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"Safe Dam Act" Construed
If land is located at or near a body of water, the water level or flow may be regulated by a dam. In New Jersey, many dams are privately owned or maintained, but the Department of Environmental Pro- tection [“DEP”] exercises regulatory authority over the same in order to ensure public safety. The Safe Dam Act [“SDA”], N.J.S.A. 58:4-1 et seq., as supplemented by administrative regulations, N.J.A.C. 7:20-1.1 et seq., provides a statutory basis for the DEP’s regulation of dams. It may require that adjoining owners or other responsible parties undertake repairs or maintenance obligations. See Nuzzo v. Horvath, -- N.J. Super. --, 2011 WL 3795035 (App. Div. 2011) (not officially reported).
In a 2009 decision (not officially reported until 2012), the Chancery Division had occasion to construe the meaning of the word “owner” as used in the SDA. N.J.D.E.P. v. Mercer Soil Conservation Dist., 425 N.J. Super. 208 (Ch. Div. 2009) arose from an action brought by the DEP against the Soil Conservation District and others, claiming that certain individual defendants were the owners of a dam within the meaning of the SDA and thus responsible for its maintenance and repair. In construing the meaning of dam ownership under the SDA, the court found that four factors must be considered: (1) the nature and extent of legal title to the underlying realty; (2) participation in construction of the dam; (3) the extent of control over the dam; and (4) legal authority to exercise control over the dam.
Analyzing each of these criteria in turn, the Chancery Division determined that the necessary ownership criteria had not been met. Accordingly, it dismissed the suit as against the individual defendants, as they were not “owners” of the dam within the meaning of the SDA.
From the title insurer’s standpoint, the existence of a dam located on or adjacent to the land to be insured gives rise to certain underwriting issues. First, the title examination of title may disclose a recorded instrument which imposes a duty to repair or maintain the dam. Second, even in the absence of a declaration of covenants, it may be possible (for the reasons discussed above) for the DEP or others (such as downstream owners) to seek to hold adjacent or nearby lot owners responsible for dam repair or maintenance-related expenses. For this reason, some title insurers believe it is prudent to except the possible obligation to pay such costs from policy coverage.
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