALITY CERTIFICATE, PERMIT NO. 1500-04-0005.3 APL1700001 CHALLENGED BY FAIRWAYS AT LAKE RIDGE HOMEOWNERS ASSOCIATION, INC., DATED APRIL 12, 2019. _____________________________

Argued April 19, 2021 – Decided June 22, 2021

Before Judges Currier and DeAlmeida.

On appeal from the New Jersey Department of Environmental Protection, Permit Nos. 6 and 1500-04-0005.3 APL1700001. Michele R. Donato argued the cause for appellant Fairways at Lake Ridge Homeowners Association, Inc.

Matthew N. Fiorovanti argued the cause for respondent Mordechai Sternstein c/o GDMS Holdings, LLC (Giordano, Halleran & Ciesla, attorneys; Matthew N. Fiorovanti, of counsel and on the brief; David J. Miller, on the brief).

Kathrine M. Hunt, Deputy Attorney General, argued the cause for respondent New Jersey Department of Environmental Protection (Gurbir S. Grewal, Attorney General, attorney; Melissa H. Raksa, Assistant Attorney General, of counsel; Kathrine M. Hunt, Deputy Attorney General, on the brief).

PER CURIAM

Appellant Fairways at Lake Ridge Homeowners Association, Inc.

(Fairways) appeals from the April 12, 2019 order of respondent Commissioner,

Department of Environmental Protection (DEP) denying its request for an

adjudicatory hearing with respect to approvals DEP issued to respondent

Mordechai Sternstein c/o GDMS Holdings, LLC (GDMS) authorizing the

commercial and residential development of respondent's property. We affirm.

I.

The following facts are derived from the record. GDMS intends to

develop four contiguous lots comprising approximately 100 acres in Lakewood

Township on which is located the Eagle Ridge golf course. Fairways is a

A-3561-18 2 homeowners' association whose members include approximately 1124 property

owners in an age-restricted residential development adjacent to the golf course.

A private road in the Fairways development, Augusta Boulevard, provides

access to the golf course through an easement.

In 2017, GDMS applied to DEP for permits necessary to develop the

property pursuant to the Coastal Area Facility Review Act (CAFRA), N.J.S.A.

13:19-1 to -51, the Freshwater Wetlands Protection Act (FWPA), N.J.S.A.

13:9B-1 to -30, and regulations implementing the statutes. Fairways opposed

the application.

On August 3, 2017, DEP denied the application. GDMS challenged the

denial and requested the matter be submitted to DEP's alternative dispute

resolution process. GDMS and DEP entered into a settlement that provided for

DEP to publish a notice of intent to settle and issue approvals to GDMS for

development of its property, a thirty-day public comment period, and

submission of agreed upon plans to Lakewood and interested parties that

previously commented on GDMS's application. The stipulation provided that

DEP would issue the approvals following the public comment period unless any

comments showed that the decision to approve the development was based on

A-3561-18 3 incomplete or inaccurate information or violated DEP regulations. Fairways

submitted comments on the settlement during the public comment period.

On January 11, 2018, DEP issued a CAFRA individual permit, freshwater

wetlands general permit, and a water quality certificate to GDMS (collectively,

the Permit). The Permit authorizes the construction of 1034 residential units,

five community buildings, a clubhouse, retail buildings, parking, internal

roadways, stormwater management facilities, and associated improvements on

the golf course property. The Permit also authorizes filling 14,941 square feet

(0.34 acres) of isolated intermediate value freshwater wetlands and requires

GDMS to record conservation restrictions on 1.94 acres of forested area to meet

vegetation cover requirements and other areas of critical habitat for the red-

headed woodpecker, a protected species under CAFRA.

Notice of the January 11, 2018 issuance of the Permit was published in

the DEP bulletin on February 7, 2018. Fairways did not file a notice of appeal

challenging the Permit.

On February 15, 2018, Fairways requested an adjudicatory hearing

regarding issuance of the Permit. In its hearing request, Fairways argued that

the Permit conflicts with certain provisions of Lakewood municipal land use

ordinances, earlier municipal approvals for GDMS's planned development, and

A-3561-18 4 CAFRA's implementing regulations. Fairways also argued that the planned

development of the golf course property requires additional permits and

conflicts with prior CAFRA approvals issued with respect to the development

of the Fairways community. Fairways contends that the approval of its

development was conditioned on the golf course property remaining open space

and that the Permit allows GDMS to use Augusta Boulevard for access to its

proposed development, contrary to the terms of the existing easement.

GDMS opposed the application, arguing Fairways lacked standing to

request a hearing and that its substantive arguments were meritless. It stated

that it did not intend to use Augusta Boulevard for access to the development.

On April 12, 2019, the Commissioner denied Fairways's request for a

hearing. The Commissioner found that Fairways was not an applicant, State

agency, or an individual with a "particularized property interest sufficient to

require a hearing on constitutional or statutory grounds." N.J.S.A. 52:14B-3.2.

The Commissioner noted that neither CAFRA nor FWPA give Fairways a

statutory right to an adjudicatory hearing. In addition, the Commissioner

determined that Fairways's interest in the Augusta Boulevard easement was not

a particularized property interest sufficient to create a right to an adjudicatory

hearing because the Permit authorizes activities on land adjacent to, but not

A-3561-18 5 including, Augusta Boulevard and does not impact the existing easement or its

terms. Further, the Commissioner noted that GDMS had conceded that it does

not intend to use Augusta Boulevard for access to its development.

The Commissioner also found that Fairways's contention regarding the

dedication of the golf course property as open space was, in effect, a question

of interpretation and implementation of Lakewood's zoning ordinances within

the exclusive jurisdiction of the municipality. The Commissioner also noted

that a standard condition of the Permit requires GDMS to obtain all necessary

permits and approvals from the municipality. Fairways can raise its claims

concerning the alleged open space dedication before municipal officials. 1

On April 23, 2019, Fairways filed a notice of appeal challenging the April

12, 2019 agency decision. Fairways raises the following arguments.

POINT I

THE CAFRA PERMIT AND THE DENIAL OF THE ADJUDICATORY HEARING LACK SUBSTANTIAL CREDIBLE EVIDENCE TO SUPPORT THE DECISION OF THE [DEP].

POINT II

1 The Commissioner took no position on constructive trust, consumer fraud, and statutory claims concerning the marketing of the Fairways development that Fairways has alleged in a pending Law Division action. A-3561-18 6 THE [DEP] ERRED IN FAILING TO RECOGNIZE THAT THE FAIRWAYS ASSOCIATION HAS A PARTICULARIZED INTEREST AND IN CONCLUDING THAT A CONSTITUTIONAL RIGHT MUST BE SHOWN.

POINT III

THE [DEP] ERRED IN APPROVING SETTLEMENT OF A DENIED PERMIT WITHOUT COMPLIANCE WITH THE ADMINISTRATIVE CODE.

POINT IV

THE [DEP] ERRED IN IGNORING THE OPEN SPACE PROTECTIONS OF THE [MUNICIPAL LAND USE LAW].

POINT V

THE 2018 CAFRA PERMIT ALLOWS A PERCENTAGE OF IMPERVIOUS COVERAGE INCONSISTENT WITH THE STATE PLAN POLICY MAP.

GDMS and DEP argue that Fairways's appeal is limited to the denial of

its request for an adjudicatory hearing because Fairways did not appeal the

January 11, 2018 issuance of the Permit. They argue that this court lacks

jurisdiction to consider Fairways's substantive challenges to the Permit.

II.

We first address the scope of Fairways's appeal. When DEP issued the

Permit on January 11, 2018, Fairways had the option of appealing the Permit

A-3561-18 7 directly to this court within forty-five days, R. 2:4-1(b), pursuing administrative

remedies at the DEP, N.J.A.C. 7:7-28.1, or taking both steps. In re Riverview

Dev., LLC, 411 N.J. Super. 409, 425 (App. Div. 2010). Fairways elected to seek

a hearing at the DEP. It did not file a notice of appeal challenging the

substantive provisions of the Permit within forty-five days of its issuance.

Fairways's request for a hearing did not affect the Permit's status as a final

agency decision. N.J.A.C. 7-7.28.3(b) provides that "[w]hen a person other than

the permittee requests an adjudicatory hearing on a permit or authorization, the

operation of the permit or authorization is not automatically stayed. The

Department shall stay operation of the permit or authorization only if it

determines that good cause to do so exists." This regulation implicitly

recognizes that a DEP approval that is the subject of a third-party adjudicatory

hearing request is a final agency decision. To conclude otherwise would render

the regulation superfluous, as a stay of a DEP approval would not be a

consideration if the permit was not final.

The DEP's April 12, 2019 final agency decision, which is the only decision

of the agency issued within forty-five days of the April 23, 2019 notice of

appeal, concerns the narrow question of whether Fairways was entitled to an

adjudicatory hearing. Fairways cannot assert a time-barred challenge to the

A-3561-18 8 substantive basis of the Permit through its appeal of DEP's decision to deny its

request for an adjudicatory hearing. See Dep't of Law & Pub. Safety v.

Contemporary Cmtys., 337 N.J. Super. 177, 179 (App. Div. 2001). We,

therefore, do not address the arguments raised by Fairways regarding the

substantive validity of the Permit.

III.

With respect to the agency's denial of Fairways's request for an

adjudicatory hearing, a "strong presumption of reasonableness attaches to the

actions of the administrative agencies." In re Carroll, 339 N.J. Super. 429, 437

(App. Div. 2001) (quoting In re Vey, 272 N.J. Super. 199, 205 (App. Div.

1993)). The scope of our review of a final decision of an administrative agency

is limited and we will not reverse such a decision unless it is "arbitrary,

capricious, or unreasonable, or . . . not supported by substantial credible

evidence in the record as a whole." In re Stallworth, 208 N.J. 182, 194 (2011)

(citing Henry v. Rahway State Prison, 81 N.J. 571, 579-80 (1980)). When

making that determination, we consider:

(1) whether the agency's action violates express or implied legislative policies, that is, did the agency follow the law; (2) whether the record contains substantial evidence to support the findings on which the agency based its action; and (3) whether in applying the legislative policies to the facts, the agency clearly

A-3561-18 9 erred in reaching a conclusion that could not reasonably have been made on a showing of the relevant factors.

[Ibid. (citing In re Carter, 191 N.J. 474, 482-83 (2007)).]

We are "in no way bound by the agency's interpretation of a statute or its

determination of a strictly legal issue . . . ." Carter, 191 N.J. at 483 (quoting

Mayflower Sec. Co. v. Bureau of Sec., 64 N.J. 85, 93 (1973)). We will, however,

generally "afford substantial deference to an agency's interpretation of a statute

that the agency is charged with enforcing." Patel v. N.J. Motor Vehicle Comm'n,

200 N.J. 413, 420 (2009) (quoting Richardson v. Bd. of Trs., 192 N.J. 189, 196

(2007)). Substantial deference must be extended to an agency's interpretation

of its own regulations, particularly on technical matters within the agency's

expertise. In re Freshwater Wetlands Prot. Act Rules, 180 N.J. 478, 488-89

(2004).

Under the Administrative Procedure Act (APA or the Act), an "applicant"

is entitled to request an adjudicatory hearing with respect to a decision by the

DEP on its application. The APA defines "applicant" as an entity seeking an

"agency license, permit, certificate, approval, chapter, registration[,] or other

form of permission required by law." N.J.S.A. 52:14B-3.2. The Act, however,

"strictly limits the situations in which third parties are entitled to . . . a formal

A-3561-18 10 hearing to challenge a permit application." In re Riverview Dev., 411 N.J.

Super. at 424. A third party is defined as any person other than:

a. An applicant . . . .

b. A State agency; or

c. A person who has a particularized property interest sufficient to require a hearing on constitutional or statutory grounds.

[N.J.S.A. 52:14B-3.2.]

Accordingly, a non-applicant can demand an adjudicatory hearing only

where the non-applicant can demonstrate: (1) a right to a hearing under an

applicable statute; or (2) a "particularized property interest" of constitutional

significance. In re Freshwater Wetlands Statewide Gen. Permits, 185 N.J. 452,

463–64 (2006). These limitations are "intended to prevent the processing of

permit applications by State agencies from being bogged down by time-

consuming and costly formal hearings," which "consume substantial public and

private resources." In re Riverview Dev., 411 N.J. Super. at 424.

Having considered the record in light of the applicable legal precedents,

we conclude that DEP's decision denying Fairways's request for an adjudicatory

hearing is well supported by the record. Fairways acknowledges that it is not an

applicant with respect to the Permit. Neither the CAFRA nor the FWPA provide

A-3561-18 11 a third-party with a statutory right to appeal a permit issued to an applicant by

the DEP. In re Auth. for Freshwater Wetlands Statewide Gen. Permit 6, 433

N.J. Super. 385, 407 (App. Div. 2013) (finding the FWPA does not provide

third-party objectors with the right to a plenary administrative hearing to

challenge the DEP's issuance of a permit); Spalt v. Dep't of Envt'l Protection,

237 N.J. Super. 206, 211-12 (App. Div. 1989) (finding the CAFRA does not

provide third-party objectors with the right to a plenary administrative hearing

to challenge the DEP's issuance of a permit). Fairways identified no other

statute entitling it to a hearing.

We also agree with DEP's determination that Fairways does not have a

particularized property interest sufficient to create a right to an adjudicatory

hearing. "[T]hird parties generally are not able to meet the stringent

requirements for constitutional standing in respect of an adjudicatory hearing."

In re NJPDES Permit No. NJ0025241, 185 N.J. 474, 482 (2006). Fairways does

not own the property that GDMS seeks to develop; its members own property in

an adjoining development. "[L]andowners objecting to the development of

neighboring property" do not, by proximity alone, "have a particularized

property interest warranting an adversarial hearing before an administrative law

judge." In re Freshwater Wetlands Gen. Permits, 185 N.J. at 470. Our courts

A-3561-18 12 have consistently held that a generalized property right shared with other

property owners, such as collateral economic impacts, traffic, views, quality of

life, recreational interest, and property values, are insufficient to establish a

third-party right to an adjudicatory hearing. Ibid.; In re Riverview Dev., 411

N.J. Super. at 429; In re AMICO/Tunnel Carwash, 371 N.J. Super. 199, 212

(App. Div. 2004); In re Waterfront Dev. Permit No. WD88-0443-1, Lincoln

Harbor Final Dev., 244 N.J. Super. 426, 436 (App. Div. 1990); Spalt, 237 N.J.

Super. at 212; Normandy Beach Improv. Ass'n v. Comm'r, DEP, 193 N.J. Super.

57, 61 (App. Div. 1983).

Any interest that the members of Fairways have with respect to the alleged

prior dedication of the golf course property as open space and the municipal and

DEP approvals associated with the construction of their development are not

particularized property interests under the APA. The DEP adjudicatory process

is not the forum in which Fairways may assert those claims. The Commissioner

concluded she would take no position on those claims, which Fairways may

pursue before municipal land use authorities or in its pending Law Division

action.

In addition, the Permit does not purport to affect Fairways's rights under

the Augusta Boulevard easement. As the Commissioner aptly noted, the Permit

A-3561-18 13 authorizes activities on land adjacent to, and not including, Augusta Boulevard,

does not address the terms of the easement, and is based on a proposal that

GDMS concedes does not include use of Augusta Boulevard for access to the

development. As is the case with the zoning-related claims raised by Fairways,

any rights that it has under the easement can be enforced through the courts. An

adjudicatory hearing before the DEP is not the appropriate forum for claims

under the easement.

To the extent we have not addressed any of Fairways's remaining

arguments we find them to be without sufficient merit to warrant discussion in

a written opinion. R. 2:11-3(e)(1)(E).

Affirmed.

A-3561-18 14