E.I. du Pont de Nemours and Co. v. State, Dept. of Environmental Protection and Energy

• Decision Date: 01 August 1995
• Parties: E.I. du PONT de NEMOURS AND COMPANY and the General Electric Company, Appellants, v. STATE of New Jersey, DEPARTMENT OF ENVIRONMENTAL PROTECTION AND ENERGY, Respondent.
• Court: New Jersey Superior Court — Appellate Division

Page 331

283 N.J.Super. 331

661 A.2d 1314

E.I. du PONT de NEMOURS AND COMPANY and the General Electric

Company, Appellants, v. STATE of New Jersey, DEPARTMENT OF ENVIRONMENTAL PROTECTION AND ENERGY, Respondent.

Superior Court of New Jersey,

Appellate Division.

Argued April 24, 1995.

Decided Aug. 1, 1995.

Michael L. Rodburg, Roseland, for appellants (Lowenstein, Sandler, Kohl, Fisher & Boylan, attorneys; Mr. Rodburg, Richard F. Ricci, Robert L. Glicksman, Michael David Lichtenstein and Nelson D. Johnson, on the brief).

Eileen P. Kelly, Deputy Atty. Gen., for respondent (Deborah T. Poritz, Atty. Gen., attorney; Mary C. Jacobson, Asst. Atty. Gen., of counsel; Ms. Kelly, on the brief).

Before Judges DREIER, WEFING and BRAITHWAITE.

The opinion of the court was delivered by

BRAITHWAITE, J.S.C. (temporarily assigned).

Appellants, E.I. du Pont de Nemours and Company and The General Electric Company, appeal from the adoption by the Department of Environmental Protection ¹ (DEP) of amendments to N.J.A.C. 7:26B (Administrative Consent Orders) and a new regulation, N.J.A.C. 7:26C (Department Oversight Of The Remediation Of Contaminated Sites). On April 6, 1992, DEP published for public comment proposed amendments to N.J.A.C. 7:26B and a new regulation known as N.J.A.C. 7:26C. The disputed regulations were promulgated under DEP's authority given in the Solid Waste Management Act, N.J.S.A. 13:1E-1 to -207; the Environmental Cleanup Responsibility Act (ECRA), N.J.S.A. 13:1K-6 to -35, now the Industrial Site Remediation Act (ISRA); the Spill Compensation and Control Act ("Spill Act"), N.J.S.A. 58:10-23.11 to -23.12; the Water Pollution Control Act, N.J.S.A. 58:10A-1 to -60; and N.J.S.A. 58:10A-21 to -37, which regulates the underground storage of hazardous material. Appellants and many others commented on the proposed regulations. On May 17, 1993, DEP published the adopted regulations. This appeal followed.

According to DEP, the regulation changes were needed in part because its past practice of "addressing the worst environmental cases first," often "discouraged private parties from addressing the contamination at sites of lower priority in terms of environmental severity." Given what it termed "economic" and "business factors," DEP had routinely been requested "to respond with oversight and approval of cleanups of contaminated sites" different from its own environmental priorities. In an effort to respond to this need, DEP sought to "institutionalize [through the proposed regulations] a new initiative to enable a variety of factors to influence the timing of contaminated site cleanup."

The cornerstone of DEP's new approach was the introduction of various oversight documents. The oversight documents are a Memorandum of Agreement (MOA), an ECRA consent order, and a Responsible Party Administrative Consent order (RP-ACO). The various oversight documents allow a party to perform remediation and obligate it to pay DEP's review and oversight costs, in return for DEP's promise to review and comment on submissions within specific time frames. DEP's oversight costs are calculated according to the "oversight cost formula," set forth in the regulations.

Appellants challenge many provisions of the regulations, but essentially they assert that there is no legislative authorization for DEP to collect oversight fees, and the "oversight cost formula" is arbitrary, capricious and therefore invalid. Appellants contend that neither the Spill Act nor the Water Pollution Control Act authorizes the oversight fees envisioned by DEP. Their position is that neither act refers to any "oversight" by DEP or permits the extent of oversight fees that DEP's regulations impose for monitoring parties' cleanups of their own sites, and that the Spill Act authorizes "no fee imposition and collection authority whatsoever."

DEP's position is that the Spill Act both expresses and implies the broad grant of power to it to require oversight cost reimbursement as the price of a party obtaining DEP's supervision in cleaning up a site. DEP asserts that the oversight fees are geared to a private party's request to perform its own remediation of a site and DEP's resultant costs in insuring that the remediation is properly performed.

I

The Authority Of DEP To Engage In Oversight In The

Remediation Of Contaminated Sites

An agency regulation is "presumptively valid," and therefore the party challenging it bears the burden of proving its invalidity. Medical Soc'y v. Dep't of Law & Pub. Safety, 120 N.J. 18, 25, 575 A.2d 1348 (1990). The presumption of validity follows if the regulation is within the authority delegated to the agency and is not on its face beyond the agency's power. Ibid. In considering the grant of authority, courts look to the "fair contemplation" of the delegation of the enabling statute. New Jersey Guild of Hearing Aid Dispensers v. Long, 75 N.J. 544, 561-62, 384 A.2d 795 (1978). And while a regulation cannot "alter the terms of a statute or frustrate the legislative policy," courts place great weight on the interpretation of legislation by the administrative agency enforcing it. Medical Soc'y, supra, 120 N.J. at 25-26, 575 A.2d 1348.

In deciding whether a particular regulation is statutorily authorized, a court "may look beyond the specific terms of the enabling act to the statutory policy sought to be achieved by examining the entire statute in light of its surroundings and objectives." New Jersey Guild of Hearing Aid Dispensers, supra, 75 N.J. at 562, 384 A.2d 795. In this manner the court considers whether the requisite authority is implied, if not expressed. Ibid. Furthermore, declarations of public policy in enabling legislation can serve as sources of statutory authorization for regulations aimed at pursuing that policy. In Review of Health Care Admin. Bd. v. Finley, 168 N.J.Super. 152, 162, 402 A.2d 246 (App.Div.1979), aff'd, 83 N.J. 67, 415 A.2d 1147, cert. denied, 449 U.S. 944, 101 S.Ct. 342, 66 L.Ed.2d 208 (1980). This is especially true where policy is expressed in broad terms. Ibid.

We are satisfied that DEP's power to enter into agreements, to issue orders, and to monitor compliance with any directives is clearly expressed in the Spill Act, which provides as follows:

Whenever any hazardous substance is discharged, the department may, in its discretion, act to clean up and remove or arrange for the cleanup and removal of such discharge or may direct the discharger to clean up and remove, or arrange for the cleanup and removal of, such discharge. If the discharge occurs at any hazardous or solid waste disposal facility, the department may order the facility closed for the duration of the cleanup and removal operations. The department may monitor the discharger's compliance with any such directive. Any discharger who fails to comply with such a directive shall be liable to the department in an amount equal to three times the cost of such cleanup and removal, and shall be subject to the revocation or suspension of any license or permit he holds authorizing him to operate a hazardous or sold waste disposal facility.

[N.J.S.A. 58:10-23.11f.a(1).]

We find that the MOAs that are envisioned by the regulations are authorized by the statutory language permitting DEP to "arrange for the cleanup and removal of, such discharge." N.J.S.A. 58:10-23.11f.a(1). Moreover, ISRA, supra, recognizes DEP's authority to condition a party's remediation upon its entering into a MOA. See N.J.S.A. 58:10B-15.

Likewise, a RP-ACO is authorized by the provision permitting DEP to "direct the discharger to clean up and remove, or arrange for the cleanup and removal of, such discharge." N.J.S.A. 58:10-23.11f.a(1). In addition, N.J.S.A. 58:10-23.11f.a(1) expressly empowers DEP to "monitor the discharger's compliance with any such directive." Ibid. Moreover, ISRA, supra, expressly recognizes DEP's "oversight," in certain cases, of a private party's remediation, and also recognizes the use of a RP-ACO to accomplish the remediation of hazardous sites. N.J.S.A. 58:10B-3a.

II The Authority Of DEP To Collect Oversight Fees

Despite the above language, appellants contend that nothing in the statutes authorizes DEP to collect from participants its costs of overseeing the participants' site remediation. We agree with appellants that the Spill Act does not expressly provide for DEP to collect its oversight costs from those entering into agreements or orders with DEP to remediate. However, if such a power is implied, it is just as effective as if it had been expressed. New Jersey Guild of Hearing Aid Dispensers, supra, 75 N.J. at 562, 384 A.2d 795. We find that several statutes imply such a power. For example, under N.J.S.A. 58:10-23.11g.c(1):

Any person who has discharged a hazardous substance, or is in any way responsible for any hazardous substance, shall be strictly liable, jointly and severally, without regard to fault, for all cleanup and removal costs no matter by whom incurred. Such person shall also be strictly liable, jointly and severally, without regard to fault, for all cleanup and removal costs incurred by the department or a local unit pursuant to subsection b. of section 7 of P.L.1976, c. 141. ... ( [N.J.S.A.] 58:10-23.11f).

[Ibid.]

It is appellants' position that DEP's oversight costs are not "cleanup and removal costs," but rather administrative expenses incurred to oversee another's remediation. The term "cleanup and removal costs" is broadly defined as follows:

"Cleanup and removal costs" means all costs associated with a discharge, incurred by the State or its political subdivisions or their agents or any person with written approval from the department in the: (1) removal or attempted removal of hazardous substances, or (2) taking of reasonable measures to prevent or mitigate damage to the public health, safety, or welfare, including, but not limited to, public and private property, shorelines, beaches, surface waters, water columns and...