Appellate Division Narrowly Construes Highlands Act Exemption

A recent decision of the Appellate Division of the Superior Court highlights that statutory exemptions from legislation designed to protect the environment will be narrowly construed.  At issue in Intellect Real Estate Development v. DEP was the scope of a “grandfather” exemption under the Highlands Water Protection and Planning Act (the “Highlands Act”).  The Highlands Act exempts development that received on or before March 29, 2004:  (a) an approval under the Municipal Land Use Law; “and” (b) one of three DEP water supply or septic approvals, if applicable to the development; “or” (c) a DEP Freshwater Wetlands or Flood Hazard Area Control Act approval if the development does not require any of the permits listed in subsection (b).

DEP and Intellect offered differing interpretations of the somewhat confusing interpolation of “and” and “or” in the exemption provision of the statute.  DEP contended that to be exempt an applicant must satisfy the municipal approval provision of subsection (a), and also satisfy either subsection (b) or subsection (c), if applicable.  Since Intellect did not receive the necessary municipal approvals by the statutory deadline, DEP claimed Intellect was not exempt from the Highlands Act.  Intellect asserted that an applicant is entitled to an exemption if it satisfies subsections (a) and (b), or if it satisfies subsection (c).  Narrowly construing the statutory exemption, the Court resolved this ambiguity by adopting the restrictive interpretation promoted by DEP.

The Highlands Act is but one of many environmental statutes that include “grandfather” or other exemptions.  This recent decision is a reminder that courts often go out of their way to narrowly construe these exemptions.