IN RE NEW JERSEY HIGHLANDS WATER PROTECTION COUNCIL'S APPROVAL OF RESOLUTION 2020-03, ETC. (NEW JERSEY HIGHLANDS WATER PROTECTION COUNCIL)

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
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SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-2605-19

IN RE NEW JERSEY
HIGHLANDS WATER
PROTECTION COUNCIL'S
APPROVAL OF RESOLUTION
2020-03 THE AMENDED
PETITION FOR PLAN
CONFORMANCE.
___________________________

Submitted March 2, 2021 – Decided May 13, 2021

Before Judges Gilson, Moynihan, and Gummer.

On appeal from the New Jersey Highlands Water
Protection Council.

Wisniewski & Associates, LLC, attorneys for appellant
DPF Chester, LLC (John S. Wisniewski and Jennifer
M. Kurtz, on the brief).

Gurbir S. Grewal, Attorney General, attorney for
respondent New Jersey Department of Environmental
Protection (Sookie Bae, Assistant Attorney General, of
counsel; Jason Brandon Kane, Deputy Attorney
General, on the brief).

Mason Thompson, LLC, attorneys for respondent
Borough of Chester (Brian W. Mason, on the brief).
PER CURIAM

On January 16, 2020, the New Jersey Highlands Water Protection and

Planning Council (Council) adopted Resolution 2020-03, approving a petition

from the Borough of Chester (Chester) to designate Chester as a Highlands

Center. "A Highlands Center is an area where development and redevelopment

[are] planned and encouraged . . . to support balance . . . by providing for

sustainable economic growth while protecting critical natural and cultural

resources." Highlands Center Designation, N.J. Highlands Council,

www.nj.gov/njhighlands/planconformance/guidelines/centers.html (last visited

Apr. 22, 2021).

Appellant DPF Chester, LLC (DPF), which owns land in Chester, appeals

from the Council's final agency action adopting Resolution 2020-03 (Resolution

2020-03 or the Resolution). DPF seeks to have us either vacate the Resolution

or remand the matter for further proceedings. Discerning no abuse of discretion

by the Council, we reject DPF's objections and affirm the Council's adoption of

Resolution 2020-03.

I.

In 2004, the Legislature enacted the Highlands Water Protection and

Planning Act (the Act), N.J.S.A. 13:20-1 to -35, which designated an area

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encompassing approximately 1,250 miles, spanning eighty-eight municipalities

in seven counties, as the Highlands Region. N.J.S.A. 13:20-2. The Act

recognizes the Highlands Region as an "essential source of drinking water . . .

for one-half of the State's population" that "contains other exceptional natural

resources such as clean air, contiguous forest lands, wetlands, pristine

watersheds, and habitat for fauna and flora," as well as "many sites of historic

significance, and . . . abundant recreational opportunities." Ibid.

The Act created the Council and designated it a regional planning and

protection entity, charged with protecting and enhancing the significant

resources of the Highlands Region. The Council was authorized to develop,

adopt, and periodically revise a Regional Master Plan (Master Plan). N.J.S.A.

13:20-4, -6 and -10.

The Act established two distinct areas within the Highlands Region: the

"preservation area," which is of "exceptional natural resource value" and subject

to stringent natural resource protection standards and regulations, N.J.S.A.

13:20-2; and the "planning area," which is an area subject to a comprehensive

planning approach that protects water and other significant resources while

accommodating appropriate development and economic growth, N.J.S.A. 13:20-

10(b) to (c). Municipalities and counties in the preservation area are required

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to conform their land use and development to the Master Plan. N.J.S.A. 13:20 -

14. Municipalities and counties in the planning area can voluntarily adhere to

the Master Plan by submitting "plan conformance" petitions. N.J.S.A. 13:20-

15.

Chester is entirely in the planning area of the Highlands Region. N.J.S.A.

13:20-7(a)(3) and (c). Accordingly, it had the option to submit a petition to the

Council advising of its intent to conform to the Master Plan. N.J.S.A. 13:20-

15(a)(1). In November 2008, Chester submitted a petition for plan conformance,

which was administratively completed in April 2016 (2016 Petition or Petition).

In July 2016, the Council approved Chester's 2016 Petition with conditions.

In October 2018, Chester entered into a settlement agreement with two

borough property owners concerning Chester's efforts to comply with its

affordable housing obligations. Chester had filed a declaratory-judgment action

seeking approval of its Housing Element and Fair Share Plan to comply with In

re Adoption of N.J.A.C. 5:96 & 5:97, 221 N.J. 1 (2015). Larison's Corner, LLC

and Turkey Farms Acquisitions, LLC intervened in the declaratory-judgment

action. Under the settlement agreement thirty-six affordable housing units, as

well as other commercial facilities, are to be built on the Turkey Farms property.

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The settlement agreement also contemplates the development of the Larison's

Corner property.

In October 2019, Chester requested an amendment to the 2016 Petition to

designate the entire borough as a Highlands Center. Chester sought that

designation to "support Center-based planning for development, redevelopment

and infrastructure development that is appropriately scaled to address existing

infrastructure needs and maintain Chester Borough's small-town quality of life

and historic character." Chester also sought Center designation to "expand

wastewater treatment capacity and extend wastewater collection lines to

eliminate an existing long-standing, undesirable and unsustainable condition of

individual on-site septic systems" by constructing "a new centralized sewage

treatment facility."

Chester supported its request with a Highlands Center Designation

Feasibility Report (Feasibility Report) and implementation plan. The Feasibility

Report discussed the proposed designation's consistency with the Master Plan

and its objectives of smart growth and sustainable economic development. The

Feasibility Report discussed some of the settlement agreement's terms but did

not include a copy of the agreement.

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 In October and November 2019, Council staff communicated with Chester

and sought additional information related to its request to amend the 2016

Petition. During those communications, Council staff asked Chester to

designate Highlands Environmental Resource Zones (Resource Zones) and

demonstrate that Chester had available water infrastructure to support future

growth. A Resource Zone "is a land area within a designated center that contains

environmentally sensitive resources" and will "be afforded appropriate planning

and management as part of the comprehensive center planning." N.J. Highlands

Council, Consistency Review and Recommendations Report: Petition for

Highlands Center Designation Borough of Chester, Morris County 3 (2020), ht

tps://www.nj.gov/njhighlands/morris_county/chester_borough/center_amendm

ent/1406_center_dcrrr.pdf. Chester proposed to designate certain areas as

Resource Zones, with two exceptions for areas where development is anticipated

for affordable housing units and a wastewater treatment plant.

The Council invited public comment on Chester's request to amend its

2016 Petition for thirty days, from November 15, 2019, to December 16, 2019.

No comments were submitted during that period. While the period for public

comment was open, Chester requested, and Council staff agreed, to revise the

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implementation plan to include funding for a study regarding the removal of

invasive species and regrowth of critical habitat.

On January 16, 2020, the Council considered Chester's amended Petition

at an open public meeting. Prior to the meeting, a copy of the Council staff's

recommendation report, which appended Chester's Feasibility Report, was made

available to the public on the Council's website.

At the beginning of the meeting, Council member Kurt Alstede announced

that a company he owned had real estate in Chester. Alstede stated that he had

conferred with the Council's ethics liaison officer and had been advised that his

company's ownership of property in Chester was not a conflict of interest.

Accordingly, Alstede stated that he would participate in considering Chester's

amended Petition.

Council staff then presented the amended Petition and their

recommendation for approval. During the meeting, DPF's counsel spoke and

submitted written comments, arguing that the amended Petition was inconsistent

with the Act. DPF's counsel also contended that the Council should consider

the anticipated development called for in the settlement agreement.

Furthermore, counsel for DPF contended that designating all of Chester as a

Highlands Center would violate the Master Plan because it would be inconsistent

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with the Plan's goals of surface-water and ground-water protection and

preservation of historic sites. Accordingly, DPF requested that the amended

Petition be rejected or that the Council adjourn consideration so that additional

information could be submitted.

After hearing from staff and the public, the Council voted to pass

Resolution 2020-03 and adopt the recommendation report and implementation

plan. Eight Council members voted in favor of approving the Resolution and

three voted against.

In March 2020, DPF filed this appeal. Around the same time, DPF moved

before the Council for a stay of Resolution 2020-03 pending the appeal. In July

2020, the Council denied the request for a stay.

II.

On appeal, DPF makes four arguments, contending that the Resolution

approving Chester's amended Petition should be vacated because (1) it was

adopted after the Council learned Chester had omitted material information

concerning the settlement agreement; (2) it was arbitrary and capricious; (3) it

violates the legislative policies the Council was created to implement; and (4)

there was insufficient time for public comment and a "possible" conflict of

interest in Council member Alstede voting on the amended Petition.

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 A.

An appellate court's review of an administrative agency's final decision is

limited. Commc'ns Workers of Am., AFL-CIO v. N.J. Civ. Serv. Comm'n, 234

N.J. 483, 515 (2018). An agency's decision will not be reversed unless "(1) it

was arbitrary, capricious, or unreasonable; (2) it violated express or implied

legislative policies; (3) it offended the State or Federal Constitution; or (4) the

findings on which it was based were not supported by substantial, credible

evidence in the record." Univ. Cottage Club of Princeton N.J. Corp. v. N.J.

Dep't of Env't Prot., 191 N.J. 38, 48 (2007) (citing In re Taylor, 158 N.J. 644,

656 (1999)). Moreover, courts generally "afford substantial deference to an

agency's interpretation of a statute that it is charged with enforcing." Ibid.

(citing R & R Mktg., L.L.C., v. Brown-Forman Corp., 158 N.J. 170, 175 (1999)).

An appellate court, however, is not "bound by the agency's interpretation of a

statute or its determination of a strictly legal issue." Ibid. (quoting In re Taylor,

158 N.J. at 658).

"'[A] strong presumption of reasonableness' attends an agency's exercise

of its statutorily delegated duties, which 'is even stronger when the agency has

delegated discretion to determine the technical and special procedures to

accomplish its task.'" Caporusso v. N.J. Dep't of Health & Senior Servs., 434

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N.J. Super. 88, 103 (App. Div. 2014) (alteration in original) (quoting In re Holy

Name Hosp., 301 N.J. Super. 282, 295 (App. Div. 1997)). "As long as the

agency decision is contemplated under its enabling legislation, the action must

be accorded a presumption of validity and regularity." A.M.S. ex rel. A.D.S. v.

Bd. of Educ., 409 N.J. Super. 149, 159 (App. Div. 2009) (citation omitted).

B.

DPF argues that Chester omitted material information concerning the

2018 settlement agreement. DPF asserts the settlement agreement contemplates

future development exceeding that disclosed by Chester in its submission and

that the development will frustrate the Act. We reject this argument for several

reasons.

First, in approving the amended Petition, the Council did not approve

developments contemplated in the settlement agreement. Instead, the Council

examined whether Chester should be designated as a Highlands Center and

whether that designation was consistent with the Master Plan.

Second, the record establishes that the Council and its staff were aware of

Chester's settlement agreement. Although DPF asserts that the Council should

have been given a full copy of the settlement agreement, DPF did not make that

objection during the thirty-day comment period, nor did it move before us to

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supplement the Council's record under Rule 2:5-5(b). See, e.g., In re Highlands

Act, 401 N.J. Super. 587, 595 (App. Div. 2008).

C.

Next, DPF argues that the amended Petition did not meet the applicable

designation requirements for a Highlands Center. In that regard, DPF contends

that Chester's application "serves the sole purpose of facilitating development

in an area currently designated a Highlands Center Protection Zone," violating

the requirement that a Highlands Center be an "area[] of existing development,"

which is "appropriate for additional growth and economic development." N.J.

Highlands Council, RMP Addendum 2019-2 Plan Conformance Procedures 16

(2019), https://www.nj.gov/njhighlands/master/amendments/pc/pcprocedures.p

df.

In the Highlands Region, protection zones consist of high resource value

lands integral to maintaining water infrastructure and sensitive ecological

resources. N.J. Highlands Council, Land Use Capability Zone Map 2 (2008),

https://www.nj.gov/njhighlands/master/tr_land_use_capability_zone_map.pdf.

Development is "extremely limited" in protection zones and "subject to stringent

limitations" meant to preserve environmentally sensitive lands. Ibid. In

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conditionally permitting Chester to be a Highlands Center, the Council found

that the implementation and designation of Resource Zones would allow smart

growth while protecting critical natural resources. Significantly, the Council

also found that most of Chester was developed and thus not part of a protection

zone. The Council's actions reflect a balancing of smart growth with

comprehensive planning. Accordingly, its approval was consistent with the

applicable standards and was not arbitrary, capricious, or unreasonable. See

N.J. Highlands Coal. v. N.J. Dep't of Env't Prot., 456 N.J. Super. 590, 603 (App.

Div. 2017), aff'd as modified, 236 N.J. 208 (2018) (citation omitted)

(recognizing appellate courts should not second-guess judgments falling

squarely within an agency's expertise).

D.

DPF also argues that Chester's amended Petition violates the Act's

legislative policies. Under the Act, the Council has a duty to "protect, restore,

and enhance the quality and quantity of surface and ground waters." N.J.S.A.

13:20-10(b)(1). Accordingly, the Council's Master Plan limits septic system

density and requires adequate and appropriate infrastructure for wastewater.

N.J. Highlands Council, Highlands Regional Master Plan 39, 89, 173 (2008),

https://www.nj.gov/njhighlands/njhighlands/master/rmp/final/highlands_rmp_

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112008.pdf; see also N.J.S.A. 13:20-32. DPF argues that this policy will be

violated because Chester's wastewater system is overburdened, and the

settlement agreement contemplates the construction of a septic system.

Chester's plans, however, call for an upgrade of its wastewater treatment plant

that is expected to remedy its wastewater issues and improve water quality.

Consequently, the new septic system in the settlement agreement is propos ed to

be a temporary system and will be replaced when the wastewater system is

upgraded. Moreover, as already noted, the Council did not approve specific

developments. Instead, it conditionally allowed Chester to be designated as a

Highlands Center. That designation was not inconsistent with or in violation of

the policies embodied in the Act.

E.

Finally, DPF argues that there are two procedural flaws in the Council's

approval of Resolution 2020-03. First, DPF argues that the Council provided an

insufficient public comment period. Specifically, DPF asserts that the Council

should have afforded more than thirty days of public comment because Chester's

implementation plan was amended to include additional funding for a study of

the borough's lands during the comment period.

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 The Council is required to afford a thirty-day comment period before

considering a petition for Highlands Center designation. RMP Addendum 2019-

2 Plan Conformance Procedures, at 18. The Council held a public comment

period from November 15, 2019, to December 16, 2019, on Chester's application

to amend its 2016 Petition. The revision did not change the fundamental aspects

of the request to designate Chester a Highland Center, and it did not require

additional time for public comment.

Second, DPF alleges that Council member Alstede "may" have had a

"potential conflict" because his company owned property in Chester. The

Council and its staff are subject to the New Jersey Conflicts of Interest Law,

N.J.S.A. 52:13D-12 to -28. N.J.S.A. 13:20-5(h). Under State Ethics

Commission regulations, State officials are required to recuse themselves from

matters in which they have a financial or personal interest, "direct or indirect,

that is incompatible with the discharge of the State official's public duties."

N.J.A.C. 19:61-7.4(d).

Council member Alstede disclosed that the Council's ethics liaison officer

had found no conflict arising from his company's ownership of real estate in

Chester. DPF points to no law establishing a conflict for a business owner to

consider a municipality's Highlands Center designation. See N.J.A.C. 19:61-

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7.4(e) and (f) (explaining when an "incompatible financial or personal interest"

may exist). Alstede's business owning property in Chester did not create a

fiduciary relationship between him and the borough. Furthermore , the

designation of a Highlands Center does not confer a direct financial benefit to

any property or individual within the Center. Consequently, DPF's conflict of

interest argument has no factual support.

In summary, the record establishes that the Council considered Chester's

request to designate a Highlands Center in a manner consistent with the Act and

the Master Plan. We discern nothing arbitrary, capricious, or unreasonable in

the Council's actions in passing Resolution 2020-03.

Affirmed.

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