A. Fiore & Sons, Inc., Matter of

• Decision Date: 05 November 1997
• Citation: 701 A.2d 1303,305 N.J.Super. 192
• Parties: In the Matter of ALLEGATIONS OF VIOLATIONS OF LAW AND ADMINISTRATIVE CODE BY A. FIORE & SONS, INC., Andrew Fiore, Jr., Theodore Fiore and Andrew Fiore, Sr. (Deceased), individually and as Officers, Directors and Shareholders.
• Court: New Jersey Superior Court — Appellate Division

Page 192

305 N.J.Super. 192

701 A.2d 1303

In the Matter of ALLEGATIONS OF VIOLATIONS OF LAW AND ADMINISTRATIVE CODE BY A. FIORE & SONS, INC., Andrew Fiore Jr., Theodore Fiore and Andrew Fiore, Sr. (Deceased) individually and as Officers, Directors and Shareholders.

Superior Court of New Jersey Appellate Division.

Argued Oct. 7, 1997.

Decided Nov. 5, 1997.

Harry L. Starrett, West Orange, for appellants A. Fiore & Sons, Inc.; Andrew Fiore, Jr.; Theodore Fiore; and Andrew Fiore, Sr. (deceased) (Starrett & Klinghoffer, attorneys; Mr. Starrett, on the brief).

Gail M. Lambert, Deputy Attorney General,for respondent Department of Environmental Protection (Peter Verniero, Attorney General, attorney; Andrea M. Silkowitz, Assistant Attorney General, of counsel; Ms. Lambert, on the brief).

Before Judges DREIER, PAUL G. LEVY and WECKER.

The opinion of the court was delivered by

DREIER, P.J.A.D.

Appellants, A. Fiore & Sons, Inc. ("Fiore"), the Estate of Andrew Fiore, Sr. (who died while this appeal was pending), Andrew Fiore, Jr., and Theodore Fiore, appeal from the assessment of a monetary penalty of $145,219, the revocation of the corporation's Certificate of Public Convenience and Necessity, and the permanent debarment of the individual Fiores from participating in the solid waste disposal industry in New Jersey. We reverse and remand this matter to the Commissioner of the Department of Environmental Protection ("DEP") for reconsideration.

Fiore is in the trash collecting, recycling and disposal business. It is a continuation of a sole proprietorship founded by the late Andrew Fiore, Sr. in the 1940's and reorganized as a closely held corporation with Andrew Sr., Andrew Jr., and Theodore owning the business as equal shareholders. Following Andrew Sr.'s death, the corporation redeemed his corporate stock and Andrew Jr. became the president of the corporation. It has held a Certificate of Public Convenience and Necessity as a solid waste collector since 1975. Since 1982, Fiore has conducted the bulk of its operations from an Essex County site on McCarter Highway in Newark which it shared with an affiliated corporation, A. Fiore & Sons Salvage, Inc. ("Salvage"). Salvage was incorporated in 1985, and had been operating under a DEP order permitting it to function as a transfer station and recycling facility as well as a "materials recovery facility" as defined in N.J.A.C. 7:26-1.4. Although the time was not specified, it appears that Salvage merged into Fiore so that there now is but one corporation.

Fiore's waste collection business employs approximately sixty employees and provides solid waste disposal services to more than one thousand customers in eight New Jersey counties, including Passaic and Morris. The collections from these two counties involved less than 4% of Fiore's total collection business. Its trucks collect unseparated recyclable and non-recyclable materials, and return them to the McCarter Highway site where they are dumped and sorted. Recyclable materials are removed both mechanically and manually, leaving only residual solid waste. This waste is then loaded into containers for shipment to a disposal facility.

The problem in this case emanates from the fact that when the waste was dumped, the materials collected from Morris County and Passaic County were not processed and segregated from materials collected from customers in the other counties in Fiore's service territory. Conflicting waste flow control directives in the 1980's required that solid waste collected from specific counties be taken to designated disposal sites within these counties. In 1983 the DEP addressed the problem and published what became known as the "Pereira policy." Under that policy, transfer stations are permitted to "accept solid waste from various origins as long as the solid wastes, or a similar amount and type, are ultimately transported for disposal to the facility designated" by the DEP for the county of origin. See Passaic Cty. Utils. Auth. v. DiBella Sanitation Serv., Inc., 272 N.J.Super. 238, 240, 639 A.2d 745 (App.Div.1994).

Later, the DEP issued another policy concerning disposal of solid waste residue requiring that the waste from each county be kept separate in the truck and separate in the transfer station. This "Separate policy" required the segregation of inbound solid waste by county so that there would be no mixing or commingling of this waste or resulting residue. At one point in the 1980's the Board of Public Utilities (later the Board of Regulatory Commissioners) ("Board"), the DEP, and the Passaic County Utilities Authority ("PCUA") had such conflicting regulations that it was impossible for Fiore to comply with any one of them without violating another.

In 1987 and 1988, the Board issued franchise orders granting the PCUA and the Morris County Transfer Station, Inc. ("MCTS") the "exclusive right to control and provide for the disposal of solid waste" in Passaic and Morris Counties, respectively. The Board and the DEP then issued waste flow control orders requiring that the Separate policy for disposal be implemented, rather than the Pereira policy which the DEP, at least at an earlier time, had authorized.

Fiore's attorneys advised Fiore in 1987 that the residue emanating from its Essex County facility after separation of recyclables was Essex County waste, and therefore was unregulated and could be disposed of either in Essex County or even shipped outside New Jersey. Such out-of-state shipment to licensed facilities provided a tremendous cost-savings to Fiore. Fiore's position had been bolstered by a letter received from the DEP in September 1987, recognizing the out-of-state shipment, but stating that the haulers employed by Fiore to transport the residue to the out-of-state sites were required to register with the DEP. Significantly, the ALJ who initially determined this matter agreed with this interpretation, as did a DEP employee (Sondermeyer) when testifying in another case involving Fiore.

In March 1988, the DEP filed an unrelated action against Fiore and other haulers for failure to follow the waste flow control orders for Essex County. At that time, the DEP clearly indicated to Fiore its position that out-of-state disposal was illegal. Furthermore, the DEP informed Fiore that it must adhere to the Separate policy for residue disposal at the designated disposal facilities. While so indicating to Fiore, the DEP apparently promoted the Pereira policy vigorously as its official agency position in cases involving other haulers. We have been unable to locate in this extensive record any statement by the DEP contradicting this assertion.

In the summer of 1989, Fiore received the first of numerous summonses from the PCUA charging violations of waste flow regulations. In addition to Passaic County, Morris County asserted that the solid waste generated in that county must be disposed of at its facility pursuant to the waste flow control orders. Later in 1989, Fiore began to negotiate with Essex County officials for the disposal at the Essex County facilities of all the solid waste residue Fiore generated. By April 1990, an agreement was reached with Essex County, and Fiore ceased disposing of its residue out-of-state. The Essex County disposal was with Essex County's knowledge of the source of the waste, and nothing was hidden from the DEP. Nevertheless, Fiore was not in compliance with the DEP's waste flow orders for Passaic and Morris Counties.

In July 1990, after negotiations, the Board entered an Interim Rate Order granting rate relief to Fiore in the form of increased disposal fees that it could charge its customers. In that order was a stipulation between Fiore and the Board that Fiore would use the disposal sites designated under the waste flow control orders. In Passaic and Morris Counties the designated sites were as specified by the PCUA and the MCTS. Despite the order, Fiore continued to dispose of the residue in the Essex County facilities. Fiore's position was that until the conflicting orders were resolved, it would dispose of the residue at the closest facility. It contends that it did not take advantage of the Interim Rate Order by charging higher rates to Morris or Passaic Counties, but charged its customers only the Essex County rates because it was these charges that it had itself incurred.

Finally, on June 28, 1991, the Board moved to have the Interim Rate Order declared null and void because of Fiore's failure to use the designated sites. Later the Board withdrew its motion because of informal agreements it had entered into with Fiore. According to Fiore, these agreements finally meant that the DEP would no longer insist that Fiore follow the Separate policy for residue disposal, but could apply the Pereira policy which did not require segregating the Morris and Passaic Counties' collections and residue. Shortly thereafter, Fiore began depositing solid waste in Passaic, Morris and Essex Counties in accordance with the Pereira policy.

In August 1990, however, the PCUA had filed a complaint with the Board to enjoin Fiore from removing solid waste from Passaic County. Thereafter the Board filed its own expanded action against Fiore and dismissed the PCUA's complaint, but granted the PCUA permission to intervene in the Board's action. The separate claims of the PCUA and the MCTS against Fiore were settled during the course of this litigation and they have no active role in this appeal. The Board's litigation, however, has proceeded from 1991 through the present time. In January 1991, the matter was transferred to the OAL as a contested case.

On September 22, 1993, the Board moved for a partial summary decision on the issue of liability. The motion was grounded on Fiore's admission that it had disposed of the solid waste it had collected in Passaic and Morris Counties between 1988 and 1991 at facilities located either out-of-state or in Essex County. Fiore ...