The opinion
NOT FOR PUBLICATION WITHOUT THE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-0608-23
IN THE MATTER OF LACEY
SAND SOLAR FARM, LLC –
PETITION FOR ASSIGNMENT
OF "PREFERRED" TREC
FACTOR FOR FLOATING
PHOTOVOLTAIC SOLAR
PURSUANT TO THE BOARD'S
TRANSITION INCENTIVE
ORDER.
_____________________________
Argued February 24, 2025 – Decided March 14, 2025
Before Judges Sabatino, Berdote Byrne, and Jacobs.
On appeal from the New Jersey Board of Public
Utilities, Docket No. QO21020469.
Kenneth J. Sheehan argued the cause for appellant
Lacey Sand Solar Farm, LLC (Genova Burns LLC,
attorneys; Kenneth J. Sheehan, of counsel and on the
briefs).
Steven A. Chaplar, Deputy Attorney General, argued
the case for respondent New Jersey Board of Public
Utilities (Matthew J. Platkin, Attorney General,
attorney; Donna Arons and Sookie Bae-Park, Assistant
Attorneys General, of counsel; Steven A. Chaplar, on
the briefs).
PER CURIAM
In this complex regulatory case, Lacey Sand Solar Farm, LLC ("Lacey")
appeals a September 27, 2023 final agency decision of the Board of Public
Utilities ("BPU" or "the Board"), which rejected Lacey's petition to have its
planned floating solar energy project approved for a Transition Incentive ("TI")
program launched by the BPU in 2019. The BPU rejected the petition largely
because the floating project would be a so-called "grid supply" facility that
would generate power to be sold in the energy market, rather than a "net-
metered" facility generating power that would be used on site.
Fundamentally, Lacey argues the agency's rejection of its petition was
arbitrary, capricious, and unreasonable. Applying established standards of
review in this administrative law appeal, we affirm.
I.
The record in this regulatory matter is well known to the parties and need
not be detailed comprehensively. By necessity, we use technical terminology in
the paragraphs that follow, mindful those terms will be unfamiliar to most
readers not involved in this case.
A-0608-23
2
New Jersey's Solar Energy Statutory and Regulatory Framework
On May 23, 2018, the State adopted the Clean Energy Act ("CEA") of
2018, L. 2018, c. 17 (codified at N.J.S.A. 48:3-51 to -87), which increased the
renewable energy portfolio standards and obligations for all New Jersey energy
suppliers and providers. To achieve that end, the CEA mandated that the BPU
adopt rules and regulations aimed at closing what was then the legacy Solar
Renewable Energy Certificate Program ("SRP") and cease to accept Solar
Renewable Energy Certificates ("SREC") once the Board determined that 5.1
percent of the kilowatt-hours sold in the State by third-party suppliers and basic
generation service providers has been generated by solar electric power
generators connected to the distribution system ("5.1% Milestone"). See
N.J.S.A. 48:3-87(d)(3).
The legislative mandate of 2018 entailed two phases. Phase one was the
introduction of a transitional solar energy program, the 2019 New Jersey TI
Program, N.J.A.C. 14:8-10.1 to -10.7. Phase two was the initiation of the
ultimate successor solar energy program, the 2021 Successor Solar Incentive
Program ("SuSI"), N.J.A.C. 14:8-11-1 to -12.8.
A-0608-23
3
"Grid Supply" Versus "Net-Metering" Solar Facilities
The distinction between "grid supply" and "net-metered" solar facilities is
important to an understanding of these programs. "Grid supply" solar facilities
are large-scale facilities, such as a solar farm, that generate electricity to feed
directly into an electrical grid for wholesale distribution. 1 A "grid supply solar
facility" is defined in the statute as follows:
[A] solar electric power generation facility that sells
electricity at wholesale and is connected to the State's
electric distribution or transmission systems. "Grid
supply solar facility" does not include: (1) a net
metered solar facility; (2) an on-site generation facility;
(3) a facility participating in net metering aggregation
pursuant to section 38 of P.L.1999, c.23 (C.48:3-87);
(4) a facility participating in remote net metering; or (5)
a community solar facility.
[N.J.S.A. 48:3-51.]
In contrast, residential and non-residential "net-metered" facilities are
smaller in scale. They usually power a specific building or location on-site.2 In
a net-metered system, when the solar energy system produces more power than
1
See Clean Energy Technologies: Solar, Dep't of Envtl. Prot.,
https://dep.nj.gov/cleanenergy/technologies/solar (last visited Mar. 6, 2025).
2
See Clean Energy Technologies: Solar, supra note 1 (last visited Mar. 6, 2025).
A-0608-23
4
the building or location consumes, the excess power is sent back to the local grid
and the facility owner receives a credit. 3
The Board's December 6, 2019 Order Launching the TI Program
The Board launched the TI program on December 6, 2019. It was
designed as an interim program to bridge the legacy SRP program with its
successor program, SuSI (then under development). In re New Jersey Solar
Transition Pursuant to P. L. 2018, C.17, No. QO19010068, (Bd. of Pub. Utils.
Dec. 6, 2019) (the "TI Order"). This is the program applicable on appeal here.
If eligible to participate in the TI program, developers would then receive
fixed solar energy incentives. See N.J.A.C. 14:8-10.4(f). Under the TI program,
these incentives were structured through issuing factorized Transition
Renewable Energy Certificates ("TRECs") (replacing the former SRECs),
allowing differentiated and predictable financial incentives for different types
of project installments. N.J.A.C. 14:8-10.6(b).
The TI program was opened to: (i) legacy SRP pipeline "subsection (t)"
grid supply solar projects that submitted a complete program registration but did
not become operational before the BPU determined that the State had attained
3
Ibid.
A-0608-23
5
the 5.1% Milestone, N.J.A.C. 14:8-10.49(a); 4 (ii) legacy SRP pipeline
"subsection (r)" grid supply projects that received conditional certification from
the Board but did not become operational before the BPU determined that the
State had attained the 5.1% Milestone, N.J.A.C. 14:8-10.49(a); 5 and (iii) other
net-metered projects as illustrated through the market segments listed in
N.J.A.C. 14:8-10.5 (which at its inception did not indicate floating solar as a
market). Floating solar was later included as a TI eligible market meriting
"distinct treatment" in what is known as the "TREC" program in 2020 and
assigned the default TREC factor of 0.6.
Simply stated, the TREC factor designates the rate at which a solar facility
will be paid for the energy it generates. The higher the TREC factor, the more
the facility can be paid.
4
Subsection (t) projects are grid supply solar projects. N.J.A.C. 14:8-10.2. In
re Implementation of L. 2012, Nos. A-2871-22, A-3945-22, A-3947-22 (App.
Div. Nov. 4, 2024) (slip op. at 5). Subsection (t) applicants petitioning under
the TI program were required to follow "N.J.S.A. 48:3-87(t), the Solar Act of
2012, and the Board's [i]mplementing [o]rders," N.J.A.C. 14:8-10.4(i). We cite
our unpublished opinions concerning the program purely for background
purposes. R. 1:36-3.
5
Subsection (r) projects are "grid supply solar installations not addressed by
Subsection (q)," N.J.A.C. 14:8-10.2, which essentially covers grid supply
rooftop installations and ground mount installations, N.J.A.C. 14:8-10.2(b)(1).
A-0608-23
6
The TI program remained open to all new registrants (even after the 5.1%
Milestone had been reached and as long as the applicant remained compliant)
until the successor program was established and open for registration. In re New
Jersey Solar Transition Pursuant to P. L. 2018, C.17, No. QO19010068 (Bd. of
Pub. Utils. Jan. 8, 2020) ("TI Order II").
TI program registrants seeking certification for the TREC eligibility
requirements faced three possible outcomes: "a: full certification, conditional
certification, or denial of certification." In re Implementation of L. 2012, Nos.
A-2871-22, A-3945-22, A-3947-22 (App. Div. Nov. 4, 2024) (slip op. at 7)
(citing N.J.A.C. 14:8-2.4(r), -10.4(j)).
According to the regulations, net-metered solar facilities must be
constructed and operational within one year after the applicant received
conditional registration for the BPU to issue a New Jersey State Certification
Number. N.J.A.C. 14:8-10.4(f)(4)(ii). By comparison, grid supply subsection
(t) projects were required to commence commercial operations within two years.
Ibid. However, grid supply subsection (t) applicants were also permitted to seek
up to two six-month extensions to their existing deadline, making the total
possible completion date timeline three years. In re New Jersey Solar Transition
A-0608-23
7
Pursuant to P. L. 2018, C.17, No. QO19010068 (Bd. of Pub. Utils. Aug. 17,
2022).
Waiver Procedures
Pursuant to N.J.A.C. 14:1-1.2, when projects do not fully comply with the
procedural regulations, developers may seek a waiver from such rules for "good
cause shown" so long as the developer can demonstrate that the project advances
the public interest. In re Pub. Serv. Elec. & Gas Company's Rate Unbundling,
Stranded Costs & Restructuring Filings, 330 N.J. Super. 65, 132 (App. Div.
2000). The procedure for such a waiver is detailed in N.J.A.C. 14:1-1.2(b):
In special cases and for good cause shown, the Board
may, unless otherwise specifically stated, relax or
permit deviations from this chapter.
1. The Board shall, in accordance with the
general purposes and intent of its rules, waive
section(s) of its rules if full compliance with the
rule(s) would adversely affect the ratepayers of a
utility or other regulated entity, the ability of said
utility or other regulated entity to continue to
render safe, adequate and proper service, or the
interests of the general public;
2. Any person or entity seeking waiver of any of
the Board's rules or parts thereof shall apply, in
writing, or electronically, through email, to the
Secretary of the Board. A request for waiver
shall include the following:
A-0608-23
8
i. The specific rule(s) or part(s) thereof for
which waiver is requested;
ii. The reasons for the request of waiver,
including a full statement setting forth the
type and degree of hardship or
inconvenience that would result if full
compliance with the rule(s) would be
required; and
iii. Documentation to support the request
for waiver.
New and Innovative Solar Technologies
As noted above, the TI Order the BPU issued in December 2019 did not
set forth a TREC factor for new solar technologies, such as "floating solar," but
stated that "new or innovative solar technologies can file a petition with the
Board requesting that they be assigned a TREC factorization level." TI Order
II (emphasis added). The Board later addressed this omission and set the TREC
factor for floating solar at the default 0.6 factor, despite a petitioner's request for
a 1.0 factor. See In re Petition of New Jersey-American Water Company, No.
QO20020111 (Bd. of Pub. Utils. July 15, 2020). In doing so, the Board
elaborated its findings about floating solar technology, cautioning that
there is relatively little experience with this novel
technology, and that much of the existing data is from
overseas, or lacks robust cost and revenue data. New
Jersey itself has only two operational floating solar
facilities. . . Unlike projects located on properly closed
A-0608-23
9
sanitary landfill facilities, brownfields, and areas of
historic fill, there is no statutory basis for giving
preference to floating solar, such as the Legislature
created at N.J.S.A. 48:3-87(t) [(subsection (t)
projects)]."
[Ibid. (emphasis added).]
At that time, the Board further evaluated evidence purportedly supporting
the positive environmental impacts of a floating solar project, finding those
impacts to be "indeterminate":
Additionally, the assertion that floating solar projects,
as a class, are inherently environmentally beneficial
also lacks sufficient support in the record. As
recognized by DEP's assignment of floating solar to the
"Indeterminate" permit categorization, by its nature,
each floating solar installation is unique; each is likely
to raise different compliance questions and require
different NJDEP permits and have different
environmental impacts. Placing such large manmade
structures on bodies of water, even artificial bodies of
water, may raise issues regarding possible negative
impacts on wetlands, erosion, water temperature, and
endangered species. In addition, the possibility exists
of conflicts in usage, flood hazards, navigable waters,
and perhaps other unintended consequences.
[Ibid.]
Nevertheless, the Board did state that "floating solar represents a
potentially positive development in renewable energy technology and that it is
consistent with the Board's longstanding support of renewable energy
A-0608-23
10
innovation to provide floating solar projects additional financial certainty by
making such projects eligible for TRECs." Ibid. (emphasis added). The TREC
factor was set to the default 0.6 multiplier, the Board finding that "the floating
solar will be at least as expensive as a comparable ground mount project, and a
similar 0.6 factor may be appropriate for floating solar projects." Ibid.
The April 30, 2020 Closure of SRP Registrations
The Board determined that the target level 5.1% Milestone would be
reached by April 30, 2020. Consequently, on April 6, 2020, the Board ordered
the closure of SRP registration to new applicants after that date. See In re New
Jersey Solar Transition Pursuant to P. L. 2018, C.17, No. QO19010068 (Bd. of
Pub. Utils. Apr. 6, 2020). The interim TI program, as described above, then
came into effect.
Subsequent Closure of the TI program on July 28, 2021
On July 28, 2021, the Board announced the closure of the TI program
effective thirty days later. In re New Jersey Solar Transition Pursuant to P. L.
2018, C.17, No. QO19010068 (Bd. of Pub. Utils. July 28, 2021). Accordingly,
the TI program was closed to registrants on August 27, 2021, and on August 28,
2021, Susi became operational (phase two). Ibid.
A-0608-23
11
The Proposed Project
Lacey Natural Sand LLC ("Lacey Natural Sand") operates a sand mine in
Lacey Township. At the relevant time, appellant Lacey entered into a ground
lease agreement with Lacey Natural Sand, hoping to develop a grid supply
floating solar project on the five dredge ponds on its site. The ponds had formed
after the mining of the sand pits.
Lacey's Petition
The BPU order reflects that on February 16, 2021, Lacey timely filed a
petition with the BPU pursuant to the Board's 2019 TI program, N.J.A.C. 14:8-
10.1 to -10.7. Lacey's petition specifically proposed a 22.5-megawatt grid
supply floating solar project. It also requested a "preferred" TREC factor of 1.0
in recognition of the higher construction costs associated with floating solar
projects.
The parties agree that Lacey's solar project intended to connect five
residual dredge ponds created after sand mining to form a single larger pond
consisting of 81.5 acres. Construction of the larger pond would develop as the
property is mined over time.
In its brief, Lacey describes "floating solar" technology as follows:
Floating solar is exactly what it sounds like. Rather
than being mounted on the ground or to a rooftop, solar
A-0608-23
12
photovoltaic panels are mounted to a structure that
floats on water, in this case the dredge pond left over
from sand mining. Benefits include not using prime
land for the development of solar, as well as minimizing
water evaporating, restricting algae blooms, and
providing a use for otherwise "useless" or underused
property. Additionally, water cools the panels, making
them, on average, more efficient.
Lacey contends its planned use of these otherwise-abandoned water
bodies would prevent them from becoming an attractive nuisance, and that the
project would be both revenue-generating and advance the land-use priorities of
the Pinelands Comprehensive Management Plan ("CMP"). 6
In support of Lacey's request for an increased TREC factor of 1.0 from
the default 0.6 factor, Lacey attached to its petition a report, known as the Gabel
Report, which detailed its anticipated project expenses.7 Lacey describes this
report as "setting forth the costs and benefits of the project, showing the cost s
6
The record does not expound upon the CMP program and its purpose. The
court notes, however, the New Jersey Pinelands Commission protects the
Pinelands through the CMP, including implementing regulations and standards
for Pinelands land-use and development while "safeguarding the region's unique
natural, ecological, agricultural, archaeological, historical, scenic, cultural and
recreational resources." See The Comprehensive Management Plan, NJ
Pinelands Comm'n, https://www.nj.gov/pinelands/cmp (last visited Mar. 6,
2025).
7
The Gabel Report was not supplied in the appellate record.
A-0608-23
13
as being in excess of those for installation of non-residential ground mount solar,
as well as describing the design and modeling." The Gabel Report supported an
even more enhanced TREC factor of 1.1, although Lacey's petition asked for a
slightly less generous factor of 1.0.
In addition, Lacey's petition included a letter from the Pinelands
Commission stating the solar project was consistent with the land-use priorities
of the CMP, although the Board noted that it had not received a copy of a CMP
development application.
The Discovery Questions
Responding to Lacey's petition, the Board served three sets of discovery
questions (twenty-nine in total) to evaluate the petition and its compliance with
the TI regulatory scheme. The first discovery request was in April 2021, and
the final discovery response was submitted in February 2022. The Board
describes those discovery requests as follows:
[The BPU's] Staff sought information relating to the
project's permitting and electric grid interconnection
process, project design, site preparation, and costs. In
seeking clarification of Lacey's interconnection
process, Staff inquired as to whether an interconnection
application had been filed with the regional electric grid
A-0608-23
14
operator PJM, [8] what type of interconnection
equipment will be utilized, and the costs of
interconnection.
The Board was dissatisfied with Lacey's responses. In particular, the BPU
noted, among other things, concerns about the feasibility of the project being
completed on time:
Despite the extensive responses and attachments
provided by Lacey, Lacey could not provide a date as
to when its project would have approval to connect to
the grid or provide clarity as to the excavation times of
the mining operations in order to commence
construction of the solar array in the time permitted in
the TI program.
The BPU's September 27, 2023 Final Agency Decision
On September 27, 2023, the Board issued a decision and order denying
Lacey's petition for the floating solar project. The denial principally was
because Lacey proposed an ineligible "grid supply" project, and the TI program
was only designed to work for "net-metered" projects, outside of those pipeline
grid supplied projects that were already conditionally certified "subsection (t)"
8
PJM is a regional transmission organization that coordinates the movement of
wholesale electricity in thirteen states and the District of Columbia. Who is
PJM?, PJM Learning Ctr., https://learn.pjm.com/who-is-pjm (last visited Mar.
6, 2025).
A-0608-23
15
projects under the legacy Solar Renewable Energy Program, N.J.S.A 48:3-
87(t).9
The Board's decision concerning Lacey's TI project ineligibility was made
in reliance on "Staff Recommendations," which included, among other things,
the following statements and reasons:
• The BPU had previously announced that "'new or innovative solar
technologies can file a petition with the Board requesting that they
be assigned a TREC factorization level', but it did not state that
eligibility in the TI Program may be changed for such new or
innovative solar technologies."
• "No other general grid-supply projects were accepted into the TI
Program, and all such projects have waited for the establishment of
the [Competitive Solar Incentive ("CSI")] Program within the SuSI
Program."
• Pursuant to N.J.S.A. 14:8-10.4(f)(4)(ii), "[s]taff does not
recommend waiving the rules in this closed program and making an
exception for the project" because:
i. Staff noted that Lacey could not provide certainty as to when
its project would become commercially operational, which is
problematic because grid supply projects with conditional
registration in the TI program expire after two years.
ii. "[Lacey] indicated that the project is to be built on dredge
ponds as mining operations proceed and that the ponds are not
yet combined. Mining operations of this scale tend to take
9
"Subsection (t)" were grid supply projects constructed on a brownfield, an
area of historic fill, or a properly closed sanitary landfill facility. N.J.S.A. 48:3 -
87(t).
A-0608-23
16
considerable time, and it is unclear that both excavations of
the mine and construction of the solar array can be completed
in the time permitted in the TI Program. Nothing provided by
[Lacey] indicates that this work has yet begun.
iii. "[T]here is ongoing litigation between [Lacey] and Lacey
Natural Sand regarding compliance with various terms of the
lease. The allegations in that case suggest that [Lacey] does
not currently have control over the site or a finalized plan for
project configuration. Nor did [Lacey] have site control or a
finalized plan for project configuration when they filed their
petition in February 2021, making the project inherently
speculative."
[(Emphasis added).]
At the same time, the Board denied Lacey's request for a preferred TREC
factor of 1.0. The Board concluded that, given the "project's proposed costs and
revenues, as well as further experience with this technology in New Jersey and
the United States," Lacey failed to adequately demonstrate the appropriateness
of the increase in TREC factor. The BPU's staff expressed the following
concerns:
Staff indicates the factors for the TI Program were
determined based on an in-depth analysis for each
technology class reflecting contemporaneous project
costs and benefits, as more fully described in the
Transition Order. At that time there was insufficient
data to set a class-wide incentive level for floating solar
projects. Most experience with this technology is in
Europe and Asia, with only a few large-scale projects
in the United States to date.
A-0608-23
17
Along with Staff's draft Capstone Report for the
Board's ADI Program, developed in consultation with
Cadmus Group, LLC ("Cadmus"), Staff also released
underlying modeling spreadsheets that employed
[System Advisory Model ("SAM")] modeling. One use
of SAM is to determine a solar project's anticipated
internal rate of return ("IRR") or, alternatively, an
incentive level required to provide a given IRR.
Cadmus performed an analysis of floating solar costs as
compared to ground-mount. It modeled a capital
expenditure of $2.17/W for a representative floating
solar system, which was 19% greater than the
representative ground-mount system. The higher costs
derived from costlier balance of system and more
complex engineering, though Cadmus did not
incorporate site use costs or site preparation expenses.
Cadmus also modeled representative cases for floating
solar in each electric distribution company's service
territory and concluded that the additional costs
associated with floating solar in New Jersey do not
warrant a full 1.0 TREC factor. While the anticipated
costs provided by [Lacey] for their project are greater
than those modeled for the base case, Staff believes
these are not characteristic of floating solar projects and
that they do not justify a 1.0 factor.
[(Emphasis added).]
The BPU staff thus concluded:
Staff therefore recommends that the Board deny the
petition. Staff encourages [Lacey] to consider [instead]
the CSI Program for the project.
A-0608-23
18
This Appeal and Lack of Mootness
Lacey then filed the present appeal. After the matter was briefed, this
court inquired of counsel as to whether the appeal was moot because the 2019
TI program had apparently concluded. The parties responded with supplemental
correspondence in which they agreed the appeal is not moot. As explained to us
during the oral argument, Lacey and several other applicants to the 2019
program are still pending, and if Lacey were successful in reversing the BPU's
2023 final agency decision, Lacey could still be admitted into the program. In
addition, counsel also clarified that the appeal does not depend upon
appropriations from a previous state fiscal year, because the TREC formula is
funded by payments from energy purchasers.
II.
On appeal, Lacey essentially contends the BPU's denial of its petition was
arbitrary, capricious, and unreasonable. Specifically, Lacey argues in its brief
that: (1) the BPU’s denial of the project based upon an undisclosed and sudden
requirement for "net metering," when the agency was aware of the grid-supply
nature of the project for over two years, is arbitrary and capricious; (2) the other
articulated reasons for the BPU's decision–including timing and litigation risk–
are not proper foundations for denial; (3) the denial improperly functions as a
A-0608-23
19
refutation and inappropriate repudiation of the State's solar program and
policies; and (4) the denial of the 1.0 TREC factor based upon allegedly
unrefuted submissions is arbitrary and capricious.
In considering these arguments, we apply well-established principles of
appellate review in administrative agency appeals. In general, judicial review
of administrative decisions is limited. We review only "(1) whether . . . the
agency follow[ed] the law; (2) whether the record contains substantial evidence
to support the findings on which the agency based its action; and (3) whether in
applying the legislative policies to the facts, the agency clearly erred in reaching
a conclusion" that could not reasonably have been reached. Bd. of Educ. v.
M.N., 258 N.J. 333, 342 (2024) (alternations in original).
Moreover, specifically as to the judicial review of the BPU's final agency
decisions, we recognize the breadth of the BPU's legislatively delegated powers
and that particular agency's expertise in highly technical subjects within the
domain of public utility regulation.
The BPU's powers and duties are set forth in Title 48, N.J.S.A. 48:2 -13.
Under that statute, the Board's authority to regulate utilities is broad. In re
Centex Homes, LLC, 411 N.J. Super. 244, 254 (App. Div. 2009). "Our courts
have consistently held that the Legislature in Title 48 intended to delegate the
A-0608-23
20
widest range of regulatory power over public utilities to the [BPU]." Ibid.
(alteration in original) (quoting Deptford Twp. v. Woodbury Terrace Sewerage
Corp., 54 N.J. 418, 424 (1969)). And indeed, "the BPU's 'rulings are entitled to
presumptive validity.'" In re Petition of N.J. Am. Water Co., 169 N.J. 181, 188
(2001) (quoting In re Petition of Jersey Central Power & Light Co., 85 N.J. 520,
527 (1981)).
Furthermore, the BPU's authority "extends beyond powers expressly
granted by statute to include incidental powers that the agency needs to fulfill
its statutory mandate." In re Pub. Serv. Elec. & Gas Co.'s Rate Unbundling, 167
N.J. 377, 384 (2001) (quoting In re Valley Rd. Sewerage Co., 154 N.J. 224, 235
(1998)).
"Because '[t]he grant of authority to an administrative agency is to be
liberally construed to enable the agency to accomplish the Legislature's goals,'
. . . we defer to '[t]he agency's interpretation . . . provided it is not plainly
unreasonable.'" Ibid. (citations omitted). This is especially true when reviewing
the agency's findings of fact, where appellate courts should not "substitute our
judgment for that of the agency, particularly when that judgment reflects agency
expertise." Ibid.
A-0608-23
21
That said, "a reviewing court is 'in no way bound by [an] agency's
interpretation of a statute or its determination of a strictly legal issue.'" Allstars
Auto Grp., Inc. v. N.J. Motor Vehicle Comm'n, 234 N.J. 150, 158 (2018)
(alteration in original) (quoting Dep't of Child. & Fams., Div. of Youth & Family
Servs. v. T.B., 207 N.J. 294, 302 (2011)). Questions of law remain questions
for the court's de novo review. Manalapan Realty, L.P. v. Twp. Comm. of
Manalapan, 140 N.J. 366, 378 (1995).
Having applied these scope-of-review principles to the issues and record
before us, we affirm the BPU's disposition of Lacey's petition, substantially for
the reasons articulated in its final agency decision and the related staff
recommendations. We amplify only a few aspects here.
A central theme of Lacey's appeal is its claim that the BPU acted
arbitrarily by, in essence, encouraging developers of floating solar facilities to
apply for the TI program but ultimately deeming its own floating solar project
unsuitable for approval. We are unpersuaded that the BPU led Lacey down a
proverbial "primrose path." As reflected in the language we quoted above, the
BPU's orders launching the TI interim program did not promise that grid supply
floating solar projects such as Lacey's would be eligible.
A-0608-23
22
In fact, the BPU expressed caution about the uncertain feasibility and
timing of such projects well before Lacey submitted its application. Notably,
the only identified two floating solar projects the BPU approved for the TI
program were both net-metering projects, not grid supply projects. That is an
important qualitative difference. The BPU and its staff, supported by a
consultant's report, reasonably found it would likely take longer than the allotted
two years (without discretionary extensions) for Lacey to negotiate the
necessary contracts with energy purchasers on the grid. That assessment,
informed by the agency's expertise, was neither arbitrary nor capricious.
Lacey emphasizes that, as a private entrepreneur, it bore the financial risk
of its investment failing if the project could not be completed within the
regulatory deadline, and that no state grant funds were at stake. Even so, the
BPU had the prerogative to prioritize approval of TI proposals that appeared to
have better chances of success.
Beyond these concerns, the BPU also reasonably deemed problematic
Lacey's uncertain full control of the project site, and the pendency of litigation
that clouded viability. Although we were advised at oral argument the litigation
and property control questions have since resolved, the status quo at the time of
the final agency decision was a legitimate matter of agency concern.
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We do not perceive that Lacey was treated unfairly during the process. It
was given the opportunity to respond to discovery requests and clarify and
amplify the merits of its application. The applicant did not take advantage of
the waiver process set forth in the regulations. Although there was no obligation
to pursue a waiver, the procedures existed. Regardless, we acknowledge that
the BPU's decision was made with the assumption of a properly pursued waiver
by the applicant and the application was nevertheless denied.
Also, we do not regard the BPU's rejection of this individual application
to be a "refutation" of the State's solar energy policies. Not every proposed solar
project must be approved. The BPU has wide authority to examine the merits
of each such proposal, and to apply its regulatory expertise and judgment.
Additionally, as the BPU has pointed out, Lacey's rejection from the TI
interim program does not preclude Lacey from applying for approval under the
successor SuSI program, which is now in effect. Lacey submits that the payment
formula under the SuSI program is not economically feasible given its projected
project costs. Whether or not that remains true, we discern no arbitrary or
capricious conduct that would justify a reversal of the final agency decision.
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To the extent we have not addressed them explicitly, all other arguments
raised on appeal lack sufficient merit to warrant discussion. R. 2:11-3(e)(1)(D)
and (E).
Affirmed.
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