RK ASSOCIATES, LLC v. NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION SITE REMEDIATION COMPLIANCE AND ENFORCEMENT and DES CHAMPS LABORATORIES INC
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APPROVAL OF THE APPELLATE DIVISION
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SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-1475-18T1
R&K ASSOCIATES, LLC,
Petitioner-Respondent,
v.
NEW JERSEY DEPARTMENT OF
ENVIRONMENTAL PROTECTION,
SITE REMEDIATION COMPLIANCE
AND ENFORCEMENT,
Respondent-Respondent,
and
DES CHAMPS LABORATORIES,
INC.,
Intervenor-Appellant.
__________________________________
Argued November 4, 2019 - Decided November 19, 2019
Before Judges Sabatino, Geiger and Natali.
On appeal from the New Jersey Department of
Environmental Protection, Docket No. LSR12000-
G000042626.
Daniel L. Schmutter argued the cause for appellant
(Hartman & Winnicki, PC and Greenbaum, Rowe,
Smith & Davis, LLP, attorneys; Daniel L. Schmutter
and Jack Fersko, of counsel and on the briefs; Irene
Hsieh, on the briefs).
John M. Scagnelli argued the cause for respondent
R&K Associates, LLC (Scarinci & Hollenbeck, LLC,
attorneys; John M. Scagnelli, of counsel and on the
brief; William A. Baker, on the brief).
Richard F. Engel, Deputy Attorney General, argued the
cause for respondent New Jersey Department of
Environmental Protection (Gurbir S. Grewal, Attorney
General, attorney; Melissa H. Raksa, Assistant
Attorney General, of counsel; Bethanne Sonne Prugh,
Deputy Attorney General, on the brief).
PER CURIAM
This case has been before our court on three previous occasions. In each
instance, we reversed a final agency decision of the New Jersey Department of
Environmental Protection ("DEP") either granting or denying Des Champs
Laboratories, Inc. ("Des Champs") what is known as a de minimis quantity
exemption ("DQE") under the Industrial Site Recovery Act ("ISRA"), N.J.S.A.
13:1K-9.7, and the associated ISRA regulations, N.J.A.C. 7:26B-5.9 to -8.1.
Des Champs presently appeals the October 28, 2018 final agency decision
of DEP Commissioner Catherine McCabe denying it a DQE, after the
completion of the most recent remand directed by our court. Adopting the post-
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remand findings of an Administrative Law Judge ("ALJ"), the Commissioner
concluded that Des Champs failed to prove by a preponderance of the evidence
at the administrative hearings that it meets the criteria for a DQE. For the
reasons that follow, we affirm.
I.
We incorporate by reference and assume the reader's familiarity with the
facts and procedural history reached in our three previous opinions. We
summarize that lengthy background as follows.
From 1982 to 1996 Des Champs occupied an industrial facility on Okner
Parkway in Livingston where it assembled heat recovery ventilators. In early
1990, Des Champs moved a majority of its manufacturing operations to a new
facility in Virginia, but several employees remained at the Okner site. In 1996
Des Champs decided to cease its operations at Okner altogether. Before
terminating its operations on the site, Des Champs submitted to the DEP a
preliminary assessment report, in which the company's owner certified that the
only hazardous substances it used at the site were five gallons of gasoline and
several tanks of propane gas.
In January 1997, Des Champs submitted to the DEP what is known as a
"negative declaration" certifying that there had been no discharge of hazardous
A-1475-18T1
3
substances from the property. Based on that information, the DEP issued a no
further action ("NFA") letter in January 1997 authorizing Des Champs to cease
operations at the Okner location.
In September 1997, R&K Associates, LLC ("R&K") bought the property
from Des Champs. R&K remains the property's current owner.
In 2005, the DEP began to investigate groundwater contamination in the
Township of Livingston. The contamination was traced to the Okner property
formerly occupied by Des Champs. As a result, in November 2008, the DEP
rescinded its January 1997 NFA letter and directed Des Champs to investigate
the groundwater contamination and submit a site investigation report in
compliance with the ISRA.1
In January 2009, Des Champs applied for a DQE pursuant to N.J.S.A.
13:1K-9.7, seeking an exemption from the strict liability remediation
requirements of ISRA. To support that application, Des Champs's owner
submitted an affidavit contending that the Okner site had, at maximum, only the
following: five gallons of gasoline, ten gallons of hydraulic oil, five gallons of
1
According to the DEP's counsel at oral argument on the appeal, the site
investigation has yet to be completed.
A-1475-18T1
4
motor oil, fifteen spray cans of paint, three cartridges of copy machine toner ,
and ten gallons of oil-based paints.
On January 21, 2011, the DEP denied Des Champs' DQE application
because the company had failed to certify that the property was free of
contamination. The first appeal ensued.
In our published decision, Des Champs Labs. Inc., v. Martin, 427 N.J.
Super. 84 (App. Div. 2012), we vacated the DEP's denial of a DQE to Des
Champs. We did so because we found that ISRA did not authorize the DEP to
require a DQE applicant to certify that the property is free of contamination.
We remanded the matter for further consideration by the DEP, this time without
regard to the improper condition.
On remand in August 2012, the DEP granted Des Champs the DQE. This
time, R&K, which opposed Des Champs' receipt of a DQE, appealed.
On May 16, 2013, in the second appeal, we reversed the grant of the DQE
because R&K had not been provided with a chance to participate in the remand
proceedings. R&K Assocs., LLC v. N.J. Dep't of Envtl. Prot., No. A-0413-12
(App. Div. May 16, 2013) ("Des Champs II").
By this point the DEP determined that the contested factual issues should
be heard before an ALJ. Consequently, an ALJ held a three-day Office of
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Administrative Law ("OAL") hearing in June and August 2014, at which seven
witnesses testified. Because of the long passage of time, the witnesses had
difficulty recalling the operative facts from eighteen years earlier. The ALJ
recognized this impediment in her initial decision, finding that "99% of the
testimony was not based on present day recollection of past events but rather
was based on each witness' genuine belief that he would have most likely done
x, y or z back then, or it was recollection refreshed through historic documents."
Following the administrative hearings, the ALJ recommended the denial
of the DQE. The ALJ determined that, as a matter of law, a DQE cannot be
obtained by a former owner of the property such as Des Champs. However, the
ALJ did note in her decision that, had this apparent legal requirement not
existed, she would have recommended issuance of the DQE because she found
that R&K had the burden of proof in the matter and had not sustained that
burden.2
DEP Commissioner Bob Martin adopted the ALJ's determination, with
certain modifications, in a decision dated April 6, 2015. Among other things,
2
The ALJ's initial decision did contain a caveat with a factual finding that Des
Champs had provided its consultant with "selective information" about its
activities on site. The ALJ identified this non-disclosure as an "alternative
basis" for denying Des Champs a DQE. We discus that caveat, infra, in Part II.
A-1475-18T1
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in the course of his decision Commissioner Martin criticized Des Champs for
not retaining necessary records that would help substantiate what activities
actually had occurred at the site.
The third appeal then ensued, in which Des Champs successfully argued
to this court that a former owner of a property such as itself can be eligible to
obtain a DQE. R&K Assocs., LLC v. N.J. Dep't of Envtl. Prot., A-4177-14
(App. Div. Apr. 10, 2017) ("Des Champs III"). Nonetheless, we found in our
opinion that the burden of proof properly should not rest on the objector (here,
R&K) but rather should rest on the applicant (here, Des Champs), by a
preponderance of the evidence. Id., slip op. at 22.
Based on these determinations, we remanded the case yet another time
back to the DEP. In our unpublished opinion, we provided very detailed
instructions to the DEP and the ALJ, explaining:
Improvidently shifting the burden at the hearing
to R&K, the ALJ concluded from the rather scant and
stale proofs tendered by Des Champs' witnesses that the
evidence was sufficient to justify the issuance of a
DQE, but for the legal impediments we have already
discussed. We do not know from the ALJ's decision
whether, if the burden had appropriately remained with
Des Champs, she would have reached the same
conclusions about the strength of the record.
In light of this fundamental error of burden
allocation, we are constrained to remand the matter so
A-1475-18T1
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that the ALJ now can consider the proofs in a manner
that appropriately requires Des Champs to show its
entitlement to a DQE by a preponderance of the
evidence. We accordingly remand the matter to the
DEP to make such a referral to the ALJ. The ALJ shall
have the discretion to reopen the record as she may see
fit in order to address more fully the pertinent issues.
Counsel promptly shall provide courtesy copies of their
appellate briefs and appendices to assist her in that
endeavor. Following the remand, any aggrieved
party(ies) may seek further review by the
Commissioner, and, beyond that, through an appeal in
this court.
[Des Champs III, slip op. at 23].
The matter was then remanded back again to the ALJ. All parties
stipulated that the existing administrative record developed from 2014 did not
need to be further amplified.
Based on that record, the ALJ reconsidered her previous determination,
and found that the evidence did not justify Des Champs receiving a DQE. The
ALJ noted there were numerous discrepancies in Des Champs' various
submissions to the DEP, that Des Champs failed to identify in its application at
least two of the operations at the Okner facility, and that there was a troublesome
lack of documentation regarding the company's actual usage of hazardous
substances. As the ALJ summarized it:
I must CONCLUDE that Des Champs has failed
to prove that it is factually entitled to a DQE on the
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Property because records have been lost; the agency has
been handicapped in its review role; and there are
simply too many open-ended questions about the
operations' use of hazardous materials during its
heyday.
Commissioner McCabe adopted the ALJ's decision in a final agency
decision in October 2018. The present appeal by De Champs, which is opposed
by both the DEP and R&K, ensued.
Des Champs contends that the ALJ should have adhered to her original
assessment of the record and found the company is entitled to a DQE. Des
Champs argues that the DEP and R&K have mischaracterized the record and
that Des Champs did not mislead the Department concerning its actual on-site
activities. The company maintains the record shows that it only used de minimis
quantities of hazardous substances at the site and is therefore entitled to a DQE.
Des Champs also contends the ALJ was obligated to adhere to her factual
and credibility findings from her 2014 decision, and that she arbitrarily
reconsidered her original assessment of the record without justification.
II.
Our scope of appellate review of Commissioner's McCabe's October 28,
2018 final administrative agency decision is limited. As the Supreme Court has
instructed:
A-1475-18T1
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The appellate court ordinarily should not disturb an
administrative agency's determinations or findings
unless there is a clear showing that (1) the agency did
not follow the law; (2) the decision was arbitrary,
capricious, or unreasonable; or (3) the decision was not
supported by substantial evidence.
[In re Virtua-West Jersey Hosp. Voorhees for a
Certificate of Need, 194 N.J. 413, 422 (2008)].
Des Champs has failed to demonstrate on the present appeal any of these three
limited exceptions to overcome the general policy of judicial deference to the
administrative agency's expertise. The Commissioner's decision: (1) followed
the law; (2) is not demonstrably arbitrary, capricious or unreasonable; and (3) is
adequately supported by substantial evidence in the administrative record.
We acknowledge that this court overturned three previous administrative
decisions of the DEP in this litigation. In each of those instances, however, the
agency had made an unfortunate legal or procedural error. Those errors included
misinterpreting the pertinent statute to require the property to be free of
contamination; denying R&K its legal right as property owner to participate in
the case as an intervenor; and in misconstruing the law to disallow a former
property owner to receive a DQE. Notably for the present appeal, in Des
Champs III we also corrected the agency's misapprehension about the legally
appropriate allocation of the burden of proof. All of those legal issues were
A-1475-18T1
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suitable for this court's de novo review and intervention. Mayflower Sec. Co.
v. Bureau of Sec. in Div. of Consumer Affairs of Dep't of Law & Public Safety,
64 N.J. 85, 93 (1973) (noting that appellate courts are not bound by an
administrative agency's disposition of a legal issue).
The present appeal is markedly different from the three previous ones
because it does not hinge upon a legal issue but instead concerns the strength of
the factual evidence in the record. On remand, the ALJ duly reconsidered her
original decision, and concluded that Des Champs had "failed to prove it is
factually entitled to a DQE." The DEP Commissioner upheld that factual
determination, and so do we.
Des Champs contends, in essence, that the ALJ was stuck with findings
she made in her 2014 original decision, and that this court's remand did not
permit her to change her mind after reflecting further upon the proofs. This
argument misreads our 2017 remand too narrowly and rigidly, and also
misconceives the decisional authority of a judicial officer such as an ALJ.
As the Supreme Court reaffirmed in Lombardi v. Masso, 207 N.J. 517
(2011), it is "well established" that a jurist "'has the inherent power to exercise
in [his or her] sound discretion, to review, revise, reconsider and modify . . .
interlocutory orders at any time prior to the entry of final judgment.'" Id. at 534
A-1475-18T1
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(quoting Johnson v. Cyklop Strapping Corp., 220 N.J. Super. 250, 257 (App.
Div. 1987)) (emphasis added). This power of a judge to reconsider is "rooted in
the common law." Ibid. It is a long-recognized power to grant relief from error
which can be "'exercised in justice and good conscience.'" Id. at 535 (quoting
United States v. Jerry, 487 F.2d 600, 604 (3rd Cir. 1973)). Administrative
tribunals likewise have such "an inherent power, parallel to that of the courts, to
reopen [their] own judgments on equitable grounds in the interests of justice."
Lee v. W.S. Steel Warehousing, 205 N.J. Super. 153, 156 (App. Div. 1985).
As the result of our 2017 opinion vacating the final agency decision on
discrete grounds not at issue here, this administrative case, once again, became
non-final. We made quite clear in our opinion that the ALJ should take a fresh
look at the case, this time placing the burden of persuasion upon Des Champs,
and decide whether "she would have reached the same conclusions about the
strength of the record." Des Champs III, slip op. at 23. The ALJ was explicitly
authorized to weigh the evidence anew. The ALJ did so, this time viewing the
case through a different prism of burden allocation, and she reached a different
outcome. It was not arbitrary or capricious for her to do so.
Des Champs portrays the ALJ's original 2014 decision as if it had
consistently credited the evidence as being in Des Champs' favor. That is not
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so. Indeed, the ALJ in her original decision several times expressed misgivings
and concerns about the relative paucity of evidence and about information that
Des Champs omitted concerning its operations.
Several paragraphs of the 2014 decision focused upon these informational
shortcomings, with respect to what had not been conveyed to Des Champs'
environmental consultant Joseph Pilewski concerning the company's so-called
"paint spray booth" activities and the company's use of a fireproof storage
cabinet. The ALJ also highlighted testimony from Livingston Township Fire
Department witnesses, who described safety concerns regarding the spray booth
and other aspects of the site.
Significantly, in footnote 8 of her 2014 decision, the ALJ made these
adverse factual findings concerning Des Champs' conduct in providing
"selective information" to its consultant about its on-site operations:
Separate and apart from the equitable argument
on waiver of the DQE option, I would CONCLUDE that
the testimony of Des Champs' environmental consultant
is persuasive on the factual point that the company
more likely than not was not eligible for a DQE
exemption initially, and thus an NFA was sought. There
is no reason to doubt the testimony of Pilewski that the
normal decision-tree is to first explore ISRA
exemptions. To the extent that Pilewski was not aware
of potential areas of concerns such as the spray paint
booth or hazardous storage cabinet, I must
CONCLUDE that same was the result of selective
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information produced by Des Champs, the party who
was the only one that could have provided information
not obvious to any third-party observer. Because of the
legal conclusion reached below, I need not rely upon
these conclusions to reach my Initial Decision, but they
are set forth herein as alternative bases for my ruling.
Although this finding is not completely dispositive of the issues, the ALJ saw
fit to reiterate them in full in her post-remand 2018 decision. As the ALJ
explained, her original concerns about "the failure of Des Champs to fully
inform Pilewski of its past manufacturing operations and use of potentially
hazardous materials" are failings that "fall at its [Des Champs'] feet," now that
it bears the burden of proof. The ALJ's explanation is eminently reasonable.
Moreover, Des Champs had an opportunity to attempt to expand the record
and strengthen its proofs on remand. It elected – perhaps for strategic reasons
– not to do so. Accordingly, Des Champs bears responsibility for its lack of
success in surmounting the preponderance standard of proof.
Des Champs further argues that the ALJ was irrevocably bound in 2018
by her 2014 determination that Des Camps' witnesses were credible. It is readily
apparent from an objective reading of the ALJ's 2018 decision that she
reconsidered her original pronouncement in this regard, and, on further
reflection, implicitly found certain aspects of that testimony to be insufficiently
credible to satisfy Des Champs' reallocated burden of proof. To be sure, it would
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have been preferable if the ALJ had been more explicit and detailed about
findings from her 2014 decision that she was now reconsidering. But the gist of
the ALJ's ultimate assessment of the evidence is clear and transparent.
Finally, it bears noting that the ALJ did not stray from her original "bottom
line." The ALJ concluded in 2014 that Des Champs should be denied a DQE.
She reached the same conclusion in 2018, albeit based upon different grounds.
Commissioner McCabe's final agency decision is consequently affirmed.
The matter is now concluded.
Affirmed.
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