In a recent edition of Legal Update, we called your attention to the NJDEP regulations governing septic systems. In effect since March, 2001, the new regulations virtually eliminated development in non-sewered areas. Extremely expensive “water quality management plans” were mandated by any project proposing 6 or more single family homes or approximately 16,000 square feet of commercial space. Worse still for the development community, the application procedures that needed to be followed were not defined in the new regulations, leaving applicants for development and their professionals rudderless in efforts to secure approvals.Lawsuit Brought
Happily, the New Jersey Builder’s Association, among others, brought legal action challenging the new regulations. On March 18, 2002, the Appellate Division determined that the process by which the new regulations were adopted was flawed. In its decision, the Court noted that the proposed regulation amendments were originally identified by DEP as “comprehensive”, “holistic” and a “coherent” new scheme for administering water quality applications. In fact, the Court cited the Builder’s Association brief which noted that 35 pages of text in the New Jersey Register were required just to set forth the proposed new regulations. (Another 45 pages were required to “explain” the changes!). After the statutorily required comment period and public hearings, DEP revised the proposed amendments. Thirty-five pages of “comprehensive” and “coherent” regulations were somehow reduced to less than a single page.
The Court noted that “…DEP acknowledges that the existing rules which it determined not to replace…provide minimal detail with regard to the procedural and substantive criteria for review…” under the new regulations. In response, DEP called the Court’s attention to its position as articulated in the New Jersey Register just days before the new regulations would take effect. With “comprehensive” changes to the regulations, DEP took the public position that it would review projects on a “case-by-case” basis and that it would be “developing” guidance to advise how water quality management plans should be amended. The Court indicated that this failure to adopt the procedural aspects of the new regulatory scheme left “…newly regulated septic system developers to comply with an entirely different, and perhaps not fully known, procedural process.” This absence of procedures was used effectively by DEP over the past twelve months to dramatically curtail issuance of any septic related permits.
Fortunately, the Appellate Division saw through this effort to establish a de facto moratorium on septic based development. Procedurally, the process for adopting new regulations was flawed and the Appellate Division has so ruled. This has the effect of invalidating the March 2001 changes with a return to the old regulations. However, the substantive issues surrounding the new regulations were not directly addressed. While the Builder’s Association sought to invalidate the regulations on both procedural and substantive grounds, the Court did not address substance in depth because its decision on procedural deficiencies invalidated the new regulations. However, it should be noted that a footnote in the decision does not bode well for a future analysis of substance. The Court in Footnote 1 noted the “dubious validity of the contentions” regarding the substance claims. Hopefully, since this regulatory change was one of Governor Whitman’s initiatives, it will not garner support under the new Governor. (For a copy of the full Appellate Division decision, please contact Jim Jaworski.)
James E. Jaworski is a Partner at WJ&L, LLP, who practices in the Real Estate and Land Use areas.