DRYTECH, INC v. THE STATE OF NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION

NOT FOR PUBLICATION WITHOUT THE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

DRYTECH, INC.,

Plaintiff-Appellant,

v.

THE STATE OF NEW JERSEY,

DEPARTMENT OF ENVIRONMENTAL

PROTECTION,

Defendant-Respondent.

_________________________________

December 29, 2016

Submitted December 12, 2016 Decided

Before Judges Haas and Currier.

On appeal from Superior Court of New Jersey, Chancery Division, Burlington County, Docket No. C-41-15.

Giansante & Associates, LLC, attorneys for appellant (Louis Giansante, of counsel and on the briefs).

Christopher S. Porrino, Attorney General, attorney for respondent (Melissa H. Raksa, Assistant Attorney General, of counsel; Mark S. Heinzelmann, Deputy Attorney General, on the brief).

PER CURIAM

Plaintiff Drytech, Inc. appeals from the Chancery Division's June 30, 2015 order dismissing its complaint against defendant Department of Environmental Protection ("DEP") in which it sought a declaration that it did not have to comply with the remediation obligations imposed on it by the Site Remediation Reform Act ("SRRA"), N.J.S.A. 58:10C-1 to -28. We affirm substantially for the reasons expressed by Judge Karen Suter in her comprehensive written decision.

The facts of this matter are not in dispute. Plaintiff manufactures desiccants at its New Hanover facility. Plaintiff concedes that its industrial manufacturing operations are subject to the Industrial Site Recovery Act ("ISRA"), N.J.S.A. 13:1K-6 to -14, and related amendments to the Brownfield and Contaminated Site Remediation Act, N.J.S.A. 58:10B-1 to -31. Under ISRA, regulated entities like plaintiff are required to remediate the discharge of hazardous substances on their property under the supervision of the DEP "before the transfer or upon the closing of an industrial establishment." N.J.S.A. 13:1K-7.

A business may "trigger" ISRA by transferring its operations to a new corporate entity. N.J.S.A. 13:1K-8. When such a transfer occurred prior to the enactment of SRRA, the entity was required to notify the DEP and seek either: (1) a "negative declaration" that there had been no discharge of hazardous substances or hazardous wastes at the site, or (2) if there had been such a discharge, the DEP's approval of a remedial action plan. N.J.S.A. 13:1K-9. Once the environmental concern was remediated to the DEP's satisfaction, the DEP would issue a No Further Action letter ("NFA") to the regulated entity, together with a covenant not to sue for any area of concern ("AOC") remediated at the site. N.J.S.A. 58:10B-13.1(a).

In 1998, plaintiff triggered ISRA's remediation requirements. Plaintiff notified the DEP, which identified several AOCs on plaintiff's property that needed to be remediated. After plaintiff completed the remediation, the DEP issued an NFA and a covenant not to sue concerning the matters addressed by plaintiff at that time. Plaintiff subsequently triggered ISRA in 2001 and again in 2002. On both of these occasions, plaintiff applied for and received NFAs and covenants not to sue from the DEP relating to the two ISRA triggering events.

"In 2009, the Legislature enacted SRRA, in an effort to further improve the efficiency and speed with which environmental sites are remediated." Des Champs Labs, Inc. v. Martin, 427 N.J. Super. 84, 99 (App. Div. 2012). Under SRRA, the DEP no longer supervises the remediation efforts at an industrial site. Morristown Assocs. v. Grant Oil Co., 220 N.J. 360, 378 n.5 (2015). Instead, SRRA shifted primary supervision for industrial site cleanup of contaminants from the DEP to certified specialists known as Licensed Site Remediation Professionals ("LSRPs"). Des Champs, supra, 427 N.J. Super. at 99. Following the enactment of SRRA, a regulated entity like plaintiff must hire an LSRP to oversee remediation in accordance with the DEP's regulations. When the LSRP is satisfied that the site has been "remediated in accordance with all applicable statutes and regulations," the LSRP issues a Response Action Outcome ("RAO") to the DEP certifying compliance with the law. N.J.S.A. 58:10C-14; N.J.A.C. 7:26C-2.3(a); N.J.A.C. 7:26B-1.10.1

Thus, LSRPs "are individuals who independently oversee the cleanup of contaminated sites, ensuring that the process is conducted effectively and in compliance with New Jersey statutes and regulations." Magic Petroleum Corp. v. Exxon Mobil Corp., 218 N.J. 390, 400 n.2 (2014). The New Jersey Site Remediation Professional Licensing Board is responsible for establishing "strict" licensing requirements for LSRPs. Ibid. (citing N.J.S.A. 58:10C-3, -5). The Board adopted these standards in January 2016. N.J.A.C. 7.26I-1.1 to -9.3.

SRRA does not contain any provision permitting the DEP to "waive" a regulated entity's obligation to retain an LSRP following an ISRA-triggering event. In addition, an LSRP must exercise his or her "independent professional judgment" in determining the steps that must be taken prior to the issuance of a RAO. N.J.S.A. 58:10C-16(f); N.J.A.C. 7:26I-6.8(a). In this regard, an LSRP is required to

make a good faith and reasonable effort to identify and obtain the relevant and material facts, data, reports, and other information evidencing conditions at a contaminated site for which he or she is responsible that are in the possession of the owner of the property, the [DEP], or that are otherwise available, and identify and obtain whatever additional data and other information as the LSRP deems necessary.

[N.J.A.C. 7:26I-6.8(d).]

As a first step in the remediation process, the LSRP is required to prepare a preliminary assessment report. N.J.A.C. 7:26E-3.2(a). Among other things, the LSRP must identify each AOC existing at the site and make a recommendation,

supported by a written rationale, that either

(1) The [AOC] is potentially contaminated; or

(2) There is an order of magnitude change in an applicable remediation standard and the prior remediation is no longer protective of the public health and safety and the environment because it is not in compliance with the standard applicable at the time of the comparison; or

(3) Additional remediation is not necessary because the [AOC] is not suspected to contain contaminants at concentrations above any applicable remediation standard or criterion.

[N.J.A.C. 7:26E-3.2(a)(6).]

Industrial establishments like plaintiff are required to pay a $900 "annual remediation fee" when ISRA is triggered and for any subsequent year until the LSRP completes the remediation and issues the RAO. N.J.A.C. 7:26C-4.3(a)(a)-(3); N.J.A.C. 7:26C-4.3(f).

In 2013, plaintiff triggered ISRA for the fourth time when it transferred ownership of its property to a different, but related limited liability company. Plaintiff alleged that it contacted several LSRPs to undertake a preliminary assessment of the site as the first step in the issuance of an RAO. One of the LSRPs completed the preliminary assessment required by N.J.A.C. 7:26E-3.2(a), and advised plaintiff that there were "no new [AOCs] at the site, other than those previously associated with the" three NFAs issued by the DEP in 1998, 2001, and 2002.

However, each of the LSRPs plaintiff contacted stated that they would need to "completely reinvestigate the site," including the previous remediation work performed in connection with the prior triggering events, before issuing an RAO. Plaintiff alleged that such a review would "cost [plaintiff] in excess of $12,000." Because plaintiff concededly triggered ISRA in 2013, it had already been assessed a $900 annual remediation fee for that year, and would soon be assessed a second $900 fee for 2014.

In May 2014, plaintiff sent a letter to the DEP asking for a "waiver" of the requirement that it retain an LSRP to investigate the AOCs at the site and issue an RAO. Plaintiff argued that it had previously complied with ISRA in connection with the three NFAs the DEP issued for the site. Based upon this prior compliance, plaintiff asserted that it was not obligated to comply with SRRA's new requirement that an LSRP must review a contaminated site and determine the appropriate steps needed to protect the public health and safety and environment leading up to the issuance of an RAO. Based upon its contention that it was not obligated to comply with SRRA, plaintiff also argued that it was not required to pay the $900 annual remediation fee.

When the DEP did not immediately respond to plaintiff's unprecedented request, plaintiff filed a complaint for declaratory judgment. The DEP responded by filing a motion to dismiss plaintiff's complaint for failure to state a claim under Rule 4:6-2(e). The DEP argued that SRRA and the regulations promulgated thereunder impose a duty upon LSRPs to exercise their independent professional judgment in determining whether a RAO should be issued and the steps that must be taken to ensure that a site is not contaminated.

Following oral argument, Judge Suter granted the DEP's motion and dismissed plaintiff's complaint. In her thorough and thoughtful written opinion, the judge fully considered plaintiff's contentions and found that plaintiff failed to state a claim upon which relief could be granted. As Judge Suter explained

Plaintiff argues that it does not owe an annual assessment to the DEP because the DEP previously issued NFAs and covenants not to sue on three occasions from 1998-2002. Under N.J.A.C. 7:26C-4.3(a), "the person responsible for conducting the remediation that is subject to N.J.A.C. 7:26C-2.3 shall submit the applicable annual remediation fee to the Department pursuant to this section." N.J.A.C. 7:26C-2.3, in turn, requires remediation upon the sale of property, as occurred here. See also N.J.A.C. 7:26C-2.2; N.J.A.C. 7:26B-3.2. Plaintiff does not dispute that ISRA was triggered when the [p]roperty was sold . . . ; rather, [p]laintiff argues that it is excused from paying the annual fee due to the previously-issued NFAs and covenants not to sue. This argument lacks merit, however, because it is clear that any event that triggers remediation requirements also triggers payment of annual fees.

The judge continued

Similarly, [p]laintiff alleges no legally cognizable basis to compel [the DEP] to grant [p]laintiff's waiver application. Plaintiff argues that the previous NFAs mandate a finding that [p]laintiff has complied with the regulations under ISRA, and maintains that a previous NFA is, essentially, binding on the LSRP with respect to AOCs that were previously decided. The court disagrees; here, the statute, regulations, and procedures have changed. Thus, because the post-SRRA law and regulations require the submission of a positive assessment from an LSRP, and [p]laintiff has not obtained such, the court will dismiss the complaint. Plaintiff has not put forth any authority for the proposition that the DEP's previous determinations under a prior law are binding on an LSRP's determinations under the new laws and, to the contrary, SRRA clearly indicates to the contrary. See N.J.S.A. 58:10C-16i ("[An LSRP] shall exercise independent professional judgment . . . and identify and obtain whatever additional data and other information as the [LSRP] deems necessary." (emphasis added)).

This appeal followed.

On appeal, plaintiff repeats the same arguments that it unsuccessfully pressed in the Chancery Division. In reviewing a Rule 4:6-2(e) dismissal, we employ the same standard as that applied by the trial court. Donato v. Moldow, 374 N.J. Super. 475, 483 (App. Div. 2005). Our review is limited to the "legal sufficiency of the facts alleged in the complaint." Id. at 482. We "assume the facts as asserted by plaintiff are true[,]" and we give the plaintiff "the benefit of all inferences that may be drawn[.]" Banco Popular N. Am. v. Gandi, 184 N.J. 161, 166 (2005) (quoting Velantzas v. Colgate-Palmolive Co., 109 N.J. 189, 192 (1988)). "Where, however, it is clear that the complaint states no basis for relief and that discovery would not provide one, dismissal of the complaint is appropriate." County of Warren v. State, 409 N.J. Super. 495, 503 (App. Div. 2009), certif. denied, 201 N.J. 153, cert. denied, sub. nom. Shope v. New Jersey, 201 U.S. 153, 130 S. Ct. 3508, 177 L. Ed. 2d 1092 (2010).

Exercising our plenary review of the record, we discern no basis for disturbing Judge Suter's reasoned conclusion that plaintiff's complaint failed to set forth a claim upon which relief could be granted. As the judge cogently observed in her decision, SRRA is a new law, which imposes new obligations upon industrial manufacturers like plaintiff. One of the main features of SRRA is its requirement that an LSRP conduct a detailed review of a site, issue a preliminary assessment, and undertake any actions needed to remediate AOCs existing on the property. Nothing in SRRA affords a regulated entity the option of waiving this requirement based upon its prior compliance with ISRA following previous triggering events. Therefore, the judge correctly concluded that plaintiff was obligated to abide by SRRA's requirements, including the retention of an LSRP who, in the exercise of his or her independent judgment, would determine the remedial action plan necessary to support the issuance of an RAO for the property.

Plaintiff argues that the DEP's issuance of NFAs and covenants not to sue in the past barred it from seeking to compel plaintiff to comply with the new SRRA requirements. This contention also lacks merit. In 1998, plaintiff triggered ISRA for the first time and, following the remediation of the AOCs on plaintiff's property, the DEP issued an NFA and a covenant not to sue. At that time, N.J.S.A. 58:10B-13.1(d), specifically stated

A covenant not to sue and the protections it affords shall not apply to any discharge that occurs subsequent to the issuance of the [NFA] letter which was the basis for the issuance of the covenant, nor shall a covenant not to sue and the protections it affords relieve any person of the obligations to comply in the future with laws and regulations.

[N.J.S.A. 58:10B-13.1(d) (1998)[2] (emphasis added).]

Thus, the DEP's issuance of prior NFAs and covenants not to sue did not excuse plaintiff's obligation to comply with any future laws or regulations, including SRRA and the regulations promulgated thereunder.

Finally, because plaintiff failed to obtain an RAO after it triggered ISRA in 2013, the DEP properly assessed it a $900 annual remediation fee for each year it remained out of compliance as required by N.J.A.C. 7:26C-4.3(f).

Affirmed.

1 When the Legislature enacted SRRA in 2009, it also amended the Brownfield and Contamination Site Remediation Act 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 The language of the 1998 statute was in effect at the time of the next two ISRA-triggering events in 2001 and 2002, and is now contained in N.J.S.A. 58:10B-3.2(d).