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Avon Products Inc. v. New Jersey Department of Environmental Protection

Decided: August 23, 1990.

AVON PRODUCTS, INC., PLAINTIFF-APPELLANT,
v.
NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION, DEFENDANT-RESPONDENT



On appeal from Final Decision of New Jersey Department of Environmental Protection.

Antell, Bilder and Stein. The opinion of the court was delivered by Antell, P.J.A.D.

Antell

In December 1985 plaintiff contracted to sell its subsidiary, Mallinckrodt, Inc., together with a manufacturing plant at 11 William Street, Belleville, New Jersey, to International Minerals and Chemical Corporation ("IMC"). The transaction was subject to the terms of the New Jersey Environmental Cleanup Responsibility Act, N.J.S.A. 13:1K-6 ("ECRA"), the provisions of which we recently reviewed in Chemos Corp. v. State DEP, 237 N.J. Super. 359, 568 A.2d 75 (App.Div.1989). Plaintiff began the ECRA process on December 27, 1985, by submitting the General Information Submission to the Department of Environmental Protection (DEP) required by N.J.A.C. 7:26B-3.2. On January 21, 1986, it submitted its Site Evaluation Submission and Sampling and Analysis Plan. Both submissions were found incomplete by DEP and by letter of January 30, 1986, plaintiff requested DEP to prepare an Administrative Consent Order ("ACO") which would authorize plaintiff to close its transaction with IMC on February 23, 1986, prior to the completion of all ECRA requirements. The procedure is authorized by N.J.A.C. 7:26B-5.1(c), -7.1.

The ACO obliges plaintiff to submit a cleanup plan which addresses remediation of any contamination on the site and to "implement any NJDEP approved Cleanup Plan in accordance with the approved time schedule." The order also provides that plaintiff financially secure its obligations by posting a surety bond or letter of credit for $1,500,000.00 prior to execution of the ACO, and also establish a standby trust fund with the understanding that DEP would be permitted to draw upon the financial assurance should Avon fail to comply with the ACO or other ECRA requirements. The ACO also provides for penalties in the event of non-compliance.

The William Street facility had been used as a chemical plant since the early 1940s. It was occupied by Van Dyk and Co. ("Van Dyk") until that company was acquired by plaintiff in 1982. During its occupancy Van Dyk utilized in the operation

of its heat transfer system polychlorinated biphenyls (PCBs), a product which has been recognized by DEP and the United States Environmental Protection Agency (EPA) as a probable human carcinogen. The Site Evaluation Submission herein showed extensive PCB contamination caused by leaks in the transfer system.

This appeal focuses upon the parties' dispute as to the cleanup standard to which plaintiff may be held under the circumstances presented. In its final determination expressed in letters dated July 6, 1988, and August 17, 1988, from which this appeal is taken, DEP required that the cleanup levels for PCBs be fixed at 100 micrograms per square meter for high skin contact impervious surfaces and 250 micrograms per square meter for low skin contact impervious surfaces. A microgram is one millionth of a gram. By high contact surfaces DEP intends to include walls, floors, desks, chairs, tables, manned machinery and control panels. Low contact surfaces extend to ceilings and barrel roofs. Pointing out that the EPA has set a standard of 1000 micrograms per square meter for high contact and 10,000 for low contact areas, plaintiff maintains that it is entitled to either a negative declaration certifying that there are no hazardous wastes at the site, N.J.S.A. 13:1K-8g, or a much lower cleanup standard which more realistically relates to the goals and standards of ECRA legislation.*fn1 It contends that DEP's standards are arbitrary, lack support in the record and are invalid for failure to have been promulgated by rule pursuant to the Administrative Procedure Act, N.J.S.A. 52:14B-1 et seq. ("APA"), as required by ECRA, N.J.S.A. 13:1K-10, and for failure to accord plaintiff a hearing.

We first dispose of DEP's objection to this appeal which is made on the ground that plaintiff must first await an enforcement

proceeding before seeking review of cleanup plan standards, relying on Matter of Kimber Petroleum Corp., 110 N.J. 69, 539 A.2d 1181 (1988), app. dism. sub nom; Kimber Petroleum Corp. v. Daggett, 488 U.S. 935, 109 S. Ct. 358, 102 L. Ed. 2d 349 (1988). The contention has merit with respect to plaintiff's request that we find DEP's approved cleanup plan standards arbitrary and capricious. Without an adversarial record there is no basis for judicial review to determine whether standards governing administrative action have been breached. But as matters now stand plaintiff has no assurance of a pre-cleanup enforcement proceeding from which there can be any meaningful review. Plaintiff has already deposited its $1,500,000.00 letter of credit and established a standby trust fund. With these financial assurances intact DEP is free to proceed with its own cleanup and then, so long as proper notice has been given, "draw on the financial assurance provided" under paragraph 11D of the ACO. The relevance of Kimber is to be found not in its holding that judicial review is unavailable until an enforcement proceeding is brought, but in its larger concerns that due process values not be overlooked, even in environmental litigation. Its particular significance to this case is that plaintiff should be afforded an opportunity to be heard before the cleanup costs have been incurred.

In Kimber, supra, the Supreme Court considered a challenge to the constitutionality of the treble damages section of the Spill Compensation and Control Act, N.J.S.A. 58:10-23.11f(a), which imposed such liability upon any polluter which failed to comply with a DEP directive to remove a hazardous discharge. Because Kimber had allowed the contamination of existing groundwater, a DEP directive ordered it to pay $2.16 million to fund the construction of an alternate water supply. The Court found the statute constitutionally doubtful for failure to allow for a hearing in which the directive's validity could be disputed before imposition of penal ...


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