DEP wins many routine cases, but loses a potentially significant one

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Title:
DEP wins many routine cases, but loses a potentially significant one
Date:
November 26, 2001
Publication:
New Jersey Lawyer
Author(s):
Dennis J. Krumholz
Area(s) of Practice:
Environmental Law

Continuing last year's trend of environmental court cases that refused to second-guess the Department of Environmental Protection, the Superior Court and Office of Administrative Law continued this year to accord significant deference to the agency's routine exercise of its expertise and discretion. In contrast to that trend, however, the United States Federal District Court ruled against DEP, and in favor of the minority citizens of South Camden on a suit alleging discrimination on the basis of race and national origin (although the Third U.S. Circuit Court of Appeals has stayed the District Court's Order). The agency also lost another significant case: the Appellate Division remanded to DEP the minimum remediation standards for groundwater, with instructions to either re-promulgate them properly in accordance with the Administrative Procedures Act or review groundwater remediation workplans on a case-by-case basis in accordance with the requirements of S-1070.

While the courts continue to regularly approve the agency's routine determinations, they closely examine DEP's decisions in more significant cases.

Again this year, DEP scored victory after victory in state courts in routine permitting, rulemaking, and enforcement actions. The judicial and administrative courts upheld DEP decisions time and again on a variety of bases and rationales. DEP determinations upheld by the Appellate Court included:

  • Issuance of wetlands construction permits and denial of requests for an administrative hearing to challenge the issuance of permits, finding that the actions of DEP were not arbitrary or unreasonable and were within its statutory and regulatory authority. In the Matter of Third Party Appeal of Permit No. 1432-91-0001.5 (GP No. 10) and Transition Area Waiver Averaging Plan No. 1432-91-0001.7 Issued to Randolph Joint Venture for Randolph Village Center Plaza.
  • Issuance of a waterfront development permit because of mootness (In the Matter of Waterfront Development Permit No. 1111-96-0003.2 WFD.
  • Issuance of a waterfront development permit, a freshwater wetlands individual permit, and freshwater wetlands transition area waivers because it found that DEP did not misapply applicable rules and regulations. In re Third Party Appeal of Permit Application Nos. 0308-90-0001.14, .18, .19, .20, and Letter of Interpretation No. 0308-90-0001.17 for Harbour Reef Townhouse Development.
  • Approval of a drainage plan which affects a historic district in Lambertville because DEP did not violate administrative due process. In the Matter of Route 29/Delaware Avenue Drainage Trunkline Installation, City of Lambertville, Hunterdon County, Lambertville Historic District and Delaware and Raritan Canal Historic District.
  • Issuance of a stream encroachment permit, two freshwater wetlands general permits, and two wetlands and transition area waivers because DEP's action did not exceed the scope of its enabling legislation. In the Matter of Stream Encroachment and Freshwater Wetlands Permits Nos. 1025-91-0005.4, 1025-91-0005.5, 1025-91-0005.7, 1025-91-0005.8, and 1025-91-0005.9.

Similarly, other DEP determinations the courts upheld were: denial of a stream encroachment permit on the grounds that the agency properly found that the applicant was not entitled to a waiver (Mansoldo v. DEP); the agency's position that approval was required under a CAFRA permit for a property owner to connect into a sewer system extension (Mutschler v. DEP); denial of a waterfront development permit to construct a timber bulkhead because DEP did not act improperly in determining that a bulkhead was not necessary (Muir v. DEP); denial of a CAFRA permit for a proposed residential and commercial development because DEP was correct in determining that a conditional permit was inappropriate considering the project's noncompliance with WQM (Hovsons, Inc. v. DEP); and denial of a permit to possess tigers for theatrical and exhibition purposes because DEP was justified in denying the permit where the applicant could not establish her qualifications and compliance with the permit requirements (Byron-Marasek v. DEP).

Rulemaking

DEP was equally successful before state courts considering cases involving rulemaking and enforcement. In Moss v. Shinn, plaintiff sought an order of mandamus compelling the agency to enforce trail use restrictions against bicycles at Ringwood State Park. The court dismissed the case for failure to state a claim upon which relief could be granted, finding that the enforcement of trail use restrictions was a discretionary, rather than a ministerial, act and that DEP had properly exercised its discretion in setting the level and manner of enforcement.

In Carney's Point Generating Plant v. DEP, the administrative law judge (ALJ) agreed with DEP that a new NOx Budget Rule designed to correct an error in the old rule could be applied retroactively in a pending case.

In In re South Jersey Fuel, Inc., ISRA Applicability Determination of the Middle Township, Cape May County Facility, the court affirmed the agency's rescission of a Letter of Non-Applicability based on its conclusion that the facility in question was a wholesaler of petroleum products and not a retail fuel oil dealer.

In In the Matter of Recycling and Salvage Corp., the ALJ found a DEP-imposed penalty of $648,000 for exceeding permit capacity to be appropriate and reasonable.

Finally, in Caven Point Realty v. DEP, App. Div. No. A-1917-00T3, the court held that the plaintiff was not entitled to reimbursement from the Spill Compensation Fund because his claim was time-barred and because he impaired DEP's subrogation rights by contractually waiving such claims.

Federal Court

The U.S. District Court was not as easily persuaded by DEP's arguments as was the New Jersey Superior Court. In South Camden Citizens in Action v. DEP (SCCIA I), the federal district court imposed a preliminary injunction vacating air permits issued by DEP to the St. Lawrence Cement facility that was designed to grind and process granulated blast furnace slag in Camden's Waterfront South neighborhood and required DEP to make appropriate findings regarding the totality of the circumstances surrounding the operation of the proposed facility.

The court further held that DEP's failure to consider any evidence beyond compliance with technical emissions standards, and specifically its failure to consider the totality of the circumstances surrounding the operation of the proposed facility, violated EPA's regulations to implement Title VI of the Civil Rights Act of 1964. It further held that plaintiffs had established a prima facie case of disparate impact discrimination based on race and national origin in violation of EPA regulations.

Subsequent to SCCIA I, the U.S. Supreme Court decided Alexander v. Sandoval, holding Section 602 does not provide an implied right of private action to enforce disparate impact regulations promulgated by federal agencies pursuant to Section 602. In light of this decision, the District Court issued a supplemental opinion, SCCIA II, that held that the Sandoval decision precluded only a cause of action directly under Section 602, and that it did not preclude the SCCIA plaintiffs from pursuing their claim for disparate impact discrimination, in violation of EPA regulations, so long as the action was prosecuted under 42 U.S.C. Section 1983.

Accordingly, the District Court denied a motion by DEP to vacate the previous opinion or to stay the order pending appeal. The Third Circuit, however, disagreed with the District Court, and, concluding that St. Lawrence Cement was entitled to relief, stayed the District Court's order pending appeal. The case is currently scheduled for oral argument.

A loss

One noteworthy Appellate Division case swam against the tide of State court decisions favorable to DEP. In Federal Pacific Electric Co. v. DEP, the Appellate Division struck down a DEP decision disapproving the groundwater component of a remedial action work plan submitted pursuant to the Industrial Site Recovery Act (ISRA) that did not comply with the stringent Groundwater Quality Standards. The court held that DEP had adopted the Groundwater Quality Standards as the minimum remediation standards required by S-1070 without the proper notice and comment opportunity required by the Administrative Procedures Act.

The Court did not reach appellant's substantive argument that this adoption also violated S-1070's legislative purpose and mandate regarding the adoption of less stringent minimum remediation standards, but instead required the DEP to proceed either on a case-by-case basis in the absence of valid minimum remediation standards, or to properly promulgate the minimum standards in accordance with the requirements of the Administrative Procedures Act. [Appellant's case was argued by this article's author.] The agency is poised to re-propose the technical requirements for site remediation ("tech regs") this fall, and it is anticipated that DEP will take the opportunity to provide the regulatory notice called for by the Appellate Division.

Two other environmental cases decided this year are noteworthy, even though DEP was not a party .

Following last year's decision in DeAngelo v. Exxon Corp, holding that the operation of a gasoline service station is not an abnormally dangerous activity subject to strict liability (which had been a question left open by the New Jersey Supreme Court in T & E Industries v. Safety Light Corp.) the Superior Court in Biniek v. Exxon Mobil Corp. held that the sale and installation of gasoline USTs also is not an abnormally dangerous activity subject to strict liability. The court noted that, "[f]or over seventy years, the case law in New Jersey has stated that the normal course of distributing, storing and selling fuel is not inherently dangerous. . . . The danger arises, not from its use in the ordinary transportation, but from its negligent use or misuse, in a dangerous environment."

Finally, in a case decided under the Spill Compensation and Control Act case, the Appellate Division in White Oak Funding, Inc. v. Winning held that the passive migration of fuel oil was not a "release," and therefore could not be a "discharge" under the Spill Act. In so doing, the court rejected plaintiff's invitation to adopt the CERCLA definition of "release" which includes "leaching," a term commonly used in the environmental context to describe the migration of contaminants.

In White Oak Funding, defendants were prior owners of contaminated property who were unaware of the presence of fuel oil, although they knew when they purchased the property that it had been formerly used by a fuel oil distribution business. Plaintiff's expert opined that fuel oil contamination probably occurred prior to defendants' purchase of the property, that limited environmental testing at the time of purchase would have revealed the contamination, and that during the period of defendants' ownership the contamination migrated and spread. Plaintiff argued, therefore, that defendants were liable under the Spill Act either as "dischargers" or as persons "in any way responsible" for the contamination due to their "utter failure to conduct environmental due diligence before purchasing the property, and subsequent failures to report the contamination to DEP or take any steps to contain the spreading fuel oil."

The court declined to adopt plaintiff's position, holding a discharge requires an "interaction with the environment" by "some act or omission of human conduct which causes a hazardous material not previously present" to enter the air, water or land. Since the contamination in this case was already pre-existing, no "discharge" could be found. The dictionary definition of "release" which included "the act of permitting a … fluid to escape" did not help plaintiff either because it described a discreet event and not a continuous process.

In summary, DEP continued this year to enjoy carte blanche from the judiciary with respect to its exercise of discretion regarding ordinary permitting, rulemaking and enforcement decisions. Nonetheless, the courts are exercising careful oversight of agency actions which have the potential for more serious and widespread repercussions, and are not hesitating to reject the agency's positions when warranted.