On appeal from Superior Court of New Jersey, Chancery Division, Morris County, Docket No. C-7-11 and Passaic County, Docket No. C-24-1l.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued September 20, 2012
Before Judges Fuentes, Grall and Ashrafi.
These separate appeals challenge actions taken by the Commissioner of Education (Commissioner) and three executive county superintendents (ECS or ECSs) in the discharge of their responsibility to review and approve employment contracts that local school districts award to superintendents. N.J.S.A. 18A:7-8(j). At issue is the Commissioner's adoption and implementation of amended regulations capping superintendents' salaries based on enrollment. N.J.A.C. 6A:23A-1.2, -3.1(e)2. Because the legal issues are the same and the material facts are substantially identical, we address the appeals together.
The questions presented are whether: the salary cap exceeds the authority delegated to the Commissioner by the Legislature in N.J.S.A. 18A:7-1 to -16 (L. 2007, c. 63, §§ 42-58) or violates the Separation of Powers Clause, N.J. Const. art. III, ¶ 1; the cap on salary conflicts with the authority of a local school board to fix its superintendent's salary, N.J.S.A. 18A:17-19; application of the salary cap to superintendents whose contracts expired on June 30, 2011 is precluded by N.J.S.A. 18A:17-20.1 or -20.2; and the Commissioner violated the rulemaking provisions of the Administrative Procedure Act (the Act), N.J.S.A. 52:14B-1 to -24, by directing the ECSs to suspend review of renegotiated contracts pending adoption of the salary caps. Concluding that the answer to each of the foregoing questions is "No," we uphold the agency's actions.
These separate lawsuits were initially filed with the Chancery Division in Passaic and Morris Counties. In Passaic, Robert H. Holster, Superintendent for the School District of the City of Passaic, filed the complaint against the Commissioner and that county's ECS, Robert Gilmartin. In Morris, the New Jersey Association of School Administrators, James F. O'Neill, Superintendent for the School District of the Chathams, and Rene Rovtar, Superintendent for the School District of Long Hill Township, filed suit against the Commissioner and that county's ECS, Kathleen Serafino. In conformity with Rules 1:13-4 and 2:2-3(a)(2), the cases were both transferred to this court because the action of a State officer, the Commissioner, was challenged. The phrase "individual plaintiffs" is used throughout this opinion to refer collectively to Holster, O'Neill and Rovtar and the term "plaintiffs" is used to refer to the Association and the individuals.
Pursuant to N.J.S.A. 18A:7-8(j), "Each [ECS] shall . . .
[r]review and approve, according to standards adopted by the commissioner, all employment contracts for superintendents of schools . . . in school districts within the county, prior to the execution of those contracts[.]" (Emphasis added). Since June 2009, the standards for review and approval have been stated in N.J.A.C. 6A:23A-3.1(e)(2). On November 1, 2010, the Commissioner proposed amendments setting a "maximum salary amount" and defining the term with a schedule of salary caps based on enrollment. 42 N.J.R. 2524(a) (amending N.J.A.C. 6A:23A-3.1 and the definitional section, N.J.A.C. 6A:23A-1.2).
On November 15, 2010, the Commissioner directed each ECS to review and provide information on superintendents' contracts in his or her county, and the Commissioner gave instruction on review of proposed contracts pending approval of the amendments to the regulations:
Until this review process is completed and the submissions are fully analyzed by me and other executive staff, no superintendent contracts are to be approved.
Furthermore, given pending regulations with respect to Superintendent contracts that will be effective the date those regulations are approved, contracts expiring subsequent to February 7, 2011 should not be renegotiated or extended prior to the effective date of the new regulations.
When the Commissioner proposed the amendments, each of the individual plaintiffs was serving under a contract that was to expire on June 30, 2011. Each of them was either in the process of negotiating, or had already negotiated, conditions of employment under a new contract; none of the negotiated contracts had been approved by the ECS. Rovtar's contract was for a term commencing on July 1, 2011. In contrast, because O'Neill's and Holster's contracts included a renegotiation of the contract expiring on June 30, 2011, which included a retroactive salary increase for the final year, their proposed contracts called for a term commencing prior to July 1, 2011.*fn1
In each instance, the base salary for the term commencing July 1, 2011 in the proposed contract was higher than the per-pupil cap for the individual plaintiff's school district as stated in the Commissioner's proposed amendment to the regulations. Holster's negotiated base salary was $218,762.73, and the proposed cap for his district was $177,500. Rovtar's negotiated base salary was $155,000, which is $10,000 more than the proposed cap for her district. O'Neill negotiated a new salary of $217,213, but his district's cap was $165,000.
On February 7, 2011, the date the amended regulation took effect, the ECS for Morris County disapproved the contracts submitted by O'Neill and Rovtar and directed them to submit revised contracts conforming with the cap. When Holster filed his initial complaint in the Chancery Division on January 31, 2011, Passaic County's ECS had not approved or disapproved his contract. Since filing his complaint, O'Neill has retired, but he intends to reapply for his position if the salary cap is invalidated.
The standard that governs our review of the questions presented is clear. The judicial role is limited. In re Petitions for Rulemaking, N.J.A.C. 10:82-1.2 and 10:85-4.1, 117 N.J. 311, 325 (1989). Administrative action that "'can be said to promote or advance the policies and findings that served as a driving force for the enactment of th[e] legislation'" it implements is upheld. In re Certain Amendments to Adopted and Approved Solid Waste Mgmt. Plan of Hudson Cnty. Solid Waste Mgmt. Dist. (Solid Waste), 133 N.J. 206, 216 (1993) (quoting A.A. Mastrangelo, Inc. v. Comm'r of Dep't of Envtl. Prot., 90 N.J. 666, 684 (1982)).
One challenging a regulation must rebut the presumption of its validity and reasonableness by establishing that it is "arbitrary, capricious or unreasonable." N.J. Ass'n of Sch. Adm'rs v. Schundler (Schundler), 211 N.J. 535, 548 (2012) (quoting Henry v. Rahway State Prison, 81 N.J. 571, 579-80 (1980)). That burden can be met by demonstrating an inconsistency between the regulation and the statute it implements, a violation of policy expressed or implied by the Legislature, an extension of the statute beyond what the Legislature intended, or a conflict between the enabling act and other statutory law that cannot be harmonized. Id. at 548-49, 555; Lourdes Med. Ctr. of Burlington Cnty v. Bd. of Review, 197 N.J. 339, 376 (2009); N.J. Ass'n of Sch. Bus. Officials v. Davy (Davy), 409 N.J. Super. 467, 494 (App. Div. 2009).
In making the foregoing determinations, courts give "'great deference'" to the agency's "'interpretation of statutes within its scope of authority.'" Schundler, supra, 211 N.J. at 549 (quoting N.J. Soc'y for the Prevention of Cruelty to Animals v. N.J. Dep't of Agric., 196 N.J. 366, 385 (2008)). That approach is taken in recognition of "the specialized expertise agencies possess to enact technical regulations and evaluate issues that rulemaking invites." Ibid.
When considering a claim that a regulation exceeds delegated authority, "a court 'may look beyond the specific terms of the enabling act to the statutory policy sought to be achieved by examining the entire statute in light of its surroundings and objectives.'" Ibid. (quoting N.J. Guild of Hearing Aid Dispensers v. Long, 75 N.J. 544, 562 (1978)). And when a regulation consistent with the enabling act is challenged on the ground that it is in conflict with a related statute, courts "read both statutes and the relevant regulations together to give them their intended effect" when they can be harmonized.
Id. at 561. Finally, where the meaning of a statute or regulation is at issue, we give the language its plain meaning on the assumption that the terms reflect what the Legislature intended. Id. at 549; DiProspero v. Penn, 183 N.J. 477, 493 (2005).