SMB Associates v. New Jersey Department of Environmental Protection ( 1994 )

PER CURIAM.

This appeal concerns primarily (1) the standing of the American Littoral Society (ALS), an environmental interest group, to contest the issuance of a development permit in a coastal zone, and (2) the ability of an interdepartmental review body to waive the substantive provisions of a regulatory plan that is under the jurisdiction of one of the agencies. We hold that in the unusual and non-recurring circumstances of this case the Appellate Division correctly held that the review panel lacked the power to waive the substantive requirements of the regulatory plan and that ALS had the required standing to challenge the review board’s decision.

I

The facts of the case are set forth in the decision of the Appellate Division. 264 N.J.Super. 38, 624 A.2d 14 (1993). Briefly stated, the case involves SMB Associates’ proposal to build a 200-slip marina, a 200-room motel, a restaurant, five nautical shops, a dockmaster’s building, and a residential development consisting of sixty-nine townhouses, 120 condominiums, and 700 parking spaces on an undeveloped bay island. The development would require an elevated roadway covering 5.63 acres of a seventeen-acre tract of wetlands in Egg Harbor Township. The primary regulatory issues arose under the Coastal Area Facilities Review Act (CAFRA), N.J.S.A 13:19-1 to -21. The Department of Environmental Protection and Energy (DEPE) is the agency charged with enforcing CAFRA. It has adopted regulations to guide the development of bay-island corridors, which are “non-oceanfront islands surrounded by tidal waters” and areas “lying upland of wetlands and beaches but including the filled water’s edge.” N.J.AC. 7:7E-3.24(a)(2) and (3). The regulations permit certain forms of “water dependent development” in bay-island corridors if the property “abut[s] a paved road and sewage system with adequate capacity.” N.J AC. 7:7E-3.24(d). The proposed Anchoring Point development at issue in this case is “water dependent” because it involves a marina. However, in the view of DEPE, the Anchoring Point property does not abut a paved road and lacks access to sewers. Without detailing the prior history of the matter, the nub of the present controversy is the ability of the Coastal Area Review Board (CARB) to waive certain CAFRA bay-island corridor development requirements for SMB Associates.

CARB was established in 1973 as a sort of safety valve for the then-newly-enacted CAFRA. N.J.S.A 13:19-13, in pertinent part, provided the following:

The Coastal Area Review Board shall have the power to hear appeals from decisions of the [C]ommissioner [of Environmental Protection] * * *. The board may affirm or reverse the decision of the commissioner with respect to applicability of any provision of this act to a proposed use; it may modify any permit granted by the commissioner, grant a permit denied by him [or her], deny a permit granted by him [or her], or confirm his [or her] grant of a permit.

Beyond that, CAFRA does not grant explicitly any other powers to CARB.

The Appellate Division, relying on general principles of agency law, concluded in this case that “the power to waive CAFRA regulations must be exercised through the adoption of a rule establishing standards for the application of waiver authority.” 264 N.J.Super. at 54, 624 A.2d 14. The Attorney General argues that agencies have inherent power to waive regulatory requirements without first promulgating a waiver rule pursuant to the Administrative Procedure Act, N.J.S.A 52:14B-1 to -21, if “extraordinary circumstances merit a waiver to prevent an unjust and unreasonable result in a particular case.”

We need not resolve in this case the breadth of an agency’s power to waive regulatory requirements or whether a rule authorizing waiver is always necessary. We are satisfied that the Legislature did not contemplate that CARB would be authorized to waive substantive requirements of CAFRA. The CARB members are to use their best judgment and experience in applying the law to the facts of cases coming before them, but not to revise CAFRA in the process. In addition, the idiosyncratic interdepartmental nature of CARB, which is composed of the Commissioners of Environmental Protection and Energy, Commerce, and Community Affairs (or their representatives), prompts us not to generalize about the issue of agency power. Our decision not to decide this case expansively is reinforced by the fact that the Legislature has recently repealed N.J.S.A. 13:19-13, thus abolishing CARB. L. 1993, c. 190, § 20.

Those same considerations lead us to conclude that ALS had the required standing to pursue this appeal. The policy choice between the desire to have a manageable administrative hearing process (without a proliferation of parties) and the public interest in not having non-party objectors raise issues in judicial appeals that might better be resolved in the agency process is difficult. This case is atypical in that the position of the primary regulator (DEPE) in the administrative hearing was at variance with that of the final review body (CARB). ALS argues that it could not have foreseen that existing DEPE policy would not be applied to the case under review. ALS did not lay back to sandbag its opponents later. Thus, although our dissenting colleague makes an excellent argument that notions of fundamental fairness and exhaustion of administrative remedies should preclude sophisticated third-party objectors from intervening in litigation after observing its progress for several years, this is not the case for application of those principles. These facts are much too unusual to deny ALS standing to appeal, even though ALS should have made its position known earlier in the administrative process. Under the circumstances, the Appellate Division did not err in concluding that ALS, as an association concerned with the preservation of our coastal resources, had sufficient interests in the water-dependent development issues of this case to appeal the CARB action under Rule 2:2-3(a)(2). Because ALS had standing to prosecute this appeal, we need not consider whether D.W. Bennett and Richard Crema had sufficient interests in the disposition of the case to provide them with standing to appeal as individuals. See Elizabeth Fed. S. & L. Ass’n v. Howell, 24 N.J. 488, 499-500, 132 A.2d 779 (1957) (holding that right to challenge administrative decisions “inheres not only in those who are direct parties to the initial proceedings before an administrative agency * * * but also belongs to all persons who are directly affected by and aggrieved as a result of the particular action sought to be brought before the courts for review’).

The judgment of the Appellate Division is affirmed.