January 1, 1900

by Thomas F. Carroll, III

The DEP has now adopted its new regulations severely limiting the number of homes that can be constructed using septic systems. For any such development of greater than five homes, an expensive application to DEP is now required, which would be submitted for review under criteria that have not even been established yet. The rules also impose similar restrictions on any nonresidential development generating more than 2,000 gallons of wastewater per day (gpd), whereas the prior restrictions did not apply unless the flow would exceed 20,000 gpd.

Background of the New Rules

In July of 2000, the DEP proposed and published comprehensive regulations known as the Water Quality and Watershed Management Rules. Those rules were popular with no one. An unusual coalition of industry, labor, environmental and municipal interests soundly criticized them. Both houses of the New Jersey legislature issued resolutions providing that the comprehensive rules were not supported by statutory authority.

Rather than adopt (or modify) the comprehensive rules, DEP chose instead to carve out a small, yet draconian, portion of the rules for adoption. DEP limited its new proposal to Subchapter 8, which governs discharge of effluent to groundwater. The new Subchapter 8 has now been adopted. DEP states that it is still considering the balance of the comprehensive rules it first proposed in July 2000, and that it hopes to revisit them by August 2001.

In re-proposing the new rules, DEP acknowledged that: "The Department is aware that these changes will need to be revised upon the adoption of the remaining provisions to the July 2000 proposal." The DEP further conceded that: "The Department recognizes that adopting this subchapter may result in conflicts with other provisions of this chapter." The DEP nevertheless concluded, when adopting Subchapter 8, that: "The Department believes that any conflicts would be temporary in nature because the Department intends to finalize other portions of proposed Water Quality and Watershed Management [sic]."

Thus, the DEP has cobbled together a limited set of rules that, according to DEP itself, are contrary to other rules, "temporary," and impossible to apply. There is no rational explanation for the rules except stifling new development. In essence, the rules impose a moratorium on all residential development not located in sewer service areas unless the development consists of five homes or less.

The Exemptions Provided by the Rules

Certain septic developments are exempt from the rules. The effective date of the rules is March 20, 2001. While a number of exemptions apply, a couple of them are most important. The first provides that the new restrictions do not apply to developments that have received site plan or subdivision approvals before March 20, 2001. The second deals with the "grandfathering" effect of having received certain DEP wastewater-related permits, or having filed complete DEP wastewater-related applications, prior to March 20, 2001. Thus, the first step in confronting the new rules is analyzing whether any exemptions apply.

The Impact of the Rules

If no applicable exemption can be found in the rules, their impact on development must be fully considered. It should first be recognized that the rules go to great lengths to firmly impose the restrictions regarding development of any more than five lots on any given piece of property. For example, the rules provide that subdividing a large piece of land into smaller tracts, so that five lot subdivisions could thereafter be sought on the smaller tracts, will not relieve applicants from the restrictions. In other words, previous development on contiguous tracts of land under common ownership will be considered when DEP evaluates whether the five lot limitation has been exceeded.

Secondly, it must be recalled that, while the new rules limit development on septic systems to five homes without the need to engage in detailed DEP review, the rules do theoretically permit more extensive development. The rules provide that, in order to engage in more extensive development, an applicant may request that DEP revise the water quality management plan so as to allow such development. As noted above, the first problem presented by this theoretically available procedure is that the rules fail to establish any criteria for DEP review of such applications. Again, the rules themselves recognize that they conflict with other rules, and that more rulemaking will be required before the new rules can be sensibly implemented. When that will occur cannot be determined with any certainty.

No less important is the expense an applicant would incur in order to file a DEP application seeking authority to develop more than five homes on septics. It has been estimated that such DEP petitions will cost an applicant in excess of $100,000, which is clearly a prohibitive cost for all but large projects. In fact, the likely cost may be higher since DEP has not revealed what review criteria will be used and, hence, it is not clear what type of studies must be commissioned in order to seek an amendment allowing for more than five homes (or 2,000 gpd for a nonresidential project).

Lastly, it is believed that the rules may not apply to those areas that, while presently within a sewer service area, do not yet have readily available sewer infrastructure. In analyzing this issue, a builder would be well advised to seek the guidance of a wastewater engineer and legal counsel, so that DEPÍs view on this question can be ascertained with certainty.

Legal Challenges to the Rules

Litigation contesting the new septic rules has already been filed. In that case, the Appellate Division is being asked to first stay the implementation of the rules, with a legal battle over their validity to then follow. Additional litigation will no doubt be filed in due course. How the rules are perceived by the courts remains to be seen. It is, however, certain that DEP's new septic rules, until invalidated, will impose drastic limitations on many proposed communities where wastewater is to be treated through septic systems.

Thomas F. Carroll, III also a partner of Hill Wallack, is a member of the firm's Land Use Division. He also serves on the NJBA's Land Use and Planning Committee and its Site Improvement and Infrastructure Standards Committee. A Member of the Board of Directors of the NJ State Bar Association's Land Use Section, he concentrates his practice in the development application process and the litigation required in the course of land development.