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Middle Dept. Inspection Agency, Inc. v. New Jersey Dept. of Community Affairs

Decided: January 24, 1995.

MIDDLE DEPARTMENT INSPECTION AGENCY, INC., AND GARDEN STATE ELECTRICAL INSPECTION SERVICES, INC., APPELLANTS,
v.
NEW JERSEY DEPARTMENT OF COMMUNITY AFFAIRS, DIVISION OF HOUSING AND DEVELOPMENT, RESPONDENT.



On appeal from New Jersey Department of Community Affairs, Division of Housing and Development.

Before Judges Brody, Long and Levy. The opinion of the court was delivered by Brody, P.J.A.D.

Brody

The opinion of the court was delivered by BRODY, P.J.A.D.

Appellants, private inspection and plan review agencies, challenge the validity of certain amendatory regulations adopted by the Commissioner of the Department of Community Affairs (Department) pursuant to N.J.S.A. 52:27D-124i(2) (the statute), a section of the State Uniform Construction Code Act, 52:27D-119 et seq. The Code offers municipalities four choices when selecting people to review construction plans and to make code or subcode building inspections. One choice is to engage private agencies, such as appellants, who are licensed and regulated by the Department. N.J.S.A. 52:27D-126(a). Another is to have the work done by personnel of the Department. N.J.S.A. 52:27D-128.*fn1

The main regulation under attack requires that when a municipality engages private agencies, it do so through open bidding. N.J.A.C. 5:23-4.5A.

Appellants are concerned that bidding will lead to abuses such as "low-ball" bidding that will drive other agencies out of the market, and cost cutting by successful bidders that will lower the quality of their work and thereby endanger the public. Appellants' legal argument is that the statute prohibits bidding.

The statute provides in relevant part:

The commissioner shall have all the powers necessary or convenient to effectuate the purposes of this act, including, but not limited to, the following powers in addition to all others granted by this act:

i. To adopt, amend and repeal rules and regulations providing for:

(2) The setting of the amounts of fees to be charged by a private agency for inspection and plan review services; provided, however, that such fees shall not be more than those adopted and charged by the department when it serves as a local enforcement agency. . . .

The Commissioner contends that she may exercise her power of "setting . . . the amount of fees to be charged by a private agency" by adopting a regulation that establishes the fees through open bidding.

Accordingly, the Commissioner adopted N.J.A.C. 5:23-4.5A, which requires in part that municipalities engage a "private onsite inspection agency' by soliciting bids from authorized and licensed private agencies. The bids must be "expressed as a uniform percentage, by subcode, which shall not exceed 100 percent, of the fees charged, as of the date on which the bids are opened, by the Department when it serves as an enforcing agency. . . ." N.J.A.C. 5:23-4.5A(b)2.

The statute requires the Commissioner to abandon the method of setting private-agency fees that had been established in the statute's predecessor, L. 1983, c. 338 (predecessor statute), by deleting a proviso in the predecessor statute that "such fees shall be identical to those adopted and charged by the Department when its serves as a local enforcement agency. . . ." Under the current statute, the amount of fees charged by the Department caps the fees private agencies may charge. Otherwise the Commissioner may set the fees by any reasonable method.

Ultimately the judiciary interprets statutes that establish a regulatory scheme. Service Armament Co. v. Hyland, 70 N.J. 550, 560-63, 362 A.2d 13 (1976). However, courts must "accord substantial deference to an interpretation of a statute or regulation by the agency responsible for enforcing it." Petition of Adamar of New Jersey, Inc., 222 N.J. Super. 464, 469, 537 A.2d 704 (App. Div. 1988). We have considered the arguments of counsel, read carefully the public's formal written comments and the Department's responses respecting the regulation before it was adopted, and reviewed a transcript of the related public hearing conducted by the Director of the Division of Housing and ...


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