St. James v. Department of Environmental Protection and Energy

Decision Date14 July 1994
Citation646 A.2d 447,275 N.J.Super. 342
PartiesPaul ST. JAMES; A.P. Development Corporation; and Stoney Fields Estates Mobile Home Park, Plaintiffs-Appellants, v. DEPARTMENT OF ENVIRONMENTAL PROTECTION AND ENERGY, Defendant-Respondent.
CourtNew Jersey Superior Court — Appellate Division

Christopher J. Hanlon, Freehold, for appellants (Gross, Hanlon, Truss & Messer, P.C., attorneys, Hanlon and Kenneth W. Biedzynski, on the brief, Biedzynski, on the supplemental letter brief).

Susan Savoca, Deputy Atty. Gen., for respondent (Deborah T. Poritz, Atty. Gen., Atty., Mary C. Jacobson, Asst. Atty. Gen., of counsel, Savoca and Sushila Nanda, Deputy Atty. Gen., on the brief, Savoca on the supplemental letter brief).


The opinion of the court was delivered by


The Department of Environmental Protection and Energy issued an order determining that appellants were water polluters and imposing a $6,750 penalty. The appellants requested a formal hearing. The DEPE refused to grant a hearing unless appellants first posted the proposed penalty amount in the form of a surety bond, irrevocable letter of credit or trust agreement or some other form of financial assurance approved by the agency. We granted leave to appeal from the refusal.

We reverse. A requirement for deposit of the proposed penalty as a precondition to a hearing satisfies due process only if there is some interim review procedure available to the putative violator between the agency's issuance of a notice of proposed penalty assessment and its final order of disposition. The present statutory and regulatory scheme provides no such hearing to persons determined by the DEPE to violate the provisions of the Water Pollution Control Act, N.J.S.A. 58:10A-1 to -60.

Appellants own and operate an eighty-nine-unit mobile home park in Egg Harbor Township. The park is serviced by a "community on-site subsurface sewage disposal system." They hold a New Jersey Pollutant Discharge Elimination System permit which allows them to discharge a volume of 26,700 gallons per day of treated domestic waste water into the state ground waters by means of four subsurface disposal beds.

On various dates between May and July 1993, a representative of the Atlantic County Health Department inspected appellants' property and observed the illegal discharge of sewage from the system onto land which may flow or drain into state waters. Notices of the violations were issued by the health department to appellants on May 27, June 10 and July 22, 1993. Samples collected on June 7 and July 20, 1993, indicated the presence of fecal coliform, defined as a pollutant by N.J.A.C. 7:14A-1.9. The condition was later abated.

Several months later, on January 7, 1994, the DEPE issued an Administrative Order and Notice of Civil Administrative Penalty Assessment for the discharge of the pollutants on June 7 and July 20, 1993. This was the first formal notification that appellants received from the DEPE. The order required that appellants immediately cease all unpermitted discharges of pollutants. The DEPE also gave notice that it had "determined that a civil administrative penalty should be assessed ... in the amount of $6,750.00." Appellants demanded a hearing but refused to post the financial assurance for the assessed penalty demanded by the Department. The Department refused to conduct the hearing.

The authority for posting financial assurance in the penalty amount as a condition precedent to a hearing comes from N.J.S.A. 58:10A-10d(5) of the Water Pollution Control Act:

A person, other than a local agency, appealing a penalty assessed against that person ... shall, as a condition of filing the appeal, post with the commissioner a refundable bond, or other security approved by the commissioner, in the amount of the civil administrative penalty assessed.

[ N.J.S.A. 58:10A-10d(5).]

The penalty imposed pursuant to a final order is considered a debt of the violator and may be docketed with the clerk of the Superior Court as a judgment. A lien attaches to the real property of the violator unless he or she "posts a refundable bond or other security with the commissioner pursuant to an appeal of a final order to the Appellate Division of the Superior Court." N.J.S.A. 58:10A-10d(6)(b).

N.J.A.C. 7:14-8.4(a)9i, the regulation implementing the statute, requires that a person requesting a formal hearing to contest the order post "financial assurance in the full amount of the civil administrative penalty ... in the form of a surety bond guaranteeing payment, an irrevocable letter of credit or a fully funded trust ... or in another form the Department individually approves in writing."

In Mathews v. Eldridge, 424 U.S. 319, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976), the United States Supreme Court enunciated a test to determine whether an administrative procedure satisfied due process requirements:

[I]dentification of the specific dictates of due process generally requires consideration of three distinct factors: first, the private interest that will be affected by the official action; second, the risk of an erroneous deprivation of such interest through the procedures used, and the probable value, if any, of additional or substitute procedural safeguards; and finally, the Government's interest, including the function involved and the fiscal and administrative burdens that the additional or substitute procedural requirement would entail.

[424 U.S. at 335, 96 S.Ct. at 903, 47 L.Ed.2d at 33.]

There is language in In re Kimber Petroleum Corp., 110 N.J. 69, 539 A.2d 1181 (1988), appeal dismissed, 488 U.S. 935, 109 S.Ct. 358, 102 L.Ed.2d 349 (1988), which suggests that a financial security pre-posting requirement to obtain a formal hearing can satisfy due process:

The Supreme Court has held that it is sufficient for the due process guarantee of the federal constitution that there be some forum where an order's validity can be challenged without penalty; it need not be the same forum where enforcement actions are prosecuted and the challenge need not be pre-payment. Yakus v. United States, 321 U.S. 414, 64 S.Ct. 660, 88 L.Ed. 834 (1944). Under this analysis the pre-adjudication payment of actual costs under the statute with the opportunity later to contest the legality or reasonableness of such costs without further penalty could be viewed as satisfying essential due process concerns.

[Id. at 79, 539 A.2d 1181 (footnote omitted).]

Federal decisions have almost uniformly upheld as satisfying due process the provisions in the Service Mining Control and Reclamation Act of 1977, 30 U.S.C.A. § 1201 to § 1328, requiring that a mine operator against whom a penalty has been assessed prepay the proposed penalty in escrow as a prerequisite to obtaining a formal hearing. 30 U.S.C.A. § 1268(c); see, e.g., Graham v. Office of Surface Mining Reclam. and Enforc., 722 F.2d 1106, 1109-13 (3d Cir.1983); Blackhawk Mining Co. v. Andrus, 711 F.2d 753, 757-58 (6th Cir.1983); B & M Coal Corp. v. Office of Surface Mining Reclam. and Enforc., 699 F.2d 381, 384-86 (7th Cir.1983); Donald Paul Duffala, Annotation, Penalties under 30 U.S.C.S. § 1268 for violating Surface Mining Control and Reclamation Act, 82 A.L.R.Fed. 218, 223-28 (1987).

In Graham, the Third Circuit held that the review procedures available to mine operators without prepayment of the proposed penalty were more than sufficient to comply with the due process requirements set forth in Mathews v. Eldridge, supra, 722 F.2d at 1111. The court pointed out that the Act contains a detailed statutory and administrative scheme of procedural safeguards available to the mine operators to assure them a meaningful opportunity to be heard:

The various provisions concerning review of OSM decisions are somewhat complex. There are three stages in the process: (1) the Notice of Violation, (2) the Cessation Order, and (3) the Proposed Assessment of the Penalty.

The Notice of Violation, listing an operator's appeal rights, is issued by an OSM inspector on the site of the mine when he deems there to be a violation of statute but when there is no imminent danger to the public safety nor risk of environmental harm. 30 U.S.C. § 1271(a)(3) (Supp. II 1978). Upon receipt of the Notice, the mine operator may submit written information about the violation to the OSM and to the inspector who issued the Notice, which information must be considered in determining the amount of the penalty assessment. 30 C.F.R. § 723.16(a) (1977) (now codified at 30 C.F.R. § 723.17(a) (1982). In this case, as we have previously noted, an informal review was held on July 8, 1980, after which the Notice of Violation was confirmed.

An operator may also ask for a formal public hearing before an administrative law judge without prepayment. 30 U.S.C. § 1275(a) (Supp. II 1978). At such a hearing, the burden of showing a prima facie case would be on the OSM, but the ultimate burden of persuasion is placed on the operator. 42 C.F.R. § 4.1171 (1982). An operator may also request temporary relief from an administrative law judge pending a formal hearing.

A Cessation Order is issued whenever the inspector deems there to be an imminent danger to public safety or risk of environmental harm, or when the mine operator has not abated a violation described in a Notice of Violation within the time allotted. After the Cessation Order is served, the operator is also entitled to a formal review hearing before an administrative law judge. Provision is made in the regulations for an informal review of a Cessation Order within thirty days of issuance. 30 C.F.R. § 722.15 (1982).

After the operator has been served with a Notice of Proposed Penalty Assessment, he is entitled to an informal assessment review conference. Up to this point, all review procedures are available to an operator without prepayment of the penalty. If, after an...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT