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Des Champs Laboratories, Inc v. Robert Martin

July 6, 2012

DES CHAMPS LABORATORIES, INC., APPELLANT,
v.
ROBERT MARTIN, COMMISSIONER, NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION, RESPONDENT.
R&K ASSOCIATES, LLC, INTERVENOR.



On appeal from the New Jersey Department of Environmental Protection, ISRA Case #E96510.

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

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

APPROVED FOR PUBLICATION

Argued December 12, 2011

Before Judges Sabatino, Ashrafi, and Fasciale.

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

This appeal raises the question of whether the Industrial Site Recovery Act of 1993 ("ISRA"), N.J.S.A. 13:1K-6 to -14, the Site Remediation Reform Act of 2009 ("SRRA"), N.J.S.A. 58:10C-1 to -29, or any other statute authorizes the Department of Environmental Protection ("the Department" or "the DEP") to impose certain disputed obligations upon the owners or operators of industrial establishments that stored or handled small quantities of hazardous substances, as a condition of obtaining a so-called "de minimis quantity exemption" ("DQE") from ISRA requirements.

In particular, the appeal implicates the validity of regulatory provisions within N.J.A.C. 7:26B-5.9, most recently amended by the Department in May 2012. Those provisions require an applicant for a DQE to certify, to the best of the applicant's knowledge, that the property where the de minimis quantities had been present is now "clean," i.e., not contaminated above levels established by the Department. The appeal also calls into question the validity of related provisions within N.J.A.C. 7:26B-5.9 that require such applicants to remediate the property if the Department disapproves their DQE application and the application is not withdrawn.

For the reasons that follow, we conclude that the Department presently lacks the statutory authority to require DQE applicants to certify that they believe their property is not contaminated. The imposition of such an obligation as a condition of DQE approval is inconsistent with ISRA and SRRA, statutes which are designed, among other things, to streamline the regulatory process and, as ISRA proclaims, "minimize governmental involvement in certain business transactions." N.J.S.A. 13:1K-7.

Consequently, we invalidate the regulatory provisions in question and reverse the Department's final agency decision insofar as it denied appellant's application for a DQE based upon the unauthorized condition. We do so without prejudice to the Department's potential ability to seek a cleanup of the industrial site under other environmental statutes and regulations that are not tied to the DQE approval process.

I.

From 1982 through 1996, appellant Des Champs Laboratories, Inc.,*fn1 operated an industrial establishment on Okner Parkway in Livingston. Appellant used the property for the light assembly of heat recovery ventilators sold primarily in the residential market. During that fourteen-year period of operation, appellant's President, Nicholas Des Champs, and his wife, Rebecca Des Champs, owned the property.

In November 1996, appellant's environmental consultant submitted to the Department a General Information Notice*fn2 and a Preliminary Assessment Report.*fn3 ISRA required appellant to file these submissions in anticipation of appellant terminating its operations at the Livingston site. See N.J.S.A. 13:1K-9. Appellant also submitted, in connection with its planned cessation of operations, a "negative declaration" affidavit*fn4 to the Department in January 1997. In that affidavit, Mr. Des Champs certified that, "there have been no discharge(s) of hazardous substances or hazardous wastes from the industrial establishment[.]"

The Department subsequently issued appellant a "no further action" letter*fn5 on January 22, 1997, thereby authorizing the cessation of operations. Later that same year, Mr. and Mrs. Des Champs sold the property to its current owner, intervenor R&K Associates, LLC ("R&K").

Eight years later, beginning in October 2005, the Department investigated the potential source of groundwater contamination that had been reported in Livingston. The investigation indicated to the Department that the source of the Livingston contamination had originated in the middle of appellant's former property at Okner Parkway.*fn6 As a result of that information, the Department issued appellant a letter on November 10, 2008, rescinding its January 22, 1997 "no further action" letter. The November 10, 2008 letter informed appellant that because of the rescission, appellant "no longer ha[d] the required authorization that allowed the sale of property to occur in 1997."

The Department's November 10, 2008 rescission letter further informed appellant that the investigation had "determined that the contaminants in ground water have never been used [by the successors in title] in their operations suggesting that the discharge occurred during or before the ownership of the site" by appellant. In order to regain compliance with ISRA, the Department instructed appellant to complete an application for a remediation agreement and submit the application within fifteen days of receiving the November 10, 2008 letter. The Department also directed appellant to "conduct an investigation of the former Des Champs [site] to further define the source of the ground water contamination." Additionally, the Department directed appellant to "submit a Preliminary Assessment and Site Investigation Report with the appropriate review fees for further review by the Department within 180 days of receipt of [the November 10, 2008] letter."

Appellant did not carry out the demands set forth by the Department in its November 10, 2008 letter. Instead, on March 23, 2009, appellant submitted to the Department a DQE affidavit from Mr. Des Champs, pursuant to N.J.S.A. 13:1K-9.7 and former N.J.A.C. 7:26B-2.3 (codified in its current form at N.J.A.C. 7:26B-5.9).

In a transmittal accompanying the DQE affidavit, appellant's counsel noted that, after a review of prior operations, appellant "determined that it handled a de minimis quantity of hazardous substances at the property. Therefore [appellant's] operations were exempt from ISRA." Appellant likewise asserts in its brief on appeal that "[n]one of these substances were the substances of concern alleged to have contaminated the groundwater at and near the [Okner Parkway]

[p]roperty."

On April 21, 2009, the Department denied appellant's

application for a DQE. In its letter memorializing that denial, the Department stressed "the overlying presumption that an industrial establishment, without regard to fault, should not qualify for a [DQE] when contamination is known to exist at the site."

Subsequently, in letters dated May 7, 2009 and June 24, 2009, appellant requested that the Department reconsider the denial of its application for a DQE. The Department declined to change its position. Instead, it issued a written final agency determination on January 21, 2011, that denied appellant's request to reconsider the rejection of the DQE application. The Department maintained that, in order to regain compliance, appellant must adhere to the requirements of its earlier letter, which required that appellant complete a Remediation Agreement application, "conduct an investigation . . . to further define the source of the ground water contamination . . . [and] submit a Preliminary Assessment and Site Investigation Report[.]"

Pursuant to the Spill Compensation and Control Act, N.J.S.A. 58:10-23.11 to -23.11z ("the Spill Act"), the Department issued a directive concerning the subject property on September 30, 2010. The Spill Act directive instructed appellant and intervenor, among other things, to "[h]ire a Licensed Site Remediation Professional to perform the remediation at the [s]ite[,] . . . complete delineation of the

[i]mmediate [e]nvironmental [c]oncern contaminant source[,]" conduct remediation, and "[e]stablish a remediation funding source[.]"*fn7

Following the Department's final agency decision of Janaury 21, 2011, appellant filed an appeal. Appellant's successor in title, R&K, intervened with this court's permission in the appeal.

Appellant urges that the Department's denial of its DQE application be reversed. In particular, appellant argues in its brief that "ISRA does not require that a property be free from contamination as a condition to obtaining" the exemption. Appellant maintains that the public policies underlying ISRA reflect a legislative desire to relieve property owners and industrial establishment operators from certain onerous regulatory obligations that had existed under the predecessor statute, the Environmental Cleanup Responsibility Act of 1983 ("ECRA"), N.J.S.A. 13K-6 to -14. In that vein, appellant contends that the Legislature, in codifying a "de minimis" exemption within ISRA, "recognized the unfairness of requiring an owner or operator who uses a de minimis quantity of hazardous substances to bear the cost of investigating and remediating a substantial discharge." Appellant further argues that the Department's attempt through administrative regulations to impose such obligations upon an owner or operator, as a condition of DQE approval, is ultra vires, and that those regulations must be declared invalid.

Conversely, the Department and intervenor maintain that the investigatory and remedial obligations imposed upon appellant and other DQE applicants to assure that the property is "clean" are impliedly authorized under ISRA and other applicable statutes. They argue that requiring such owners or operators of sites that once housed de minimis quantities of hazardous materials to confirm that the property is now free of contamination is consistent with the overall policy objectives of the statutory scheme. They maintain that neither ISRA nor SRRA preclude imposing such "contamination free" conditions as part of DQE approval. Consequently, they defend ...


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