In review of a challenge to municipal petitions for plan conformance under the Highlands Water Protection and Planning Act, the Appellate Division determined that the Highlands Council Water Protection and Planning Council had authority under the Highlands Act to adopt Plan Conformance Guidelines (“PCGs”) as a component of the Highlands Regional Master Plan (“RMP”) to establish standards and procedures for plan conformance.  The Fair Share Housing Center challenged the Council’s approval of municipal petitions for plan conformance adopted by the Boroughs of High Bridge and Clinton to confirm that their respective master plans and land use regulations conformed with the RMP.  Along with the petitions, the action constituted a procedural challenge of the PCGs upon which the petitions were developed and approved.  The Center argued that the Council’s action was not consistent with the rulemaking procedures of the Administrative Procedures Act, N.J.S.A. 52:14B-1 et seq.  Underlying the argument was the Center’s objection to the municipalities’ reliance on the Highlands’ build-out numbers for calculating their fair share obligation for affordable housing.

The Council adopted the RMP and PCGs in 2008, setting forth standards and procedures for plan conformance approval.  The PCGs are a component of the RMP.  By Resolution, the Council also developed a Plan Conformance Grant Program, establishing steps or “modules” for administering authorized grant funding based on a municipality’s establishing required contents of the petition for plan conformance.  One of the modules of the Grant Program is establishment of a housing element and fair share plan.

In considering the Center’s challenge, the court held that the Council had general authority under the Highlands Act to adopt the PCGs as part of the RMP, even though they are not identified in the Act as a mandatory component of the RMP.  The Legislature directed the Council to include provisions in the RMP for actual implementation of the RMP by State and local government units in the Preservation Area, which may also be used for advisory purposes in the Planning Area.  Accordingly, the court found that the inclusion of the PCGs as a component of the RMP was consistent with the Act.

Although the Act requires the Council to adopt, amend or repeal “such rules and regulations as may be necessary in order to exercise its powers and duties and performance responsibilities”, the court relied on provisions of the Highlands Act that contain specific procedures for adoption of the RMP to justify adoption of the PCGs without adherence to the APA since the PCGs were adopted as a component of the RMP.

The Center also attacked the modules of instruction adopted after the RMP was completed on the grounds that they function as rules subject to the APA rulemaking requirements.  Applying the Metromedia standards to determine whether the modules constituted rules of general applicability or, rather, informal action not subject to rulemaking procedures, the court afforded deference to the Council’s decision to proceed with the modules on an informal, instructional basis notwithstanding its determination that some of the Metromedia factors that would support characterizing the modules as a “rule” existed.

The decision confirms the Council’s authority to adopt the PCGs pursuant to the Highlands Act as a component of the RMP and clarifies the ability of municipalities to rely upon the PCGs and PCG Grant guidelines in the plan conformance process, notwithstanding the lack of formal APA rulemaking.