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NEW JERSEY DEPT. OF ENVTL. PROTECTION & ENERGY V.

September 1, 1994

STATE OF NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION AND ENERGY, Plaintiff,
v.
GLOUCESTER ENVIRONMENTAL MANAGEMENT SERVICES, INC. et al., Defendants.



The opinion of the court was delivered by: JEROME B. SIMANDLE

 SIMANDLE, DISTRICT JUDGE:

 Presently before the court are the motions of defendant Township of Gloucester and the defendant Operators *fn1" for partial summary judgment, seeking to dismiss the various lien claims made against them herein by the plaintiff, New Jersey Department of Environmental Protection of Energy ("NJDEPE") under the Sanitary Landfill Facility Closure and Contingency Fund Act, N.J.S.A. 13:1E-100, et seq. ("Closure Act"), which total approximately $ 6 million in claims paid to date. These claims were largely paid to property owners in the general vicinity of the Gloucester Environmental Management Services ("GEMS") Landfill who allegedly suffered diminution in property value due to the operation or closure of the Landfill, under a Closure Act provision that created an NJDEPE-administered fund which is held "strictly liable for all direct and indirect damages . . . proximately resulting from the operation or closure of any sanitary landfill." N.J.S.A. 13:1E-106. The principal issues decided in this motion are: whether the Closure Act authorizes payment for diminution in property value where no tangible physical damage has occurred to the property; whether the methodology adopted by NJDEPE for addressing such diminution of value claims is arbitrary and capricious; and whether various types of diminution in value claims paid by the Fund are barred by the Closure Act's statute of limitations. For the reasons set forth below, the motions are granted in part, and denied in part.

 I. FACTUAL AND PROCEDURAL BACKGROUND2

 This court has subject matter jurisdiction under 28 U.S.C. § 1331. *fn3" The cause of action discussed in the present motion arises under the law of New Jersey and is within this court's supplemental jurisdiction, 28 U.S.C. § 1367(a).

 In 1980 the New Jersey Department of Environmental Protection and Energy (the "NJDEPE") filed suit to force the closure of the landfill and to recover clean-up costs. Eventually the United States Environmental Agency (the "EPA") became involved in the clean-up, identifying GEMS as a Superfund site in July 1982, and listing the GEMS landfill as twelfth on its national priority list of hazardous waste sites. See 40 C.F.R. Part 300, Appendix B (1992).

 The instant motion focuses on whether plaintiff NJDEPE acted reasonably in implementing the New Jersey Sanitary Landfill Closure and Contingency Fund Act (the "Closure Act" or the "Act"), N.J.S.A. 13:1E-100, et seq.4 The Closure Act, enacted in 1981, created a fund (the "Fund") to be held "strictly liable for all direct and indirect damages . . . proximately resulting from the operation or closure of any sanitary landfill." N.J.S.A. 13:1E-106. This Fund receives its capital from fees assessed for solid waste disposal in New Jersey. The bulk of the GEMS-related claims herein were submitted and processed under the NJDEPE's 1983 regulations, N.J.A.C. 7:1I-1, et seq., (15 N.J.R. 2034(d) (Dec. 5, 1983)), which procedures were subsequently revised and markedly contracted in coverage in July, 1988, as discussed further below. Upon NJDEPE's payment of any claim from the Fund, NJDEPE would acquire by subrogation the rights of that claimant against the owner or operator of the sanitary landfill. N.J.S.A. 13:1E-111.

 According to the Township (Township Br. at 2-3), and not disputed by plaintiff, the NJDEPE received 959 GEMS-related claims for payment from the Fund created by the Act, as of October 22, 1991. Almost all claims are from homeowners living at varying distances up to more than two miles from the landfill. Some bought the property at issue while the landfill was operated, others after it closed in 1980. Some sold their property, most never sold nor offered it for sale. Many claims had not been reviewed by NJDEPE as late 1991. Of the claims reviewed, 296 have been approved by plaintiff and paid by the Fund, with such payments totalling approximately $ 5.9 million. Of these 296 paid claims, the Township has examined the files in 268 and has found that 252 were claims based totally or in part upon diminution in property value. Of the remaining 16 claims examined by the Township, four (4) were based on physical illness and/or physical intrusion of contaminants from the GEMS landfill, and the remaining twelve (12) did not have a basis that could be discerned from the claim form. Id.

 NJDEPE now seeks to recover against the defendant owners and operators for its subrogated claims. *fn5" Defendants in turn seek summary judgment, arguing, inter alia, that the NJDEPE exceeded its statutory authority under the Act and that the claims payment procedure implemented by the NJDEPE was constitutionally defective.

 The defendants have also argued that the Act was not intended to apply to landfills like GEMS, which allegedly did not fit the definition of a "sanitary landfill" under pre-1988 regulations, as discussed below.

 These defendants further argue that payment of these claims created liens which violated their constitutional rights of due process and equal protection.

 Each of these arguments is now addressed.

 II. LEGAL DISCUSSION

 A. The Summary Judgment Standard

 A court may grant summary judgment only when the materials of record "show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). As the motions by agreement of the parties and court order raise only issues of law rather than fact, see Case Management Order No. 12, filed October 7, 1991, no genuine issues of disputed fact exist.

 B. Was The Compensation of Diminution in Property Value Ultra Vires?

 The Closure Act lists certain types of damages compensable by the Fund, including, but not limited to:

 
(1) The cost of restoring, repairing or replacing any real or personal property damaged or destroyed;
 
(2) The cost of restoration and replacement, where possible, of any natural resource damaged or destroyed, including any potable water supply;
 
(3) The cost of any personal injuries, including medical expenses incurred and income lost as a result thereof;
 
(4) The costs of the design, construction, installation, operation and maintenance of any device or action deemed necessary by the department to clean up, remedy, mitigate, monitor or analyze any threat to the public health, safety or welfare of the citizens of this State, including the installation and maintenance of methane gas monitors and vents and leachate monitoring wells and collections systems, and the sampling and analysis of any public or private potable water supply.

 N.J.S.A. 13:1E-106. Indeed, the same statutory section deems the Fund to be "strictly liable for all direct and indirect damages. . . proximately resulting from the operation or closure of any sanitary landfill." Id. (emphasis added). These statutory provisions are unamended since 1981.

 NJDEPE issued implementing regulations in 1983 which broadened this list by making the Fund strictly liable not only for "the cost of restoring, repairing or replacing any real or personal property damaged or destroyed," but also for "the diminution in fair market value of any real property." N.J.A.C. 7:1I-1.5 (emphasis added). *fn6"

 Defendants contend that the NJDEPE's compensation of diminution in property value was unauthorized by the Closure Act. Regulations that exceed the Legislature's grant of authority are deemed ultra vires. An ultra vires finding is strongly disfavored, and is made only in exceptional circumstances, as administrative regulations are accorded a strong presumption of validity and reasonableness. City of Newark v. Natural Resource Council, 82 N.J. 530, 539, 414 A.2d 1304, cert. denied, 449 U.S. 983, 66 L. Ed. 2d 245, 101 S. Ct. 400 (1980); New Jersey Guild of Hearing Aid Dispensers v. Long, 75 N.J. 544, 561, 384 A.2d 795 (1978); In re New Jersey Bd. of Public Utilities, 200 N.J. Super. 544, 557, 491 A.2d 1295 (App. Div. 1985). The party attacking the regulation bears the burden of proving that the administrative regulation is arbitrary, capricious or otherwise unreasonable. Long, 75 N.J. at 561.

 In determining whether an administrative regulation is authorized by the statute, "the reviewing court may look beyond the specific terms of the enabling statute to the statutory policy to be achieved by examining the entire statute in light of its surroundings and objectives." Long, 75 N.J. at 561-62. Significantly, "the absence of an express statutory authorization in the enabling legislation will not preclude administrative agency action where, by reasonable implication, that action can be said to promote or advance the policies and findings that served as the driving force for the enactment of the legislation." In re New Jersey Bd. of Public Utilities, 200 N.J. Super. at 557.

 In interpreting a regulatory statute, a court must accord great deference to the agency's construction of that statute. Long, 75 N.J. at 575. In fact, the agency's construction is "'a substantial factor to be considered in construing the statute,'" particularly where the agency is responsible for implementing a newly-enacted statute. Id. (quoting Youakim v. Miller, 425 U.S. 231, 235, 47 L. Ed. 2d 701, 96 S. Ct. 1399 (1976)).

 A court may not substitute its judgment regarding the wisdom of an administrative action for the judgment of the agency as long as the action is statutorily authorized and reasonable. K.P. v. Albanese, 204 N.J. Super. 166, 176, 497 A.2d 1276 (App. Div. 1985). "If there is any fair argument in support of the agency's action or any reasonable ground for difference of opinion among intelligent and conscientious officials, 'the decision is conclusively legislative, and will not be disturbed unless patently corrupt, arbitrary, or illegal.'" IFA Ins. Co. v. New Jersey Dept. of Ins., 195 N.J. Super. 200, 208, 478 A.2d 1203 (App. Div.), cert. denied, 99 N.J. 218, 491 A.2d 712 (1984) (quoting Flanagan v. Civil Serv. Dept., 29 N.J. 1, 12, 148 A.2d 14 (1959).

 NJDEPE's determination that the diminution in fair market value of real property may be compensable under the Act accords with the plain language of the statute and its purposes, and thus is not ultra vires. Examining the plain language of the statute, it is important to note that the Closure Act did not limit compensation to the four types of damages listed. Instead, the legislature purposefully made the list non-exclusive, in keeping with the broad remedial purpose behind the statute. The Fund's purpose is to compensate persons for "all direct and indirect damages . . . proximately resulting from the operation of a closure of any sanitary landfill," N.J.S.A. § 13:1E-106, supra. It was within these broad confines that the NJDEPE expanded the list of examples to include diminution in property value.

 The impetus for the Act's passage was the Legislature finding in pertinent part "that compensation for the damage resulting from improper operation or closure is, at best, inadequate; and that it is necessary to provide a mechanism for the prompt and adequate compensation for these damages." N.J.S.A. 13:1E-101. As discussed more fully infra, the Act created an extra-judicial procedure for adjudicating common law nuisance claims. Under the common law, diminution in value may be recovered in a nuisance action. See, Barberi v. Bochinsky, 43 N.J. Super. 186, 190, 128 A.2d 1 (App. Div. 1956).

 The Legislature has chosen to leave NJDEPE's well-known and long-standing interpretation undisturbed. As the New Jersey Supreme Court has recognized, "an agency's construction of a statute over a period of years without legislative interference will generally be granted great weight as evidence of its conformity with the legislative intent." Last Chance Development Partnership v. Kean, 119 N.J. 425, 434, 575 A.2d 427 (1990). Had the Legislature disagreed with compensating diminution in value claims, the Legislature could easily have corrected NJDEPE's misinterpretation. Under New Jersey's rule of statutory interpretation, the fact that it did not further supports NJDEPE's interpretation.

 Defendants contend, nonetheless, that such an expansion is void under the doctrine of ejusdem generis. This doctrine of statutory construction provides that when specific items are listed in a statute as part of a general category, only items similar to those enumerated are included in that general category. See 2A Sutherland Statutory Construction § 47.17 (4th ed. 1984). A court may not resort to this rule until first determining the intent of the legislature in drafting the statute. State v. Port Authority of New ...


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