IN THE MATTER OF THE PETITION OF SOUTH JERSEY GAS COMPANY FOR AUTHORIZATION TO CONSTRUCT A 24-INCH PIPELINE THROUGH MAURICE RIVER TOWNSHIP IN CUMBERLAND COUNTY

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R.1:36-3.

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

IN THE MATTER OF THE PETITION

OF SOUTH JERSEY GAS COMPANY FOR

AUTHORIZATION TO CONSTRUCT A

24-INCH PIPELINE THROUGH MAURICE

RIVER TOWNSHIP IN CUMBERLAND

COUNTY, CITY OF ESTELL MANOR IN

ATLANTIC COUNTY, AND UPPER

TOWNSHIP IN CAPE MAY COUNTY,

NEW JERSEY.

_____________________________________________

November 7, 2016

Argued October 11, 2016 Decided

Before Judges Yannotti, Fasciale and Gilson.

On appeal from the Board of Public Utilities, No. GO13030202.

Mariel R. Bronen of the New York bar, admitted pro hac vice, argued the cause for appellant Pinelands Preservation Alliance (Dechert LLP, attorneys; Ms. Bronen, George G. Gordon and Roxanne R. Wright, on the brief).

Caroline Vachier, Deputy Attorney General, argued the cause for respondents New Jersey Board of Public Utilities and New Jersey Pinelands Commission (Christopher S. Porrino, Attorney General, attorney; Melissa H. Raksa, Assistant Attorney General, of counsel; Ms. Vachier, Helene P. Chudzik, Geoffrey R. Gersten and Timothy P. Malone, Deputy Attorneys General, on the brief).

James W. Glassen, Assistant Deputy Rate Counsel, argued the cause for respondent Division of Rate Counsel (Stephanie A. Brand, Director, New Jersey Division of Rate Counsel, attorney; Mr. Glassen, on the brief).

Ira G. Megdal argued the cause for respondent South Jersey Gas Company (Cozen O'Connor, P.C., attorneys; Mr. Megdal, Peter J. Fontaine and Mark A. Lazaroff, on the brief).

John G. Valeri, Jr., argued the cause for respondent-intervenor R.C. Cape May Holdings, L.L.C. (Chiesa Shahinian & Giantomasi, P.C., attorneys; Mr. Valeri and Michael K. Plumb, on the brief).

PER CURIAM

Pinelands Preservation Alliance (PPA) appeals from an order entered by the Board of Public Utilities (Board) dated July 23, 2015, which amended an order entered by the Board on June 21, 2013, pursuant to N.J.A.C. 14:7-1.4, concerning a natural gas pipeline that South Jersey Gas Company (SJG) proposes to construct in three municipalities in the Pinelands. For the reasons that follow, we affirm in part, and remand in part for entry of an amended order.

I.

We briefly summarize the relevant facts. In 2006, the New Jersey Department of Environmental Protection (DEP) issued an administrative consent order (ACO) which required that by 2013, the B.L. England Generating Station (BLE) in Upper Township, Cape May County, must meet certain emission standards, be repowered, or shut down. BLE was then owned by Atlantic City Electric Company (ACE). In 2007, ACE sold the generating station to RC Cape May Holdings (RC), an affiliate of Rockland Capital. In 2012, DEP amended the ACO and gave RC until 2016 to comply with the order. RC decided to repower BLE with natural gas, which would be supplied by SJG with a newly-constructed pipeline.

In July 2012, SJG filed an application with the Pinelands Commission (Commission), seeking authorization to construct the pipeline, which would be run through three municipalities in the Pinelands and located in part in a Pinelands Forest Area. The Commission's staff initially determined that the proposed pipeline did not meet the permitted use standards of the Pinelands Comprehensive Management Plan (CMP), N.J.A.C. 7:50-1 to -10.35.

In March 2013, SJG filed a petition with the Board seeking authorization to construct the pipeline pursuant to N.J.A.C. 14:7-1.4, which states in pertinent part

(a) No person shall install and/or operate a natural gas pipeline with a maximum operating pressure in excess of 250 psig within 100 feet of any building intended for human occupancy, which is in existence prior to, or under construction at the date of, execution of the right-of-way agreement, or at the date of filing with the Clerk of the Superior Court of a complaint in a condemnation action, unless such person has obtained prior Board approval of the installation and/or operation of the pipeline.

. . . .

(c) A request for approval of the installation and/or operation of a transmission pipeline shall be subject to the requirements of 49 C.F.R. 192 [Pipeline Safety Regulations], including the requirements for passage of internal inspection devices at 49 C.F.R. 192.150, and for an integrity management program in Subpart O, 49 C.F.R. 192.901 through 192.951.

The Board considered the petition at a public hearing in May 2013. The Board's staff reviewed the project, and the Board heard comments from representatives of SJG, Rate Counsel, and certain environmental groups, as well as comments from residents of the affected municipalities. No one voiced any opposition to the reliability or safety of the pipeline's proposed alignment near buildings intended for human occupancy or its proposed operating pressure. PPA did not participate in the public hearing.

The Board issued an order dated June 21, 2013 addressing the reliability and safety of the proposed pipeline. The Board found that the pipeline would be located within 100 feet of 134 structures intended for human occupancy, specifically 114 residential structures, fifteen commercial buildings, three municipal buildings, one church, and a Masonic lodge. The closest buildings intended for human occupancy would be a commercial structure and a residential structure, both of which would be twenty-five feet from the proposed pipeline.

The Board noted that SJG had agreed there would be a minimum cover of four feet over the pipeline and it would install a twelve-inch wide warning tape as a damage-protection measure. SJG also had agreed to: construct the pipeline using higher-strength steel pipe with a yield strength equal to 60,000 pounds; have full-time inspectors overseeing the construction; and provide the safety certifications and documents required in N.J.A.C. 14:7-1.4(c). In addition, the Board's staff would conduct pipeline safety compliance inspections during construction and operation.

Accordingly, the Board found that SJG's request to construct and operate the pipeline was "reasonable and in compliance with all relevant Federal and State requirements." No appeal was taken from the Board's June 21, 2013, reliability and safety order.

In November 2013, SJG filed a petition with the Board, seeking a determination that the Municipal Land Use Law (MLUL), N.J.S.A. 40:55D-1 to -163, and any local ordinances or regulations adopted pursuant to the MLUL, would not apply to the construction or operation of the pipeline (the MLUL petition). The Board designated Commissioner Joseph L. Fiordaliso to serve as hearing officer, and thereafter, the Commissioner conducted the first public hearing on the MLUL petition.

In January 2014, Nancy Wittenberg, the Commission's Executive Director, recommended that the Commission enter into a memorandum of agreement (MOA) with the Board, pursuant to N.J.A.C. 7:50-4.52(c)(2). Wittenberg apparently believed the MOA would allow the project to proceed, notwithstanding any inconsistency with the permitted use standards in the CMP. Seven members of the Commission voted in favor of the recommendation, seven members voted against the recommendation, and one member recused himself from voting.

Because the Commission's by-laws require eight votes to take action, Wittenberg's recommendation to authorize the MOA was not accepted. SJG thereupon filed a notice of appeal, challenging the Commission's failure to authorize the MOA.

In October 2014, SJG petitioned the Board for approval of two amendments to the June 21, 2013, reliability and safety order. One amendment would allow SJG to relocate the pipeline's interconnect point/regulator station outside the Pinelands Forest Area. The other amendment would preclude SJG from connecting the pipeline to any new customers in the Pinelands Forest Area unless ordered to do so by the Board "or other governmental authority having jurisdiction."

The Board considered SJG's petition at a public hearing in June 2015. PPA's representative submitted written comments to the Board. In its submission, PPA asserted that SJG had not demonstrated that the pipeline was necessary to maintain or safeguard the region's power supply. PPA stated that the Commission had determined that the pipeline violated the minimum standards of the CMP, and refused to waive compliance with those standards. PPA also stated that the Commission had not issued a certificate of filing (COF), which PPA said was required before the Board could review the proposed amendments to the Board's earlier reliability and safety order.

The Board issued an order dated July 23, 2015, granting the petition. In the order, the Board noted that proposed relocation of the interconnect point/regulator station would move that facility from the Pinelands Forest Area to a less restrictive area of the Pinelands. The Board also noted that moving the interconnect point/regulator station would not change the number of structures located within 100 feet of the pipeline.

The Board found that the relocation of the station "does not increase safety concerns for the Pipeline." The Board also found that SJG's request for an amendment restricting SJG from connecting new customers to the pipeline unless ordered to do so "would serve to curtail development in the area around the [p]ipeline." The Board stated that this amendment also did not present any safety issue.

The Board then focused on its initial order, as well as another order dated April 29, 2013, in which the Board had approved the repowering of BLE and the allocation of that cost. The Board compared those orders to the State's 2011 Energy Master Plan (EMP), and explained that one of the EMP's goals was to foster additional new, clean, and efficient in-state power generation.

The Board noted that BLE presently supplies electric power to a large percentage of customers in municipalities within the Pinelands. If BLE is decommissioned, these customers would have to obtain electric power from out-of-state coal-burning facilities that generate more air contaminants. This also would require the construction of additional transmission and distribution lines through the Pinelands. The Board found that the proposed pipeline was necessary to repower BLE.

Therefore, the Board approved the amendments to the previously-entered reliability and safety order. In its July 23, 2015 order, the Board stated that, except as modified, the terms and conditions of its prior orders "shall remain in effect." PPA filed a timely appeal from the Board's July 23, 2015, order. We thereafter granted RC's motion to intervene.

In May 2015, SJG submitted a revised application for construction of the pipeline to the Commission, along with certain additional information that was intended to show that the pipeline was, in fact, "intended to primarily serve only the needs of the Pinelands," N.J.A.C. 7:50-5.23(b)(12), and would be a permitted use in a Pinelands Forest Area. In August 2015, Wittenberg determined the application was complete, and issued a COF which stated in part that the proposed pipeline was consistent with the permitted use standards of the CMP.

In October 2015, Commissioner Fiordaliso conducted two more public hearings and an evidentiary hearing on SJG's MLUL petition. PPA was permitted to participate in the evidentiary hearing. On December 14, 2015, Wittenberg issued a letter to the Board, stating that the proposed pipeline was consistent with the minimum standards of the CMP. On December 16, 2015, the Board issued its decision and order granting SJG's MLUL petition.

PPA and the New Jersey Sierra Club and Environment New Jersey (Sierra Club) appealed from the Board's December 16, 2015, order. In addition, Sierra Club appealed from Wittenberg's decision of December 14, 2015. We consolidated the appeals, and have addressed them in an opinion also filed this date. In re Petition of S. Jersey Gas Co., ___ N.J. Super. ___ (App. Div. 2016).

We remanded Wittenberg's decision to the Commission for further proceedings, and affirmed the Board's order granting SJG's MLUL petition, but directed that the Board's order be amended to state that its approval of the pipeline is conditioned upon the Commission issuing a final determination finding that the pipeline complies with the minimum standards of the CMP. Id. at ___ (slip. op. at 32).

In this appeal, PPA argues that: (1) the Board did not have jurisdiction to act on SJG's petition to amend the June 21, 2013, reliability and safety order; (2) the Board erred by issuing the amended order without obtaining authorization from the Commission; (3) the Board erred by approving the pipeline when the record shows that it does not comply with the CMP.

II.

We turn first to PPA's contention that the Board did not have jurisdiction to consider SJG's petition to amend its prior order under N.J.A.C. 14:7-1.4, because SJG had previously filed an appeal from the Commission's failure to approve the MOA. SJG's appeal was dismissed with prejudice in May 2016. PPA contends that, while SJG's appeal was pending, the Board did not have jurisdiction to take any action regarding the proposed pipeline. We disagree.

Rule 2:9-1(a) provides that except in certain limited circumstances, "supervision and control of the proceedings on appeal . . . shall be in the appellate court from the time the appeal is taken or the notice of petition for certification filed." Generally, the filing of an appeal divests the trial court or agency of jurisdiction to act in the matter under appeal, unless directed to do so by the appellate court. Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 376 (1995).

Here, SJG's appeal from the Commission's failure to approve, by the required number of votes, the proposed MOA did not divest the Board from exercising its statutory authority to consider SJG's petition to amend the June 2013 reliability and safety order. The two matters involved different State agencies, each with its own statutory authority. Both matters pertained to the pipeline, but they were not, as PPA contends, inextricably linked.

We therefore conclude that the pendency of SJG's appeal from the Commission's failure to take action on the MOA did not deny the Board jurisdiction to exercise its statutory authority to review and approve SJG's petition to amend its prior reliability and safety order. PPA's remaining arguments on this issue lack sufficient merit to warrant comment. R. 2:11-3(e)(1)(E).

III.

Next, PPA argues that the Board erred by issuing the amended order without first obtaining authorization to proceed from the Commission. PPA contends that the Board could not act on SJG's petition unless the Commission has previously issued a COF.

As we explained previously, in March 2013, SJG petitioned the Board for a reliability and safety order under N.J.A.C. 14:7-1.4, and in June 2013, the Board granted the petition and issued the order. SJG filed its petition to amend the order in October 2014, and the Board granted that petition in July 2015. The Commission did not, however, issue a COF on SJG's revised application until August 2015.

The Pinelands Act provides in pertinent part that

[n]o application for development within the pinelands area shall be approved by any municipality, county, or agency thereof, and no State approval, certificate, license, consent, permit, or financial assistance for the construction of any structure or the disturbance of any land within the [Pinelands] area shall be granted unless such approval or grant conforms to the provisions of such [CMP.]

[N.J.S.A. 13:18A-10(c).]

Furthermore, the CMP provides that

[n]o State department, board, bureau, official or other agency shall deem an application for development complete unless it is accompanied by a Certificate of Filing, a Notice of Filing, a Certificate of Completeness or a resolution of the Pinelands Commission approving, pursuant to the provisions of Part IV of this subchapter, an application for public development.

[N.J.A.C. 7:50-4.81(b).]

"Application for development" is defined in the CMP as "any application, filed with any permitting agency, for any approval, authorization or permit which is a prerequisite to initiating development in the Pinelands Area, except as provided in N.J.A.C. 7:50-4.1(a)." N.J.A.C. 7:50-2.11.

The Board and SJG argue that neither SJG's initial petition requesting reliability and safety approval for the pipeline under N.J.A.C. 14:71.4, nor the petition to amend the June 2013 order, constitutes an "application for development" under the CMP. We disagree.

In our view, a petition for approval of a natural gas pipeline's reliability and safety under N.J.A.C. 14:7-1.4 meets the definition of an "application for development" under the CMP rules. The issuance of such an order was a necessary "prerequisite for initiating development" of SJG's pipeline. Indeed, the pipeline could not be constructed without such an order.

That said, we reject PPA's contention that the Board's order must be reversed because the Board reviewed and acted upon SJG's petition to amend the June 2013 order before the Commission issued a COF on SJG's revised application. The regulation does not state that if a State agency acts on an "application for development" before the COF is issued, its action is void.

The COF is merely a declaration that the Pinelands development application is complete. Here, it is undisputed that SJG's initial petition for a reliability and safety order under N.J.A.C. 14:7-1.4 was complete, and PPA did not assert at that time that the Board could not consider that petition unless the Commission first issued a COF. Moreover, PPA does not claim that SJG's petition to amend the June 2013 order was in any way incomplete.

Furthermore, after SJG submitted its revised application to the Commission, which incorporated the changes that the Board had approved in the amended reliability and safety order, the Commission's staff determined that the application was complete and issued the COF. We therefore reject PPA's argument that the Board's July 23, 2015, order must be set aside because the Commission did not issue the COF until after the Board issued that order.

IV.

PPA also argues that the Board acted arbitrarily, capriciously and contrary to law by approving a project that does not comply with the Pinelands Act and the CMP.

The scope of our review of an administrative agency's final determination is strictly limited. In re Stallworth, 208 N.J. 182, 194 (2011). We will not reverse an agency's decision unless we find that "it was arbitrary, capricious or unreasonable, or that 'it lacked fair support in the evidence.'" Thurber v. City of Burlington, 191 N.J. 487, 501 (2007). An agency's legal conclusions are, however, subject to de novo review on appeal. Norfolk S. Ry. Co. v. Intermodal Props., LLC, 215 N.J. 142, 165 (2013).

We note that PPA did not appeal from the Board's initial reliability and safety order dated June 21, 2013. Therefore, this appeal is limited to review of the Board's July 23, 2015, order. See In re CAFRA Permit No. 87-0959-5 Issued to Gateway Associates, 152 N.J. 287, 305-06 (1997) (holding that appellate challenge to the issuance of an amended permit is limited to the amended order and the appeal does not encompass any substantive challenge to determinations reflected in the initial order).

Thus, the primary issue before us on this appeal is whether the Board acted arbitrarily, capriciously or contrary to law when it approved the amendments to the June 2013 reliability and safety order. At oral argument, PPA conceded that it has no substantive objections to the two amendments approved by the Board.

PPA argues, however, that the proposed pipeline violates the CMP, and the Board cannot waive compliance with those regulations. PPA further argues that when it failed to approved the MOA, the Commission decided that the pipeline did not meet the development standards for construction in the Pinelands Forest Area. PPA also contends that there was insufficient evidence before the Board to establish that the pipeline does not comply with the CMP.

Here, the Board did not waive compliance with the CMP by approving the two amendments to the June 21, 2013, reliability and safety order. The Commission never took official action on the MOA; therefore, its failure to approve the MOA cannot be viewed as a substantive determination the pipeline did not comply with the minimum standards of the CMP.

Furthermore, in its July 23, 2015, order, the Board did not make any findings as to whether the pipeline project complies with the CMP. In our decision on the companion appeals, we remand Wittenberg's December 14, 2015, determination to the Commission for further proceedings and issuance of a final decision as to whether the proposed pipeline meets the minimum standards of the CMP. In re Petition of S. Jersey Gas Co., supra, ___ N.J. Super. at (slip op. at 32).

In any event, in the comments that PPA submitted to the Board on SJG's petition to amend the June 2013 order, PPA asserted that the Board could not authorize the construction of the pipeline unless it complies with the Pinelands Act and the CMP. The CMP states in pertinent part that

No department, board, bureau, official or other agency of the State of New Jersey shall issue any approval, certificate, license, consent, permit, or financial assistance for the construction of any structure or the disturbance of any land in the Pinelands Area unless such approval or grant is consistent with the minimum standards of [the CMP].

[N.J.A.C. 7:50-4.81(a).]

In its July 23, 2015, order, the Board stated that, except as amended by that order, the June 21, 2013, reliability and safety order remains in full force and effect. The Board thus reaffirmed its prior order finding that the pipeline met the applicable reliability and safety standards and authorized its construction.

We conclude that, in light of the issues raised by PPA, and our determination in the companion appeals, the Board's July 23, 2015, order must be amended to state that the Board's approval of the pipeline and its construction is conditioned upon the issuance by the Commission of a final decision finding that the pipeline is consistent with the minimum standards of the CMP.

We therefore remand the matter to the Board for entry of an amended order with the aforementioned condition. In all other respects, the Board's July 23, 2015, order is affirmed.

Affirmed in part, remanded in part. We do not retain jurisdiction.