NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION SITE REMEDIATION COMPLIANCE AND ENFORCEMENT v. HOOD FINISHING PRODUCTS INC KASNER

NOT FOR PUBLICATION WITHOUT THE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-0

NEW JERSEY DEPARTMENT OF

ENVIRONMENTAL PROTECTION,

SITE REMEDIATION COMPLIANCE

AND ENFORCEMENT,

Petitioner-Respondent,

v.

HOOD FINISHING PRODUCTS, INC.

(KASNER),

Respondent-Appellant.

_______________________________

November 3, 2016

Submitted September 20, 2016 Decided

Before Judges Yannotti and Gilson.

On appeal from New Jersey Department of Environmental Protection, Docket No. PEA120005-G000039686.

Jason H. Kasner, attorney for appellant.

Christopher S. Porrino, Attorney General, attorney for respondent (Melissa Dutton Schaffer, Assistant Attorney General, of counsel; Kimberly A. Hahn, Deputy Attorney General, on the brief).

PER CURIAM

Hood Finishing Products, Inc. (Hood) appeals from a February 2, 2015 final agency decision by the Commissioner of the Department of Environmental Protection (Commissioner) that found Hood in violation of three environmental statutes and imposed $40,500 in penalties and fees. We affirm because the findings of violation are supported by substantial credible evidence, the penalties and fees are authorized by the governing regulations, and the amounts imposed were within the discretion delegated to the Commissioner.

I.

The disputes underlying this proceeding arose out of the closure of Hood's industrial business in 2003 and the ensuing efforts to insure that the site was environmentally cleaned up. The facts were established during a proceeding in the Office of Administrative Law (OAL).

From 1998 to 2003, Hood operated a business that manufactured and distributed wood-working materials, such as wood finishes, stains, and finish removers. Hood conducted that business on property it leased from Berry-Somerset, LLC (Berry-Somerset). The property was located at 59 Berry Street and 61 Gurley Avenue in Franklin Township (the Berry Street property).

Hood ceased its operations at the Berry Street property in July 2003 and vacated the property in August 2003. Since 1983, New Jersey environmental law has required that the Department of Environmental Protection (DEP) be notified of the closure of an industrial establishment and that the owner and operator demonstrate that the property is environmentally sound. See The New Jersey Environmental Clean-Up Responsibility Act (ECRA), now known as the Industrial Site Recovery Act (ISRA), N.J.S.A. 13:1K-6 to -14.

Hood claimed it submitted a General Information Notice (GIN) to the DEP on September 13, 2003, advising DEP of is cessation of operations. The DEP, however, contends that it first received notice of Hood's cessation in 2004, when an environmental consultant hired by Berry-Somerset submitted a Preliminary Assessment Report (PAR) to the DEP. Berry-Somerset then submitted a GIN in 2004, disclosing that Hood had ceased its business operations in 2003.

In December 2004, DEP inspected the Berry Street property to evaluate Berry-Somerset's PAR and noted a number of deficiencies, including an area of stressed vegetation. In January 2005, DEP issued a report to Berry-Somerset listing actions required to complete the PAR. Berry-Somerset, however, did not remedy the deficiencies.

After Hood ceased its operations, Berry-Somerset leased the Berry Street property to NBSF Cabinets. In 2007, NBSF Cabinets purchased the Berry Street property and changed its name to 59 Berry Street, LLC (59 LLC).

In January 2006, sampling conducted on behalf of NBSF Cabinets disclosed soil and ground water contamination, including methylene chloride, a major component of nine of Hood's products. The DEP maintains that it first became aware of this soil and ground water contamination in 2011, when 59 LLC filed a petition under N.J.S.A. 13:1K-11.9, requesting the DEP to determine whether Hood was responsible for ISRA compliance because of its 1998 to 2003 tenancy and operations at the Berry Street property.

In October 2011, the DEP responded to the petition by advising that Hood was primarily responsible for any discharge that occurred during its operations at the Berry Street property and that Hood and Berry-Somerset have joint responsibility to remediate the property. The DEP also advised Hood, Berry-Somerset, and 59 LLC that they were obligated to retain a licensed site remediation professional (LSRP) to conduct and complete remediation of the property. The requirement to use an LSRP was established in 2009 under the Site Remediation Reform Act (SRRA), N.J.S.A. 58:10C-1 to -29. Finally, DEP advised Hood, Berry-Somerset, and 59 LLC that an annual remediation and oversight fee would be imposed starting in June 2012.

During the first half of 2012, Hood and DEP exchanged submissions and correspondence concerning the remediation of the Berry Street property, but DEP was not satisfied by Hood's submissions. Thus, in September 2012, DEP issued an administrative order and notice of civil administrative penalties assessments (AONOCAPA) charging Hood with violations of ISRA, SRRA, the Brownfield and Contamination Site Remediation Act, N.J.S.A. 58:10B-1.3, and the regulations promulgated under those statutes, N.J.A.C. 7:26B, 7:26C, and 7:26E.1 DEP cited Hood for (1) failure to remediate its industrial establishment at the Berry Street property; (2) failure to hire an LSRP; and (3) failure to pay fees. Thus, DEP imposed penalties of $35,000, which included $20,000 for failure to remediate the property, and $15,000 for failure to hire an LSRP. DEP also assessed Hood $5500 in fees, which consisted of three annual fees (2012 to 2014) of $1850.2

Hood requested a hearing and the matter was referred to the OAL. In 2013, while the OAL matter was pending, Hood retained an LSRP and remediated the property. Thereafter, Hood filed a motion to dismiss DEP's AONOCAPA, which the ALJ treated as a motion for summary decision. DEP filed opposition and cross-moved for summary decision, noting that while Hood had attained remediation compliance, it had failed to pay the assessed penalties and fees. Hood also filed motions to dismiss or mitigate the assessed fees and to depose a DEP employee, Joshua Gradwohl. Gradwohl is a DEP supervisor who was involved in overseeing DEP's involvement with the Berry Street property.

After hearing oral argument on all the motions, the ALJ issued an Initial Decision on September 18, 2014, granting the DEP's motion for summary decision, ordering Hood to pay the penalties and fees, which totaled $40,500, and denying Hood's three motions. Hood filed an administrative appeal, and on February 2, 2015, the Commissioner issued a final agency decision, adopting the ALJ's findings and conclusions in the Initial Decision.

II.

On this appeal, Hood makes ten contentions, which can be grouped into four arguments: (1) summary decision in favor of the DEP should not have been granted because there were disputedmaterial facts; (2) certain procedures by the DEP and the ALJ violated Hood's constitutional due process rights; (3) the penalties and fees should not have been imposed or should have been barred under the doctrine of laches, unclean hands, or 28 U.S.C.A. 2462; and (4) Hood should have been allowed to depose Gradwohl.

Our review of an administrative agency's final decision is limited. Univ. Cottage Club of Princeton N.J. Corp. v. N.J. Dep't of Envtl. Prot., 191 N.J. 38, 48 (2007) (citing In re Taylor, 158 N.J. 644, 656 (1999)). An appellate court will not reverse an agency's decision unless "(1) it was arbitrary, capricious or unreasonable; (2) it violated express or implied legislative policies; (3) it offended the State or Federal constitution; or (4) the findings on which it was based were not supported by substantial, credible evidence in the record." Ibid. Moreover, courts generally afford substantial deference to an agency's interpretation of a statute that it is charged with enforcing. Ibid. (citing R & R Mktg., LLC v. Brown-Foreman Corp., 158 N.J. 170, 175 (1999)). An appellate court, however, is not "bound by the agency's interpretation of a statute or its determination of a strictly legal issue." Ibid. (quoting In re Taylor, supra, 158 N.J. at 658).

Applying this standard of review, we affirmed substantially for the reasons expressed by the Commissioner in his February 2, 2015 sixteen-page final decision. In that regard, we note that the Commissioner adopted the ALJ's Initial Decision, which consisted of twenty-one pages of facts and conclusions. We add some additional comments to address Hood's arguments on this appeal.

Hood primarily takes issues with certain facts found by the ALJ concerning whether contamination ever existed at the Berry Street property, whether Hood's ongoing remediation of the property insulated it from the requirement to retain an LSRP, and the location of the stressed vegetation. When analyzed against the facts that were relied upon by the Commissioner, however, it is clear that the facts identified by Hood were not material to the Commissioner's final decision.

ISRA requires owners or operators of an industrial establishment to notify DEP before closing, selling, or transferring operations. N.J.S.A. 13:1K-9(a). Owners and operators must then "remediate the industrial establishment . . . in accordance with criteria, procedures, and time schedules established by the [DEP]." N.J.S.A. 13:1K-9(b)(1).

It is undisputed that Hood's operation at the Berry Street property constituted an industrial establishment subject to ISRA. Thus, when Hood ceased its operation in 2003, it was required to give notice and engage in remediation under ISRA. N.J.S.A. 13:1K-9. The GIN submitted by Hood and the GIN and PAR submitted by Berry-Somerset did not fulfill all of the ISRA requirements because it is undisputed that no remediation took place at that time.

Significantly, Hood never petitioned the DEP for a determination of liability between itself and Berry-Somerset. Instead, 59 LLC, the successor-owner to Berry-Somerset, filed a petition in 2011. Since SRRA had been enacted in May 2009, L. 2009, c. 60, DEP correctly directed Hood in 2011 to retain an LSRP to supervise the remediation. Hood, however, failed to either hire an LSRP or remediate the Berry Street property in 2012. Consequently, DEP issued the AONOCAPA in 2012. Thus, at the time that the matter was submitted to the OAL, Hood was in violation of ISRA and SRRA.

Hood first hired an LSRP in 2013, and thereafter remediated the property. The undisputed facts established, however, that Hood had previously failed to comply with ISRA and SRRA for nearly a decade from 2003 to 2012. Thus, the substantial credible evidence in the record supports the Commissioner's finding that Hood violated the governing environmental statutes.

Next, we briefly review the penalties and fees. Regulations promulgated under ISRA and SRRA authorized the DEP to determine the seriousness of the violations and to assess penalties for non-minor violations. N.J.A.C. 7:26C-9.5. The base penalty for failure to remediate in violation of N.J.A.C. 7:26B-3.3(a) is $20,000. N.J.A.C. 7:26C-9.5(b). The base penalty for failure to hire an LSRP in violation of N.J.A.C. 7:26B-2.3(a)(1)-(2) is $15,000. Ibid. The annual remediation fees are also authorized by regulations. N.J.A.C. 7:26C-4.3(a)(1)-(3). Consequently, the penalties and fees were authorized and we find no abuse of discretion in the Commissioner's imposition of base penalties, which totaled $35,000, and three years of annual fees, which totaled $5500.

The remainder of Hood's arguments lack sufficient merit to warrant discussion in a written decision. R. 2:11-3(e)(1)(D) and (E).

Affirmed.

1 In 2009, when the Legislature enacted SRRA, it also amended the Brownfield and Contamination Site Remediation Act, N.J.S.A. 58:10B-1 to -31, to require use of an LSRP to perform the remediation, to provide notice to the DEP, and to pay fees and oversight costs, among other requirements. N.J.S.A. 58:10B-1.3(b)(1)-(9).

2 Although the sum of those three fees is $5550, the ALJ's order imposed fees of $5500. No party raised an issue concerning this $50 difference and, thus, we do not address this discrepancy.