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New Jersey Dep't of Environmental Protection v. Mills

January 23, 2008


On appeal from the Department of Environmental Protection, Docket Nos. ESW 7423-00 and 7424-00.

Per curiam.


Argued December 3, 2007

Before Judges Stern, Collester and C.S. Fisher.

In A-3551-06, Top Soil Depot Inc., and in A-3964-06, Marcal Paper Mills, appeal from a "final decision on motion for partial summary decision" of the Commissioner of the Department of Environmental Protection (DEP), entered on January 22, 2007, which affirmed the initial determination of an Administrative Law Judge (ALJ), who determined that the paper byproduct kaofin was properly subject to regulation under the Solid Waste Management Act (SWMA), N.J.S.A. 13:1E-1 to -47, that the two appellants "were jointly and severally liable" for violations thereof, that Top Soil engaged in solid waste disposal (in the flood plain of the Ramapo and Pompton Rivers) without a permit, in violation of N.J.A.C. 7:26-2.8(e), and that Marcal transported solid waste to a destination not authorized by the DEP, in violation of N.J.S.A. 13:1E-9.3(b). The Commissioner remanded to the Office of Administrative Law (OAL) for a determination of the penalty to be imposed against Top Soil. The Top Soil remand was because the $20,000 penalty assessed by the ALJ was not within the motion for summary decision. A penalty had not been assessed against Marcal due to other related proceedings pending before the OAL.*fn1 We permitted the appeals to us by Top Soil and Marcal "to proceed in this court as of right," but stayed "[e]nforcement of the Commissioner's final decision under the SWMA pending disposition of the appeals." However, we declined to stay a DEP action against Top Soil and Marcal pending in the Chancery Division. That action had been commenced under the Flood Hazard Area Control Act (FHACA).*fn2

Top Soil asserts that the findings "do not establish any violation of the SWMA or N.J.A.C. 7:26-2.8(e), as opposed to an FHACA violation which the Commissioner had no jurisdiction to adjudicate," that it "did not alter or fill the floodplain," and that "the proofs demonstrated that Top Soil Depot's operations are protected by the grandfather provisions of N.J.A.C. 7:13-2.2." Marcal also asserts the "floodplain" and "grandfather" arguments and further asserts that the Commissioner improperly decided issues of material fact on a motion for summary decision and improperly determined that kaofin constituted solid waste, and that the conduct of the DEP requires application of an estoppel and in the circumstances was arbitrary, capricious and unreasonable.

The ALJ granted summary decision as to liability and site remediation. The Commissioner summarized the ALJ's lengthy and comprehensive decision as follows:

The October 19, 2006 Initial Decision agreed with DEP that the placement of Kaofin in a flood plain was prohibited by the BUD,*fn3 and that Marcal accepted this as a condition of Kaofin's exemption from regulation as a solid waste. The Initial Decision found Respondents estoppel argument to be without merit under Aqua Beach Condo, Ass'n v. Dep't of Cmty Affairs, 186 N.J. 5, 1 9-20 (2006). The Initial Decision further found that placement of the Kaofin was not a grandfathered use under N.J.A.C. 6:13-2.2(b)(1) because it did not conform to all relevant laws in effect prior to March 20, 1995, see id., and that any such grandfathered use would have been extinguished by the BUD conditions. The Initial Decision therefore held that Top Soil had engaged in the disposal of a solid waste without a permit in violation of N.J.A.C. 7:26-2.8(e) and that Marcal had transported a solid waste to a destination not authorized by the Department in violation of N.J.S.A. 13:1E-9.3(b). Accordingly, Respondents were held jointly liable for remediation of the Top Soil site.

The Commissioner adopted the initial opinion, but made the liability both "joint and several" (not just "joint") in light of the placement of kaofin which she found "altered or filled the floodplain" without DEP authorization, in violation of N.J.A.C. 7:13-1.2.

The critical issues before us include whether this was in reality a FHACA case for consideration before the Superior Court, or should have been part of that case, whether there was a material factual dispute including whether kaofin is solid waste, see N.J.S.A. 13:1E-3, and therefore whether N.J.A.C. 7:26-2.8 was violated, whether there was a basis in 1997 for revoking the 1994 BUD exemption letter, whether the deposit of kaofin "altered or filled" the flood plain, whether the parties should be "grandfathered" under N.J.A.C. 7:13-2.2(b), and whether the DEP is estopped from prosecuting the action. DEP's principal contention at argument before us is that violation of the 1994 BUD exemption letter justified its rescission and, therefore, the alleged violations occurred because acceptance of the BUD letter in 1994 constituted an acknowledgment that kaofin constituted solid waste and was subject to regulation under the SWMA. Of significance, the Commissioner, like the ALJ, found that Marcal "accepted" DEP's "classification of Kaofin as a solid waste by the failure to challenge in, and by accepting the necessity for, the 1994 BUD letter."


Marcal is a paper manufacturer that operates a paper mill in Elmwood Park. Marcal produces various paper products and recycles waste paper. In the 1980s, Marcel developed a product from leftover elements not recycled into paper products and gave it the trade name "kaofin." Kaofin is partially dewatered material and consists mainly of kaolin clay and short paper cellulose fibers not reusable in paper recycling. The DEP has deemed kaofin to be industrial residual waste subject to solid waste regulation. Marcal disagreed that kaofin is solid waste or sludge.

The New Jersey Meadowlands Commission and its predecessor, the Hackensack Meadowlands Development Commission, accepted kaofin at its landfills. It was blended with soil and used as a daily cover, and Marcal paid the landfills to accept the material. In 1994 Top Soil started to receive kaofin from Marcal, and was paid by Marcal to remove 79,000 tons of kaofin between July 1995 and June 1997.

Allan Rombough, Top Soil's president and general manager, stated in a deposition that kaofin, dirt, top soil and rocks are stored at the Top Soil site.*fn4 He purchased the business from prior owners in 1984. At the time of his deposition on February 13, 2003, he stated that approximately 60,000 to 80,000 cubic yards of kaofin were on the site, which weighed about 55,000 tons. Initially, Marcal paid Verniero Trucking to transport the kaofin, and Verniero Trucking paid Top Soil to accept the kaofin at the Top Soil site. Later, Marcal paid Top Soil directly.

In his certification, Rombough stated that the prior owners had mixed, stored, and blended soil and top soil on the site since 1954. He claimed that to the extent that Top Soil may be performing operations in a floodplain, those operations have been performed in that area for over fifty years.

In 1992 and 1993, Marcal submitted tests of kaofin to the DEP that Marcal claims show that levels of PCP (Phencyclidine) as well as the levels of certain other elements were within the range acceptable to the Food and Drug Administration and the Environmental Protection Agency. Marcal explained that it planned to sell kaofin for use as "floor absorbents, pet litter, spill control and management materials, and agricultural chemical carriers."

On May 31, 1994, the DEP wrote to Marcal and stated that it would consider kaofin to be a recycled product when produced and sold for the uses outlined by Marcal. DEP concluded that kaofin would not be subject to regulations under the SWMA or the Pollutant Discharge Elimination System when used in the manner that Marcal had suggested.

Marcal then applied to the DEP for a BUD exemption letter providing that kaofin is exempt from solid waste regulations as a recycled non-hazardous material to be reintroduced into the economic mainstream. On June 8, 1994, DEP, through its Director of the Division of Solid Waste Management, issued what the parties call the "BUD letter," granting kaofin an "exemption from the solid waste regulations" for permitted uses set forth in the BUD. The letter states that:

The following applications of Kaofin are herewith conditionally exempted in New Jersey.

. A cement component added to the kiln by cement manufacturers - (no limit on quantity)

. Cover and cap material at permitted landfills - (site- specific land-fill limitation requirements only)

. A component added to road aggregate and construction sand - (up to 25% scale- weight Kaofin)

. A blending component for soil, sand, compost and other vegetative support materials - (up to 25% scale weight Kaofin).

The letter further states that any other uses have to be approved on a case-by-case basis. The exemption letter also includes the following conditions:

Based on the analyses the Department has received from Marcal of the Kaofin, the Department hereby grants a conditioned exemption to Kaofin for use as a recycled product pursuant to N.J.A.C. 7:26-1.1(a)1, so long as the following conditions are met: . Marcal is required to provide a ...

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