The Town Crier - Legislative Backgrounder

The New Jersey Department of Environmental Protection (NJDEP) officially introduced sweeping changes to land use regulations through its Resilient Environments and Landscapes (REAL) rule proposal. Published in the August 5, 2024 New Jersey Register, the more than 1,000-page document will significantly impact municipalities across the state, particularly those in coastal areas. The REAL Rule presents significant changes to multiple NJDEP regulatory permitting programs related to development, redevelopment, and substantial improvements to existing infrastructure.  

While the REAL rule proposal aims to increase New Jersey's resilience to climate change and sea level rise, it presents significant challenges for municipalities. Local governments, particularly in coastal areas, will need to carefully evaluate how these changes will affect their development plans, infrastructure needs, and economic strategies. It is crucial for municipalities to engage with the NJDEP, voice their concerns, and seek clarifications on how to navigate this new regulatory landscape. Of particular concern is the impact these rules would have on the amount of developable and re-developable land and the corresponding effect this will have on municipal affordable housing obligations. In addition, the NJDEP has noted in their rule proposal the potential impact these changes will have on the affordability of development projects including affordable housing development. 

Comments on the proposal are accepted through November 3, 2024. The NJDEP has indicated that final rules will be adopted in the summer of 2025.  

A brief explanation of the REAL Rule proposal is included below along with the potential municipal impacts if adopted.  

Expanded Flood Hazard Areas 

The REAL rule introduces two critical concepts: 

1. Inundation Risk Zone (IRZ): Areas predicted to be permanently under water by 2100 due to sea level rise. The IRZ is defined by adding 5 feet to the mean high water line elevation. Projects within this zone involving new residential developments, critical buildings and infrastructure (i.e. roadways and utilities), or substantial improvements to existing structures will need to meet more stringent risk assessments criteria.

Any new development, redevelopment, or substantial improvement renovations within the IRZ will require an Impact Assessment of sea level rise on the proposed activity, an On-Site Alternatives Analysis to avoid or minimize risks, and a Risk Acknowledgement to be incorporated into the NJDEP decision documents. 

2. Climate Adjusted Flood Elevation (CAFE): The predicted limit of coastal flood hazard areas, including storm-induced flooding exacerbated by sea-level rise by 2100. In tidal flood hazard areas, the REAL Rule establishes a new flood elevation standard that adds 5 feet to FEMA’s 100-year flood elevation.

N.J.A.C. 7:7 Coastal Zone Management Rules: 

• Clarification that the presence of engineered dunes created for the purpose of shore protection does not diminish the importance of any other dune areas.
• Amendments to the traffic rule to ensure that permitted development meets or exceeds Traffic Level D standards.
• Adding a definition for “cabana” that describes the structures and clarifies that such structures are regulated as dwelling units and setting forth the conditions under which development of cabanas is acceptable in coastal high hazard areas.
• Replacing the term “canopied shelter” with a newly defined term “sun shelter” in the definition of the existing term “seasonal temporary structures related to the tourism industry.” The proposed definition for “sun shelter” clarifies that these structures are temporary and serve functions such as providing shelter from the sun while using the beach.
• Clarifying that structures subject to the Zane Exemption must exist at the time of application to qualify for the “repair, replacement, renovation or reconstruction of the preexisting structure” in the rule. A Zane Exemption is a limited exemption available pursuant to the Waterfront Development Act, N.J.S.A. 12:5-1 through 11, which allows waterfront structures (for example, docks, wharfs, piers, bulkheads, and buildings) that legally existed prior to January 1, 1981, to be rebuilt, repaired, renovated, or reconstructed, provided such actions do not increase the size of the waterfront structure and the structure is used for residential, docking, or servicing of vessels.
• Replacing the term “permit-by-rule,” throughout the chapter with the new term “permit-by-registration,” which requires user registration and submittal of compliance information to the Department through its online portal to provide for better tracking of regulated activities throughout the State.

N.J.A.C. 7:7A Freshwater Wetlands Protection Act Rules: 

• Clarifying that applicants must justify that wetland impacts are necessary for conducting a project regardless of whether the impacts meet other criteria established in the rules.
• Requiring applicants to demonstrate compliance with the Stormwater Management rules for any project impacting wetlands or transition areas, which is associated with, or part of, a major development.
• In non-surface water connected wetlands, requiring onsite assessment when impacts are proposed in vernal habitats.
• Requiring a permit for horizontal directional drilling to protect against accidental release of contaminants.
• Requiring the removal of existing impervious surface, where practicable, within 25 feet of wetlands under a special activity transition area waiver for redevelopment of a significantly disturbed area to promote restoration and more closely align with the FHACA rules.
• Ensuring all activities in transition areas are situated at least 25 feet from freshwater wetlands.
• Requiring the entire transition area to be protected by a conservation restriction once modified through an averaging plan.

N.J.A.C. 7:13 Flood Hazard Area Control Act Rules: 

• Ensuring isolated waters draining less than 50 acres are regulated in order to better protect headwater areas.
• Placing riparian zones on the non-oceanfront side of barrier island complexes.
• Applying a 150-foot riparian zone to regulated waters based upon defined criteria for endangered or threatened species that are considered “critically dependent on the regulated water for survival” and requiring riparian zone mitigation for all impacts within 150-foot riparian zones that individually or cumulatively exceed 2,000 square feet.
• Requiring riparian zone mitigation in a 50-ft riparian zone when onsite impacts cumulatively exceed 0.1 acres.
• Replacing references to “manmade” waters (such as ditches and piped streams) with the term “human created” waters. This replaces gender specific terms with more inclusive language that underscores the Department’s commitment to equality and diversity.
• Deleting the exception for work that lies within 25 feet of “a lawfully existing bulkhead, retaining wall, or revetment along a tidal water or impounded fluvial water” to better protect structures from flood damage and preserve water quality.
• Requiring an Individual Permit (IP) for bridge and culvert replacements to facilitate reduction in flooding due to undersized structures, ameliorate threatened or endangered species habitat fragmentation, and remove obstacles to low-flow aquatic passage.
• Requiring a general permit authorization for horizontal directional drilling to protect against accidental release of contaminants.

Impact on Municipal Planning and Development 

1. Restricted Development: Municipalities will face significant limitations on new development and redevelopment in IRZ and CAFE areas. This could severely impact their ability to grow and adapt to changing economic needs.
2. Affordable Housing Challenges: The new regulations may complicate municipalities' efforts to meet their affordable housing obligations, as previously designated development areas may now be subject to stricter regulations.
3. Infrastructure Costs: Local governments may need to invest heavily in raising roads and other infrastructure to meet new elevation requirements, potentially straining municipal budgets.
4. Stormwater Management: The expanded definition of "major development" for stormwater management review will require more projects to undergo scrutiny, potentially slowing development and increasing costs.
5. Riparian Zone Expansion: New riparian zones will be established, including along the non-oceanfront side of barrier islands, affecting development in these areas.

Economic Implications 

1. Ratable Base Impact: The restrictions on development in coastal communities could significantly impact the ratable base of these municipalities, affecting their ability to generate tax revenue.
2. Property Values: The new regulations may affect property values, particularly in areas newly designated as flood-prone.
3. Insurance Costs: There may be implications for flood insurance rates, potentially increasing costs for property owners and municipalities.
4. Tourism Industry: For municipalities reliant on seasonal tourism, new regulations on temporary structures and shore protection projects could impact this crucial economic sector.

Administrative Burden 

1. Ordinance Updates: Municipalities will be required to update their ordinances within one year of the REAL rule adoption to match NJDEP's new definitions and standards.
2. Increased Permit Complexity: The new rules will require more detailed analyses and assessments for many development projects, potentially increasing the workload for municipal planning and zoning boards.
3. Climate Resilience Planning: Local governments will be required to address climate resilience in their stormwater management and land use planning, necessitating new expertise and resources.

Local governments, particularly those in coastal areas, will need to carefully evaluate how these changes will affect their development plans, infrastructure needs, and economic strategies. As we approach the formal publication of the REAL rule proposal in July 2024, it's imperative that municipal leaders, planners, and concerned citizens stay informed and actively participate in the public comment process to ensure their communities' interests are represented in this transformative regulatory shift. 

The League has established a working group to prepare comments on the REAL Rule proposal. Municipalities are encouraged to submit their own comments with detailed explanations of how the proposal would affect your community. For those sending comments, please also send a copy of those to the League to Associate General Counsel, Frank Marshall, Esq. at FMarshall@njlm.org.