GH&C Secures Appellate Division Victory – Court Clarifies Options for Challenging State Agency Actions

June 29, 2021 | No Comments
Posted by David J. Miller

Recently, Giordano, Halleran & Ciesla, P.C. (“GH&C”) attorneys successfully defended a challenge to a client’s development approvals in the New Jersey Appellate Division. In its decision, the Court clarified the options available to parties seeking to challenge permits issued by the New Jersey Department of Environmental Protection (“DEP”) and other agencies.

The case involved a homeowners’ association’s (the “HOA”) attempt to overturn certain DEP approvals at a neighboring development site. After the approvals were issued, the HOA requested that DEP hold an adjudicatory hearing to consider the HOA’s allegations that the approvals were improperly granted. DEP denied the hearing request on the basis that the HOA did not have a “particularized property interest” as required to challenge such an approval as a third party. The HOA appealed the denial of the hearing request to the Appellate Division, but also requested that the Court review the substance of the approvals and reverse them due to alleged procedural and substantive deficiencies in the developer’s application. Importantly, the HOA did not also file a direct appeal to the Appellate Division within 45 days of DEP’s issuance of the approvals.

The Court’s decision adopted the developer’s and DEP’s position that the HOA was foreclosed from arguing the merits of the Permit approval, and was instead confined to challenging DEP’s denial of the hearing request. The Court did not address the HOA’s arguments regarding the substantive validity of the Permit. The Court held that the HOA had the option of an appeal in the Appellate Division on the substance of the approvals and could have filed such an appeal within 45 days of its issuance. While the HOA did elect to seek a hearing from DEP, it did not file a notice of appeal challenging the substantive provisions of the Permit within the 45-day timeframe. The Court determined that, because the HOA could not assert a time-barred challenge to the substantive basis of the Permit through its appeal of DEP’s decision to deny its request for an adjudicatory hearing, it would not address the HOA’s arguments regarding the substantive validity of the approval.

With regard to the HOA’s request for an adjudicatory hearing, the Court concluded that DEP’s decision to deny the request was well supported by the record. Since neither of the statutes at issue provide a third-party with a right to appeal a permit, the HOA must have had a particularized property interest in order to be entitled to an adjudicatory hearing on the approvals. Given that the HOA failed to make such a showing, DEP’s denial of the HOA’s hearing request was proper.

While seemingly a routine decision affirming an administrative agency action, the decision provides important guidance to parties considering a challenge to a permit decision or other action of a state agency. In short, a challenger must file both an appeal in the Appellate Division and an adjudicatory hearing request to preserve all available procedural routes to overturn or modify the subject agency action. Failing to file a direct appeal cuts off a challenger’s ability to argue the merits in a later appeal of the agency’s denial of a hearing request. Failing to pursue an adjudicatory hearing within the prescribed timeframe prevents the challenger from availing itself of an administrative remedy, including the potential for an alternate dispute resolution process and settlement of the underlying issue.

The case is captioned In the Matter of the Challenge to the Denial of the Request for Adjudicatory Hearing and the Grant of CAFRA Permit Regarding Mordechai Sternstein c/o GDMS Holdings, LLC CAFRA Individual Permit, Freshwater Wetlands General Permit No. 6, and Water Quality Certificate, Permit No. 1500-04-005.3 APL1700001 Challenged by Fairways at Lake Ridge Homeowners Association, Inc. Dated April 12, 2019, Docket No. A-003561-18.

The environmental and litigation teams at GH&C regularly handle cases before the New Jersey Appellate Division, often involving attempts to reverse DEP permitting decisions. We will continue to monitor developments in the courts’ consideration of New Jersey administrative law issues and stand ready to assist clients with all manner of environmental issues.

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