Cadgene Family Partnership, Matter of

• Decision Date: 19 October 1995
• Citation: 286 N.J.Super. 270,669 A.2d 239
• Parties: In the Matter of CADGENE FAMILY PARTNERSHIP.
• Court: New Jersey Superior Court — Appellate Division

Page 270

286 N.J.Super. 270

669 A.2d 239

In the Matter of CADGENE FAMILY PARTNERSHIP.

Superior Court of New Jersey Appellate Division.

Argued Sept. 19, 1995.

Decided Oct. 19, 1995.

Timothy S. Haley argued the cause, for appellant Cadgene Family Partnership (Sullivan & Sullivan, attorneys; Arthur J. Sullivan, Jr., of counsel; Mr. Haley, on the brief).

Karen L. Jordan, Deputy Attorney General, argued the cause, for respondent DEP (Deborah T. Poritz, Attorney General, attorney; Mary C. Jacobson, Assistant Attorney General, of counsel; Ms. Jordan, on the brief).

Dennis J. Smith argued the cause, for respondent Paterson Laundry & Dye Works (Clancy, Callahan & Smith, attorneys; Mr. Smith, of counsel; James J. Cronin, on the brief).

Craig S. Provorny argued the cause, for respondent McLean Boulevard Associates (Herold & Haines, attorneys; Anthony J. Reitano, of counsel; Mr. Provorny, on the brief).

The briefs of Cristany Print Works, Inc., Mirarobles, Inc., and Textile Piece and Dyeing Company, Inc. were suppressed.

Before Judges MICHELS, BAIME and KIMMELMAN.

The opinion of the court was delivered by

BAIME, J.A.D.

Cadgene Family Partnership Industrial Establishment (Cadgene) appeals from the action of the Department of Environmental Protection (DEP) rescinding its approvals of Cadgene's letter of non-applicability and negative declaration. The DEP concluded that Cadgene had withheld material information when applying for these approvals. Although phrased in a variety of ways, Cadgene contends (1) the DEP abused its discretion by reopening issues previously decided, (2) the DEP's determination was not supported by sufficient credible evidence in the record, (3) the administrative agency failed to make detailed findings of fact, (4) the regulations in force when the approvals were originally sought were invalid because they were not sufficiently detailed and objective, and (5) the matter should be remanded to the Office of Administrative Law for an adjudicatory hearing. We find no merit in these arguments. R. 2:11-3(e)(1)(D) and (E).

I.

The Environmental Cleanup Responsibility Act (ECRA) ( N.J.S.A. 13:1K-6 to -13), now known as the Industrial Site Recovery Act (ISRA), requires owners and operators of industrial sites, as a condition precedent to closing, sale or transfer, either to develop a cleanup plan for real property contaminated by hazardous waste or to certify in a "negative declaration" that remediation is unnecessary. In re Adoption of N.J.A.C. 7:26B, 128 N.J. 442, 445, 608 A.2d 288 (1992). A negative declaration is a written statement submitted by the owner or operator, certifying that there has been no discharge of hazardous substances on the site, or that, if one has occurred, the property has been remediated in accordance with standards established by the DEP. N.J.S.A. 13:1K-8. If the owner or operator believes that the requirements of ECRA are not applicable, it may apply to the DEP for an applicability determination. N.J.A.C. 7:26B-1.9. Noncompliance with ECRA may result in voiding the sale of an industrial site and may make the owner or operator strictly liable, without regard to fault, for all remediation costs. N.J.S.A. 13:1K-13; In re Adoption of N.J.A.C. 7:26B, 128 N.J. at 449, 608 A.2d 288.

At issue here is whether Cadgene complied with this statutory mandate when it sold industrial property to McLean Boulevard Associates (McLean) in 1986. Cadgene purchased the property in 1910. Over the years it leased portions of the property, including lots 21 and 27F, to various tenants. From 1935 to 1982, Brewster Finishing Corporation (Brewster) used the property for dyeing and finishing textiles. From the early 1940's until at least 1987, Textile Piece and Dyeing Company (TPD) also performed these operations on a portion of the property.

In 1986 Cadgene contracted to sell the property to McLean. At the time of the sale, most of the property was leased to TPD, but not lots 21 and 27F. Nevertheless, the record contains overwhelming evidence that TPD used lots 21 and 27F with Cadgene's implied or express assent. It is also abundantly plain from the record that, at the time of the sale, Cadgene knew full well that TPD had performed industrial operations on the site of these lots.

In April of 1987, Cadgene, notwithstanding this knowledge, certified to the DEP that lots 21 and 27F were exempt from ECRA's requirements. Based on Cadgene's documentary submissions, the DEP approved Cadgene's letter of non-applicability on May 18, 1987. The DEP noted that its approval was "made in light of the absence of an industrial establishment ... as covered by [ECRA]," adding that "[a]ny inaccuracies in [Cadgene's] affidavit ... could alter [its] determination."

Cadgene had retained AccuTech as its environmental consultant. At various times, AccuTech warned Cadgene that the DEP might some day learn of TPD's industrial use of lots 21 and 27F. Under a procedure adopted by the DEP, an owner or operator may seek an administrative consent order allowing a transfer to take place before full compliance with ECRA and obligating the applicant to complete the site investigation and any required remediation at a future time. N.J.A.C. 7:26B-7.1 to -7.6. Cadgene sought to avail itself of this procedure, but was warned by AccuTech of a "potential problem" because an ECRA case manager "upon his site inspection, may see TPD (or the subtenant) operating upon a portion of tax lot[s] 27F and/or 21, lots which we have previously exempted from this application claiming no one is operating upon them."

In documents submitted to the DEP in support of its application for approval of its negative declaration, Cadgene minimized the possibility of industrial pollution at the site. Although the DEP requested "[a] detailed description of the most recent operations and processes ... with particular emphasis on areas ... where hazardous substances and wastes are generated, manufactured, [or] refined," Cadgene submitted a response stating "[t]here have been no known recorded spills or discharges during the historical operation of the facility" and adding that "no [s]ampling [p]lan [was] necessary for this facility." Cadgene did allude to the existence of storage tanks on the property, noting that "[u]nderground storage tank integrity documentation [was] to be provided when complete." Although these documents were submitted to the DEP on August 5, 1987, AccuTech had previously warned Cadgene that it was "important that we eliminate" "areas of concern" in addition to the storage tanks "such as electrical transformers and asbestos." Indeed, on the very day Cadgene submitted the documents we have described to the DEP, it was informed in a letter by AccuTech that:

the ... two 55,000 gallon abandoned underground storage tanks, the electrical transformers, and the asbestos filled boiler room needs to be resolved.... A general pre-ECRA cleanup of the facility will assist in minimizing areas of environmental concern. Specific areas are dumpsters, operation discharges to outside areas, the boiler room courtyard area and the building interior including the subbasement.

AccuTech was particularly concerned with the "subbasement," which it characterized as "strewn with debris."

In subsequent submissions relating to the administrative consent order, Cadgene represented "there are no environmental contamination problems on the site known to [the] [a]pplicant." A section in the DEP's application form requested Cadgene to check all applicable categories "of [e]nvironmental [c]oncern." Among these categories were discharge, floor drain, spill, dumpster, asbestos, tank farms, and transformers. Although the record clearly indicates that many of these environmental concerns were applicable to the property in question, Cadgene only checked the category marked "asbestos." Cadgene later amended the application, noting that "asbestos" had been checked by mistake and that the only applicable category related to "underground storage tanks." Based on these documents, an administrative consent order was issued, and McLean took possession of the property.

On April 26, 1988, a caseworker assigned to the Bureau of Environmental Evaluation and Cleanup Assessment visited the TPD site. Because of Cadgene's prior submissions, the caseworker's principal concern was the underground storage tanks. He did not report on the condition of the property, but he did note that "the chemicals ... have been removed ... to an unknown destination."

The DEP approved Cadgene's negative declaration on September 27, 1988. However, ECRA was triggered when Paterson Laundry & Dye Works, Inc., a sublessee of TPD, ceased operations in March 1991. At about the same time, Cadgene instituted a foreclosure action against McLean. In a counterclaim McLean asserted that Cadgene had duped the DEP by withholding material information in its letter of non-applicability and its negative declaration. McLean thereafter petitioned the DEP to revoke its prior approvals. The DEP denied McLean's application "without prejudice." McLean appealed to this court, and we remanded the matter for dispute resolution. N.J.S.A. 58:10B-17.

On remand the DEP issued a decision on April 13, 1994, rescinding its approvals of Cadgene's letter of non-applicability and negative declaration. The DEP found that Cadgene had withheld material information regarding TPD's use of lot 27F as an industrial establishment and had failed to identify applicable "areas of environmental concern" with respect to both lots. The Commissioner subsequently denied Cadgene's application for reconsideration.

We examine Cadgene's contentions in light of this factual backdrop.

II.

The DEP did not abuse its discretion by reopening the case. An administrative...