In the Matter of the Petition of New Jersey Natural Gas Company, Etc.

NOT FOR PUBLICATION WITHOUT THE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-1582-22

IN THE MATTER OF THE

PETITION OF NEW JERSEY

NATURAL GAS COMPANY

FOR A DETERMINATION

CONCERNING THE HOLMDEL

REGULATOR STATION

PURSUANT TO N.J.S.A.

40:55D-19 -2017 PETITION.

____________________________

IN THE MATTER OF THE

PETITION OF NEW JERSEY

NATURAL GAS COMPANY

FOR A DETERMINATION

CONCERNING THE HOLMDEL

REGULATOR STATION

PURSUANT TO N.J.S.A.

40:55D-19 -2018 PETITION.

____________________________

Argued November 19, 2024 – Decided April 17, 2025

Before Judges Susswein, Perez Friscia and Bergman.

On appeal from the New Jersey Board of Public

Utilities, Docket Nos. GO17010023 and GO18111257.

Peter D. Dickson argued the cause for appellant

Township of Holmdel.

Matko Ilic, Deputy Attorney General, argued the cause

for respondent New Jersey Board of Public Utilities

(Matthew J. Platkin, Attorney General, attorney;

Sookie Bae-Park, Assistant Attorney General, of

counsel; Matko Ilic, on the brief).

Mamie W. Purnell, Assistant Deputy Rate Counsel,

argued the cause for respondent New Jersey Division of

Rate Counsel (Brian O. Lipman, Director, attorney;

Mamie W. Purnell, on the brief).

James C. Meyer argued the cause for respondent New

Jersey Natural Gas Company (Riker Danzig LLP,

attorneys; James C. Meyer and Michael S. Kettler, on

the briefs).

PER CURIAM

This appeal arises from a protracted dispute concerning the construction

of an aboveground natural gas pressure reduction facility, also known as a

regulator station, and its associated heating equipment. Holmdel Township (the

Township) appeals from the Board of Public Utilities' (the BPU) December 21,

2022 final decision granting the New Jersey Natural Gas Company's (NJNG)

petition to construct the facility (the Project). An Administrative Law Judge

(ALJ) heard the matter over the course of six days. After considering extensive

expert testimony and making credibility findings, the ALJ found the proposed

Project was "reasonably necessary for the service, convenience or welfare of the

public" and posed no adverse public health concerns.

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2

The BPU adopted the ALJ's initial decision without modification,

concluding that the Municipal Land Use Law (MLUL), N.J.S.A. 40:55D-1 to -

163, and Holmdel Township's local ordinances did not preclude the Project. In

doing so, the BPU exercised its authority pursuant to N.J.S.A. 40:55D-19 to

override the Township's denial of the Project.

On appeal, the Township argues the BPU: failed to consider the entire

record and erroneously relied on NJNG's pre-filed direct testimony while

ignoring contradictory information adduced on cross-examination; failed to

apply climate laws; wrongly considered the proposed regulator station as a

reliability project, instead of a costly future stranded asset; erroneously

disregarded NJNG's alleged failure to consider alternatives and that NJNG's

current underground regulator station is still viable and has a remaining useful

life of at least fifteen to twenty years; and ignored the Holmdel Township

Zoning Board of Adjustment's (Zoning Board) decisions yet accepted allegedly

self-contradictory testimony of NJNG's experts.

After carefully reviewing the extensive record in light of the parties'

arguments and governing legal principles, we affirm. We are satisfied there is

sufficient evidence in the record to support the BPU's decision and we decline

to substitute our judgment for the BPU's on the critical question of whether the

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3

Project is reasonably necessary for the service, convenience or welfare of the

public pursuant to N.J.S.A. 40:55D-19. The Township failed to demonstrate

that there was no evidence before the Board to support its decision. See N.J.S.A.

48:2-46 (authorizing the Appellate Division to set aside any BPU order "in

whole or in part when it clearly appears that there was no evidence before the

[B]oard to support the same reasonably").

I.

We discern the following procedural history from the record. On March

17, 2015, NJNG filed an application with the Zoning Board requesting variances

and approvals to construct an aboveground regulator station at 970 Holmdel

Road. The Zoning Board denied the application on December 7, 2016.

On January 11, 2017, NJNG filed a petition with the BPU, seeking to

override the Zoning Board's decision pursuant to N.J.S.A. 40:55D-19 through a

determination that the proposed Project is "reasonably necessary for the service,

convenience, or welfare of the public, and that the zoning and land-use

ordinance of the municipality and its county shall have no application thereto."

It also cited to N.J.S.A. 48:2-23, which allows the BPU to require a public utility

"to furnish safe, adequate and proper service . . . and to maintain its property

and equipment in such condition as to enable it to do so."

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On January 23, 2017, the BPU referred NJNG's petition to the Office of

Administrative Law (OAL) as a contested case. The matter was assigned to ALJ

Elia A. Pelios. On April 3, the Township filed an unopposed motion to

intervene, which the ALJ granted.

On January 2, 2018, NJNG filed a new application with the Zoning Board,

seeking use variances, a conditional use approval, and site plan approval for the

construction of the regulator station at a different location on Holmdel Road.

The Zoning Board denied NJNG's application on October 25.

On November 29, 2018, NJNG filed a new petition with the BPU pursuant

to N.J.S.A. 40:55D-19 and N.J.S.A. 48:2-23, again seeking to override the

Zoning Board's denial of its regulator station application at the new proposed

location at 960 Holmdel Road. NJNG also requested its new petition be

consolidated with its prior petition, which had been put on inactive statu s.

On December 3, 2018, the BPU transmitted NJNG's second petition to the

OAL as a contested case. ALJ Pelios consolidated the two petitions and granted

the Township's motion to intervene.

On February 13, 2020, ALJ Pelios presided over a public hearing and then

convened six virtual evidentiary hearings in October 2020.

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5

On March 2, 2020, the Township filed a motion to direct NJNG to

"undertake a formal review of the merits of this [P]roject measured against the

new policies" of New Jersey's 2019 Energy Master Plan 1 (EMP). The ALJ

denied the motion on June 11, 2020, concluding NJNG "should not be required

to reassess their petition[s] in light of the general goals of the EMP." The ALJ

thereafter denied the Township's motion for reconsideration.

II.

We next recount the pertinent facts adduced at the evidentiary hearings.

We describe the evidence presented by both NJNG and the Township in

considerable detail to show the breadth, scope, and specificity of competing

expert opinion testimony that the ALJ considered.

In 2012, with the BPU's approval, NJNG installed a new sixteen-inch

diameter underground natural gas transmission line through Holmdel. This

transmission line served NJNG's customers in Monmouth County, including

approximately 6,100 metered customers in Holmdel and additional customers in

the surrounding communities. NJNG intended for this sixteen-inch line to

replace eight miles of an existing line of ten-inch pipe to comply with federal

1

N.J. Dep't of Env't Prot., 2019 New Jersey Energy Master Plan: Pathway to

2050 (2020).

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6

safety regulations, which include a new requirement that transmission lines be

capable of being checked by an inline inspection device often referred to as

"smart pig" technology.

Because NJNG kept the remaining ten-inch line as part of its distribution

system, it needed to manage the depressurization of natural gas from

transmission pressures in the sixteen-inch line, which exceed 700 pounds per

square inch gauge (psig), to approximately 125 psig or lower in the ten-inch line.

At the connection point of the two pipelines, NJNG installed what it considered

to be a "temporary" regulator station in a vault casement under Holmdel Road,

intending to find a more permanent aboveground location.

NJNG sought to locate an available aboveground site that would: (1) be

operationally suitable to meet the reliability need by being located close to the

transmission line at its southern end; (2) minimize impacts on Holmdel residents

by avoiding residential zones and seeking already-developed property; and (3)

minimize impacts on the environment by avoiding preserved farmland, Green

Acres sites, wetlands, and sites requiring more than minimal tree clearing.

NJNG first considered the property at 970 Holmdel Road. As we have

noted, the Zoning Board denied the application for the required variances and

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7

approvals at that proposed site. Further, the property owner at 970 Holmdel

Road refused to grant NJNG an easement for the Project.

NJNG then considered the property at 960 Holmdel Road. That property

comprises 16.51 acres and is located in a zone that allowed public utility

infrastructure as a conditional use. The property already contained an 80,000

square-foot office complex with two office buildings and associated front and

rear parking lots. It also contained a cellular communications tower that stood

over 100 feet tall. A solar farm was located just south of the site.

NJNG obtained an easement area from the property owner comprising

approximately 6,000 square feet (40 feet by 150 feet) on the southeastern side

of the property. NJNG also obtained an additional easement for access off of

the existing office building's driveway.

A.

We next recount the expert testimony heard by the ALJ, starting with the

experts presented by NJNG: Kraig Sanders, Marc Panaccione, John Wyckoff,

Jeffrey Otteau, Edward Potenta, Robert Chilton, and Christine Nazzaro Cofone.

Sanders, Panaccione, and Wyckoff testified collectively as a panel (the

panel) as to the need for NJNG's proposed regulator station. Sanders was

NJNG's Director of Pressure Management and Transmission, responsible for the

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8

maintenance and operation of NJNG's metering and regulator stations,

transmission facilities, and for NJNG's gas control center, which remotely

handles the operations and control system for the entire delivery system.

Panaccione was NJNG's senior engineer, responsible for the engineering design,

project management, construction oversight, and system planning for its

transmission and distribution systems. Wyckoff was NJNG's vice president,

responsible for overseeing all aspects of NJNG's natural gas infrastructure.

NJNG employed Sanders for nineteen years, Panaccione for over fourteen years,

and Wyckoff for thirty years.

The panel testified that installing the proposed regulator station required

installation of a Cold Weather Technologies (CWT) heater, which significantly

reduces the pressure of transported natural gas between the transmission and

distribution systems in a safe, adequate, and reliable manner to deliver natural

gas to NJNG customers in Holmdel and nearby areas. They explained that

freezing and icing problems occur from depressurization of natural gas

"primarily due to ambient moisture," i.e., water vapor in the natural gas. The

difference in pressures between a transmission line and a distribution line "can

cause a temperature drop of the gas of up to [forty] degrees, to temperatures

below freezing; this causes ice encasements around regulators, control

A-1582-22

9

equipment and piping due to the freezing of moisture in the surrounding air and

ground as well as in the pipeline." That, in turn, can cause damage to the

equipment and result in loss of gas service to the NJNG customers serviced by

that regulator.

The underground regulator station installed under Holmdel Road,

however, could not include a CWT heater unit to prevent icing due to the

station's lack of venting and air flow required to power it. To mitigate the risks

of an outage from reducing the temperature drop and the intensity of freezing,

NJNG operated this portion of its system at sub-optimal inlet gas pressures, i.e.,

a maximum of about 450 psig in winter and 400 psig or below in summer.

Despite these precautionary measures, the underground regulator station was

continuously encased in ice throughout the winter.

NJNG introduced a photograph from February 2018 showing the

underground regulator encased in thick ice. Two icing incidents were also

severe enough to cause the regulator station to malfunction and be taken out of

service for repairs because it could not maintain pressure. NJNG explained that:

[L]owering the maximum operating pressure of the

Holmdel transmission line . . . simply to avoid having

to install a heater . . . would be operationally imprudent

because it would significantly inhibit NJNG's ability to

provide adequate and reliable service . . . during peak

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10

winter months, when uninterrupted gas service is most

critical.

The panel testified that the current underground regulator station was

installed only as a "stopgap measure," and that "it was never intended as a

permanent solution." They acknowledged, however, that the current regulator

station, from "a mechanical device standpoint," with proper maintenance could

have a useful life of "[fifteen], [twenty] years [or] . . . longer as well." On cross-

examination, the Township's counsel referred to an exhibit on depreciation

schedules which showed the regulator had twenty-two more years of useful life.

Wyckoff responded that the schedule pertained to its useful life "in financial

terms" and not "in physical terms." Sanders opined that the risk linked to the

temporary regulator station was "the potential for failure."

Wyckoff also acknowledged that the immediate area was predicted to

grow "around less than [one] percent for the next few years." Nonetheless, he

testified that NJNG made no change to its anticipated load projections.

NJNG considered various sites to locate the proposed regulator station.

Panaccione first explained that NJNG used several criteria to narrow the search.

Specifically, they were looking for properties: (1) that were adjacent to the

current transmission line and close to its southern end, so the proposed regulator

station would be near the line that feeds Holmdel and the surrounding areas yet

A-1582-22

11

provide adequate spacing from other stations to minimize system vulnerability;

(2) that were zoned for commercial or utility uses, and large enough to

accommodate the proposed facility with landscaping; (3) that were not Farmland

Preserved, Green Acres, wetlands, contaminated property, or properties that

would require extensive deforestation or be too close to residential zones; and

(4) that contained preexisting development.

Using those criteria and parameters, NJNG identified six potential sites.

Two sites were not chosen because they were near the northern portion of the

transmission line, zoned for residential use, and the property owner was

unwilling to grant NJNG an easement. Monmouth County owned the third site,

but it was unsuitable because the site was close to the northern end of the line

and was purchased using Green Acres' funding. The fourth site was on the

southern end of the line, but the owner was unwilling to grant NJNG an

easement. The final two properties were located at 970 and 960 Holmdel Road.

NJNG originally considered 970 Holmdel Road, which contained another utility

facility, a solar farm, and was available by the owner, but the Zoning Board

objected because the proposed regulator station would need to be located too

close to Holmdel Road. NJNG's ultimately selected site, 960 Holmdel Road,

already contained another utility facility, a cell tower, and a commercial

A-1582-22

12

building, but the proposed regulator station could be constructed further back

and the property could accommodate additional landscaping.

In addition to location, NJNG also considered various alternative heaters

for the proposed regulator station. NJNG's panel said they were "not aware of

any electric heating technology currently available in the industry that would

meet the required needs in this type of application." They also stated that NJNG

considered using a catalytic heater, which uses radiant heat, but it had not

installed such heaters since 2010 after finding "numerous issues with their

reliability[,]" especially "extensive problems with the catalytic heaters' heater

panels and circuit boards, as well as electrical issues." In the five catalytic inline

heaters installed between 2008 and 2010, NJNG experienced major failures to

six heater panels within the first two years of operation, and had to replace

thirty-two panels in four years. There also were "several electrical failures

related to wiring, thermocouples and connectors."

Furthermore, NJNG considered using indirect-fixed water bath heaters to

pre-heat the natural gas prior to regulator station pressure reduction instead of

the proposed CWT heater. However, the CWT heater is preferable because it

would have a near silent operation, lower vent heights, a simpler modular

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13

design, reduced maintenance requirements, lower required gas fuel operational

pressure, significantly improved thermal efficiency, and reduced emissions.

Otteau, a real estate valuation expert, opined on the proposed Project's

impact on property values. He used a "paired sales technique" to analyze "sales

or rental data on nearly identical properties . . . to isolate a single characteristic's

effect on value or rent," such as the construction of a regulator station, an d

determine the Project's impact on nearby property values. Based on his market

study, Otteau concluded that five other stations had not caused any stigma2 to

affect the surrounding neighborhood properties or diminution in the market

appeal or property value for nearby properties. He thus concluded that the

Project would not have any adverse impact on nearby property values.

Otteau also rejected the "repeat sales technique" used by appellant's

witnesses to examine sales of the same property before and after a particular

event, such as the installation of a regulator station. He explained that there are

2

Otteau relied on "The Dictionary of Real Estate Appraisal (6th Edition)" to

define "stigma" as: "[a]n adverse public perception regarding a property,

commonly the identification of a property with a condition such as

environmental contamination or other detrimental condition, such as a violent

crime, that penalizes the marketability of the property and may also result in a

diminution in value." He represented that "[t]his definition indicates that there

must be a quantifiable penalty to the market appeal of a property for stigma to

exist."

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often many reasons for changes in property values over time, such as market and

economic changes, financial crises, and pandemics. Adjustments for changes in

property values over time can become even more complex over extended time

periods, making the repeat sales technique more problematic, subjective, and

less reliable than an examination of matched pairs.

Potenta offered expert testimony on the air quality, noise, and related

environmental impacts of the proposed regulator station. His background

includes degrees in civil and environmental engineering and over forty years of

multi-disciplinary experience in the field of environmental engineering,

specifically air quality and noise impact analyses and prediction modeling. In

addition, he is a certified environmental consultant and member of the Institut e

of Noise Control Engineering and the Environmental Assessment Association.

Based on his noise assessment tests, Potenta concluded that NJNG's

proposed regulator station will comply with applicable state and local noise

regulations. He also found that the noise generated will be lower than the

existing daytime and nighttime ambient noise levels so as not to be noticeable

to the surrounding residences or have an adverse impact on the surrounding

community.

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With regard to the emissions from NJNG's proposed CWT heater, Potenta

prepared an air-quality assessment using the New Jersey Department of

Environmental Protection's (DEP) air quality risk screening method and the

United States Environmental Protection Agency's regulatory air prediction

model to evaluate the air quality impact to the surrounding areas. Potenta

concluded that neither the regulator station nor its heater will have any adverse

impact on local or state air quality. He explained that the majority of the heater's

emissions would be carbon dioxide and water vapor, which are not toxic

pollutants. However, in the "worst-case scenario[,]" namely, a situation when

the CWT heater does not reach "proper combustion temperatures[,]" Potenta

admitted that the heater may emit trace amounts of air pollutants. Nevertheless,

his results showed that the predicted concentrations would be considered

"negligible," which he defined as "significantly below the criteria air pollutant

standards" set by state and federal agencies.

Chilton testified as an expert in New Jersey energy utility regulation and

policy, including development, interpretation, and implementation of New

Jersey's EMP. While working for the BPU as the Division of Energy's Director,

Chilton was responsible for the development of energy policy and related

rulemaking, and worked on the development of several prior EMPs and their

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updates, specifically the 1991 and 1995 EMPs which restructured the retail

electrical and natural gas markets. He also oversaw numerous siting matters and

supervised engineers reviewing gas utility applications concerning the reliability

of their gas distribution systems.

According to Chilton, New Jersey's EMP is a "policy" and "long-range

planning document that sets a vision, strategies and goals to achieve by 2050 a

transition to a [one hundred percent] carbon-neutral electric grid, and a[n]

[eighty percent] reduction in the State's carbon emissions, including a [seventy-

five percent] reduction in natural gas consumption." He explained that there are

"many important implementation details still to be worked out in future

proceedings." He considered NJNG's proposed regulator station in light of the

current 2019 EMP, concluding the Project is consistent with the EMP's Goal 5.4,

which aims to maintain existing gas pipeline system reliability and safety while

planning for future reductions in natural gas consumption.

Chilton further determined that the proposed regulator station does not

constitute an "expansion" of the natural gas system as described in the EMP

because it satisfies Goal 5.4. He added that the proposed Project will be "used

and necessary" over the course of its "typical useful life"—which the panel

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17

stated was at least twenty or twenty-five years—and so it would be unlikely to

become a stranded asset under the EMP.

Cofone, a certified and licensed professional planner, testified as an expert

in planning and land use. She opined that NJNG duly considered Holmdel's

zoning ordinances and its community zone plan when it proposed the new

regulator station. She further explained that the proposed site is zoned for

conditionally permitted public utility use, and after visiting the site, she found

that it is already developed as a commercial property "with an 80,000 square

foot multi-tenanted office building with related parking and a cell tower that is

over 100 feet tall and easily visible to the public . . . and [a] solar farm on the

adjacent property also is visible to the public." Thus, Cofone concluded that the

proposed regulator station will not change the character of the area.

Cofone also opined that NJNG's Project, which she characterized as "a

benign facility," "will not have any negative impact on the surrounding

neighborhood" and is "consistent with Holmdel's master plan, which calls for

adequate infrastructure to serve the township while also conserving its natural

resources." She explained that "there will be no traffic, permanent on-site

employees, or population increase and [Potenta]'s offered expert testimony is

that it will have no noise impacts, and the Regulator Station will be less visible

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than the cell tower because of the extensive screening, landscaping and berm."

She pointed out that the regulator station qualified as "an incredibly passive

use[,]" which was "similar" to the existing "taller, far more visible, far less

green" cell tower that the Zoning Board had previously approved, and therefore

should be permitted. Thus, she found the Project was consistent with the master

plan's goals, which include maintaining "the unique character of Holmdel,"

protecting "the Township's open spaces from development," and providing

"adequate infrastructure to serve Township residences and businesses" while

"limit[ing] the development of growth-inducing infrastructure."

Cofone further opined that moving the proposed regulator station further

back on the proposed site, as the Township suggested, would not achieve any

planning benefits, and would not lessen any negative impacts as "it was well-

screened and not visible from where it was proposed and not violative of any

conditional use standards for the siting of that actual structure." She pointed out

that the variance NJNG sought from the Zoning Board was "not for the location

of the proposed regulator station on the property, it was for the introduction of

the third beneficial use on the property, so the location was not violative of the

Holmdel ordinance."

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B.

The Township presented testimony from Prakash Santhana, Dr. Donald

Moliver, and Berne L. Mosley.

Santhana, an elected Holmdel Township committee member, also

appeared at the ALJ's public hearing. His testimony offered on behalf of the

other committee members, expressed the public's concerns about the Project's

potential impacts on the environment, natural gas rates, and general quality of

life in Holmdel. He also testified that "safe, efficient and reliable service" had

already been provided to Holmdel's residents for the past twenty years, so there

was no need for NJNG's proposed regulator station. Regarding the sixteen-inch

pipeline and the potential for greater pressures, he stated that: "[t]he need for

an increase in pressure . . . to 722 psig has nothing to do with Holmdel or area

residents' consumption as indicated by the lack of population growth in all of

Monmouth County over the last [twenty] years."

Moliver, who has a Ph.D. in economics and is a certified tax assessor and

general real estate appraiser, testified on the lower sales prices that would be

ascribed to the proximity of the aboveground regulator station. He stated that

the regulator station would create safety and environmental risks, such as

noxious odors emissions and noise pollution. These risks, in turn, "would create

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an environmental stigma in the nearby community and lead to an unspecified

diminution of real estate property values . . . [that] would last an indeterminate

period of time until . . . the use is abandoned, sufficiently modified, relocated,

or the public's reaction to its presence no longer is adverse." He also disagreed

with Otteau and opined that a "repeat sales" methodology comparing the sales

value of the same residences before and after the construction of a nearby

regulator station was a "better example" of whether the regulator station would

adversely impact property values since "[a]ny differences in sales

price . . . could be ascribed to the proximity of the Facility."

On cross-examination, Moliver admitted that he used a drone to examine

the area and had not reviewed any of the other potential sites that NJNG had

previously considered. He also explained that public perception of a condition

can impact property values.

Mosley, who testified as an expert and private consultant in pipeline flow

and hydraulic analysis, previously worked at the Federal Energy Regulatory

Commission (FERC) for approximately twenty-eight years, where he was

mainly responsible for supervising and processing permit applications for

interstate natural gas pipelines. While at the FERC, Mosley gained expertise in

performing hydraulic analyses of natural gas flow through pipelines, meters, and

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regulators, and was knowledgeable about the engineering requirements of

maintaining adequate and appropriate pipeline capacity, operating pressures and

temperatures. He also had experience with noise and air issues attributed to

regulator stations but did not consider himself an expert on those issues.

The Township's counsel asked Mosely to testify about whether the

proposed regulator station: (1) is necessary; (2) is appropriately sized and

scaled; (3) is redundant due to the current underground regulator station; (4) can

be moved farther away from the road and the other current properties on the site;

(5) can use a catalytic heater; and (6) implicates New Jersey's 2019 EMP and

the Governor's related executive orders, specifically, Executive Order No. 100

(Jan. 27, 2020), 52 N.J.R. 365(a) (Mar. 2, 2020) (EO100).

Mosley opined that the BPU should deny NJNG's petition or, in the

alternative, hold its decision in abeyance. He explained that "because of the

accelerated schedule[,]" the record was "woefully inadequate for determining

the need, size, heating source and potential alternative location(s) for the

proposed regulator." For example, notwithstanding Sanders's testimony,

Mosley explained that there was no information "on the frequency and duration

of these icing events, in that such information would prove to be a good indicator

of any reasonably expected operational issues associated with the continued use

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of the temporary regulator as currently configured." Also, if the icing incidents

were as frequent and severe as Sanders testified, "surely the [BPU] must be

interested in knowing what measures NJNG has undertaken to mitigate such

incidents, as well [as] knowing what contingency plans NJNG would have

available if the permanent regulator were not to be installed."

Mosley also testified that the record was unclear as to whether NJNG had

explored if it could keep the temporary regulator and install only a heating unit

at another location, why Panaccione proposed the regulator station to be set back

180 feet from Holmdel Road and not some other measurement, or why NJNG

proposed installing a natural gas fired heater instead of other heaters that

produce less emissions, like the catalytic heaters that NJNG uses at other

locations. He explained that, although it had not been performed, "a hydraulic

analysis would surely identify a certain point or location elsewhere . . . on the

system where heating equipment could be located and sill [sic] prevent

operational issues . . . from occurring at the temporary regulator . . . ." Mosley

further questioned whether the sixteen-inch pipeline "was sized solely for

Holmdel, or if it is sized for other markets and/or future growth that NJNG

anticipated at the time of planning . . . ." He testified that due to the inadequate

information provided by NJNG, he could not make firm conclusions on its

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proposal. He added, "it's not apparent that the continued use of the temporary

regulator, either in its current location, or installed at an alternate location[,]

would not meet the ongoing load requirements of Holmdel."

Mosley also testified as to the proposed regulator station's impact on New

Jersey's EMP goals and the EO100. He opined that, although the proposed

regulator station was "not a major addition[,]" NJNG had not adequately

considered the EMP and EO100 goals in designing and preparing its Project,

especially in assessing "the need for future expansion of its gas system" and

proposing "non-pipeline solutions." He explained:

Every existing and proposed natural gas facility

in New Jersey now faces the distinct possibility of

becoming underutilized or, in many ways, obsolete as

the State implements policies to achieve its ambitious

reductions in usage. Utilities refer to such assets as

"stranded," and are vitally (and mostly understandably)

concerned about having infrastructure that seemed

reasonably necessary when constructed but as

consumption continues to decline, now become

expensive and too large in relation to load served. The

EMP and EO[]100 recognize this concern. Regulators

are urged to create some means of compensating

utilities for these assets that become "stranded" because

of changes in regulatory policies. This proceeding is

not the appropriate forum for a detailed examination of

these issues, but I can say some rather obvious things

that should inform the [BPU]'s decision on this appeal.

First, the best way in which to meet the stranded

asset issue head-on is to avoid as often as possible the

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creation of new potentially stranded assets. Second, if

some improvement in infrastructure is absolutely

necessary, it should be as minimally scaled as possible.

Third, if there is available a means of avoiding any

increase in natural gas consumption, by for example

making use of electricity or renewable energy, that

should be the choice.

At the point at which NJNG asks that its

ratepayers assume the costs of this [proposed regulator]

[s]tation as a stranded asset, that cost recovery must be

denied unless NJNG can prove that at the time it

constructed this [s]tation, it did all that it could to avoid

this construction altogether, and scaled the [s]tation as

minimally as possible, and did all that it could to avoid

any increase in natural gas consumption, including

using the [s]tation to add new load and using natural

gas to provide what heat is needed.

Mosley acknowledged that DEP had not yet finalized the regulatory

reforms the 2019 EMP and EO100 required to reduce emissions and integrate

climate change considerations. He nonetheless opined that NJNG should not

wait for the outcome of the DEP's process before putting the EMP's goals into

effect. Mosley explained:

We know that the end result of the DEP's process is not

going to be an approval of increased emissions; the only

question will be how much reduction is mandated and

how it is to be achieved. The [s]tation as proposed will

increase greenhouse gas emissions. Prudent

management would reassess the need for the [s]tation

and not needlessly incur potential stranded costs.

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25

III.

On May 18, 2022, ALJ Pelios issued his initial decision, concluding that

NJNG's petition regarding the new site should be granted. ALJ Pelios found:

(1) the Project "is reasonably necessary to provide safe, adequate, and reliable

natural gas services in New Jersey;" (2) the Project "is reasonably necessary for

the service, convenience, and welfare of the public;" (3) NJNG "considered

alternative sites and methods for this project;" (4) the proposed site and project

design are "reasonable considering the alternatives;" (5) the Project, as designed,

"will minimize adverse impacts on the environment;" and (6) "based upon the

record, the [P]roject is not adverse to the public health and welfare." ALJ Pelios

recommended that NJNG's petition to construct the regulator station at the 960

Holmdel Road site should be granted and that any local rules, ordinances, or

regulations promulgated under the MLUL "should not apply to the construction,

installation, and operation of the project."

The Township filed exceptions, and NJNG and Rate Counsel 3 filed

replies.

3

The Division of Rate Counsel (Rate Counsel) represents the interests of utility

ratepayers. N.J.S.A. 52:27EE-46 to -55.

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26

IV.

On December 21, 2022, the BPU issued its final decision, "adopt[ing] the

Initial Decision in its entirety and without modification" and granting NJNG's

petition. The BPU found, in accordance with N.J.S.A. 40:55D-19, that NJNG

had met its burden to demonstrate that the "Project, as proposed, is reasonably

necessary to provide safe, adequate, and reliable natural gas services in New

Jersey, and is reasonably necessary for the service, convenience, and welfare of

the public."

Reviewing that evidence, the BPU agreed with the ALJ's "determinations

regarding witness credibility, development of the record, and analysis thereof."

It further accepted the ALJ's factual findings that:

1. NJNG's panel testimony was credible concerning the

need for the Project, that the most reasonable and

practical method for heating the regulator is a CWT

heater, and that the proposed site was the most

reasonable option.

2. The Project will have little to no material impact on

the value of nearby properties.

3. The Project will have no adverse impact on the area's

ambient noise levels or air quality, and will have a

negligible impact on the State's overall air quality and

greenhouse-gas emissions.

4. The law-of-the-case doctrine bars re-litigation of the

binding effect of the EMP, and EMP Goal 5.4.2 is not

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27

implicated in this matter because the Project will

address reliability concerns and is not an expansion or

improvement project. Further, the Project is consistent

with the EMP's goals when considering NJNG's

obligation to maintain a reliable and safe natural-gas

system.

5. NJNG duly considered Holmdel Township's zoning

ordinances and Holmdel's Master Plan when selecting

the Project's site.

[(Citations omitted).]

In addition, based upon the ALJ's factual findings, the BPU rejected the

Township's argument that the current regulator is adequate so that NJNG's

proposed regulator station is not necessary. The BPU's final decision explains

that:

[T]he current regulator cannot be equipped with a

heater, and as such, [NJNG] operated its system at

reduced, suboptimal pressures, continuously in winter

months and regularly throughout the year, to mitigate

risk of equipment becoming encased in ice.

Additionally, [NJNG] reported incidents where high-

pressure alarms were triggered and the regulator had to

be placed on standby while equipment was rebuilt. The

Project will have an above-ground heating unit to

prevent the pressure-reducing regulators and other

equipment from becoming encased in thick ice.

According to NJNG, without a heater, ice encasement

could cause station failure, resulting in gas service

outages to customers, and devastating consequences to

scores of affected customers, especially in the winter.

Additionally, [NJNG] considered the costs of the

[P]roject as it related to the selection of the heater.

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28

The BPU also rejected the Township's argument that NJNG's proposed

regulator station is actually a capacity expansion, rather than reliability project,

because the BPU found the evidence supported the ALJ's determination that

NJNG's proposed regulator station is not intended to increase system capacity.

Similarly, the BPU was not persuaded by the Township's claim that the

reductions in natural gas consumption required by the EMP will negate the need

for the proposed regulator station, thereby becoming a stranded asset. The BPU

found "there is no reason to believe that the Project will not operate into the

foreseeable future." Thus, the BPU agreed with ALJ Pelios that NJNG's

proposal was "one of necessity because it increases reliability."

Next, the BPU acknowledged that, when determining reasonable necessity

under N.J.S.A. 40:55D-19, the factfinder "must also consider 'reasonable,

practical, and permanent alternative[s] to the construction' of the proposed

facility." (Alteration in original). Pursuant to that requirement, it agreed with

the ALJ's finding that NJNG had used reasonable site-selection criteria in

considering alternate locations for its proposed regulator station. The BPU

noted the record showed that NJNG's site selection process "was in cooperation

with property owners, thereby eliminating the need to utilize condemnation

which potentially could have further delayed the Project and increased costs

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29

through additional litigation." The BPU further reasoned NJNG's site analysis

established that there were no reasonably available alternative sites that would

achieve an equivalent public benefit.

Moreover, the BPU noted that the record shows NJNG compared the

advantages and disadvantages of many sites and concluded its proposal offered

the optimal engineering design and presented the least harmful impacts to

residential areas and the environment. Thus, the BPU determined that NJNG

had "adequately demonstrated that the proposed location of the Project is

reasonable compared to the alternatives, as required by N.J.S.A. 40:55D-19."

In addition, the BPU found the record "reflects that NJNG made good faith

attempts to address [the Township]'s concerns [by] moving the proposed

location approximately 200 feet from Holmdel Road" and "includ[ing] berms

and foliage in its plans to minimize the site's visibility and impact on noise."

The BPU also determined the record adequately showed that "the new facility

would not generate odor or substantial noise in the surrounding area ." It noted

that NJNG "would install a sound wall to mitigate any generated noise, and the

heater is the only part of the facility that would generate emissions, the majority

of which would consist of carbon dioxide and water vapor, with trace amounts

of criteria air pollutants" which would not require an air permit from DEP.

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30

Additionally, the BPU reasoned that NJNG's witnesses predicted that the

emissions would be minimal when compared to the overall emissions generated

in New Jersey. It therefore concluded that NJNG's proposal "is not an expansion

project and is pivotal for NJNG to provide reliable service," and does not

conflict with the state's EMP.

Based on these findings, the BPU approved NJNG's petition, ordering,

pursuant to N.J.S.A. 40:55D-19, Holmdel's land use law and any other

ordinances, rules, or regulations it promulgated pursuant to the MLUL do not

apply to the construction, installation, and operation of NJNG's proposed

regulator station and associated heater facility at 960 Holmdel Road, and thus

NJNG may construct its Project as proposed.

This appeal followed. The Township raises the following contentions for

our consideration: 4

POINT I

NJNG Always Has The Burden Of Proof And

Persuasion.

POINT II

The Initial Decision And BPU Decision Did Not

Consider The Entire Record; They Relied Upon An

Arbitrary and Capricious Selection Of NJNG's Pre-

4

To comport with our conventions, we omit certain points.

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31

Filed Direct Testimony And Ignored The Cross

Examination Of The NJNG Witnesses.

POINT III

The BPU Decision And Initial Decision Are Fatally

Wrong About The Application Of New Jersey's Climate

Law To This Proceeding.

A. The Clean Energy Act

B. The Global Warming Response Act

C. The "2019 New Jersey Energy Master Plan:

Pathway To 2025"

D. "New Jersey's Global Warming Response Act:

80x50 Report: Evaluating Our Progress And

Identifying Pathways To Reduce Emissions By

[Eighty Percent] By 2050"

POINT IV

The Proposed Regulator Station Is Not A Reliability

Project, But A Costly Stranded Asset In The Making.

POINT V

The BPU Arbitrarily And Capriciously Approved

NJNG's Failure To Consider Alternatives.

POINT VI

The BPU And [ALJ] Erred As A Matter Of Law In

Ignoring The Decisions Of The [] Zoning Board And

Accepted And Relied Upon "Expert" Testimony That

Contradicted The Expert Findings Of The [] Zoning

Board.

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32

NJNG argues:

POINT I

THE [BPU] AND ALJ CORRECTLY APPLIED THE

LEGAL STANDARD FOR A PETITION UNDER

N.J.S.A. 40:55D-19.

POINT II

THE [BPU]'S EXERCISE OF ITS EXPERTISE AND

THE ALJ'S CREDIBILITY FINDINGS ADOPTED

BY THE [BPU] ARE ENTITLED TO DEFERENCE.

POINT III

THE [BPU] AND ALJ CORRECTLY FOUND THAT

THE REGULATOR STATION IS REASONABLY

NECESSARY FOR THE PUBLIC'S SERVICE,

CONVENIENCE OR WELFARE

A. The [BPU] and ALJ's Findings of Reasonable

Necessity Were Based on Substantial Credible

Evidence That The Regulator Station Will

Address Freezing Conditions and Minimize the

Risk of Equipment Failure and Gas Service

Outages.

B. [The Township]'s Arguments Do Not

Establish That [T]he [BPU] and ALJ's Necessity

Findings Were Erroneous.

1. The [BPU] Considered the Entire

Record, and Did Not Err in Relying on Pre-

Filed Testimony or in Adopting the ALJ's

Fact Findings and Credibility

Determinations.

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33

2. [The Township]'s Argument That The

Continued Operation of the Temporary

Regulator Station Poses "No Risk" to

Reliable Service Is Based On a

Mischaracterization of the Record.

POINT IV

NJNG CONSIDERED HEATER ALTERNATIVES,

AS CORRECTLY FOUND BY THE BOARD AND

ALJ.

POINT V

THE REGULATOR STATION, WHICH IS AN

ESSENTIAL RELIABILITY PROJECT, IS

CONSISTENT WITH THE [EMP] AND OTHER

STATE ENERGY POLICIES.

A. The [BPU]'s Interpretation and Application of

the EMP, Its Own Planning Document, is Entitled

to Deference.

B. The EMP Recognizes the Need for

Infrastructure Like the Project that Supports the

Reliability of the Existing Gas Transmission and

Distribution System.

C. [The Township]'s Arguments Regarding the

EMP Are Meritless.

D. [The Township]'s Untimely Objections to the

Admissibility of [] Chilton's Testimony Are

Meritless.

E. Other New Jersey Energy Policies Did Not

Preclude the [BPU] From Approving the Project.

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34

POINT VI

THE REGULATOR STATION WILL NOT

GENERATE STRANDED COSTS; IT WILL BE

NEEDED FOR THE FORESEEABLE FUTURE.

POINT VII

THE [BPU] AND ALJ PROPERLY CONSIDERED

[THE TOWNSHIP]'S COMMUNITY ZONE PLAN

AND ORDINANCE.

Rate Counsel argues:

POINT I

THE [BPU] MUST CONSIDER COST IN

REVIEWING APPLICATIONS FOR A WAIVER

UNDER N.J.S.A. 40:55D-19.

POINT II

RATEPAYERS SHOULD NOT BEAR

UNREASONABLE COST INCREASES FOR THE

REGULATOR THAT ARE ASSOCIATED WITH

[THE TOWNSHIP]'S REQUESTS AND THE

RESULTING PASSAGE OF TIME.

POINT III

THE FUTURE OF NATURAL GAS IN THE STATE

HAS YET TO BE DECIDED THEREFORE THE

TOWNSHIP'S STRANDED ASSET ARGUMENT

MUST FAIL.

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35

BPU argues:

POINT I

THE COURT SHOULD AFFIRM THE BPU'S ORDER

AS THE PROJECT IS REASONABLY NECESSARY

FOR THE SERVICE, CONVENIENCE, AND

WELFARE OF THE PUBLIC.

A. The record supports the BPU's determination

that the Project is reasonably necessary to

provide safe, adequate, and reliable natural gas

services.

B. The record supports the BPU's finding that 960

Holmdel Road is the most reasonable site for the

Project, considering the alternatives.

C. The Project will have little to no material

impact on property values in the vicinity.

D. The record supports the BPU's determination

that the Project will not adversely impact the

area's ambient noise levels and air quality.

POINT II

THE PROJECT IS CONSISTENT WITH THE

ENERGY MASTER PLAN'S GOALS TO MAINTAIN

A RELIABLE AND SAFE NATURAL GAS SYSTEM.

V.

Although the Township raises numerous issues, the gravamen of its appeal

is that the BPU's decision was arbitrary, capricious, and unreasonable. We begin

our analysis by acknowledging the foundational legal principles governing this

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36

appeal. The scope of our review is limited. In reviewing an administrative

agency's decision, a court will generally accord considerable deference to the

agency's expertise. Campbell v. N.J. Racing Comm'n, 169 N.J. 579, 588 (2001).

Relatedly, "[a]n appellate court may reverse an agency decision if it is arbitrary,

capricious, or unreasonable." In re Proposed Quest Acad. Charter Sch. of

Montclair Founders Grp., 216 N.J. 370, 385 (2013). This review is restricted to

three inquiries: (1) whether the action violates any express or implied legislative

policies; (2) whether the record contains substantial evidence to support the

agency's findings; 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 made on a showing of the relevant factors. Id. at 385-86 (quoting

Mazza v. Bd. of Trs., Police & Firemen's Ret. Sys., 143 N.J. 22, 25 (1995)).

Further, an important question in applying the deferential standard of

review to an agency's factfinding is whether "we have 'confidence that there has

been a careful consideration of the facts in issue and appropriate findings

addressing the critical issues in dispute.'" In re Thomas Orban/Square Props.,

LLC, 461 N.J. Super. 57, 77 (App. Div. 2019) (quoting Bailey v. Bd. of Rev.,

339 N.J. Super. 29, 33 (App. Div. 2001)). "The obligation that there be

substantial evidence in the record requires a sifting of the record, and the ability

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37

to find support for the conclusions reached by the [agency] under the statutory

framework within which [it] must act." Proposed Quest Acad. Charter Sch., 216

N.J. at 387. The reviewing court, however, "will not weigh the evidence,

determine the credibility of witnesses, draw inferences and conclusions from the

evidence or resolve conflicts therein." In re Recycling & Salvage Corp., 246

N.J. Super. 79, 87 (App. Div. 1991). The burden of demonstrating that the

agency's action is reversible "rests upon the [party] challenging the

administrative action." In re Adoption of Amends. to N.E., Upper Raritan,

Sussex Cnty. & Upper Del. Water Quality Mgmt. Plans, 435 N.J. Super. 571,

583 (App. Div. 2014) (alternation in original) (quoting In re Arenas, 385 N.J.

Super. 440, 443-44 (App. Div. 2006)).

The BPU has been vested with broad discretion in the exercise of its

authority to regulate utilities. In re Pub. Serv. Elec. & Gas Co.'s Rate

Unbundling, Stranded Costs & Restructuring Filings, 167 N.J. 377, 384 (2001);

In re Centex Homes, LLC, 411 N.J. Super. 244, 254 (App. Div. 2009). The

Legislature tasked the BPU with the "general supervision and regulation of and

jurisdiction and control over all public utilities . . . and their property, property

rights, equipment, facilities and franchises so far as may be necessary for the

purpose of carrying out the provisions of [] Title [48]." N.J.S.A. 48:2-13(a).

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38

More specifically, N.J.S.A. 48:2-23 empowers the BPU to ensure that regulated

public utilities:

[F]urnish safe, adequate and proper service, including

furnishing and performance of service in a manner that

tends to conserve and preserve the quality of the

environment and prevent the pollution of the waters,

land and air of this State . . . and to maintain its property

and equipment in such condition as to enable it to do

so.

[(Emphasis added).]

Further, our Supreme Court has construed this legislative grant of

authority "to the fullest and broadest extent." In re Pub. Serv. Elec. & Gas Co.,

35 N.J. 358, 371 (1961). See Township of Deptford v. Woodbury Terrace

Sewerage Corp., 54 N.J. 418, 424 (1969) ("Our courts have consistently held

that the Legislature in Title 48 intended to delegate the widest range of

regulatory power over public utilities to the [BPU].").

So too, "[t]he BPU's authority over utilities, like that of regulatory

agencies generally, extends beyond powers expressly granted by statute to

include incidental powers that the agency needs to fulfill its statutory mandate. "

Rate Unbundling, 167 N.J. at 384 (quoting In re Valley Rd. Sewerage Co., 154

N.J. 224, 235 (1998)). Thus, the BPU's final determination is generally

presumed valid. Id. at 385.

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39

We add that, as with other state agencies, the role of an appellate court

when reviewing a BPU decision "is not to substitute our judgment for that of the

agency, particularly when that judgment reflects agency expertise." Id. at 384.

See Recycling & Salvage Corp., 246 N.J. Super. at 87 ("[I]t is not our function

to substitute our independent judgment for that of an administrative agency, such

as the [BPU], where there may exist a difference of opinion concerning the

evidential persuasiveness of the relevant proofs.").

N.J.S.A. 48:2-43 states that "[a]ny order made by the [B]oard [of Public

Utilities] may be reviewed by appeal to the appellate division of the Superior

Court." Importantly, for purposes of this appeal, N.J.S.A. 48:2-46 expressly

states:

The Superior Court, appellate division is hereby given

jurisdiction to review any order of the [B]oard and to

set aside such order in whole or in part when it clearly

appears that there was no evidence before the [B]oard

to support the same reasonably or that the same was

without the jurisdiction of the [B]oard.

No order shall be set aside in whole or in part for any

irregularity or informality in the proceedings of the

[B]oard unless the irregularity or informality tends to

defeat or impair the substantial right or interest of the

appellant.

[(Emphasis added).]

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40

Accordingly, on appeal from a BPU order, we must confine our inquiry to

whether there exists competent and relevant evidence in the record to furnish a

reasonable basis for the BPU's action. "[U]pon the exercise of its broad

authority and the conduct of appropriate proceedings, 'the Board's rulings are

entitled to presumptive validity and will not be disturbed unless we find a lack

of reasonable support in the evidence.'" Rate Unbundling, 167 N.J. at 385

(quotation marks omitted) (quoting In re Jersey Cent. Power & Light Co., 85

N.J. 520, 527 (1981)). Thus, if there is evidence on the issues addressed, no

findings made or conclusions reached based on that evidence and are otherwise

within the BPU's discretionary authority will be deemed to be arbitrary,

capricious or unreasonable. In re N.J. Bell Tel. Co., 291 N.J. Super. 77, 89

(App. Div. 1996).

The MLUL sets forth the specific standard BPU applies when considering

a petition filed by a utility company, like the one filed by NJNG here. The

MLUL reads, in pertinent part:

If a public utility . . . is aggrieved by the action

of a municipal agency through said agency's exercise of

its powers under [(the MLUL)], with respect to any

action in which the public utility . . . has an interest, an

appeal to the [BPU] . . . may be taken within [thirty-

five] days after such action without appeal to the

municipal governing body . . . . If, after such hearing,

the [BPU] shall find that the present or proposed use by

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41

the public utility . . . of the land described in the

petition is necessary for the service, convenience or

welfare of the public, including, but not limited to, in

the case of an electric power generator, a finding by the

[B]oard that the present or proposed use of the land is

necessary to maintain reliable electric or natural gas

supply service for the general public and that no

alternative site or sites are reasonably available to

achieve an equivalent public benefit, the public utility

or electric power generator may proceed in accordance

with such decision of the [BPU], any ordinance or

regulation made under the authority of this act

notwithstanding.

This act or any ordinance or regulation made

under authority thereof, shall not apply to a

development proposed by a public utility for

installation in more than one municipality for the

furnishing of service, if upon a petition of the public

utility, the [BPU] shall after hearing, of which any

municipalities affected shall have notice, decide the

proposed installation of the development in question is

reasonably necessary for the service, convenience or

welfare of the public.

[N.J.S.A. 40:55D-19 (emphasis added).]

Construing the language in N.J.S.A. 40:55-50, the predecessor to N.J.S.A.

40:55D-19, our Supreme Court held that the BPU must also consider the site,

the community zoning plan and zoning ordinances, the plot's physical

characteristics, and the surrounding neighborhood. Pub. Serv. Elec., 35 N.J. at

377. Also, when determining reasonable necessity, the BPU must consider

alternative methods and sites and their advantages and disadvantages, including

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42

costs. Ibid. Further, the BPU must weigh all of the parties' interests, and where

those interests are equally balanced, must give the utility preference in light of

the Legislature's clear intent that the broad public interest to be served is greater

than local considerations. In re Monmouth Consol. Water Co., 47 N.J. 251, 258

(1966); Pub. Serv. Elec., 35 N.J. at 377. Our Supreme Court added that "[t]he

utility must show that the proposed use is reasonably, not absolutely or

indispensably, necessary for public service, convenience and welfare at some

location." Pub. Serv. Elec., 35 N.J. at 377 (emphasis added). The Court

explained:

This exemption section expresses a legislative intent

that, in the zoning field, at least some power over a

utility is reserved to a municipality, subject to the

supervising authority of the Board to declare the local

regulation inapplicable if it determines "the situation of

the building or structure in question is reasonably

necessary for the service, convenience or welfare of the

public."

[Id. at 373-74.]

VI.

Apply the foregoing general principles to the matter before us, the

Township has not established a basis upon which we might overturn the BPU's

decision to grant NJNG's petition. We are unpersuaded by the Township's

contention the BPU erred by not considering the entire record. Nor are we

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43

persuaded by its argument that the ALJ ignored cross-examination testimony.

We find no abuse of discretion in the ALJ's credibility assessments. We reiterate

and emphasize that we "will not weigh the evidence, determine the credibility

of witnesses . . . or resolve conflicts therein." Recycling & Salvage Corp., 246

N.J. Super. at 87.

We further stress that N.J.S.A. 48:2-46 states that a reviewing court can

set aside the BPU's order only "when it clearly appears that there was no

evidence before the board to support the same reasonably . . . ." Here, NJNG

provided ample evidence to support its petition. Notably, the BPU accepted the

ALJ's finding that NJNG's panel of witnesses were "credible as to the need for

the proposed facility, [and] that the most reasonable and practical method for

heating the regulator is the CWT heater chosen by [NJNG], and that the

proposed site was the most reasonable option available on the lot at 960 Holmdel

Road." The BPU further found from the evidence "that the Project is one of

necessity because it increases reliability."

And contrary to Township's claims, there is no evidence in the record from

NJNG's witnesses that its intention was anything other than to increase the safety

and reliability of its system by preventing icing at the points where the gas

pressure needs to be decreased between the sixteen-inch and ten-inch lines to

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44

prevent any possibility of service loss. In reaching this conclusion, we are

guided by our Supreme Court's clear instruction in In re Delaware, Lackawanna

& Western Railroad Co., where the Court stressed:

In passing upon the appellants' contentions we must

ever bear in mind that ours is not the function of making

original factual findings and policy determinations as

to whether the operation of the new [regulator station]

is necessary and proper for the public convenience and

will properly serve the public interest. That function

has been appropriately vested by the Legislature in the

[BPU] Commissioners which applies its experienced

administrative judgment to the subject at hand. Its

determination carries with it the presumption of

correctness, and on judicial review the court will not

substitute its independent judgment for that of the board

but will confine its inquiry to the ascertainment of

whether the evidence before the board furnished a

reasonable basis for its action.

[25 N.J. 353, 356 (1957) (citations omitted) (quoting In

re Greenville Bus Co., 17 N.J. 131, 137 (1954)).]

We add that the BPU's expertise is to review and ensure that NJNG

furnishes "safe, adequate and proper service . . . and to maintain its property and

equipment in such condition as to enable it to do so." N.J.S.A. 48:2-23. The

agency properly discharged that function in rendering its final decision.

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45

VII.

We next address the Township's contention the BPU erred by not applying

New Jersey's climate laws to its decision on NJNG's proposed regulator station. 5

The Township contends the ALJ erred by denying its motion to order NJNG to

undertake a formal review of the merits of its proposal measured against the

EMP's policies. The ALJ determined that NJNG "should not be required to

reassess their petition[s] in light of the general goals of the EMP." He reasoned

that:

[T]he need for definite regulations and standards to first

be put in place by the NJDEP, as the designated agency

put in charge of proposing and adopting regulations in

regard to the EMP, before any reliance on the general

declarations within the EMP and EO can impact the

proceedings. There is nothing within the []DEP Order

or elsewhere that suggests any regulations have been

proposed or adopted yet. Because the EMP did not put

a moratorium on ongoing and new projects, there is no

regulation in place yet that would mandate compliance

with the newly unveiled EMP.

5

The Township refers to the 2018 amendment, L. 2018, c. 17 (eff. May 23,

2018) to the Clean Energy Act, N.J.S.A. 48:3-87.9; the Global Warming

Response Act, N.J.S.A. 26:2C-37 to -68; the EMP; and the N.J. Dep't of Env't

Prot., 2020 New Jersey Global Warming Response Act: 80x50 Report (Oct. 15,

2020).

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46

We note that both the Township and NJNG presented witnesses who gave

their opinions on the Project in the context of the EMP. Mosley testified for the

Township that the NJNG's proposed regulator station does not meet the EMP's

Goals 5.4.1 and 5.4.2 to assess the need for future expansion of the gas system

and to propose and adopt non-pipeline solutions. On rebuttal, Chilton testified

for NJNG that the regulator station was not an expansion of the gas system, as

discussed in Goal 5.4, but rather equipment necessary to maintain the reliability

of NJNG's existing sixteen-inch transmission line and ten-inch distribution line.

Chilton explained that achieving the EMP's goals will be a gradual process and

NJNG cannot abandon or lessen the reliability of its system during that time

because a public utility is required by law to provide "safe, adequate, and proper

service."

The ALJ found that, although "both Mosley and Chilton were credible

witnesses," Chilton's testimony was "more thorough and detailed" and

persuasive. The law is well-settled that when reviewing the testimony of

experts, the ALJ as the factfinder, has "the prerogative to evaluate the credibility

of the testimony of the competing experts" and to find one expert's testimony

more credible than another expert's testimony. N.J. Div. of Child Prot. &

Permanency v. M.M., 459 N.J. Super. 246, 258 (App. Div. 2019) (citing City of

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47

Long Branch v. Liu, 203 N.J. 464, 491 (2010)). Furthermore, "[t]he choice of

accepting or rejecting testimony of [expert] witnesses rests with the

administrative agency, and where such choice is reasonably made, it is

conclusive on appeal." Oceanside Charter Sch. v. N.J. State Dep't of Educ., 418

N.J. Super. 1, 9 (App. Div. 2011) (quoting In re Howard Sav. Bank, 143 N.J.

Super. 1, 9 (App. Div. 1976)). Accord Renan Realty Corp. v. State, Dep't of

Cmty. Affs., Bureau of Hous. Inspection, 182 N.J. Super 415, 421 (App. Div.

1981). Here, the BPU fully embraced the ALJ's assessment of the experts'

credibility.

Importantly, moreover, the BPU found that the record showed that the

heater, due to its "limited emissions," was "not considered a significant source

of air pollutants and does not require an air permit per Environmental Protection

Agency and DEP regulations" The BPU therefore determined:

Though reducing greenhouse gas emissions and other

air pollutants is a stated goal and mandate set forth in

the 2019 EMP, the proposed facility's emissions would

be minimal compared to the overall emissions

generated in the State. Lastly, the Project is not an

expansion project and is pivotal for NJNG to provide

reliable service. The Project, therefore, does not

conflict with the sub-goals of Goal 5.4 of the EMP.

We reiterate and amplify that the BPU did not act arbitrarily, capriciously,

or unreasonably in finding that NJNG's proposed regulator station and heater is

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"reasonably necessary" as an interim measure because it increases reliability.

That finding is consistent not only with N.J.S.A. 48:2-23, which requires utilities

to provide safe, adequate, and proper service to customers, but also the EMP's

policy goal that gas utilities must "continue to deliver reliable, resilient, and

affordable service" in a manner that "meets the immediate needs of New Jersey's

gas consumers." 6 We add that under the Time of Application (TOA) Rule 7, the

Project's environment impact should be measured by the standards and

requirements in place at the time of NJNG's petition, not emission goals that are

6

The EMP's Strategy 5 states in pertinent part that gas utilities must "continue

to deliver reliable, resilient, and affordable service" in a manner that "meets the

immediate needs of New Jersey's gas consumers" while realizing the State's

goals to achieve "[one hundred percent] clean energy and an [eighty percent]

reduction in greenhouse gas emissions" from 2006 levels by 2050.

7

N.J.S.A. 40:55D-10.5 replaced the TOA Rule. It provides:

Notwithstanding any provision of law to the contrary,

those development regulations which are in effect on

the date of submission of an application for

development shall govern the review of that application

for development and any decision made with regard to

that application for development. Any provisions of an

ordinance, except those relating to health and public

safety, that are adopted subsequent to the date of

submission of an application for development, shall not

be applicable to that application for development.

[N.J.S.A. 40:55D-10.5.]

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to be achieved in the future. Cf. Hoboken for Responsible Cannabis, Inc. v. City

of Hoboken, 480 N.J. Super. 357, 374-78 (App. Div. 2024).

In short, we have no basis upon which to overturn the BPU's determination

that because the transition away from using natural gas will be a gradual process,

NJNG must still fulfill its duty to provide reliable service which, the BPU found,

necessitates addressing the icing issue.

VIII.

Finally, in the interests of completeness, we address the Township's

contention the BPU erred by agreeing with NJNG's assertion that its proposed

regulator station is a reliability project, and not a costly future stranded asset 8

that will overburden the ratepayers. The ALJ found that NJNG's panel was

credible when they testified that the regulator station and heater will not be

stranded costs because even as the State moves to one hundred percent

electricity-based energy and phases out the use of natural gas pursuant to the

EMP, NJNG will still need to reduce the pressure between transmission and

distribution lines. BPU concurred with the ALJ that NJNG's Project does not

increase system capacity and, therefore, is not part of an expansion project. We

8

Chilton testified that the general meaning of a stranded cost is "a piece of

equipment that's no longer needed" but which still presents "unamortized costs

on the books of the utility."

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have no basis to second guess that finding, which is supported by ample

evidence in the record. NJNG's panel testified that the proposed regulator

station is needed for the foreseeable future to reliably reduce pressure, even

assuming gas demand declines. Chilton testified that the proposed regulator

station will have a useful life of at least twenty years. And Santhana

acknowledged that many Holmdel "residents, business[es] and public facilities"

rely on, and will continue to rely on, "natural gas for all or a portion of their

energy needs . . . ."

In sum, we are satisfied that the BPU did not act arbitrarily, capriciously,

or unreasonably in discharging its function to review NJNG's petition and the

evidence adduced during the evidentiary hearings. To the extent we have not

specifically addressed them, any remaining arguments raised by the Township

lack sufficient merit to warrant discussion. R. 2:11-3(e)(1)(E).

Affirmed.

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