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Zuccarelli v. State

December 13, 1999

JOHN ZUCCARELLI, III, LILLIAN ZUCCARELLI, AND JOHN ZUCCARELLI, APPELLANTS,
V.
STATE OF NEW JERSEY, DEPARTMENT OF ENVIRONMENTAL PROTECTION, RESPONDENT



Before Judges Muir, Jr., Wallace, Jr. & Cuff

The opinion of the court was delivered by: Wallace, Jr., J.A.D.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued: September 28, 1999

On appeal from the Commissioner of New Jersey Department of Environmental Protection.

Appellants, John Zuccarelli, III (Zuccarelli, III) and Lillian and John Zuccarelli (Zuccarelli) appeal from a decision and order of the Commissioner of the Department of Environmental Protection (DEP), denying their application to reopen and vacate a 1992 settlement agreement. In their appeal, appellants contend:

(1) the unconstitutionality of the waste flow regulations mandates voiding or substantially modifying the agency order adopting the settlement agreement; (2) Zuccarelli, III is entitled to reimbursement for the monetary penalties paid based on the unconstitutional waste flow regulations; (3) the Commissioner's failure to grant a hearing strips Zuccarelli, III of his vested property right in his license and renders the decision arbitrary, capricious, and unreasonable; and (4) they clearly have standing. We disagree with these contentions and affirm.

I.

Zuccarelli, III was President, sole owner, and sole stockholder of National Waste Disposal, Inc. (National Waste), a solid waste collector. In 1988 and 1989, the DEP initiated two administrative enforcement actions against both National Waste and Zuccarelli, III for violations that included: (1) the operation of multiple, unlicensed solid waste facilities; (2) the violation of tariff requirements under the solid waste flow regulations; (3) the falsification of waste origin and disposal forms; and (4) the failure to follow intradistrict solid waste flow plans.

In the first matter captioned, Department of Environmental Protection and Energy, Divisions of Solid Waste Management and Hazardous Waste Management v. National Waste Disposal, Inc. OAL Dkt. Nos. ESW 8300-88, ESW 3265-89, EHW 9221-89 and ESW 9458-90 (consolidated)(decided January 6, 1992), the Administrative Law Judge (ALJ) found that National Waste and Zuccarelli, III "had engaged in wholesale and egregious violations" of the rules and regulations governing solid waste and recommended a fine of $6,016,286, revocation of National Waste's solid waste collection license, and debarment of Zuccarelli, III from the solid waste industry. Approximately $4,620,775 of the monetary penalty was attributed to waste flow violations, while the remaining $1,395,511 monetary penalty was attributed to the ALJ's findings that National Waste had operated at least four solid waste transfer stations without any engineering design approval. In addition, the ALJ found violations of asbestos disposal requirements and that National Waste falsified origin and destination documents.

In the second action captioned, In the Matter of Allegations of Violations of Law and the Administrative Code by National Waste Disposal, Inc. and John M. Zuccarelli, III, individually and as President and Sole Owner of National Waste Disposal, Inc. OAL Dkt. No. ESW 3740-90 (decided June 26, 1992), another ALJ found that appellants had falsified origin and destination forms, violated the tariff regulations by overcharging, and violated the solid waste flow rules. The ALJ recommended imposing penalties of $479,000 and a one-year continuance of National Waste's Certificate of Public Convenience and Necessity while the Company operated under the general supervision of the DEP.

While these matters were pending before the Commissioner, the parties reached a final settlement agreement on November 25, 1992. By order dated December 4, 1992, the Commissioner affirmed the terms of the settlement "as just and reasonable and as disposing of all issues in both cases." The principle terms of the settlement agreement provided that: (1) National Waste could operate for three years from the date of settlement, but the Company would have to be sold to a buyer approved by the DEP on or before December 31, 1995; (2) National Waste would cease operations no later than January 1, 1996, irrespective of whether a sale had been consummated; (3) National Waste would pay a monetary penalty of $3.5 million; and (4) Zuccarelli, III would not participate in the solid waste and recycling business for a period of five years following the cessation of National Waste's operations. Some of the other numerous provisions in the settlement agreement limit the appellants' ability to contest the terms and conditions of the settlement and prohibit Zuccarelli, III's parents from purchasing the Company from him.

Following approval of the settlement agreement, several significant court decisions affected the validity of New Jersey's waste flow regulatory scheme. On May 16, 1994, the United States Supreme Court held that a local New York waste flow control ordinance violated the Commerce Clause. C & A Carbone, Inc. v. Town of Clarkstown, 511 U.S. 383, 389-95, 114 S. Ct. 1677, 1681-84, 128 L. Ed. 2d 399, 407-10 (1994). Following the C & A Carbone decision, the Third Circuit Court of Appeals concluded that New Jersey's "waste flow regulations discriminate against interstate commerce on their face or in effect," and remanded the matter to the District Court for a determination whether those regulations could survive application of the "heightened scrutiny test" for constitutionality under the Commerce Clause as set forth in C&A Carbone. Atlantic Coast Demolition & Recycling, Inc. v. Board of Chosen Freeholders of Atlantic County, 48 F.3d 701, 717-18 (3d Cir. 1995) (Atlantic Coast I).

Following the remand, on July 15, 1996, the District Court applied the "heightened scrutiny test" of Commerce Clause constitutional analysis and determined that "New Jersey's system of flow control of waste violates the Commerce Clause of the United States Constitution." Atlantic Coast Demolition & Recycling v. Board of Chosen Freeholders of Atlantic County, 931 F. Supp. 341, 358 (D.N.J. 1996) (Atlantic Coast II). On May 1, 1997, the Third Circuit affirmed the District Court's conclusion that New Jersey's present waste flow control system is unconstitutional under the Commerce Clause of the United States Constitution. Atlantic Coast Demolition & Recycling, Inc. v. Board of Chosen Freeholders of Atlantic County, 112 F.3d 652, 673 (3d Cir. 1997) (Atlantic Coast III).*fn1 The United States Supreme Court denied certiorari on November 10, 1997, ___ U.S. ___, 118 S. Ct. 412, 139 L. Ed. 2d 316 (1997).

As a result of these decisions, Zuccarelli, III and National Waste filed an action in federal district court seeking reconsideration of the terms of the settlement agreement since the solid waste flow rules which National Waste allegedly violated had been declared unconstitutional. The complaint was dismissed for lack of jurisdiction and the Third Circuit affirmed ...


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