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The Department of Environmental Protection has finally begun to recognize that through strict policing and review of those entities that provide water, it can effectuate a powerful chokehold on development within New Jersey. In fact, as recently as Dec. 2003, DEP Commissioner Bradley Campbell stated that there are approximately 20 water purveyors statewide that have been determined by the DEP to have no additional water resources to supply. While much attention has been paid to Gov. James McGreevey’s promise of broad and sweeping legislative efforts to prevent unwanted development within New Jersey’s suburbs, the reality is that such legislation has not been forthcoming. However, such a short fall in legislative initiatives should not be construed as an indication that the administration has given up its assault on what it has termed “sprawl,” or what most of us know as suburban, residential development. Quite to the contrary, the administration and the DEP recognize that developers in New Jersey require resources beyond the simple procurement of land use approvals to proceed with construction. While many of those resources are not within the ambit of DEP jurisdiction, some vital ones are squarely within the DEP’s regulatory control. Specifically, the DEP controls the state’s water resources. Without water there can be no new development. Moreover, the claimed lack of water is not limited to future development within the affected municipalities, but also to projects that, in some instances, have already commenced construction. In certain instances, the DEP’s declarations as to lack of available water for water companies and municipalities come suddenly to both landowners and water purveyors. The consequences have proved devastating for developers, their workforces and buyers awaiting finished products. However, municipalities that continue to plead for the state’s aid in turning back unwanted housing welcome the DEP’s new stance on water allocation as an addition to the ever-growing regulatory arsenal in use to prevent such additional housing in the suburbs. Is New Jersey Really Running Out of Water? Of course, the obvious question in light of these separate water moratoriums is whether or not the state is truly running out of available water supplies. In particular, are New Jersey’s groundwater resources (i.e., aquifers) safely sustaining present levels of development? Could those same ground water resources sustain additional development? Not surprisingly, the state has taken the position that restrictions on water usage, including moratoriums, are necessary to preserve groundwater resources. However, the rationale for that determination seems to be that any additional water withdrawn from the state’s groundwater resources would create adverse ecological and water supply consequences. In short, more water withdrawn is too much water withdrawn. While this reasoning seems to serve the apparent policy objective to stop additional, unwanted development, it fails to address the real question: Can New Jersey’s groundwater resources, from an ecologic and water supply perspective, safely serve additional development? That question � an issue of science and hydrology � is one that the DEP has yet to answer. If recent experience is any indication, it seems that protecting New Jersey’s groundwater resources is but a secondary motivation for the state’s and the DEP’s recent actions to scale back the allocation of water supplies. As the rise and fall of Executive Order No. 32, and the DEP’s accompanying Administrative Order No. 2002-22, demonstrate, ecological and water supply concerns that may serve as a preamble for the state’s regulatory action are little more than a thinly veiled pretext for yet another measure to stop residential expansion in New Jersey’s suburban and rural areas. If it were otherwise, then the moratorium that befell three municipalities in the summer of 2002, following the enactment of Executive Order No. 32 would have been applied even-handedly across a number of municipalities in Atlantic County. However, an impartial path toward ecological protection was not taken. New Growth Control Strategy Perhaps the most prominent effort by the current administration to use water resources as a growth control measure was the Sept. 22, 2002, issuance of these orders. In short, Executive Order No. 32 prohibited two water companies from distributing additional water in the municipalities of Egg Harbor Township, Galloway Township and Hamilton Township in Atlantic County. Each water purveyor obtained their respective water supplies by drilling wells into a groundwater source known as the Kirkwood-Cohansey aquifer system. The supposed rationale behind the water moratorium was that the two water purveyors serving the three municipalities in question were at or near their water distribution limits and, in the assessment of the state, any further water diversions by those purveyors would create “adverse ecological and water supply consequences to the Kirkwood-Cohansey aquifer system.” From the date of the order through Dec. 2002, the two water purveyors were prohibited from providing water to any additional developments � even those developments to which the DEP had previously granted the necessary approvals. Quite literally, on Sept. 22, 2002, construction crews walked off active job sites, not to return for months. While the supposed basis for the moratorium was the protection of the ecologically threatened aquifer, the reality is that Order No. 32 was the unveiling of the state’s bold strategy of growth control by means of stringent water resource regulation. The Kirkwood-Cohansey aquifer system contains an estimated 17 trillion gallons of water and serves as the primary water source for approximately 80 municipalities across five New Jersey counties. In order to provide water service to the Townships of Egg Harbor, Galloway and Hamilton, the wells that draw from the Kirkwood-Cohansey aquifer system are located next to the very same wells that serve other municipalities, including Atlantic City. In fact, most of the wells that provide water service to Atlantic City are located in Egg Harbor Township. The irony of Order No. 32 is that while it prohibited the provision of additional water service to three municipalities, it did nothing to prevent or curtail other water purveyors from increasing their withdrawal of water from the same Kirkwood-Cohansey aquifer system to meet the development demands in municipalities other than the Townships of Egg Harbor, Galloway and Hamilton. The order contained no mechanism to preserve New Jersey’s groundwater; it simply prohibited ground water distribution to areas experiencing residential development. Following a lawsuit by the Builders League of South Jersey, the moratorium created by the order was lifted. However, the DEP’s use of water resource management as a tool to stifle development persists. Unfortunately for developers, avoiding hurdles imposed by the DEP’s ever-increasing declarations that water purveyors have depleted their respective water resources is proving to be a daunting and time-consuming task. Most difficult and frustrating is that the DEP has not approved and adopted any new regulations that make the availability of water supply more possible. Rather, the DEP is enforcing, with fervor, long-standing procedures that when combined with a review process approaching inertia, have led to a system in which water purveyors have been prevented from supplementing their available water supplies quickly enough to match the pace of new development. While determining how and why these moratoriums have occurred is one challenge, resolving them is a much more difficult task. Water Service Basics Key to understanding how the DEP has managed to transform water supply regulations into a measure of growth control is an understanding of how water is distributed throughout the state. Municipal corporations or private utility companies receive franchises that allow them to provide water service to designated areas. When a property owner proposes to construct a project requiring water usage, the property owner must submit a water application to the designated water purveyor. The water purveyor must review the application, in part, to confirm that the purveyor has a sufficient water supply to meet the water demands posed by the construction outlined in the water application. If the water purveyor determines that it has an adequate supply, the water purveyor will endorse the application and submit it to the DEP for approval. If the DEP is satisfied that an available water supply exists for the water purveyor submitting the water application, the DEP should approve the water application. The volume of water that each of New Jersey’s water purveyors may distribute to its franchised customers is controlled through the issuance of Water Allocation Permits. The receipt, review and issuance of Water Allocation Permits are handled by certain divisions within the DEP. Each permit issued to a water purveyor sets forth the maximum amount of water allowable for distribution on a monthly and yearly basis. A water purveyor may not exceed its monthly or yearly limits. In theory, when a water purveyor recognizes that demand within its franchised area is increasing and at some point in the foreseeable future will outgrow the limits of its permit, the water purveyor must develop a plan for meeting that increasing demand. Depending on the pace and speed of new developments requiring water supplies, a water purveyor can seek to increase the limits of its permit by either increasing the potential water yield of its present water sources or by seeking new water sources. By way of example, a water purveyor only seeking a minimal addition to the limits of its permit may choose to simply update or improve its current water supply system. Measures to accomplish such efficiency increases could include a well rehabilitation program or a water system maintenance program that, quite literally, checks the existing water lines for leaks. Although sometimes overlooked, a leak or other mechanical problem within a water line pumping hundreds of thousands, or even millions of gallons of water per day, can result in a sizable loss of water resources. While improvements or upgrades to a water system may allow a water purveyor some relief in meeting increasing demand, the more typical case is one in which the water purveyor must secure additional water from existing sources or develop an entirely new source of water. In most instances, when a water purveyor faces rising levels of development, it must develop a future water strategy that includes the additions of new water sources. In areas where the majority or all of the water supply comes from groundwater, as was the case with Order No. 32, the conventional means of increasing the limits of a permit is to drill a new well for placement into service. The process of developing, testing and obtaining approval for a new well is costly and time consuming. It is especially time consuming in light of the pace of regulatory approval. As many water purveyors have learned (and others will undoubtedly soon learn), the pace of that regulatory review has not matched the pace of the need for housing. So slow is that regulatory process that even prudent water purveyors who have been diligent in assessing and anticipating their need for expansion over the years have been unable to meet increased demand because of the DEP’s inability to efficiently process the necessary applications. Whether the delays within the DEP are a function of policy or unavailable resources, many applications submitted in conjunction with water resources can be subjected to internal DEP processing and reviews that sometimes take years. Whether it is a simple water application submitted by a property for water service to a particular project or a complex application for an increase in the limits of a water purveyor’s permit, the DEP rarely acts in an expeditious manner. Awaiting Regulatory Overhaul While both current and prior administrations have recognized that New Jersey’s population will continue to grow, the state has failed to implement an efficient regulatory process for allocating the state’s water resources in order to meet the housing need posed by that population growth. This lack of a satisfactory process is only further undermined by the DEP’s re-discovered diligence in policing the state’s water purveyors. The result, while perhaps desirable from the prospective of prohibiting additional residential development, is inconsistent with the recognized need to address a state population that continues to grow. The challenge for the state and the DEP will be to implement a system of allocating the state’s water resources in a safe, efficient and timely manner. Whether the state and the DEP have the will to undertake the necessary, regulatory overhaul remains to be seen. Benjamin Franklin once observed that, “When the well’s dry we know the worth of water.” In recent years, the DEP � and developers � have discovered that the worth of water is more than even the great statesman could have envisioned. Hoff is an associate in the real estate, land use, construction and environmental law practice group at Flaster/Greenberg of Cherry Hill.

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