JOHN P. TWINING BLASTING et al. v. NEW JERSEY DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-1428-04T11428-04T1

JOHN P. TWINING BLASTING and

REX TWINING,

Appellants,

v.

NEW JERSEY DEPARTMENT OF LABOR

AND WORKFORCE DEVELOPMENT,

Respondent.

__________________________________

 

Submitted October 18, 2005 - Decided November 17, 2005

Before Judges Skillman and Payne.

On appeal from Department of Labor and Workforce Development.

Ballard & Dragan, attorneys for appellants (Robert A. Ballard, Jr., on the brief).

Peter C. Harvey, Attorney General, attorney for respondent (Michael J. Haas, Assistant Attorney General, of counsel; Lisa N. Lackay and Andrew J. Walko, Deputy Attorneys General, on the brief).

PER CURIAM

Appellants Twining Blasting and Rex Twining appeal from a final decision of the Commissioner of Labor and Workforce Development that imposed $50,000 in penalties upon them for violations of the New Jersey Explosives Act, N.J.S.A. 21:1A-128 to -144, and the regulations adopted to implement this legislation.

These penalties were based on two separate incidents. The first occurred at 10:44 a.m. on May 23, 2001, while appellants were engaged in a blasting operation in Bridgewater Township. This activity caused a rock to fly in the air and break the windshield of a motor vehicle driving through the area. As a result of this incident, the Office of Public Safety Compliance within the Department charged appellants with failing to take special precautions in loading, delaying, initiation and confinement so as to control the throw of fragments, in violation of N.J.A.C. 12:190-7.11(a), and failing to immediately report an accident involving explosives which resulted in injury to a person or property damage, in violation of N.J.A.C. 12:190-3.20(a). After this incident, the Office of Safety Compliance initially issued appellants an order to cease violations but did not undertake to impose penalties. However, after the second incident, the Office sent appellant a letter, dated July 8, 2002, indicating that it was seeking penalties for these violations.

The second incident occurred on the morning of May 21, 2002, when Rex Twining drove to the Round Valley Recreation Area in a Twining Blasting pick-up truck to go fishing. A park ranger observed a large box with a caution sign in the bed of the truck. The ranger called the State Police. Shortly after the arrival of a State trooper at the scene, Rex Twining pulled his fishing boat into a ramp near the parking lot. The ranger and State trooper asked Twining to open the box, which was found to contain thirty fifty-pound bags of "1.5 Blasting agent." Based on this incident, the Office of Public Safety Compliance charged appellants with storing explosives in a vehicle parked in a public place, in violation of N.J.A.C. 12:190-1.8(b); storing unattended explosives in a type 3 magazine, in violation of N.J.A.C. 121:190-5.18(e); failing to display the placards required by N.J.A.C. 12:190-6.4 on a motor vehicle used to transport explosives, in violation of N.J.A.C. 12:190-6.3(e); and attaching a trailer (boat) to a vehicle transporting explosives, in violation of N.J.A.C. 12:190-6.5(b).

Appellants rejected settlement proposals regarding these charges and requested a hearing. The Department referred the matter to the Office of Administrative Law. The Administrative Law Judge (ALJ) to whom the matter was assigned conducted a hearing on March 31, 2003, at which appellants stipulated to the admission into evidence of the investigatory reports and other documents upon which the charges had been based and the facts set forth therein. In addition, Rex Twining apparently testified or presented a statement in mitigation of penalty at the hearing. However, the only indication of what he said is contained in the ALJ's recommended initial decision because the hearing was not recorded. After the hearing, the parties also submitted written summations regarding the penalties to be imposed for appellants' violations.

On September 21, 2004, the ALJ issued a recommended initial decision which concluded that Twining Blasting should pay a penalty of $1,500 for the violations committed on May 23, 2001, and that Rex Twining should pay a penalty of $1,000 for the violations committed on May 21, 2002.

Regarding the May 23, 2001 incident, the ALJ concluded that appellants "should not be sanctioned for failing to immediately report the incident to state officials because it did so within a reasonable time after it dealt with the victim, investigators and secured the site." In reaching this conclusion, the ALJ relied upon Rex Twining's statement in mitigation:

[H]e immediately went to the driver of the car hit by the rock and assumed full responsibility for the damage. He then returned to the blasting site in order to secure it and other explosives prior to making the call to report the incident. When he did make the call, petitioner learned the incident had already been reported through the local police who investigated the incident.

The ALJ found that "because of the quick response of the municipal investigators, [Twining] did not have time to report the accident prior to those investigators doing so." However, the ALJ found that the actual blasting was conducted in a negligent manner and that this constituted "a serious infraction of the safety rules associated with the use of explosives" that could have resulted in serious personal injuries. The ALJ concluded that because this violation consisted of negligence rather than willful misconduct and only property damage actually occurred, a $1,500 penalty was appropriate. The ALJ also concluded that because this violation arose out of Twining Blasting's business operations, it was solely a company violation and not a violation by Rex Twining individually.

Regarding the May 21, 2002 incident, the ALJ stated that even though it was "willful" in nature, it did not result in any personal injury or property damage. The ALJ also stated: "I did not find the risk to the public to be as substantial as the respondent argued it was, since the material in question was not an 'explosive' but rather a 'blasting agent,' which I believe to be a less dangerous substance." In addition, the ALJ concluded that this violation was committed solely by Rex Twining personally, and not by Twining Blasting, "since there is no indication that his activities were anything other than ultra vires acts."

The Commissioner rejected the ALJ's recommended initial decision and imposed $5,000 in penalties upon each appellant for the violations committed on May 23, 2001, and maximum penalties of $5,000 upon each appellant for each of the four violations committed on May 21, 2002.

Regarding the May 23, 2001 incident, the Commissioner stated:

The May 2001 failure of Mr. Twining and his firm to report an inadequately controlled fragmentation blast that resulted in property damage to a passing car is an unambiguous violation of N.J.A.C. 12:190-3.20. The Department correctly determined that this violation was especially egregious because a member of the public suffered damage and the petitioners knew about the harm as soon as it occurred. N.J.A.C. 12:190-12.1(d)(3); N.J.A.C. 12:190-12.1(d)(4).

The fact that the petitioners tried to settle the potential damages claim or that they cooperated with the investigating police officer is irrelevant to whether they violated N.J.A.C. 12:190-3.20 by failing to immediately report the incident to the Department. In the absence of any credible documentary evidence to the contrary, the ALJ did not have a sufficient factual basis to conclude that the petitioners had notified the Department, "within a reasonable time after it dealt with the victim, investigators and secured the site."

Regarding the May 21, 2002 incident, the Commissioner stated:

[T]he ALJ inexplicably "merged" four distinct violations into one "incident," and then reduced the $20,000.00 penalty to $1,000.00 because no one was injured and the, "risk to the public was [not] as substantial as the [Department] argued it was, since the material in question was not an 'explosive' but rather a 'blasting agent,' which I believe to be a less dangerous substance." Decision, p. 7. The ALJ determined that the assessed penalties were unsubstantiated, shocked his sense of fairness and were contrary to the punishment scheme set forth in the applicable regulations. Id. Moreover, the ALJ failed to give any weight to the plain fact that an impulsive weekday fishing trip prompted a series of reckless and willful acts that created an obvious, significant and undifferentiated risk of serious personal injury and substantial property damage in a small state park visited by more than 1,300 people a day. Neither the applicable State regulations nor the list of explosive materials published by the ATF make any material distinction between primary explosives and blasting agents like Anfo. The coincidental fact that the Anfo was neither induced to explode nor stolen from the unattended pick-up left in the parking lot, due in large measure to the work of an alert park ranger, is simply not a relevant factual or legal factor in "merging" distinct violations or assessing penalties.

In determining what was "equitable under all the circumstances," the Department assessed penalties commensurate with the willful, callous nature of the violations, their number and seriousness, and the demonstrable risk to public health safety. The violations necessitated investigations by three State agencies (Environment Protection, Law & Public Safety and Labor) as well as the ATF. The violations took place less than eight months and forty miles from the ruins of the World Trade Center (WTC), and involved the same type of blasting agent used to attack the WTC in 1993 and, as noted, destroy the Murrah Building in Oklahoma City in 1995.

Appellants argue that the Commissioner improperly rejected the ALJ's recommended initial decision and imposed excessive penalties.

We conclude that the record before us is inadequate for informed appellate review. We also conclude that the Commissioner misconceived the role of the ALJ in the administrative process. Therefore, we vacate the Commissioner's final decision and remand for a new hearing and reconsideration by the ALJ and Commissioner.

We do not know what occurred at the hearing before the ALJ because it was not transcribed. However, the ALJ's recommended decision indicates that Rex Twining made some form of factual presentation because it sets forth various statements made by him, particularly regarding the May 23, 2001 incident, which are not reflected in any of the documents that were stipulated into evidence. Moreover, the Commissioner rejected the ALJ's finding that Twining reported this incident to the Department within a reasonable time based on "the absence of any credible documentary evidence" to support Twining's statements at the hearing. We cannot resolve this factual dispute without reviewing the record upon which the ALJ based his finding. In addition, although the ALJ's decision states that "facts were stipulated" at the hearing, those stipulations do not appear anywhere in the record on appeal.

Moreover, there are other factual disputes that indicate the need for a more complete record. For example, the ALJ found that the "risk to the public" from Twining parking a pick-up truck containing blasting agent at Round Valley Recreation Area was not "as substantial as [the Department]" contended because a "blasting agent" is "a less dangerous substance" than an "explosive." On the other hand, the Commissioner found that Twining's conduct "created an obvious, significant and undifferentiated risk of serious personal injury and substantial property damage." We are not able to resolve these conflicting views of the seriousness of the risk posed by Twining's conduct on May 21, 2002, based on the limited record before us. Therefore, we believe this is an appropriate subject for testimony.

The Commissioner also misconceived the role of an ALJ in the administrative process. The Commissioner stated that "[t]he OAL must affirm the Department's assessment of penalties against the [appellants] unless the agency's action is arbitrary, capricious, unreasonable or beyond the scope of its delegated powers[,]" citing New Jersey Guild of Hearing Aid Dispensers v. Long, 75 N.J. 544, 561 (1978); New Jersey Ass'n of Health Care Facilities v. Finley, 83 N.J. 67, 79, cert. denied and appeal dismissed, 449 U.S. 944, 101 S. Ct. 342, 66 L. Ed. 2d 208 (1980); In re Polk License Revocation, 90 N.J. 550, 578 (1982); and Henry v. Rahway State Prison, 81 N.J. 571, 579-80 (1980). However, the cases cited by the Commissioner all involved the standard that governs judicial review of final administrative agency action rather than the role of an ALJ acting as the trier of fact in a contested case.

The responsibilities of an ALJ and agency head in a contested case are set forth in the Administrative Procedure Act (APA), which states in pertinent part:

A recommended report and decision which contains recommended findings of fact and conclusions of law and which shall be based upon sufficient, competent, and credible evidence shall be filed . . . with the agency in such form that it may be adopted as the decision in the case . . . and an opportunity shall be afforded each party of record to file exceptions, objections, and replies thereto, and to present argument to the head of the agency or a majority thereof, either orally or in writing, as the agency may direct. The head of the agency, upon a review of the record submitted by the administrative law judge, shall adopt, reject or modify the recommended report and decision. . . . In reviewing the decision of an administrative law judge, the agency head may reject or modify findings of fact, conclusions of law or interpretations of agency policy in the decision, but shall state clearly the reason for doing so. The agency head may not reject or modify any findings of fact as to issues of credibility of lay witness testimony unless it is first determined from a review of the record that the findings are arbitrary, capricious or unreasonable or are not supported by sufficient, competent, and credible evidence in the record.

[N.J.S.A. 52:14B-10(c).]

Under this provision, "[ALJs] now conduct the hearings and recommend the factual findings and determinations necessary for the agency head to decide contested cases." In re Uniform Admin. Procedure Rules, 90 N.J. 85, 90 (1982). The most important goal of the APA provisions governing contested cases is to promote "independence in the conduct of administrative hearings before State agencies." Id. at 91. Consistent with this goal, the APA does not require an ALJ to defer to the preliminary decisions of agency staff in making recommended findings of fact and conclusions of law. Instead, the APA requires the ALJ's recommendations to be based solely on the evidence presented at the hearing, the applicable law and the ALJ's independent judgment concerning the application of that law to the facts of the particular case. See P.F. v. N.J. Div. of Developmental Disabilities, 139 N.J. 522, 530 (1995); State Dep't of Health v. Tegnazian, 194 N.J. Super. 435, 449-50 (App. Div. 1984). Moreover, under a 2001 amendment to N.J.S.A. 52:14B-10(c), to the extent an ALJ's findings of fact are based on "issues of credibility of lay witness testimony," the agency head must accept those findings unless they are "arbitrary, capricious or unreasonable or are not supported by sufficient, competent, and credible evidence in the record." See Cavalieri v. Bd. of Trs. of Pub. Employees Ret. Sys., 368 N.J. Super. 527, 533-34 (App. Div. 2004). The agency head is not required to defer to other findings of fact or the conclusions of law contained in an ALJ's recommended decision. However, the agency head's ultimate authority to render the final decision in a contested case hearing may be exercised only after the ALJ has issued the independent recommended decision envisioned by the APA. Thus, the Commissioner's view that the ALJ should have deferred to the agency staff's determinations concerning the penalties to be imposed upon appellants was erroneous. Instead, the Commissioner was required to defer to the ALJ's recommended decision to the extent it was based on findings of credibility of lay witnesses. Moreover, the Commissioner was required to give "attentive consideration" to the ALJ's other recommendations. In re Bergen County Utils. Auth., 230 N.J. Super. 411, 416 (App. Div. 1986).

For the guidance of the ALJ and the Commissioner on remand, we make certain additional observations. First, the Commissioner correctly concluded that the Explosives Act and implementing regulations do not preclude the imposition of penalties on both a corporation that conducts blasting operations and its principal if the principal is the one responsible for a regulatory violation. However, the fact that both the corporation and its principal are assessed penalties for the same violation is a circumstance that should be taken into consideration in determining the appropriate amount of those penalties.

Second, the Commissioner correctly concluded that there was no basis for assessing penalties for only one of the four violations committed on May 21, 2002. However, even if the record on remand supports the Commissioner's finding that the parking in a public place of a vehicle containing a blasting agent constitutes a serious violation that warrants the maximum penalty, it does not follow that the other violations committed on that same day, such as the failure to display the placards required by N.J.A.C. 12:190-6.4, were of comparable seriousness and also warranted imposition of the maximum penalty. The seriousness of each violation must be evaluated separately.

Third, the Commissioner has adopted a regulation to guide the exercise of the Department's discretion in imposing penalties for violations of the Explosives Act and its implementing regulations. This regulation states:

The Commissioner, at his or her discretion, may compromise and settle any claim for a penalty imposed under the Act in such amount as he or she deems to be appropriate and equitable under all of the circumstances, including, but not limited to:

1. The past record of compliance with the provision of the Act by the alleged violator;

2. The degree of cooperation afforded to the Commissioner's representatives by the alleged violator in securing compliance with the provisions of the Act;

3. Whether the cited violation was willful in nature; and

4. Whether the cited violation resulted in injury or bodily harm.

[N.J.A.C. 12:190-12.1(d).]

An administrative agency is generally required to follow its own regulations. In re CAFRA Permit No. 87-0959-5, 152 N.J. 287, 308 (1997). Therefore, in determining the appropriate penalty for each of the violations committed by appellants, the ALJ and Commissioner should consider the criteria set forth in N.J.A.C. 12:190-12.1(d).

 
Accordingly, we vacate the Commissioner's final decision and remand the case for further proceedings in conformity with this opinion.

For reasons not disclosed by this record, nearly a year-and-a-half elapsed between the one-day hearing and issuance of the ALJ's initial decision.

(continued)

(continued)

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A-1428-04T1

November 17, 2005