On appeal from the New Jersey Department of Environmental Protection.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Espinosa and Kennedy.
Defendants appeal from the final agency decision of the New Jersey Department of Environmental Protection (NJDEP) requiring compliance with an administrative consent order and imposing a $5,000 civil administrative penalty for failure to maintain a remediation funding source of $50,000, as required by the order.
After considering the arguments presented in light of the record and applicable law, we affirm.
Harmeet Kohli (Kohli) purchased the "Pole Tavern Mobil Site" in Upper Pittsgrove on June 27, 2002, and Nanak Auto Fuel, Inc., (Nanak)*fn1 operates a gas station on the property, which contains an underground storage tank system. In 2004, the NJDEP issued an Administrative Order and Notice of Civil Administrative Penalty Assessment (AONOCAPA) with respect to the property. On November 16, 2006, Kohli, individually and on behalf of Nanak, signed an administrative consent order (ACO) with the NJDEP in order to "settle the outstanding issues" pertaining to the 2004 AONOCAPA. Among other things, the ACO required Kohli to conduct a remedial investigation of the property, submit a remedial action work plan and implement the plan pursuant to NJDEP approval.
Under paragraph 28 of the ACO, Kohli agreed to establish and maintain a "remediation funding source" for the duration of the order and further "agree[d] that the initial remediation funding source is $50,000."*fn2 On January 10, 2007, the NJDEP received a copy of a "line of credit agreement" between Nanak and Sun National Bank establishing a $50,000 line of credit for "remediation of the site pursuant to [the ACO]." The line of credit agreement stated it would expire on December 28, 2007, and, consequently, the NJDEP wrote to Kohli on January 31, 2007, requiring evidence of the continuation of the line of credit for the next year to be submitted no later than November 1, 2007.
Neither Kohli nor Nanak provided evidence of the continuation of the line of credit, and on April 14, 2008, the NJDEP issued a notice of violation, but stated it would not assess a penalty if, within 30 days, Nanak paid the surcharge and provided evidence of the remediation funding source for the next year.
By May 2008, Nanak paid the $500 surcharge, but in a letter to the NJDEP dated May 21, 2008, Kohli asked the department to "waive the requirement for [a] line of credit" because "Nanak has already spent $25,000 to [$]35,000 in remediation work" on the property. On June 1, the NJDEP advised Kohli and Nanak that it would not waive or reduce the remediation funding source requirement set forth in the ACO. Later that month, Sun National Bank advised the NJDEP that Kohli and Nanak had "set aside $25,000 for the purpose of [r]emediation." However, the bank did not thereafter provide any documentation supporting its assertion or evidencing the establishment of a new line of credit.
On August 18, 2008, the NJDEP issued an AONOCAPA to Kohli and Nanak based on their failure to maintain a remediation funding source, as required by the ACO, ordering compliance and assessing a penalty of $5000. Kohli and Nanak submitted a hearing request and asserted that a $25,000 funding source was "sufficient" and that they could not afford to establish a $50,000 line of credit, despite their agreement in the ACO.
The matter was transferred to the Office of Administrative Law and on October 7, 2010, the administrative law judge (ALJ) issued a decision in which he found that merely because the costs of remediation exceeded expectations, "that is not a defense under the consent order." Moreover, as to the denials by Kohli and Nanak of "culpability for the [hazardous] discharges," the ALJ determined that while such arguments may have had relevance to the 2004 AONOCAPA, "[t]hey cannot undo the [ACO]." He added that neither Kohli nor Nanak substantiated financial hardship, and that the penalty of $5000 was a "measured response" to the violation and, indeed, was less than the NJDEP could have sought under N.J.A.C. 7:26C-9.5.
Kohli and Nanak filed exceptions to the ALJ decision, and on November 22, 2010, the NJDEP Commissioner issued a final agency decision adopting the ALJ decision in its entirety. This appeal followed. On appeal, Kohli and Nanak contend that they were not responsible for the discharge of hazardous material and that their prior environmental consultants were "fraudulent and inefficient." We reject these arguments.
The scope of review of an administrative agency's final determination is limited. In re Carter, 191 N.J. 474, 482 (2007) (citing Aqua Beach Condo. Ass'n v. Dep't of Cmty. Affairs, 186 N.J. 5, 15-16 (2006)). We accord an agency's exercise of its statutorily delegated responsibilities a strong presumption of reasonableness. City of Newark v. Natural Res. Council, 82 N.J. 530, 539, cert. denied, 449 U.S. 983, 101 S. Ct. 400, 66 L. Ed. 2d 245 (1980). The burden of showing the agency's action was arbitrary, unreasonable, or capricious rests upon the appellant. See ...