In the Matter of the Authorization for Freshwater Wetlands Statewide General Permit 6, A-2231-08T2; Appellate Division; opinion by Waugh, J.A.D.; decided September 9, 2013; approved for publication December 11, 2013. Before Judges Fisher, Waugh and Leone. On appeal from the New Jersey Department of Environmental Protection, 1103-07-0007.1. DDS No. 17-2-1264 [46 pp.]

In these consolidated actions, appellants Residents for Enforcement of Existing Land Use Code, Susan Tierney, and the Pond Run Watershed Association appeal from administrative decisions by respondent New Jersey Department of Environmental Protection (DEP) in connection with its grant of a general freshwater wetlands permit and transition area waivers to respondent Care One Inc.

In 1999, the department granted CareOne a freshwater wetlands permit to fill 0.97 acres of isolated wetlands and to create a stormwater management basin for construction of an assisted living facility on the corner of the intersection of Cypress Lane and Whitehorse-Hamilton Square Road in Hamilton Township. A 0.47-acre portion of the permitted area was left undisturbed.

In 2007, CareOne wanted to construct a two-story, 62,259-square-foot addition and a parking lot, which would require the filling of the existing detention basin and other wetlands on the site, and the construction of a new detention basin along Cypress Lane. CareOne submitted a combined application for a “Letter of Interpretation” (LOI) to delineate the site’s freshwater wetlands and a “Freshwater Wetlands Statewide General Permit No. 6″ (GP6), to fill the undisturbed portion covered by the 1999 permit, or 21,800 square feet (0.5 of an acre) of freshwater wetlands, and to disturb an additional 35,906 square feet (0.82 of an acre) of the transition area.

CareOne also applied to the Zoning Board of Adjustment for use and site-plan approvals and bulk variances. The zoning board denied the application. CareOne did not appeal.

The department issued CareOne a LOI/Line Verification, specifying the boundary of the freshwater wetlands and waters, including the transition area for the offsite wetlands. The department issued CareOne: (1) a GP6 permit, which authorized the filling of 21,800 square feet (0.5 of an acre) and the filling of the existing detention basin, including a transition area waiver for access; (2) a water quality certification; and (3) a Special Activity Transition Area Waiver for Stormwater Management, which authorized disturbing the transition area of the offsite wetlands. In doing so, the department used the Nonstructural Strategies Points System (NSPS) to demonstrate that sufficient nonstructural stormwater management measures were incorporated into the design of the project to meet the maximum extent practicable requirement for nonstructural strategies in the Stormwater Management Rules.

Appellants argue, inter alia, that the DEP’s reliance on the NSPS was improper because the NSPS has the effect of an administrative rule and should have been adopted through the formal rulemaking process.

Held: The DEP’s use of and reliance on the Nonstructural Strategies Points System (NSPS) in connection with its evaluation of CareOne’s applications for a general freshwater wetlands permit and transition area waivers was impermissible because the NSPS procedure was not the subject of formal rulemaking.

The department and CareOne seek dismissal of A-2231-08, the appeal concerning the department’s 2008 permit and related approvals, arguing that the issue is moot because the 2008 permit was superseded by the subsequent modifications that are the subject of the appeal in A-3400-10. However, the department never took final administrative action with respect to those modifications; therefore, the appellate panel instead dismisses A-3400-10 as interlocutory.

The issue raised in A-3837-09 concerns the acting commissioner’s denial of the appellants’ request for an adjudicatory hearing. The appellate panel finds no error in the acting commissioner’s determination that appellants “have not demonstrated a particularized property right which gives rise to a constitutional basis for granting a hearing.” Thus, the acting commissioner appropriately rejected appellants’ request, which was premised on CareOne’s project posing a threat of increased stormwater discharge to their properties.

The appeal in A-2231-08 involves appellants’ argument that the department’s reliance on its Nonstructural Strategies Points System to assess CareOne’s stormwater management plan was improper because implementation of the NSPS constituted improper administrative rulemaking. Appellants argue that the NSPS has the effect of an administrative rule and should have been adopted through the formal rulemaking process.

The department and CareOne argue that formal APA rulemaking is not required because the department is entitled to take informal action to advise and supervise the regulated community, such as creating the NSPS and using it to review permit and waiver applications. They assert that the NSPS provides no new substantive legal or administrative standard or policy that cannot be inferred from the existing stormwater management rules. Respondents further maintain that use of the NSPS is not “mandatory” or “dispositive.”

The appellate panel agrees with appellants that the use of the NSPS improperly shortcuts the application review process because it has not been subjected to the rulemaking process and its opportunity for public comment. The NSPS and its user’s guide meet all of the Metromedia factors. The use or nonuse of the NSPS, as well as the achievement of or failure to obtain the required minimum points on the NSPS, directly affects the department’s review of all applications covered by the “maximum extent possible” requirement. Avoidance of the “rigorous review” resulting from failure to use the NSPS provides a clear incentive for its use. The NSPS is intended for ongoing use, and is not an adjudicative decision or application of a procedure under limited circumstances. It establishes a standard for application submissions and agency evaluations that is not otherwise expressly provided by or obviously inferable from the department’s stormwater management rules or from any statute or other regulation. It constitutes a material and significant change from what applicants are required to submit as to nonstructural stormwater management strategies under N.J.A.C. 7:8-5.3(a). It also represents a significant change from the department’s own position at the time it adopted the regulation, when it specifically rejected suggestions that it create a formula because compliance with those requirements is a “fact-sensitive” determination. Finally, creating a fixed formula for assigning NSPS points and percentages reflects a decision on regulatory policy not found in regulations adopted through the APA.

The appellate panel concludes that the department’s use of and reliance on NSPS in connection with its evaluation of CareOne’s applications was impermissible because the NSPS procedure was not the subject of formal rulemaking. In A-2231-08, the panel reverses the department’s approval of the applications, as well as its issuance and modification of permits and related approvals.

For appellants Residents for Enforcement of Existing Land Use Code et al.—R. William Potter (Potter & Dickson). For respondents: New Jersey Department of Environmental Protection—Jill Denyes, Deputy Attorney General (Jeffrey S. Chiesa, Attorney General; Lewis A. Scheindlin, Assistant Attorney General, of counsel); Care One Inc.—Richard M. Hluchan (Hyland Levin; Robert S. Baranowski Jr. on the brief). For amici curiae Delaware Riverkeeper et al.—Nicholas B. Patton (Patton and Jane P. Davenport McClintock on separate briefs).