On appeal from a Final Decision of the Department of Environmental Protection.
The opinion of the court was delivered by: Parrillo, J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued September 24, 2007
Before Judges Parrillo, Graves*fn1 and Alvarez.
In this environmental enforcement action, appellant Town & Country Developers, Inc. (T&C) appeals from a final decision of the New Jersey Department of Environmental Protection (DEP) assessing T&C a civil administrative penalty of $604,110 for violating provisions of the New Jersey Water Pollution Control Act (Act), N.J.S.A. 58:10A-6, and regulations promulgated thereunder, N.J.A.C. 7:14A-22.3(a), by constructing and operating a residential sewer line prior to obtaining a permit. Appellant contends that its violation is "minor" and therefore falls within the Grace Period Law, N.J.S.A. 13:1D-125 to -133, but that even if not so exempted, the penalty was erroneously calculated and should be substantially reduced. We disagree with both contentions, and affirm.
The facts are undisputed and stipulated. By way of background, in the late 1990's, T&C commenced construction of a 602-unit residential development in the Township of Nutley, comprised of 569 townhouses and 33 single-family homes to be constructed in six phases. The sanitary sewers for the project, to be connected to the wastewater conveyance system owned and operated by the Passaic Valley Sewerage Commissioners (PVSC), were constructed by T&C over a ten-day period in October and November, 1998. The project's sanitary sewer extension, force main and pumping station were built to serve a total design flow of 138,000 gallons per day. Although T&C partially prepared the Treatment Works Approval (TWA) permit application on June 11, 1998, based on all six phases, T&C did not complete and file the application with the DEP until June 10, 1999, more than six months after construction of the sewer line and after two residential units in the first construction phase (section 6) were already built and occupied. In fact, the DEP issued a permit to T&C on July 30, 1999,*fn2 almost two weeks after the sewer line was in use on July 19, 1999.
Because the "dry-sewer line" provisions of the Act prohibit the construction of sewer lines without approvals, even if these lines are never used, N.J.S.A. 58:10A-6, on March 18, 2003, following investigation, the DEP issued to T&C an Administrative Order and Notice of Civil Administrative Penalty Assessment under the agency's penalty-setting regulations. These regulations apply to both the installation and operation of a sewer line without approval, N.J.A.C. 7:14-8.8, and allow penalties to be assessed against persons that authorize, approve, endorse or allow the construction of a sewer line in violation of the Act, N.J.A.C. 7:14-8.8(b)(1). The regulations provide an assessment formula for the construction of a sewer line without approval, N.J.A.C. 7:14-8.8(b)(2), and a formula to impose an additional sum for the actual operation of the sewer line without approval, N.J.A.C. 7:14-8.8(b)(3).
As to the former, the penalty is equal to the: (seriousness) x (conduct) x ($1.00). N.J.A.C. 7:14-8.8(b)(2). "Seriousness" is based on project development size and equates to "one-half of the design flow (in gallons per day) as determined from the permit application for that facility or project . . . ," or estimated flow established by regulation at N.J.A.C. 7:14A-22.3. N.J.A.C. 7:14-8.8(b)(2)(i). The "conduct" under the formula is either 1.00, for conduct that is "intentional, deliberate, purposeful, knowing or willful[,] or . . . 0.75 for any other conduct." N.J.A.C. 7:14-8.8(b)(2)(ii)(1),(2). "Each day . . . [of] construction . . . [that] continues without . . . approval . . . [is a] separate and distinct violation." N.J.A.C. 7:14-8.8(b)(2)(iii). For the actual operation of a treatment works without a permit, one of two methods for assessing penalty, chosen at the DEP's discretion, N.J.A.C. 7:14-8.8(b)(3), simply doubles the total penalty calculated for construction without a permit. N.J.A.C. 7:14-8.8(b)(3)(i).*fn3
Utilizing this formula, the DEP calculated total design flow of only 40,275 gallons per day (as opposed to the 138,000 gallons projected for the entire project),*fn4 then multiplied one-half the estimated design flow by a factor of 1.00, based on finding T&C's conduct knowing and intentional, and accepted the total number of construction days as ten, based on data supplied by T&C. These calculations yielded a penalty of $201,370 for the illegal construction and double that amount, $402,740, for the actual operation of the sewer line without a permit, for a total assessment of $604,110.
T&C contested the assessment and consequently the matter was transferred to the Office of Administrative Law (OAL).
Following a plenary hearing, the Administrative Law Judge (ALJ) determined that although T&C knowingly violated the Act, and the violations materially undermined or impaired the goals of the regulatory scheme, and the civil administrative penalties were properly assessed under the penalty setting regulations, nevertheless such penalties were excused by operation of the Grace Period Law, because "minor" in nature, N.J.S.A. 13:1D-129(b)(1)-(6). Following exceptions filed by the parties, the DEP's Deputy Commissioner adopted the factual findings of the ALJ's Initial Decision but rejected the legal conclusion that the Grace Period Law excused T&C from penalties, concluding that the facts establish that the violations were purposeful and knowing, that the violations were not corrected, and that the violations undermine the very purpose of the dry-sewer law prohibitions under the Act.
On appeal, T&C contends the violations are "minor" and therefore excusable under the Grace Period Law, and alternatively the penalty was erroneously calculated as based in part on total projected flow for the entire project rather than for the units actually built or for ...