In In the Matter of Proposed Construction of Compressor Station (A-24-23/088744) (Decided August 6, 2024), the Supreme Court of New Jersey clarified a section of the Highlands Water Protection and Planning Act (Highlands Act) that exempts projects that qualify as “routine maintenance and operations, rehabilitation, preservation, reconstruction, repair, or upgrade of public utility lines, rights of way, or systems, by a public utility, provided that the activity is consistent with the goals and purposes of this act.” According to the Court, “routine” modifies only “maintenance and operations” and does not modify the remaining activities.
Facts of In the Matter of Proposed Construction of Compressor Station
Tennessee Gas (Tennessee) owns and operates an interstate natural gas transmission system. As part of a project known as the “East 300 Upgrade Project,” Tennessee proposed to install various compressor stations along its natural gas transmission system. Relevant here, Tennessee sought to construct a new compressor station and facility (Compressor Station 327) in West Milford Township, where Tennessee has an existing right-of-way on the site of a former quarry.
Because Compressor Station 327 is located within the Highlands Preservation Area, an area that is subject to stringent environmental standards, Tennessee applied to the Department of Environmental Protection (DEP) for a Highlands Applicability Determination (HAD). Before any major development occurs in the Highlands preservation area, an entity must seek either a HAD or Highlands Preservation Area Approval from the DEP.
The Highlands Act creates certain exemptions from the requirements of the Act, the regional master plan, and any permitting rules or regulations imposed by the DEP Tennessee’s HAD application requested an exemption from the Highlands Act on the ground that Compressor Station 327 qualified for Exemption 11. Tennessee also submitted a copy of the complete HAD application to the Highlands Water Protection and Planning Council (Highlands Council).
On October 16, 2020, the Highlands Council wrote to the DEP stating that it would not object to the issuance of a HAD under Exemption 11 for this project, noting that Tennessee’s “efforts to avoid, minimize and mitigate . . . resource impacts are sufficient to find that the project is consistent with the goals of the Highlands Act,” especially because Compressor Station 327 would fall within a “historically disturbed” former quarry site where “[c]ritical wildlife habitat areas are disconnected and non-functional.” The DEP issued the HAD in June 2021.
Food & Water Watch appealed the DEP’s HAD, arguing that Exemption 11 must be narrowly construed such that the word “routine” modifies the word “upgrade.” The Appellate Division agreed, vacating the HAD and remanding the matter to consider whether Compressor Station 327 qualifies as a “routine upgrade.”
NJ Supreme Court’s Decision in In the Matter of Proposed Construction of Compressor Station
The New Jersey Supreme Court reversed. It held that based on the plain language deliberately crafted by the Legislature, read in context with the law as a whole, “routine” modifies only “maintenance and operations” and does not modify the remaining activities.
“Based on the plain language deliberately crafted by the Legislature, read in context with the law as a whole, we conclude that ‘routine’ modifies only “maintenance and operations” and does not modify the remaining activities. We therefore reverse the judgment of the Appellate Division and remand the matter for further proceedings,” Justice Michael Noriega wrote on behalf of the Court.
In reaching its decision, the New Jersey Supreme Court explained that Exemption 11 contains three components. First, an activity must either be “routine maintenance and operations, rehabilitation, preservation, reconstruction, repair, or upgrade.” Second, that activity must be conducted by a public utility to its lines, rights of way, or system. Third, the activity must be consistent with the goals of the Highlands Act. The case before the Court centered on the first element — whether “routine” modifies “maintenance and operations” or whether it modifies the entire series of exempt activities, including “upgrade.”
The New Jersey Supreme Court ultimately determined that “routine” modifies only “maintenance and operations” and does not modify “upgrade.” In support, it cited the plain language of Exemption 11. The Court specifically noted that by their very nature, “maintenance and operations” are activities that would both inherently occur on a periodic or “routine” basis. Conversely, Exemption 11’s remaining activities all would occur on an as-needed basis after a triggering event, making them distinct from “routine maintenance and operations.”
The New Jersey Supreme Court went on to note that the first statutory requirement for Exemption 11 is met here, while the second requirement — that the action be performed “by a public utility” —is undisputed. With regard to the third requirement — “that the activity is consistent with the goals and purposes of [the Highlands A]ct,” the Court offered guidance for the lower court on remand.
As Justice Noriega explained, just as any activity must be undertaken by a public utility to qualify for Exemption 11, so too must any activity, routine or not, be consistent with the goals and purposes of the Highlands Act for the exemption to apply. The Court further advised that while the goals of the preservation area are chiefly to promote preservation and conservation, the statute explicitly states that development should be limited to the maximum extent possible when it is “incompatible with preservation of this unique area.”
“Simply stated, the Highlands Act does not preclude development in this area; it limits only development that is incompatible with preservation and would therefore cause a decline in the environmental quality of the region,” Justice Noriega wrote.
According to the Court, in determining whether construction of Compressor Station 327 is consistent with the Highlands Act’s “goals and purposes,” it will be necessary to consider the circumstances of the project, including the fact that Compressor Station 327 is being built upon already disturbed lands that are unsuitable for vegetation and wildlife, among other arguments