Court Opinion

ID: 9646541
Source: CourtListenerOpinion
Date Created: 2023-08-23 13:02:28.420531+00
Date Added: 2024-06-11T18:11:39.163342
License: Public Domain

HANDLER, J.,
dissenting.
In these consolidated appeals, each of the appellants has embarked upon the construction of substantial, luxury cabana developments directly on the beachfront. The developments have the obvious potential for impacting drastically upon sensitive land areas within the regulatory concerns of the Department of Environmental Protection (DEP) as reflected in the comprehensive Coastal Area Facility Review Act (CAFRA). N.J.S.A. 13:19-1 to -21. Upon discovering these developments in progress, DEP promptly sought to have each of the developers submit applications and proceed under CAFRA regulations. They refused and continued construction with full knowledge that DEP considered the improvements to be subject to CAF-RA. Litigation of the matter vindicated DEP’s position in the Appellate Division. The Court now reverses that result — not because these extensive cabana developments are not subject to CAFRA but for the reason that DEP did not earlier adopt a specific rule that expressly designated cabanas as such to be included under the CAFRA statute and regulations.
I can understand the majority’s perception that the adoption of a such an express rule clearly and explicitly including cabanas within the coverage of existing CAFRA regulations would have been appropriate. I cannot share its conclusion, however, that the absence of such an explicit rule is fatal to the action taken by the DEP in this case. The judicial proceedings that resulted in an adjudication of coverage were completely fair to the parties, giving them ample notice and opportunity to challenge the DEP’s position and to defend their own interests. I therefore dissent.
*440As pointed out by the Court, M.J. Stavola t/a Driftwood Cabana Club (Driftwood) embarked upon an extensive development replacing 483 changing lockers and 35 cabanas with 134 luxury cabanas. Each cabana is between 300-400 square feet in area with full bath, dressing area, parlor, wet bar, electrical outlets, and deck. Similarly, Edgewater Beach, Inc. (Edge-water) embarked upon the building of 100 new luxury cabanas, replacing a complex of 300 lockers and 50 cabanas. Each new cabana interior will measure 10 feet by 16 feet and include a full bath, parlor, wet bar, electrical outlets, phone jacks, and will be extended by a 10-foot deck overlooking the pool or beach. Both developments are on the beachfront.
DEP discovered the Driftwood construction in April 1985. Based on that inspection, and on review of DEP records showing no CAFRA permit nor a determination of the inapplicability of CAFRA, the Bureau of Coastal Enforcement and Field Services issued a cease and desist letter to Driftwood, requiring Driftwood either to apply for a CAFRA permit or to stop construction and restore the property to its former condition. Driftwood elected to ignore the stop order and continued construction. The Edgewater construction was also discovered in April 1985. A similar cease and desist notice was sent to Edgewater, which chose to disregard it.
DEP was unsuccessful in the Chancery Division, which found that these cabanas were not equivalent to “dwelling units” within the contemplation of CAFRA. The Appellate Division, however, reversed and remanded to DEP. 206 N.J.Super. 213 (1985). The majority found the cabanas were not ordinary bathouses suitable for changing clothes and resting, but were built for living in for a large part of the day, and thus were equivalent to dwelling units irrespective of whether overnight sleeping is permissible. Id. at 223.
The Court, in reversing the Appellate Division, takes a hyper-technical view of administrative law making, failing to consider the need for procedural flexibility and wide discretion vested in
*441administrative agencies to determine sensible modes of regulation. The regulatory discretion accorded administrative agencies in their selection and adaptation of procedures to effectuate their jurisdictional responsibilities has long been acknowledged. See Securities and Exch. Comm’n v. Chenery Corp., 332 U.S. 194, 202-03, 67 S.Ct. 1575, 1580, 91 L.Ed. 1995, 2002 (1947) (Chenery II); see also In re Uniform Administrative Procedural Rules, 90 N.J. 85, 92 (1982) (a high degree of discretion in exercising procedural choice reposes in the administrative agency).
The procedural latitude accorded administrative agencies is bounded roughly by those considerations that are relevant in determining whether regulatory action should take the form of an administrative rule or an administrative adjudication. There are a variety of procedural choices and forms of regulatory action that occupy the large area between these outer bounds of administrative discretion.
On one end of the regulatory spectrum lies administrative rule-making. It is generally required or appropriate when an agency determination is intended to be applied prospectively, as a general standard or expression of administrative policy with widespread coverage and continuing effect; when agency action is concerned with “broad policy issues” that affect a large segment of the regulated or general public, rule-making as such is implicated. Similarly, an agency action that effects a material change in existing law is a proper subject for rule-making. See Metromedia, supra, 97 N.J. at 330; Crema v. New Jersey Dep’t of Envtl. Protection, 94 N.J. 286, 302 (1983); Davis, Administrative Law Treatise § 7:25 at 186 (2d ed. Supp.1982). Agency determinations of this kind should ordinarily be enunciated as an administrative rule. Metromedia, 97 N.J. 313, 330 (1984); Crema, supra, 94 N.J. at 301-02; see also N.J.S.A. 52:14B-2(e) (an agency action or determination that implements or interprets law or policy can constitute an administrative rule). Furthermore, where the agency action concentrates upon concerns that transcend those of the individual litigants *442and implicates matters of general administrative policy, rule-making procedures are deemed appropriate and should be invoked. See Metromedia, supra, 97 N.J at 330-31; Dougherty v. Department of Human Servs., 91 N.J. 1 (1982); Texter v. Department of Human Servs., 88 N.J. 376 (1982). In these varied settings, a major premise underlying rule-making as the preferred regulatory mode is the need for adequate fact-finding fully to inform a decision with wide-ranging implications.
The fact-finding process that characterizes rule-making is much more flexible and expansive than that governing administrative adjudication, which is quasi-judicial in character and lies at the other pole of administrative regulation. Agency adjudication is appropriate when essentially only the interests of a particular individual or entity are immediately or directly affected by the anticipated determination and individualized fact-finding is relevant to the ultimate determination. The appropriateness of adjudication obtains notwithstanding the fact that an adjudicative decision will, as applied prospectively, exert precedential control or influence over other parties whose particular situations are covered by that embraced by the decision. See Metromedia, Inc. v. Director, Div. of Taxation, supra, 97 N.J. at 328; Crema, supra, 94 N.J. 296. In addition, if an agency determination is one that is expressly authorized by or obviously inferable from the specific language of the enabling statute, in effect calling for only the application of a clear standard to particular facts, it can be expressed through an adjudication and need not take the form of a formal rule or regulation. E.g. Airwork v. Director, Div. of Taxation, 97 N.J. 290 (1984) (where tax statute is sufficiently specific, determination in the form of a tax assessment does not require antecedent rule); R.H. Macy & Co., Inc. v. Director, Div. of Taxation, 41 N.J. 3 (1963) (when adequate legislative standard exists for administrative guidance, general rule is not required).
In many cases it is difficult to conclude with complete confidence whether the agency determination is one that should take the form of a rule or an adjudication. There is no catechism *443that mandates agency action be one or the other in any given situation. Frequently the regulatory challenge cannot be categorized as involving only either broad policy issues or individual interests; and the agency action and determination addressed to that challenge may be a hybrid, partaking of elements from both the rule-making and adjudicatory modes. See Metromedia, supra, 97 N.J. at 332; Bally Mfg. Corp. v. New Jersey Casino Control Comm’n, 85 N.J. 325, 341-43 (1981) (concurring opinion) (procedures for “specific rule-making,” rule-making may be appropriate even when proposed rule has special impact upon particular parties as well as the public).
The selection of an appropriate procedural mode, as between rule-making or adjudication or some other procedural combination, should be governed not only by the form or effect of the final determination, such as the number of persons affected or its retroactive or prospective effect or the kinds of factual matters that must be determined and resolved. The choice ultimately should turn on which procedure is best tailored to achieve the goals and fulfill the responsibilities of the agency in the given case. See N.J.A. C. 1:11 — 1.6(a)(3); Bally Mfg. Corp. v. New Jersey Casino Control Comm ’n, supra, 85 N.J. 325, 341 (1981) (concurring opinion). The selection of a procedural format and the formulation of a suitable determination — be it adjudication or rule-making or some variant — must be responsive to the overall agency purpose and function in the context of the particular case subject of course to the general judicial and legislative guidelines governing administrative agency proceedings. Ibid.
These guidelines recognize the important authority and breadth of discretion that are necessarily reposed in administrative agencies in fulfilling their regulatory responsibilities. The procedural choices as between adjudication and rule-making are aspects of that delegated authority and lie within the discretion of administrative agencies. Bally Mfg. Corp. v. New Jersey Casino Control Comm’n, supra, 85 N.J. at 339. These considerations therefore strongly counsel judicial deference to *444the administrative choice between adjudication and rule making.
In this case, the DEP is entitled to certain deference with respect to its interpretation of the statute, which it is charged by the Legislature with enforcing. Peper v. Princeton Univ. Bd. of Trustees, 77 N.J. 55, 69-70 (1978); Honachefsky v. New Jersey Civil Service Comm’n, 174 N.J.Super. 539, 542 (App. Div.1980). Its procedural choice in enforcing the statute also ought to be respected. The Appellate Division, with this Court’s endorsement, correctly found that the rule-making authority granted to DEP, coupled with the admonition of CAFRA that it is to be liberally construed (N.J.S.A. 13:19-20), requires the conclusion that “dwellings or their equivalent” as presently expressed in the agency’s regulations is sufficiently broad to include the type and number of luxury cabanas constructed here. 206 N.J.Super. at 222.
Under CAFRA, a facility would include any improvement designed or used for public facilities and housing, new housing developments of 25 or more dwellings units or equivalent, or expansion of existing developments by the addition of 25 or more dwelling units or equivalent. N.J.S.A. 13:19-3c(5). Similarly, N.J.A.C. 7:7-2.1(a), the regulation adopted pursuant to CAFRA, restates the definitions set out in N.J.S.A. 13:19-3c(5). N.J.A.C. 7:7-2.1(b) provides that the Department interpret the statutory term “facility” in its broadest sense as to provide adequate environmental safeguards for the construction of any facility in the coastal area. DEP is authorized under the Act to adopt regulations to effect the purposes of the Act, including the regulation of “facilities.” N.J.S.A. 13:19-17. CAFRA also provides that “[tjhis act shall be liberally construed to effectuate the purpose and intent thereof.” N.J.S.A. 13:19-20.
In the case before us, I cannot within this frame of reference stigmatize the actions of DEP as arbitrary, unfounded, or unauthorized. DEP, upon discovering a situation clearly within the confines of its statutory responsibility, moved quickly, *445investigating the developments while they were still under construction. Upon ascertaining the facts and concluding that its regulatory jurisdiction encompassed these developments, DEP issued a cease and desist notice to both developers, requiring them either to apply for a CAFRA permit or stop construction and restore the property to its former condition. DEP’s determination entailed the application of reasonably clear statutory and regulatory standards to particular facts. Moreover, the parties were given full opportunity to test this position on the merits. There is no unfairness, abrupt or arbitrary administrative intermeddling, or oppressive agency conduct. The developers, with clear and prompt notice that the projects were subject to CAFRA, simply chose to ignore the legislative and administrative interdiction and continued construction at their own risk.
The absence of a more precise rule in this case is not fatal because application of CAFRA to these cabanas could be fairly anticipated under expressed DEP policy. As noted earlier, the cabanas create environmental impacts substantially similar to traditional housing facilities. Moreover, the actions here do not constitute material changes in existing law and cannot properly be regarded as ultra vires or de facto rule-making. These factors combined with the prompt action of the DEP in informing Stavola and Edgewater that the cabanas were subject to CAFRA demonstrate an absence of prejudicial surprise. Accordingly, DEP should have the authority under N.J.S.A. 13:lD-9 to enforce the State’s environmental statutes, rules, and regulations.
For these reasons I would affirm the judgment of the Appellate Division.
For reversal — Chief Justice WILENTZ, and Justices CLIFFORD, POLLOCK, GARIBALDI and STEIN — 5.
Affirmed — 1.
Not participating — 1.