NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION v. MARCAL PAPER MILLS, et al.Annotate this Case
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
DOCKET NO. A-3551-06T23551-06T2
NEW JERSEY DEPARTMENT OF
MARCAL PAPER MILLS,
TOP SOIL DEPOT, INC.,
NEW JERSEY DEPARTMENT OF DOCKET NO. A-3964-06T2
MARCAL PAPER MILLS,
TOP SOIL DEPOT, INC.,
Argued December 3, 2007 - Decided
Before Judges Stern, Collester and C.S. Fisher.
On appeal from the Department of Environmental
Protection, Docket Nos. ESW 7423-00 and 7424-00.
Joseph M. Cerra argued the cause for Top Soil
Depot, Inc., appellant in A-3551-06T2 and
respondent in A-3964-06T2 (Forman Holt Eliades &
Ravin, attorneys; Mr. Cerra, on the brief).
Craig P. Murphy argued the cause for Marcal Paper
Mills, Inc., appellant in A-3964-06T2 and respondent
in A-3551-06T2 (Windels Marx Lane & Mittendorf,
attorneys; Mr. Murphy and John D. Holden, on the
Masha D. Rozman, Deputy Attorney General, argued
the cause for respondent New Jersey Department of
Environmental Protection (Anne Milgram, Attorney
General, attorney; Patrick DeAlmeida, Assistant
Attorney General, of counsel; Ms. Rozman, on the
In A-3551-06, Top Soil Depot Inc., and in A-3964-06, Marcal Paper Mills, appeal from a "final decision on motion for partial summary decision" of the Commissioner of the Department of Environmental Protection (DEP), entered on January 22, 2007, which affirmed the initial determination of an Administrative Law Judge (ALJ), who determined that the paper byproduct kaofin was properly subject to regulation under the Solid Waste Management Act (SWMA), N.J.S.A. 13:1E-1 to -47, that the two appellants "were jointly and severally liable" for violations thereof, that Top Soil engaged in solid waste disposal (in the flood plain of the Ramapo and Pompton Rivers) without a permit, in violation of N.J.A.C. 7:26-2.8(e), and that Marcal transported solid waste to a destination not authorized by the DEP, in violation of N.J.S.A. 13:1E-9.3(b). The Commissioner remanded to the Office of Administrative Law (OAL) for a determination of the penalty to be imposed against Top Soil. The Top Soil remand was because the $20,000 penalty assessed by the ALJ was not within the motion for summary decision. A penalty had not been assessed against Marcal due to other related proceedings pending before the OAL. We permitted the appeals to us by Top Soil and Marcal "to proceed in this court as of right," but stayed "[e]nforcement of the Commissioner's final decision under the SWMA pending disposition of the appeals." However, we declined to stay a DEP action against Top Soil and Marcal pending in the Chancery Division. That action had been commenced under the Flood Hazard Area Control Act (FHACA).
Top Soil asserts that the findings "do not establish any violation of the SWMA or N.J.A.C. 7:26-2.8(e), as opposed to an FHACA violation which the Commissioner had no jurisdiction to adjudicate," that it "did not alter or fill the floodplain," and that "the proofs demonstrated that Top Soil Depot's operations are protected by the grandfather provisions of N.J.A.C. 7:13-2.2." Marcal also asserts the "floodplain" and "grandfather" arguments and further asserts that the Commissioner improperly decided issues of material fact on a motion for summary decision and improperly determined that kaofin constituted solid waste, and that the conduct of the DEP requires application of an estoppel and in the circumstances was arbitrary, capricious and unreasonable.
The ALJ granted summary decision as to liability and site remediation. The Commissioner summarized the ALJ's lengthy and comprehensive decision as follows:
The October 19, 2006 Initial Decision agreed with DEP that the placement of Kaofin in a flood plain was prohibited by the BUD, and that Marcal accepted this as a condition of Kaofin's exemption from regulation as a solid waste. The Initial Decision found Respondents estoppel argument to be without merit under Aqua Beach Condo, Ass'n v. Dep't of Cmty Affairs, 186 N.J. 5, 1 9-20 (2006). The Initial Decision further found that placement of the Kaofin was not a grandfathered use under N.J.A.C. 6:13-2.2(b)(1) because it did not conform to all relevant laws in effect prior to March 20, 1995, see id., and that any such grandfathered use would have been extinguished by the BUD conditions. The Initial Decision therefore held that Top Soil had engaged in the disposal of a solid waste without a permit in violation of N.J.A.C. 7:26-2.8(e) and that Marcal had transported a solid waste to a destination not authorized by the Department in violation of N.J.S.A. 13:1E-9.3(b). Accordingly, Respondents were held jointly liable for remediation of the Top Soil site.
The Commissioner adopted the initial opinion, but made the liability both "joint and several" (not just "joint") in light of the placement of kaofin which she found "altered or filled the floodplain" without DEP authorization, in violation of N.J.A.C. 7:13-1.2.
The critical issues before us include whether this was in reality a FHACA case for consideration before the Superior Court, or should have been part of that case, whether there was a material factual dispute including whether kaofin is solid waste, see N.J.S.A. 13:1E-3, and therefore whether N.J.A.C. 7:26-2.8 was violated, whether there was a basis in 1997 for revoking the 1994 BUD exemption letter, whether the deposit of kaofin "altered or filled" the flood plain, whether the parties should be "grandfathered" under N.J.A.C. 7:13-2.2(b), and whether the DEP is estopped from prosecuting the action. DEP's principal contention at argument before us is that violation of the 1994 BUD exemption letter justified its rescission and, therefore, the alleged violations occurred because acceptance of the BUD letter in 1994 constituted an acknowledgment that kaofin constituted solid waste and was subject to regulation under the SWMA. Of significance, the Commissioner, like the ALJ, found that Marcal "accepted" DEP's "classification of Kaofin as a solid waste by the failure to challenge in, and by accepting the necessity for, the 1994 BUD letter."
Marcal is a paper manufacturer that operates a paper mill in Elmwood Park. Marcal produces various paper products and recycles waste paper. In the 1980s, Marcel developed a product from leftover elements not recycled into paper products and gave it the trade name "kaofin." Kaofin is partially dewatered material and consists mainly of kaolin clay and short paper cellulose fibers not reusable in paper recycling. The DEP has deemed kaofin to be industrial residual waste subject to solid waste regulation. Marcal disagreed that kaofin is solid waste or sludge.
The New Jersey Meadowlands Commission and its predecessor, the Hackensack Meadowlands Development Commission, accepted kaofin at its landfills. It was blended with soil and used as a daily cover, and Marcal paid the landfills to accept the material. In 1994 Top Soil started to receive kaofin from Marcal, and was paid by Marcal to remove 79,000 tons of kaofin between July 1995 and June 1997.
Allan Rombough, Top Soil's president and general manager, stated in a deposition that kaofin, dirt, top soil and rocks are stored at the Top Soil site. He purchased the business from prior owners in 1984. At the time of his deposition on February 13, 2003, he stated that approximately 60,000 to 80,000 cubic yards of kaofin were on the site, which weighed about 55,000 tons. Initially, Marcal paid Verniero Trucking to transport the kaofin, and Verniero Trucking paid Top Soil to accept the kaofin at the Top Soil site. Later, Marcal paid Top Soil directly.
In his certification, Rombough stated that the prior owners had mixed, stored, and blended soil and top soil on the site since 1954. He claimed that to the extent that Top Soil may be performing operations in a floodplain, those operations have been performed in that area for over fifty years.
In 1992 and 1993, Marcal submitted tests of kaofin to the DEP that Marcal claims show that levels of PCP (Phencyclidine) as well as the levels of certain other elements were within the range acceptable to the Food and Drug Administration and the Environmental Protection Agency. Marcal explained that it planned to sell kaofin for use as "floor absorbents, pet litter, spill control and management materials, and agricultural chemical carriers."
On May 31, 1994, the DEP wrote to Marcal and stated that it would consider kaofin to be a recycled product when produced and sold for the uses outlined by Marcal. DEP concluded that kaofin would not be subject to regulations under the SWMA or the Pollutant Discharge Elimination System when used in the manner that Marcal had suggested.
Marcal then applied to the DEP for a BUD exemption letter providing that kaofin is exempt from solid waste regulations as a recycled non-hazardous material to be reintroduced into the economic mainstream. On June 8, 1994, DEP, through its Director of the Division of Solid Waste Management, issued what the parties call the "BUD letter," granting kaofin an "exemption from the solid waste regulations" for permitted uses set forth in the BUD. The letter states that:
The following applications of Kaofin are herewith conditionally exempted in New Jersey.
. A cement component added to the
kiln by cement manufacturers -
(no limit on quantity)
. Cover and cap material at
permitted landfills - (site-
specific land-fill limitation
. A component added to road
aggregate and construction
sand - (up to 25% scale-
. A blending component for soil,
sand, compost and other
vegetative support materials
- (up to 25% scale weight
The letter further states that any other uses have to be approved on a case-by-case basis. The exemption letter also includes the following conditions:
Based on the analyses the Department has received from Marcal of the Kaofin, the Department hereby grants a conditioned exemption to Kaofin for use as a recycled product pursuant to N.J.A.C. 7:26-1.1(a)1, so long as the following conditions are met:
. Marcal is required to provide a
detailed summation of Kaofin
distribution and use on a quarterly
(3 month) basis.
. Detailed analyses of other constituents
and contaminants will be provided by
Marcal to all prospective users of
Kaofin before shipment and use.
. Kaofin must be between 40-70% water to
eligible for the uses described
. Marcal agrees to comply with the intent
and spirit of the memorandum of
understanding, and any subsequent
similar or related agreement, developed
by the federal United States
Environmental Protection Agency (USEPA)
in response to a USEPA proposed rule
under Section 6 and of the Toxic
Substances Contract Act (TSCA) (56 Fed.
Reg. 21802; Docket OPTS-62100).
. Kaofin must provide a beneficial use
either as a raw material or directly as
a product in the uses to which it is
applied. Marcal is responsible for
being able to provide such evidence on
request from the Department. In using
Kaofin for beneficial uses either as a
replacement of raw materials or
products, Kaofin must be able to meet
the same general physical character and
chemical composition that is
consistently equivalent to or exceeds
the character and composition of the
intentionally manufactured product or
produced raw material that it is
replacing, and must not be shown
present a greater threat of harm to
human health or the environment than
the use of the product which it is
replacing. Marcal should make
contractual arrangements with its
customers so that it can obtain
and maintain the foregoing information.
. Marcal must report any changes in
feedstock or processing to the
Department before marketing any Kaofin
product as a result of those changes.
. Kaofin must be used in accordance with
all applicable federal, state, and
local laws and regulations. It is the
responsibility of Marcal to provide to
its customers information about Kaofin
that they can use together with the
proper performance of their own
responsibilities to maintain compliance.
The Department recommends that Marcal
furnish product and application
literature to its customers that will
assist them in their use of Kaofin in
compliance with federal, state and local
laws and regulations.
The DEP indicated it would "vigorously monitor and assess compliance with the conditions of [the] exemption" and that the exemption only applied "to the activities as specified" in the letter.
In addition, the BUD exemption letter further advised:
It is the responsibility of the owner/operator to properly manage and characterize/classify materials and to determine if materials are contaminated. The Department reserves the right to require or conduct testing. If the Department should find that Kaofin has been used or reused in a manner which violates or exceeds the scope of the exemption granted herein, Marcal shall be responsible for its proper remediation as well as for the remediation of all other media impacted. Specifically, the DEPE may take action if more stringent standards or other criteria are adopted or standards were improperly applied to use-reuse application. This exemption relates only to the specific issues contained herein. The use of Kaofin shall not relieve any person from obtaining any and all permits required from any federal, state, county or local agency and complying with all requirements applicable to their own activities. This exemption does not grant permission to fill or alter floodplain areas, riparian lands, freshwater wetlands or surface water runoff conditions without the appropriate authorizations. This exemption is granted without precedent and prejudice and shall not affect any future enforcement action the Department or any other agency may take against any person.
On September 5, 1996, the DEP wrote to Marcal stating that Marcal had failed to submit quarterly reports showing distribution of kaofin as required in the 1994 exemption letter. Marcal replied with copies of reports for the period from July 1994 through June 1996, and later submitted reports for the rest of 1996 through the second quarter of 1997.
On March 3, 1997, Arthur Goldberg of the DEP observed a pile of kaofin on the Top Soil site that was "about 400 feet long" and "about 20 feet high." He also saw some "very small piles of kaofin very near the river's edge." He believed that it must "enter the water" "when it rains."
On March 17, 1997, the Department of Law and Public Safety informed the DEP that the Division of Criminal Justice was conducting an investigation concerning the discovery of kaofin in waters "near" the Top Soil site. The Division requested that the DEP "refrain from taking any civil enforcement action," other than ordering "appropriate remediation," against Top Soil to avoid "double jeopardy problems" during the pendency of the investigation.
On March 19, 1997, as the result of a DEP investigation, the DEP served Top Soil with a Notice of Violation (NOV), pursuant to the New Jersey Water Pollution Control Act and its implementing regulations, alleging that Top Soil had discharged kaofin into surface waters and potentially discharged kaofin into ground waters. On July 10, 1997, the DEP issued another NOV, based on a violation of N.J.A.C. 7:26-2.8(e), for disposal of solid waste without "a solid waste facility (SWF) permit."
On July 18, 1997, the DEP wrote to Marcal and stated that based on evaluations of analytical results of testing done on kaofin, it was immediately "rescinding" the 1994 BUD exemption letter. The DEP directed that Marcal not remove kaofin from its mill site in Elmwood Park and that Marcal "instruct all persons using or distributing kaofin to cease all uses until further notice."
In a deposition, Rombough stated that in Spring 1997, Top Soil "stopped accepting kaofin," because "the NJDEP stopped the sale of kaofin because of carcinogens." The material could not be blended into top soil and was then stockpiled, and Rombough believed that it would cost his company approximately $4,000,000 to remove kaofin from the Top Soil site. Rombough further testified in his deposition that some kaofin had washed into the river due to erosion, a "little bit" at a time. Top Soil then built a "giant berm" around the pile and contained the runoff.
In January 1998, Dewling Associates prepared a report for Marcal that delineated the physical presence of "in-river" kaofin "in [the] vicinity" of Top Soil's site. Included is a map showing the location of the kaofin stockpile on the Top Soil site. The report states that a photograph from April 10, 1997, shows evidence of slope failure in the area where kaofin "apparently entered the river."
In the November 4, 1999, Administrative Order and Notice of Civil Administrative Penalty Assessments (AONOCAPA), the DEP alleged that conditions at the Top Soil site had not changed since the July 10, 1997, NOV that listed violations under N.J.A.C. 7:26-2.8(e). Marcal was simultaneously ordered to "only utilize or dispose of kaofin in strict accordance with [DEP] approvals and regulations," with specific references to N.J.S.A. 13:1E-9.3(e) and N.J.A.C. 7:26-8(e). The AONOCAPA sought removal of kaofin from the Top Soil site and other locations "within 90 days." The DEP sought a penalty of $87,500 against Marcal, $20,000 against Top Soil, and penalties against other entities that had dealings with Marcal.
Findings in the first AONOCAPA were amended in the AONOCAPA of May 17, 2000, which found the same conditions existed at the Top Soil site and added that kaofin had washed into the Ramapo River as the result of Hurricane Floyd in September 1999. In the AONOCAPA dated May 17, 2000, the DEP charged Marcal with failure to transport kaofin to Top Soil's site in compliance with the conditions in the 1994 BUD exemption letter. The DEP charged that conditions at the Top Soil site violated the conditional approval in the 1994 exemption letter. The AONOCAPA again ordered compliance with DEP approvals and regulations and removal of kaofin from the Top Soil site and other locations in accordance with procedures authorized by the Solid Waste Management Act "within 90 days." The DEP sought a penalty of $52,500 against Marcal and $20,000 against Top Soil. The AONOCAPA also referred to other authorized penalties for noncompliance.
In order to understand our disposition, we set forth the ALJ's opinion in detail. The ALJ concluded that the violations for which the DEP sought partial summary decision were "clearly within the allegations of the two AONOCAPAs as [was] the relief sought," and that Top Soil and Marcal did not dispute the material facts in this matter. She summarized the background as far back as 1985 and 1986, when the DEP had cited Top Soil for placing fill within the floodway of the Pompton River without a stream encroachment permit in violation of the FHACA. Top Soil was served with an NOV, dated March 18, 1993, as the result of an inspection conducted on October 28, 1992, for stockpiling soil materials within the delineated floodway of the Pompton River. "These dates came before the March 20, 1995, [cutoff] date in the regulation and before the first deliveries of kaofin to the site." Thus, the ALJ concluded that "there [was] persuasive evidence in the record that the placement of any substance in this floodway was not, in fact, a grandfathered activity because it did not conform to all relevant laws and regulations before March 20, 1995." See N.J.A.C. 7:13-2.2(b)(1).
In rejecting Top Soil's and Marcal's argument that they were exempt from the regulation, the ALJ also relied on the public policy embodied in the FHACA, N.J.S.A. 58:16A-50(b), and the SWMA, N.J.S.A. 13:1E-2. The ALJ explained that these "policies do not permit an exemption to place unlimited fill in a floodway." The ALJ also relied on the comments made during the adoption of N.J.A.C. 7:13-2.2(b), when the DEP explained that the exemptions to the prohibited uses were for limited socio-economic reasons; "that the claims for exemption made by Top Soil and Marcal satisfied none of the social purposes for the exemptions [and that] they only sought to avoid the economic impact of remediating the [Top Soil] site." Therefore, the ALJ concluded "that Top Soil was not entitled to an exemption as a grandfathered use pursuant to N.J.A.C. 7:13-2.2(b)(1)."
The ALJ added that "[i]n any event, the BUD letter exempting kaofin from regulation as solid waste specifically banned its placement in floodplain areas, riparian lands, freshwater wetlands, or surface runoff areas without appropriate authorizations from the DEP." Marcal had thus been "advised to make contractual arrangements with Top Soil to oversee the storage and use of kaofin in order to prevent a threat to the environment." In addition, the ALJ noted the provision in the exemption letter that "the DEPE may take action if more stringent standards or other criteria are adopted." Therefore, she believed that "any alleged grandfathering of the activity was effectively extinguished by the terms of the BUD" exemption letter. "As a result, whether or not Top Soil was grandfathered with respect to ongoing stockpiling of other materials," the ALJ concluded that "it was specifically prohibited by the BUD from placing kaofin in the floodway and it was incumbent upon Marcal to see that this did not happen."
The ALJ also concluded, by relying on N.J.A.C. 7:13-2.2, that "with or without the claimed exemption," "Top Soil and Marcal were prohibited from adding any fill, wet or dry, that would raise the existing grade of the receiving area and/or create an obstruction to flow, irrespective of whether the material added was solid waste or an exempted end-product, in beneficial use and still in the stream of commerce." She further found that it was "clear from the undisputed facts that kaofin was stockpiled for years in the floodway and this was not a temporary situation." Thus, "Top Soil was in violation of the conditions set forth in the BUD [exemption letter] prohibiting the deposit of fill in the floodplain and Marcal was equally responsible for the problem under the terms of the BUD."
The ALJ found "no merit" to the arguments of Top Soil and Marcal "that an unidentified DEP employee gave Top Soil permission" to place kaofin in the floodplain. In this connection, she noted that "[t]he law is clear as to the application of the doctrine of equitable estoppel to a State agency," and that "neither Top Soil nor Marcal could show that it would suffer a 'manifest injustice' by requiring them to remove the stockpiled kaofin and assessing penalties against them." She found support for both removal and the penalty in the public policy "to protect the health, safety and welfare of the people" of New Jersey. She declared that Marcal's and Top Soil's interests were "purely an economic use which is not to be given preference at the expense of the public welfare."
The ALJ further "found that Top Soil and Marcal were not induced to change their positions in reliance upon an alleged representation by an unidentified DEP employee." Top Soil was already stockpiling materials in the floodway over a period of years before the alleged approval by a DEP employee," which "occurred in spite of a number of prior citations for violations of the [FHACA]." Because "Top Soil did not initiate the practice based upon the alleged representation," Marcal and Top Soil were "entitled to no equitable relief on that basis."
Further, the ALJ stated that the exemption letter "specifically prohibit[ed] the placement of Kaofin in the floodway" and that "Marcal accepted this condition in exchange for allowing limited commercial use of its product." The exemption letter "also required Marcal to monitor the situation and Marcal agreed." Further, as there was "no evidence that Marcal challenged these conditions at the time the BUD was issued," the ALJ found the present challenge to be untimely.
She also found no merit to Marcal's and Top Soil's argument "that the DEP prevented remediation of the problem by interfering with or setting severe restrictions upon the transportation of kaofin off the Top Soil site." She stated that "[f]rom the outset, Top Soil placed kaofin in the floodway in violation of the conditions in the BUD," so the material lost its exemption and "became solid waste subject to regulation." She believed the argument of interference by the DEP was "based on subsequent questions concerning the toxicity of the kaofin but the problem was initially created by Top Soil." Thus, the ALJ concluded that Marcal and Top Soil did not demonstrate "an equitable basis upon which to estop the DEP from enforcing the solid waste regulations against them."
Next, the ALJ discussed the alleged violation of N.J.A.C. 7:26-2.8(e), which provides that "[n]o person shall engage or continue to engage, unless exempt by N.J.A.C. 7:26-1.1, 1.7 or 1.8 in the disposal of solid waste in this State without first having filed a completed application for and received approval of a [Solid Waste Facility] Permit." She noted the definition of solid waste in N.J.A.C. 7:26-1.6(a) as "any garbage, refuse, sludge, or any other waste material" with certain exceptions not including material which "may enter the environment or be emitted into the air or discharged into ground or surface waters." See N.J.A.C. 7:26-1.6(c). And she found that "Top Soil's placement of the kaofin in the floodway where it could predictably be expected to enter state rivers and the prohibition of such a placement in the BUD" required her to conclude "that the kaofin, as stockpiled by Top Soil, constitute[d] solid waste as defined in N.J.A.C. 7:26-1.6."
The ALJ also concluded that the kaofin, as placed, was not exempt from solid waste regulation as a "beneficial use project," pursuant to N.J.A.C. 7:26-1.7(g)(4)(vi), because Top Soil's use was not
designed and managed in a manner consistent with the environmental statutes applicable to the project, including but not limited to, the Solid Waste Management Act, N.J.S.A. 13:1E-1 et seq., the Water Pollution Control Act, N.J.S.A. 58:10A-1, et seq., the Air Pollution Control Act, N.J.S.A. 26:2C-1, et seq., and the rules adopted thereunder, and any permits or orders issued pursuant thereto.
The ALJ added that "[s]pecifically, this use was not consistent with the [FHAC]" and "[t]he exemption provided by N.J.A.C. 7:26-1.8 is irrelevant to the issues in this matter."
Next, the ALJ quoted N.J.A.C. 7:26-1.4, that a "solid waste facility" includes any site used for the "storage, collection, processing, transfer, transportation, separation, recycling, recovering or disposal of solid waste," and found that "since Top Soil used the floodway to store, collect, transfer and dispose of solid waste, as defined in N.J.A.C. 7:26-1.6," it engaged in the disposal of solid waste and operated a solid waste facility without a permit in violation of N.J.A.C. 7:26-2.8(e).
Further, the ALJ concluded that, based upon the conditions in the BUD, as accepted by Marcal, Marcal violated N.J.S.A. 13:1E-9.3(b) of the SWMA "for transporting solid waste to a destination not authorized by the DEP." She stated that "Marcal's intent, or lack thereof, is irrelevant to the violation of this regulation since it is specifically excluded as a defense by the regulation itself." The ALJ concluded that Marcal and Top Soil are "jointly liable" for the Top Soil site's remediation as required by the DEP.
As noted above, the ALJ upheld the $20,000 penalty assessment against Top Soil, but stated the DEP had not submitted a single penalty assessment against Marcal limited to alleged violations with respect to Top Soil. According to the ALJ, "the penalties assessed against Marcal, as calculated by the DEP in the appendices to the AONOCAPAs, included violations with other parties that were not part of the motion for summary decision." The ALJ therefore imposed no penalties against Marcal.
Finally, the ALJ stated that her initial decision on liability "was not intended to address the issue of the DEP's rescission of the BUD [exemption letter]" that was the subject of a separate proceeding.
In sum, the ALJ ordered that the motion of the DEP for partial summary decision as to the liability of Marcal and Top Soil and the monetary penalty to be imposed on Top Soil Depot be granted. She further ordered Marcal and Top Soil to "immediately remediate the Top Soil site in a manner subject to the approval of the DEP."
As previously noted, in her final administrative decision, the Commissioner addressed the exceptions that all parties filed to the initial decision. She explained that Marcal and Top Soil made five of the same arguments. They asserted that the ALJ erred because: (a) kaofin is not a solid waste; (b) the use was grandfathered under N.J.A.C. 7:13-2.2 (b)(1); (c) kaofin did not alter or fill the floodplain; (d) estoppel was unfairly rejected; and (e) the DEP's rescission of the 1994 BUD exemption letter was arbitrary and capricious. In addition, Top Soil argued that the ALJ lacked jurisdiction to determine whether the floodplain had been filled or altered in violation of the FHACA. Further, the DEP sought to have the initial decision corrected to find Top Soil and Marcal "jointly and severally" liable in accordance with the 1999 and 2000 AONOCAPAs.
The Commissioner adopted the factual findings and legal conclusions set forth in the initial decision. She then found that:
Respondents violated the SWMA by filling and altering the floodplain with Kaofin at the Top Soil site without authorization from the Department. The Initial Decision correctly concluded that Respondents violated the SWMA by stockpiling the Kaofin in the floodplain at the Top Soil site. The record supports the finding that Respondents placed the Kaofin in the floodplain of the Ramapo and Pompton Rivers for approximately two years, and further that such placement altered or filled the floodplain as those terms are defined in N.J.A.C. 7:13-1.2. Marcal accepted the Department's classification of Kaofin as a solid waste by the failure to challenge that classification in, and by accepting the necessity for, the 1994 BUD letter. Marcal cannot now argue that Kaofin is not subject to the SWMA in the absence of the BUD.
The Initial Decision's dismissal of Respondents estoppel defense, as well as Respondents' argument that placement of the Kaofin was a grandfathered use under N.J.A.C. 7:13-2.2(b)(1) were in accordance with the applicable law. Since the AONOCAPAs charged Respondents with violations of the SWMA, and not the FHACA, Top Soil's jurisdictional argument also fails. Finally, the Initial Decision's finding the Kaofin was stockpiled in a floodplain at the Top Soil site is well supported by the factual record, and, therefore, the Initial Decision correctly disregarded Respondents' claim that DEP's
rescission of the 1994 BUD letter was arbitrary and capricious.
Addressing the DEP's argument that Marcal and Top Soil are "jointly and severally" rather than just "jointly" liable, the Commissioner considered the ALJ's language to be an "oversight." Since the ALJ noted that the DEP's motion sought to hold Top Soil and Marcal jointly and severally liable for remediation of the Top Soil site, and the initial decision did "not provide any explanation or discussion for the conclusion that only joint liability applies," the Commissioner found joint and several liability to be appropriate.
Top Soil and Marcal contend that the ALJ and the Commissioner erred in concluding kaofin constituted "solid waste." This is a fundamental contention from which others follow. They contend that kaofin did not constitute "solid waste" as defined in N.J.S.A. 13:1E-3 and cannot be regulated as such. Marcal further asserts it did not violate N.J.S.A. 13:1E-9.3(b). Marcal and Top Soil also assert kaofin does not constitute "solid waste" as defined in N.J.S.A. 7:26-1.6. Top Soil therefore argues that it did not violate N.J.A.C. 7:26-2.8(e), as found by the ALJ and Commissioner.
The parties agree that the DEP placed no direct evidence in the record about the composition of kaofin to support its claim that kaofin is a solid waste or hazardous. In fact, the composition and safety of kaofin was never raised or contested.
In finding that kaofin constituted a solid waste, the ALJ relied on the definition of solid waste in the regulations. N.J.A.C. 7:26-1.6. As already noted, the ALJ explained that, "[b]ased upon Top Soil's placement of the kaofin in the floodway where it could predictably be expected to enter state rivers and the prohibition of such a placement in the BUD" exemption letter, "the kaofin, as stockpiled by Top Soil, constituted solid waste as defined in N.J.A.C. 7:26-1.6," and that no exemption applied under N.J.A.C. 7:26-1.6(c) because it "discharged, deposited, injected, dumped, spilled, leaked or placed into or on any land or water so that such material or any constituent thereof may enter the environment or be emitted into the air or discharged into ground or surface waters." N.J.A.C. 7:26-1.6(c).
There was a clear basis in the record for the determination that because Top Soil collected, transferred and disposed of solid waste, as defined in N.J.A.C. 7:26-1.6(c), in the floodway, it engaged in the disposal of solid waste in that it operated a solid waste facility without a permit in violation of N.J.A.C. 7:26-2.8(e). Moreover, if Marcal violated the conditions of the BUD exemption letter, Marcal violated the SWMA, specifically N.J.S.A. 13:1E-9.3(b), for transporting solid waste, as defined in N.J.A.C. 7:26-1.6, to a destination not authorized by the DEP, and the ALJ and Commissioner in essence found that because Marcal agreed to the provisions of the 1994 BUD exemption letter, it had agreed, for all purposes, that kaofin constituted solid waste and was subject to regulations under the SWMA. Other findings relating to violations therefore flow from the necessary conclusions that by requesting or accepting the letter, kaofin was subject to regulation as "solid waste" under the SWMA.
Top Soil and Marcal contend that, irrespective of whether kaofin is solid waste, their operations are protected by the grandfather provisions of N.J.A.C. 7:13-2.2(b)(1). They note that the placement of kaofin at the Top Soil site predates the March 20, 1995, cutoff in the grandfather provision. See N.J.A.C. 7:13-2.2(b)(1) (permitting uses lawful prior to March 20, 1995). Further, Marcal asserts that the operation at the Top Soil site is authorized by the BUD letter. However, the ALJ found that because the DEP had cited Top Soil in 1985 and 1986 for placing fill in the floodway without a stream encroachment permit, there was a violation of the FHACA and the pre-1995 use was not lawful. She therefore stated that the BUD letter exemption was not controlling because it only applied to uses existing prior to enactment of the FHACA that were in conformance with all relevant laws and regulations. See N.J.A.C. 7:13-2.2(b)(1)(i) (which requires the creation of no further obstruction to flow). See also N.J.A.C. 7:13-2.2(b)(1)(iv) (requiring an application for a permit).
But Marcal develops, by virtue of the 1994 BUD exemption letter, that the DEP must have been satisfied that the 1985 and 1986 violations had been rectified, and the depositing of kaofin at the Top Soil site was lawful in March 1995. In any event, Marcal claims there is a factual dispute as to whether Top Soil's operations were in compliance with the law prior to March 20, 1995.
Against this background, the 1994 BUD exemption letter and its impact on the grandfather provisions takes on great significance, as does the validity of its rescission after March 20, 1995. Significantly, the BUD letter was found to be the basis for finding that kaofin was subject to regulation under the Solid Waste Management Act. Yet Marcal was not permitted to assert its factual assertions regarding that issue and its understanding of the purpose of the letter in that respect. To the contrary, the ALJ expressly stated:
[T]his partial decision on liability is not intended to address the issue of the DEP's rescission of the BUD which is presently the subject of a separate appeal [from DEP action]. It addresses only the violations of Marcal and Top Soil Depot with respect to the Kaofin delivered to Top Soil Depot.
Moreover, Marcal and Top Soil assert that the ALJ and Commissioner improperly rejected Marcal's estoppel argument. On the underlying motion, and again before the Commissioner, Marcal and Top Soil argued that the DEP was estopped from arguing that Marcal and Top Soil violated the 1994 exemption letter.
The ALJ rejected the estoppel contention, finding no merit to the claim that "an unidentified DEP employee gave Top Soil permission to carry on this activity" of depositing kaofin in the floodplain. In his deposition Top Soil's president and general manager, Rombough, stated that an unidentified DEP employee had approved the placement of kaofin at the site without raising a floodplain issue. Moreover, Marcal claims that the DEP cannot dispute that when the BUD letter issued in 1994, it was aware that kaofin was being used and temporarily stored at the Top Soil site and permitted it despite prior NOVs.
It appears that discovery on the "grandfathering" and estoppel issues was denied, particularly because no issue of material fact was found to be in dispute and the challenged rescission of the BUD exemption was the subject of separate proceedings pending before the OAL.
Marcal does not develop its reported unsuccessful efforts to consolidate the proceedings, but we are satisfied that the record does reflect such efforts to challenge the rescission of the BUD letter and its impact on these issues. In its brief before us, DEP acknowledges that the "Assignment Judge "denied Marcal's request to consolidate two other Office of Administrative Law ('OAL') cases (EWR 1300-00 N and EWR-5190-99N) with the AONOCAPA here at issue." While it also says "no subsequent application for consolidation to the assigned ALJ" was filed, Marcal's letter to the ALJ-Assignment Judge, dated August 23, 2005, notes although two of the four matters were consolidated, the judge "declined . . . to grant Marcal's request to consolidate all four matters into a single case."
We are also satisfied that this appeal cannot be properly, or finally, decided without regard to the OAL proceeding related to the BUD letter. In fact, the ALJ expressly stated that her decision in this case did not consider or address the impact of the 1994 BUD exemption letter. Whether rescission of that letter was proper was not decided but may impact on the "grandfather" and estoppel issues.
Moreover, at argument before us, the Attorney General acknowledged that the other OAL proceeding would consider whether kaofin constitutes "solid waste," and Marcal asserted that those proceedings could be conducted within one week. On the other hand, DEP claimed that those proceedings were also ripe for summary disposition. Accordingly, we deem it appropriate for the other OAL proceedings to be resolved before there can be finality to this matter. Furthermore, while not developed in the record before us because of the grant of the summary decision, Marcal was deprived of discovery designed to develop what it expressly represented to us at oral argument - that representatives at the "highest level" of the DEP knew and approved of the method of disposing of kaofin, a fact clearly related to the estoppel contention. Counsel for Marcal expressly indicated, as an "officer of the court," that the operation was approved by one of the two DEP Assistant Commissioners who could speak for all divisions of the Department. A certification in the record by Top Soil's Rombough, while not going that far, does support the claim sufficiently to permit discovery in furtherance of the argument of estoppel.
Accordingly, we remand for the limited purpose of discovery on the estoppel issue, and pending resolution of the other proceedings now pending before the OAL. Following initial determination in that matter and the discovery we order, the Commissioner shall reconsider this case. Thereafter, the Commissioner shall reconsider her determination and, if it remains the same, order completion of the administrative proceedings including imposition of the penalties. Upon entry of the Commissioner's final administrative determination, the parties may supplement their briefs before us within thirty days after the decision on the remand.
We are satisfied that there is no safety or health concern requiring expeditious resolution of the case. The record contains a certification showing testing which revealed that kaofin was safe for all purposes including soil blending. DEP does not contest the assertion and indicates any such question will be addressed in the other OAL proceeding. To the extent there may be a perceived health or safety issue, it can be addressed in the other OAL matter or in the pending proceeding before the Chancery Division, and there is no ongoing delivery of kaofin to the Top Soil site.
When the proceedings in the Chancery Division are completed, the parties may move to have any appeal therefrom considered with this one. We are now of the view that proper resolution of this matter requires a complete record on all related issues so that the case can be properly considered as a whole. Cf. Parker v. City of Trenton, 382 N.J. Super. 454 (App. Div. 2006).
The matter is remanded for the purposes stated in this opinion. We retain jurisdiction.
The DEP had sought penalties of $20,000 and up to $87,500 respectively, and the ALJ had upheld the assessed amount as to Top Soil. More significantly, appellants claim the remediation will cost up to $4,000,000.
The parties now differ as to the significance of an order entered by the Chancery Division on October 9, 2007. They also differ as to the impact of the proceedings in this matter on that one. In any event, the Chancery Division case, finding a violation of the FHACA and requiring Top Soil to obtain a valid stream encroachment permit from the DEP, is not now before us.
"BUD" refers to a June 1994 Beneficial Use Determination letter in which DEP granted Marcal an exemption from solid waste regulation for uses permitted and on conditions stated in the letter. Marcal maintained the obligation of ensuring that the kaofin would be put to "beneficial use" after the sale to a third party.
The Top Soil site is located within the central Passaic River basin floodplain and the vast majority is in the delineated floodway of the Pompton and Ramapo Rivers.
On May 14, 1997, the DEP issued a letter correcting a prior NOV of March 18, 1993. In the 1993 NOV, the violation was incorrectly identified as occurring in the floodway of the Pompton River when it, in fact, was located in the delineated floodway at "the confluence of the Ramapo and Pequannock Rivers." The May 14, 1997 letter states that as of May 1997, Top Soil had taken no corrective action for its violations.
N.J.S.A. 13:1E-3 provides:
"Solid waste" means garbage, refuse, and other discarded materials resulting from industrial, commercial and agricultural operations, and from domestic and community activities, and shall include all other waste materials including liquids, except for source separated recyclable materials or source separated food waste collected by livestock producers approved by the State Department of Agriculture to collect, prepare and feed such wastes to livestock on their own farms.
N.J.A.C. 7:26-2.8(e) provides: "No person shall engage or continue to engage, unless exempt by N.J.A.C. 7:26-1.1, 1.7 or 1.8 in the disposal of solid waste in this State without first having filed a completed application for and received approval of a SWF Permit." Ibid.
Marcal states that the DEP never pursued the 1985 and 1986 citations and no factual determination was made of any violation.
On May 14, 1997, DEP corrected its March 18, 1993 NOV and stated that there was no corrective action taken for the violations listed in 1993. Thus, according to DEP, Top Soil was not in conformance with all relevant laws to allow the grandfather clause to apply.
This passage, relied upon by DEP in terms of the focus of the case before us, is critical to an understanding of the case. It explains the ALJ's reliance on the regulatory definition and why no penalties were assessed against Marcal which was charged with conduct beyond the Top Soil site. But the question is whether the focus is too narrow and could be so limited.
We recognize that equitable estoppel is rarely invoked against a governmental entity. Middletown Twp. Policemen's Benevolent Ass'n Local No. 124 v. Twp. of Middletown, 162 N.J. 361, 367 (2000). The doctrine will be applied against a governmental entity "only in very compelling circumstances, where the interests of justice, morality and common fairness dictate that course." Maltese v. Twp. of N. Brunswick, 353 N.J. Super. 226, 244-45 (App. Div. 2002). In addition, estoppel is rarely invoked against a governmental entity when it would interfere with essential governmental functions. Id. at 245. We refer to the issue only in the context of whether it should have been rejected summarily in this case.
We do not now decide whether there has to be further proceedings before the OAL on the subjects which may depend on the results of the discovery. We leave that matter for development before the Commissioner.
In fact, we have stayed "enforcement of the Commissioner's final decision under the SWMA," but declined to stay the action in the Chancery Division.
January 23, 2008