Public Service Elec. and Gas Co. v. New Jersey Dept. of Environmental Protection

• Decision Date: 25 April 1984
• Citation: 475 A.2d 665,193 N.J.Super. 676
• Parties: PUBLIC SERVICE ELECTRIC AND GAS COMPANY, a Corporation of the State of New Jersey, Jersey Central Power & Light Company, a Corporation of the State of New Jersey, and Atlantic City Electric Company, a Corporation of the State of New Jersey, Appellants, v. The NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION and the State of New Jersey, Respondents. ROLLINS ENVIRONMENTAL SERVICES, (N.J.), INC., Appellant, v. The NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION, Respondent. MAGNESIUM ELEKTRON, INC., a New Jersey Corporation, Appellant, v. The NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION and The State of New Jersey, Respondents.
• Court: New Jersey Superior Court — Appellate Division

Page 676

193 N.J.Super. 676

475 A.2d 665

PUBLIC SERVICE ELECTRIC AND GAS COMPANY, a Corporation of

the State of New Jersey, Jersey Central Power & Light

Company, a Corporation of the State of New Jersey, and

Atlantic City Electric Company, a Corporation of the State

of New Jersey, Appellants, v. The NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION and the State of New Jersey, Respondents.

ROLLINS ENVIRONMENTAL SERVICES, (N.J.), INC., Appellant, v. The NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION, Respondent.

MAGNESIUM ELEKTRON, INC., a New Jersey Corporation, Appellant, v. The NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION and The State of New Jersey, Respondents.

Superior Court of New Jersey,

Appellate Division.

Argued March 13, 1984.

Decided April 25, 1984.

Scott M. Duboff, Washington, D.C., on behalf of appellants Public Service Elec. and Gas (Bischoff, Lieberman Cook, Purcell, & Reynolds, Washington, D.C., attorneys).

Paul H. Schneider, Deputy Atty. Gen., for respondents N.J. Dept. of Environmental Protection (Irwin I. Kimmelman, Atty. Gen. of New Jersey, attorney; Deborah T. Poritz, Deputy Atty. Gen., of counsel and Paul H. Schneider, Deputy Atty. Gen., on brief).

Alvin E. Granite, Woodbury Heights, for appellant Rollins Environmental Services (Granite & Heim, Woodbury Heights, attorneys; Alvin E. Granite and Craig H. Klayman, Woodbury Heights, on brief).

I. Leo Motiuk, Flemington, for appellant Magnesium Elektron, Inc. (Schaff, Motiuk, Hornby, Gladstone & Knox, Flemington, attorneys; I. Leo Motiuk, Flemington, on brief).

Before Judges ANTELL, JOELSON and McELROY.

The Opinion of the Court was delivered by,

ANTELL, P.J.A.D.

The New Jersey Department of Environmental Protection (DEP) is responsible for issuing permits as part of a program regulating the discharge of pollutants into surface waters. Its authority is derived from the New Jersey Water Pollution Control Act, N.J.S.A. 58:10A-1 et seq., which was enacted in order for the State of New Jersey to administer federally mandated programs aimed at prohibiting all discharges of pollutants into surface waters except those which conform with a National Pollutant Discharge Elimination System (NPDES) permit issued by the United States Environmental Protection Agency (USEPA) or by a state having a similar permit system approved by the USEPA. The federal program is set forth in the Federal Clean Water Act, 33 U.S.C.A. § 1251 et seq. The New Jersey Water Pollution Control Act has a purpose similar to the federal legislation and among other things is intended to implement the federal act by the issuance of New Jersey Pollutant Discharge Elimination System (NJPDES) permits to municipal, industrial and thermal dischargers.

Under N.J.S.A. 58:10A-9 it is directed that DEP "shall, in accordance with a fee schedule adopted by regulation, establish and charge reasonable annual administrative fees, which fees shall be based upon, and shall not exceed, the estimated cost of processing, monitoring and administering the NJPDES permits." These appeals, which we have consolidated sua sponte, are taken from the fee structure promulgated by DEP under N.J.A.C. 7:14A-1.8(c)(3)(ii) for the period between March 1982 through June 1983 and from DEP's determination as to the amount of a credit for excess fee assessments calculated during the period March 1981 through February 1982. Appellants, consisting of a number of companies classified as thermal and industrial dischargers, maintain that the fee assessments are unrelated to expenses involved in the processing, monitoring and administering of the permit program and that the assessment methodology is therefore arbitrary, capricious and unreasonable.

Concisely, the method chosen by DEP to distribute the costs of processing, monitoring and administering the program among the permittees purports to be based upon the volume of effluent discharged by each with the largest volume dischargers bearing the greatest share of the cost. Appellants argue that no relationship exists between volume of discharge and regulatory costs, pointing out that their repeated requests of DEP to demonstrate such a relationship have produced nothing beyond the agency's unexplained insistence that such a relationship necessarily exists.

On this appeal little is said by DEP beyond adherence to the dogma that "regulatory costs must generally increase as the size of permittee's pollutant discharge increases." It states as a fact that to accomplish its statutory purpose it must allocate regulatory resources commensurately with the relative dangers posed by various dischargers. Nowhere, however, does it demonstrate in terms of work hours expended or by any other gauge that the cost of processing, monitoring and administering the permit of a high volume single outlet discharger is any greater than the cost made necessary by a small single outlet discharger. Nor does it show how the mere volume alone of a permitee's discharge reflects its potential injuriousness. DEP's assertions to the contrary are couched in conclusory form and appear to be nowhere anchored to the facts of record. We therefore note our agreement with appellants' contention that the volume based fee formula is neither cost-related nor related to the hazard posed by the individual permittee.

We disagree, however, with appellants' premise that the enabling statute requires that DEP determine its fee structure on a permit-specific cost-related basis. We read N.J.S.A. 58:10A-9 to require only that the individual fees be "reasonable" and that in the aggregate they not exceed "the estimated costs of processing, monitoring and administering the NJPDES permits." The only obligation imposed upon DEP is that the agency must find some reasonable way of apportioning its operating expenses among the permittees. Whether this is done on an individual cost basis or in some other way is a decision the legislature has left to the agency. Where the legislature intends that a license fee relate to the regulatory expense involved in processing the application it has no difficulty in expressing itself. See, for example, N.J.S.A. 5:12-139 which provides that the issuance fee for a casino license "shall be based upon the cost of investigation and consideration of the license application...."

Among the choices open to DEP in allocating its costs, of course, is that of charging each permittee an equal share of the expenses. Obviously, this course was not followed for the reason that it would place the same financial burden on a permittee which discharges a low volume of low toxic effluent as on one having a large volume of high toxic waste. In determining to avoid such a result we can hardly say that DEP acted unreasonably. Yet, from the contention asserted by appellants themselves that the volume based fee structure is unrelated to costs, it would appear that the permit-specific cost-related fee schedule which they advocate would probably bring about the very result which DEP quite reasonably wants to avoid, that is, charging the same fees to high and low volume dischargers alike. If DEP chooses to eschew this result we cannot say that such a decision lies beyond its lawful discretion.

In our view, DEP's volume based fee schedule is supportable only on the proposition that those who do most to create the injurious conditions which give rise to the need for regulation should fairly bear a greater share of the regulatory costs. This is what it seems to aim at, and if the challenged regulation did actually scale the fee structure proportionally to the degree of harm threatened by the permittee's discharge we would have no difficulty in sustaining its validity. As we shall see, however, it falls significantly short of this purpose and, lacking any other reasonable justification, must be adjudged invalid.

N.J.A.C. 7:14A-1.8(c)(3)(ii) provides that the yearly fee for a discharger of industrial pollutants is to be based on the "average daily quantity" of whichever of seventeen listed pollutants "is discharged in the largest amount." Its defects are twofold. First, it does not take into account the toxicity or the potential hazard of the measured pollutant which forms the basis of the permittee's fee. Hence, a permittee whose fee is based upon a relatively low volume of a highly toxic pollutant, the impact of which on the environment is great, pays less than a relatively high volume discharger of a non-toxic harmless pollutant which has a negligible impact. Because the toxicity of the measured pollutant is not factored into the assessing process there can be no proportionality between the fees paid by the permittees and the degree of hazard threatened by their discharge.

In its Summary of Public Comments and Agency Responses the agency indicated that the absence of "a weighting factor to reflect the hazardous nature of the waste constituent is a difficult problem which * * * needs to be seriously considered ...," and that it would "welcome the development of a weighting factor ... by any interested group and would give serious consideration to the...