On appeal from the Superior Court, Law Division, Passaic County
Before Judges Gaulkin, R.s. Cohen and Wallace
The opinion of the court was delivered by
DiBella Sanitation Service, Inc. (DiBella) and Anchor Carting Corp. (Anchor), licensed solid waste collectors operating in Passaic County, were issued summonses by Passaic County Utilities Authority (PCUA), the agency designated by Passaic County to implement its solid waste management plan, for transporting solid waste out of Passaic County in violation of the plan and of a Department of Environmental Protection and Energy (DEPE) order. N.J.S.A. 13:1E-9d; N.J.A.C. 7:26-6.5q; see Middlesex Cty. Health Dep't v. Browning-Ferris Indus., 252 N.J. Super. 134, 137 (App. Div. 1991). Following separate evidentiary hearings, the charges were sustained. DiBella and Anchor appeal.
DiBella and Anchor acknowledge, as they did in the trial court, that on the days charged they were transporting solid waste originating in Passaic County to transfer stations in Bergen County. And it is undisputed that both the Passaic County solid waste management plan and a then-outstanding DEPE emergency redirection of solid waste flow order required all solid wastes originating in Passaic County to be directed to facilities operated by PenPac, Inc. in Passaic County. DiBella and Anchor sought to justify their transporting Passaic County waste to Bergen County by reliance on the so-called "Pereira memo," a notice issued in 1983 to all solid waste collectors/haulers and facility operators by the then Deputy Director of the Division of Waste Management in the Department of Environmental Protection (now DEPE):
Policy concerning solid waste flow direction is contained in the Interdistrict and Intradistrict Solid Waste Flow Rules (N.J.A.C. 7:26-6 et seq.) jointly adopted by the Department of Environmental Protection (DEP) and the Board of Public Utilities (BPU) on December 6, 1982. These Rules designate specific solid waste disposal facilities to service waste streams originating from specific geographic areas (usually a municipality). While transfer stations are not included in these Waste Flow Rules, they may accept solid waste from various origins as long as the solid wastes, or a similar amount and type, are ultimately transported for disposal [to] the facility designated in the Rules to service the geographic area. (Note: This policy does not preclude the economic regulation of transfer stations by the BPU). Under no circumstances is a transfer station considered as the origin of the solid wastes leaving it. For purposes of determining where solid wastes shall be disposed of, the origin of the waste always remains the location where the waste was originally picked up before delivery to the transfer station.
The parties' principal dispute in the trial court, and again here, concerns the validity of the Pereira memo, which has long been in contention among DEPE, solid waste management districts and the solid waste industry. A multitude of violation proceedings have been initiated by various solid waste management districts; they have apparently been held in abeyance pending Disposition of this "test" case. In addition, three separate actions have been filed on behalf of industry members for declaratory and injunctive relief against districts that have assertedly refused to recognize the Pereira memo; those too have been stayed pending Disposition of this case. See also Regional Recycling, Inc. v. New Jersey Dep't of Envtl. Protection & Energy, 127 N.J. 568, 571 (1992) (ordering proceedings to determine the validity and sufficiency of "DEPE's existing procedures, regulations, and rulings (including the so-called 'Pereira Memo')" governing disposal by transfer stations of multi-district waste). During the pendency of these appeals, the Pereira memo has been incorporated and expanded in DEPE regulations, N.J.A.C. 7:26-2.11 to 6.9, 25 N.J.R. 4763 (October 18, 1993), which are challenged in actions now pending in this court brought by a majority of the solid waste management districts throughout the state.
DiBella and Anchor contend that the Pereira memo should have been accepted as a full defense to the charges that they unlawfully took Passaic County waste to a Bergen County transfer station. PCUA, joined by intevenor Essex County, responds that the Pereira memo was invalid and a nullity because (1) its authorization to transport waste other than as provided in the district plan violated the Solid Waste Management Act, N.J.S.A. 13:1E-1 to 207, and the Solid Waste Utility Control Act, N.J.S.A. 48:13A-1 to 13, and (2) the memo constituted "de facto rule-making" prohibited by the Administrative Procedure Act (APA), N.J.S.A. 52:14B-1 to 15.
The trial Judge denied pre-trial motions by DiBella and Anchor to dismiss the summonses, finding that "the Pereira policy is not a rule or regulation." But he ordered that DiBella and Anchor "individually will not be barred from arguing, on a case by case basis, an affirmative defense based upon detrimental reliance upon the DEPE 'Pereira policy.'" We hold that ruling to be sound: we are persuaded that principles of equitable estoppel and fundamental fairness should foreclose the imposition of penalties for actions taken in reliance on and in conformity with the Pereira memo, even if the issuance of that memo was substantively or procedurally flawed.
The equities are clear and compelling. Solid waste haulers must direct the waste flow in keeping with the governing district solid waste management plan. N.J.S.A. 13:1E-9; see generally Matter of Certain Amendments, 133 N.J. 206, 211-13 (1993). Those plans are effective only with DEPE approval granted in light of "the objectives, criteria, and standards developed in the Statewide solid waste management plan." N.J.S.A. 13:1E-24a(1). Although the district plan directs locally-generated solid waste to local facilities, DEPE instructed the industry in the Pereira memo that solid waste could properly be transported out of the district so long as the post-recycling residue, or its equivalent, is directed as the district plan requires. That authorization does not contradict any express statutory provisions; it could not be dismissed as an unauthorized or mistaken interpretation by a subordinate DEPE bureaucrat; nor were there any other factors suggesting that the Pereira memo was anything other than a reliable official pronouncement of DEPE. Solid waste haulers had every right to rely on the Pereira memo in conducting their business. Surely it would be highly inequitable for DEPE itself to penalize haulers for doing what they were thus invited to do; DEPE does not suggest otherwise. In our view, it is equally inequitable for PCUA to impose such penalties. PCUA operates under DEPE aegis in a statutory scheme designed for the "coordination" of solid waste activity. A.A. Mastrangelo, Inc. v. Commissioner of Dep't of Envtl. Protection, 90 N.J. 666, 672 (1982). If the responsible public agencies cannot coordinate their efforts, the haulers should not suffer the consequences.
We draw our guidance from Airwork Serv. Div. v. Director, Div. of Taxation, 97 N.J. 290 (1984), cert. denied, 471 U.S. 1127, 105 S. Ct. 2662, 86 L. Ed. 2d 278 (1985). Airwork there challenged sales tax assessments arising from its business of repairing airplane engines for out-of-state customers. The Supreme Court unanimously held that the applicable statute permitted imposition of the taxes, but split 4-3 in resolving Airwork's contention that the assessments were unwarranted because it had failed to collect the taxes from its customers in reliance on a Division of Taxation press release issued some four years earlier declaring such transactions to be exempt.
Speaking for the Court majority, Justice Handler described that contention to be "analogous to one based on principles of equitable estoppel." Id. at 297. The government can be estopped in appropriate circumstances, he said; the issue at hand was "whether the circumstances of this case warrant the unusual remedy of estopping the government from collecting taxes ...