PAULSBORO REFINING COMPANY LLC v. TOWNSHIP OF GREENWICH

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

PAULSBORO REFINING COMPANY,

LLC f/k/a VALERO REFINING

COMPANY NEW JERSEY,

Plaintiff-Respondent,

v.

TOWNSHIP OF GREENWICH,

Defendant-Appellant.

__________________________

July 15, 2015

Submitted February 4, 2015 Decided

Before Judges Alvarez, Waugh, and Maven.

On appeal from the Superior Court of New Jersey, Law Division, Gloucester County, Docket No. L-479-10.

Ward Shoemaker, LLC, attorneys for appellant (Mark B. Shoemaker, on the briefs).

Holston,MacDonald, Uzdavinis,Ziegler, Lodge, & Myles, P.A., attorneys for respondent (Ronald J. Uzdavinis, on the brief).

PER CURIAM

Defendant Township of Greenwich (Township) appeals the Law Division's January 13, 2014 order holding that a foundation sought to be constructed by plaintiff Paulsboro Refining Company, LLC (Paulsboro), is exempt from the provisions of the Uniform Construction Code (Code), N.J.A.C. 5:23-1.1 to -12 A. 6, and consequently not subject to municipal permitting and inspection.1 We reverse.

I.

We discern the following facts and procedural history from the record on appeal.

Paulsboro is a petrochemical company that owns and operates a petroleum refinery in the Township, with other facilities in the adjacent Borough of Paulsboro. In early spring 2003, it began preparations to install a monolithic foundation, approximately sixty feet wide, eighty feet long, and eight feet thick, at its refinery without first obtaining a construction permit from the Township. Paulsboro intends to install specialized equipment to be used for the distillation, conversion, treatment, and blending of petroleum products on the foundation. On April 2, the Township's construction code official issued a stop-work order for failure to obtain a permit, in violation of N.J.A.C. 5:23-2.14(a).

Paulsboro promptly filed a verified complaint in the Chancery Division, seeking to enjoin the Township from enforcing the stop-work order. The complaint alleged that Paulsboro was not required to obtain a permit for its foundation because the foundation falls within N.J.A.C. 5:23-9.7,2 which exempts certain types of specialized equipment from regulation under the Code.

On April 15, the parties entered into a consent order lifting the stop-work order. They agreed to submit the matter to the DCA for arbitration to determine whether processing equipment foundations, other than pipe rack foundations as set forth in N.J.A.C. 5:23-9.7(b)(13), are exempt from regulation under the Code. Before the arbitration began, however, the Township's construction code official unilaterally contacted the DCA and obtained two letters addressing the merits of the dispute. After Paulsboro objected, the parties agreed that, because of the construction official's ex parte contact with DCA, arbitration was no longer a viable option for resolving the dispute.

On March 17, 2010, the case was transferred to the Law Division for disposition. On September 2, the Township moved for summary judgment, which Paulsboro opposed. After hearing oral argument on the motion, the judge ordered a plenary hearing to obtain a better understanding of the equipment utilized and the process to take place on the proposed foundation.

At the two-day hearing in May 2011, Paulsboro presented the testimony of two licensed engineers and its construction manager. The Township presented the testimony of its construction code official.

Both parties agreed that the petrochemical equipment that was to sit on top of the foundation is exempt from the Code regulation under N.J.A.C. 5:23-9.7. Paulsboro argued that the foundation itself is also exempt because it is an integral part of the processing structure and therefore is considered process equipment under N.J.A.C. 5:23-9.7(b). William Jones, one of Paulsboro's engineers, explained that the foundation at issue was designed to hold a continuous catalytic reforming unit (CCR), which consists of, among other things, a continuous flow reactor, pipes, and motorized compressors. He noted that monolithic foundations can also be designed to hold other process units, such as fluidized catalytic crackers and crude distillation units.

The Township maintained that the foundation is not part of the equipment and thus subject to regulation under the Code. To support its argument, the Township pointed to the plain language of N.J.A.C. 5:23-9.7(b)(13). That subsection is one of sixteen examples of the type of equipment exempt from the Code and the only subsection that mentions foundations at all. It specifically excludes "[p]ipe racks, hangers, and the like that support the process piping and the storage racks for the raw materials and finished products." N.J.A.C. 5:23-9.7(b)(13). However, the

[b]uilding structural systems supporting the racks, hangers, storage loads, and the like are excluded from the definition of process equipment, except that pipe support units that include a foundation and support steel shall be included as process equipment when they do not transfer loads to structures whose main function is other than supporting process pipe.

[Ibid.]

The Township argued that foundations under all of the other fifteen types of equipment are not exempt from the Code.

The trial judge rendered an oral decision on August 11, in which she found that N.J.A.C. 5:23-9.7 did not exempt the subject foundation from the Code's permitting and inspection process. Interpreting N.J.A.C. 5:23-9.7, the trial judge explained

The statutory construction that must be undertaken has to do with N.J.A.C. 5:23-9.7(a), which provides that the manufacturing, production and process equipment are exempt from the Uniform Construction Code, and also 5:23-9.7(b), which defines, but not in an exhaustive fashion, what is manufacturing, production and processing equipment. . . . And there are 16 items in [the] Subsections to 9.7(b) and those [] items do not include foundations of processing equipment as being specifically part of the definition of process equipment. And so, therefore, that section does not specifically exempt those foundations from the jurisdiction of the [Code] and the inspection and permitting carried out under the [C]ode.

Now, Subsection 13 of 9.7(b) does talk about pipe racks, hangers and the like, and indicates that [those] foundations are part of the definition of process equipment and, therefore, exempt, except when they transfer loads to other structures. So this is a reference to foundations concerning these pipe racks and hangers and like structures.

[Paulsboro] is asking the [c]ourt to graft that provision and that reasoning concerning foundations of pipe racks to the situation at hand in this case which has to do with the foundations of the process equipment, not pipe racks.

. . . [T]he bedrock principle of statutory construction . . . says if an item is omitted by the drafters of the legislation, such as this limitation here is omitted, but addressed elsewhere in the legislation, the omission is deemed to be intentional. . . . [I]t strikes me that the absence of an explicit exemption renders the permitting and inspection necessary under the [C]ode as the [C]ode is currently written.

The trial judge entered an order entering judgment in favor of the Township.

Paulsboro appealed. In an unpublished opinion, the appellate panel agreed with the trial judge's interpretation of N.J.A.C. 5:23-9.7, concluding that "the regulation's plain meaning is clear; the [regulation does] not exempt foundations in general -- only the specific type of foundation noted in subsection (b)13 -- that which does 'not transfer loads to structures whose main function is other than supporting process pipe.'" Paulsboro Ref. Co. v. Twp. of Greenwich, No. A-0660-11 (App. Div. Dec. 11, 2012) (slip. op. at 8).

The panel determined, however, that the trial judge made insufficient findings of fact concerning the type of foundation that Paulsboro was seeking to construct, specifically "whether the pipe support units 'transfer loads to structures whose main function is other than supporting process pipe,' as the term is used in N.J.A.C. 5:23-9.7(b)13." Id. at 12-13. The panel remanded the matter to the Law Division "to make the necessary findings of fact and conclusions of law regarding the type of foundation at issue and whether it is exempt under the [Code]." Id. at 16. The judge had the option of reopening the plenary hearing if necessary. Ibid.

On remand, the parties submitted proposed findings of fact and conclusions of law to the trial judge. On January 13, 2014, the judge issued a written decision finding, "as a matter of fact[,] that the foundation is an integral part of the processing equipment and does not receive load from any other process equipment. The foundation's main purpose is to support the process equipment." The judge concluded that "the foundation(s) at issue are exempt from the [Code] and therefore not subject to municipal permitting and inspection." This appeal followed.

II.

The Township argues that the prior panel should not have remanded because the equipment at issue is not primarily the type described in N.J.A.C. 5:23-9.7(b)(13). It further argues that a plain reading of N.J.A.C. 5:23-9.7(b) as a whole supports the interpretation that footings and foundations are not exempt from the Code unless they qualify for exemption under the limited provisions of N.J.A.C. 5:23-9.7(b)(13).

As the Township points out, and as the trial judge and the prior panel concluded, the only stated exception from the Code's coverage of foundations involves foundations intended for "[p]ipe racks, hangers, and the like that support the process piping and the storage racks for the raw materials and finished products," N.J.A.C. 5:23-9.7(b)(13), and then only if they "do not transfer loads to structures whose main function is other than supporting process pipe." Paulsboro, supra, slip op. at 7-8 (quoting N.J.A.C. 5:23-9.7 (b)(13)).

When construing a regulation, an appellate court conducts "a de novo review" and does not "accord any special deference to a trial court's interpretation." U.S. Bank, N.A. v. Hough, 210 N.J. 187, 199 (2012). Courts "interpret a regulation in the same manner that [they] would interpret a statute." Ibid. Our "overriding goal is to determine as best we can the intent of the Legislature, and to give effect to that intent." State v. Hudson, 209 N.J. 513, 529 (2012).

When interpreting a statute, our main objective is to further the Legislature's intent. To discern the Legislature's intent, courts first turn to the plain language of the statute in question. In reading the language used by the Legislature, the court will give words their ordinary meaning absent any direction from the Legislature to the contrary. If the plain language leads to a clear and unambiguous result, then [the] interpretive process is over.

Where the plain meaning does not point the court to a clear and unambiguous result, it then considers extrinsic evidence from which it hopes to glean the Legislature's intent. Included within the extrinsic evidence rubric are legislative history and statutory context, which may shed light on the drafters' motives. Likewise, interpretations of the statute and cognate enactments by agencies empowered to enforce them are given substantial deference in the context of statutory interpretation.

[TAC Assocs. v. N.J. Dep't of Envtl. Prot., 202 N.J. 533, 540-41 (2010) (alteration in original) (citations and internal quotation marks omitted).]

The regulatory provision at issue in this matter, N.J.A.C. 5:23-9.7, was repealed effective June 3, 2013. 45 N.J.R. 1393(a) (June 3, 2013). However, subsection 9.7(a), was relocated to N.J.A.C. 5:23-2.2(a), and subsection 9.7(b) was relocated to N.J.A.C. 5:23-1.4, both without substantive change. 45 N.J.R. 1393(a) (June 3, 2013). The result in this case is the same, regardless of whether the old or the renumbered regulations are applied.

N.J.A.C. 5:23-2.2 provides that buildings and related structures are generally subject to the Code's permitting and inspection requirements, but that "manufacturing, production, and process equipment" is not. The regulation provides in relevant part

(a) The provisions of the regulations shall apply to all buildings and structures and their appurtenant construction, including vaults, area and street projections, and accessory additions; and shall apply with equal force to municipal, county, State and private buildings, except where such buildings are otherwise specifically provided for by the regulations.

1. Manufacturing, production, and process equipment, as defined at N.J.A.C. 5:23-1.4, is not under the jurisdiction of the [Code].

[N.J.A.C. 5:23-2.2(a).]

"Manufacturing, production, and process equipment" is defined as "all equipment employed in a system of operations for the explicit purpose of the production of a product." N.J.A.C. 5:23-1.4. In adopting N.J.A.C. 5:23-9.7, the original provision before the renumbering, DCA explained its reasons for exempting manufacturing, production, and process equipment from the permitting and inspection under the Code as follows

Highly specialized, often preassembled equipment designed for commercial or industrial use, manufacturing, production and process equipment, or "process equipment," is often unique to its function and designed beyond the referenced standards in the [Code]. This makes it impractical or impossible for code officials to review it in an appropriate way.

[ 24 N.J.R. 3458(a) (Oct. 5, 1992).]

N.J.A.C. 5:23-1.4 of the current version of the regulation, like the original N.J.A.C. 5:23-9.7(b), enumerates sixteen examples of exempt equipment

1. Electrical generation equipment, such as turbines, condensors, generators, and the like;

2. Electrical transmission equipment such as transformers, capacitors, regulators, switchgears, and the like;

3. Air pollution equipment, such as scrubbers;

4. Metal working equipment, such as castings, screen machines, grinders, lathes, presses, drills, welders, and the like;

5. Material handling equipment, such as rollers, control belts, and the like;

6. Packaging equipment, such as bottling machines;

7. Process drying equipment, such as ovens, kettles, fans, and the like;

8. Finishing equipment, used for such purposes as heat treatment, plating, painting, and the like;

9. Petrochemical refinery/plant equipment used for distillation, conversion, treatment, and blending;

10. Electric, steam, pneumatic- or hydraulic-actuated equipment, such as motors, pumps, compressors, and the like;

11. Tanks which constitute part of a controlled industrial process, including those tanks containing flammable and combustible liquids, together with the dikes surrounding the tanks;

12. All piping used to transport products to and between industrial processes; any piping connected to the potable water supply downstream of an appropriate backflow prevention device; and any piping located upstream of the first joint at the outlet of the equipment or upstream of the indirect connection to the sanitary or storm sewer;

13. Pipe racks, hangers, and the like that support the process piping and the storage racks for the raw materials and finished products. Building structural systems supporting the racks, hangers, storage loads, and the like are excluded from the definition of process equipment, except that pipe support units that include a foundation and support steel shall be included as process equipment when they do not transfer loads to structures whose main function is other than supporting process pipe;

14. Boilers, pressure vessels, furnaces, and the like used exclusively for industrial process;

15. Pre-wired and/or pre-engineered (bearing name plate) electro-mechanical equipment or machinery used exclusively for an industrial process; and

16. Electrical work which forms a part of the power or control system of industrial process equipment, up to the point where that work connects to the plant electrical distribution system. Such a point shall be considered a suitable junction box, panel board, disconnect switch, or a terminal box which constitutes the final connection to the factory-installed equipment wiring. Where these items are not supplied as a part of the equipment, they shall be subject to local enforcing agency jurisdiction.

[N.J.A.C. 5:23-1.4 (emphasis added).]

We note that example nine, which exempts "[p]etrochemical refinery/plant equipment used for distillation, conversion, treatment, and blending," ibid., most accurately describes the equipment that Paulsboro intends to place on the foundation. It provides no exemption for foundations. We conclude that the DCA's inclusion of foundations in example thirteen and its exclusion of foundations in all other examples, including example nine, reflects its intent that foundations used in connection with the other examples not be exempt from the Code's permitting and inspection requirements.

This interpretation is not only consistent with the provision's plain meaning, but also with the purpose and intent of the general exemption for manufacturing, production, and process equipment, which is highly specialized, complex, and usually preassembled outside of the municipality, from the Code's regulation. 24 N.J.R. 3458(a) (Oct. 5, 1992). Such equipment is usually outside of a construction code official's expertise. There is nothing in the record to suggest that foundations for such complex equipment were themselves complex and beyond the ken of a construction code official.

Clearly, our view of the regulatory scheme is not entirely the same as that taken by the earlier panel, although we both agree that foundations are covered unless exempted. Unlike the earlier panel, we deem it irrelevant that there may be "[p]ipe racks, hangers, and the like that support the process piping and the storage racks" on Paulsboro's proposed foundation, because that is not the primary purpose of the installation. As Jones testified on behalf of Paulsboro, the foundation at issue was designed to accommodate a CCR which is a process unit made up of a continuous flow reactor, pipes, and compressors.

Even if N.J.A.C. 5:23-9.7(b)(13) were applicable, Paulsboro's foundation would not be exempt from the Code. The overarching purpose of the proposed foundation clearly involves "transfer[ing] loads to structures[, in this case manufacturing, production, and process equipment as described in N.J.A.C. 5:23-9.7(b)(9) on the same foundation,] whose main function is other than supporting process pipe." Processing pipes are not the same as processing equipment.

Consequently, we agree with the Township that the trial judge's original decision was correct and that no remand was necessary. We reverse the order on appeal and remand to the Law Division for entry of an order dismissing Paulsboro's complaint.

Reversed.

1 The Code was adopted by the Commissioner of the Department of Community Affairs (DCA) pursuant to the State Uniform Construction Code Act, N.J.S.A. 52:27D-119 to -141. See N.J.S.A. 52:27D-123(a).

2 As will be explained in more detail below, that regulation was repealed, 45 N.J.R. 1393(a) (June 3, 2013). However, the substance of the regulation was moved to other regulations without changes material to our decision. Ibid.