July 3, 2013
NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION, COASTAL AND LAND USE COMPLIANCE AND ENFORCEMENT, Petitioner-Respondent,
ROBERT ENCH and SANDERINA R. KASPER, TRADING AS BENCH REALTY and ROBERT ENCH, INDIVIDUALLY, and WESTRUM UPPER DEERFIELD, L.L.C., Respondents-Appellants.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued May 20, 2013
On appeal from the New Jersey Department of Environmental Protection, Agency Ref. No. PEA050003-0613-04-0007.1.
Neil Yoskin argued the cause for appellants (Sokol, Behot & Fiorenzo, attorneys; Mr. Yoskin, on the briefs).
Kathrine M. Hunt, Deputy Attorney General, argued the cause for respondent N.J. DEP (Jeffrey S. Chiesa, Attorney General, attorney; Lewis A. Scheindlin, Assistant Attorney General, of counsel; Ms. Hunt, on the brief).
Chance & McCann, attorneys for respondent Sanderina R. Kasper, individually (Beth White, on the brief).
Before Judges Parrillo, Fasciale and Maven.
Appellant Bench Realty, a New Jersey general partnership in which Sanderina Kasper and Robert Ench are partners,  appeals a final decision of the Commissioner of the Department of Environmental Protection (DEP) approving DEP's assessment of penalties against Bench Realty, pursuant to an Administrative Order and Notice of Civil Administrative Penalty Assessment (AONOCAPA), for violations of the Freshwater Wetlands Protection Act (FWPA), N.J.S.A. 13:9B-1 to -30.
At issue are activities conducted on a 219-acre tract of undeveloped land in Upper Deerfield Township, Cumberland County (Property), which was owned by Bench Realty from 1986 to March 2006, when Bench sold it to Westrum Upper Deerfield, LLC (Westrum). The Property is part of an 8, 000-acre tract purchased by Bench Realty when it was formed in 1986.
The Property is essentially rectangular in shape. Its eastern side is bordered by railroad tracks and an electric power line right-of-way. In the lower southeastern portion, a stream, known as Cornwell Run, cuts southwest from the adjoining property, under the railroad through a culvert, and proceeds on the property to the southwest. This area of wetlands and transition areas running more or less parallel to the watercourse is known as the Cornwell Run Corridor. In addition, in the southern portion of the property, roughly westerly of the midpoint and to the northwest of the lower portions of Cornwell Run, is an area that now contains a very large pile of downed trees and stumps and soil, known as the "fill pile." A large part of the Property has been continuously farmed since the 1930s, with the exception of the Cornwell Run Corridor, which has mature vegetation and pronounced slopes.
The activities that are the subject of the AONOCAPA occurred within two distinct areas of the Property: the Cornwell Run Corridor and the fill pile area, which DEP claims also contains wetlands and transition areas. The AONOCAPA alleged violations of N.J.A.C. 7:7A-2.2(a) and 2.6(a), for: (1) clearing trees and woody vegetation in about one acre of freshwater wetlands and transition areas; (2) discharging and depositing sediment and other fill over about three acres of wetlands and transition areas through the creation of runoff caused by the clearing of a twenty-five acre upland section of the Property in the vicinity of Cornwell Run, in the so-called "elbow" area; and (3) creating the fill pile through the piling of cleared trees, stumps and soil in an area containing wetlands to the west of the elbow, the so-called "finger."
Indisputably, the removal of trees in the Cornwell Run Corridor itself, in both the transition and freshwater wetlands, violated the FWPA, whereas the removal of upland trees from the elbow area did not in and of itself violate the Act. Yet, as alleged by DEP, the removal of the upland trees resulted in the transport of a large amount of eroded sediment downhill into the wetlands and transition areas associated with Cornwell Run, causing damage to and changing the character of portions of this protected area, in violation of the FWPA. Finally, DEP alleged that the trees and associated soil cleared and removed from the finger were simply dumped into about three-quarters of an acre of wetland and transition area, in violation of the FWPA.
The AONOCAPA initially issued on October 4, 2006, and as amended and superseded on December 13, 2007 and December 1, 2008, ordered Bench Realty to immediately install and maintain temporary protection measures, to permanently prevent sediment from entering freshwater wetlands and transition areas, and to restore the affected areas in accordance with plans to be submitted to and approved by DEP. The AONOCAPA also sought penalties of $489, 000 from Bench Realty and Ench, and $150, 000 from Westrum.
At Bench Realty's request, the matter was transferred to the Office of Administrative Law (OAL) for adjudication. The six-day administrative hearing crystallized the matters in dispute and, equally important, those not disputed.Specifically, the parties do not dispute that the resource value of the wetlands in the Cornwell Run Corridor is "intermediate" (neither exceptional nor ordinary), requiring a fifty-foot transition area surrounding all of the wetlands. Nor do they dispute that trees were cleared from the twenty-five acre elbow area north of the Cornwell Run Corridor between 2002 and 2004, at the direction of Ench. There is also no dispute that certain trees were cleared within the 0.9 acre freshwater wetlands and transition area, although Bench Realty denies that the scope of this violation is as extensive as DEP claims, and contends its violation was unintended, inadvertent and easily remedied.
Concerning the clearing of the upland tract, a significant disagreement concerned the volume of sediment entering the transition area, its origination, and the size of the wetlands affected. On this score, DEP calculated the area of disturbance to be 2.9 acres, and alleged that as a result of the removal of the trees from the elbow, significant erosion and sedimentation has occurred, leading to the deposit of sediment at an average depth of two feet in the cleared wetland and transition area of the Corridor. In total, DEP estimated the sediment deposit at 9, 400 cubic yards.
Bench Realty disagrees with this estimate and denies that whatever sedimentation has occurred in the Corridor is the result of its removal of trees from the upland. Rather, according to Bench Realty, that sediment has historically entered the area over time from both the farming operations upland during the time that the trees were still in place and also from the upper reaches of Cornwell Run on property to the east, with the sediment entering the Property via the culvert discovered to exist under the railroad. Thus, Bench Realty contends that to the extent any sedimentation exists in the Corridor, it is nowhere near as extensive as DEP claims, and is not attributable primarily to its tree-clearing activities.
Regarding the fill pile, there is also no dispute that at the behest of Bench Realty, trees were cut in the finger area sometime between 2002 and 2004 and the tree stumps were piled up and covered with soil. The dispute is, at least in part, over whether the fill pile sits on a wetland, and also to the extent that it does, over the characterization of Bench Realty's actions in placing this material in a wetland as intentional. On this score, DEP's analysis concludes that only part of the fill pile is sitting on wetland or transition areas, and that an "approximate number" representing the affected, filled area is 0.45 acres of wetlands and 0.3 of transition area. Bench Realty, on the other hand, claims that the wetland does not extend up to the area at the base of the pile and the fill pile thus does not sit on a wetland at all.
These factual disputes were the focus of the six-day administrative hearing, which produced the following pertinent evidence.
In June 1988, a Wetlands Inventory and Delineation Report was prepared for the property by a consultant for Bench Realty and submitted to the U.S. Army Corps of Engineers (ACOE) in support of a request for a jurisdictional wetlands determination and nationwide permit that would allow the construction of a residential development. Bench Realty's report identified 6.8 acres of freshwater wetlands within the Cornwell Run Corridor. ACOE declined to issue a determination, deferring to DEP's jurisdiction. The proposed development never moved forward and there is no evidence Bench Realty ever sought to verify the boundaries of the wetlands on the property with DEP.
In 2002, Bench Realty leased the Property to Hopewell Nursery, a company owned and operated by Ench. Prior to that time, the land had been leased by farmers growing corn and soybeans. Hopewell Nursery leased the Property from 2002 until March 2008 for the purpose of cultivating nursery stock. In the winter of 2002-2003, Ench contracted with a company, Stella Contracting, to clear trees and stumps from forested portions of the Property, and the stumps were placed in the fill pile area.
In March 2004, following the clearing activities and creation of the fill pile, Bench Realty entered into an agreement to sell the property "as is" to U.S. Estates, who, in turn, as noted, assigned its right to purchase the property to Westrum in August 2004. An August 2004 environmental impact statement for a proposed development project on the Property noted that the "water quality of Cornwell Run has been affected by runoff associated with the nursery activities conducted on the majority of the site. This runoff has been enhanced by the clearing of trees and vegetation adjacent to the wetland area."
Also in August 2004, U.S. Estates applied to DEP for a letter of interpretation (LOI) to delineate wetlands on the Property. Ench signed the application on behalf of Bench Realty, the property owner. The LOI application included a wetlands delineation report prepared by Damiano Long, an engineering and environmental consulting firm retained by U.S. Estates. The Damiano Long report noted that "all of the trees have been removed in and around the wetlands [along Cornwell Run] sometime between 2002 and 2004" and that "[w]ater quality appeared generally poor in this area, with obvious field indicators of sedimentation and agricultural runoff."
In November 2004, DEP employee April Grabowski inspected the Property to verify the information in the Damiano Long report. As a result of her inspection, on February 25, 2005, DEP issued the requested LOI to U.S. Estates, confirming the jurisdictional boundary of freshwater wetlands along the length of the Corridor as delineated in the Damiano Long report. The LOI also placed the wetland boundary at the southern toe of the fill pile, in accordance with U.S. Estates' LOI application, but did not identify any part of the fill pile as a wetland. The LOI also identified the resource value of the wetlands in the Corridor as "intermediate, " requiring a fifty-foot surrounding transition area.
Based on her observations of the unpermitted clearing and disturbances of wetlands and transition areas, Grabowski referred the matter to DEP's enforcement arm, the Bureau of Coastal and Land Use Enforcement. As a result, DEP employee Robert Pacione inspected and photographed the site on March 3, 2005. He reported that extensive tree cutting had occurred in wetlands and transition areas involving the removal and deposition of stumps within transition areas. Pacione also observed a sediment plume being discharged into the wetlands that was, based on data including aerial photography, most likely a result of the erosion of sediments from the clearing of more than forty acres of upland forested areas adjacent to the wetlands with the absence of any erosion controls. In July 2005, Pacione performed a return site inspection and reported that no restoration measures had been performed and that sediment continued to be released unchecked into the wetlands from upland areas.
Pacione performed a follow-up inspection in May 2006, finding that while remedial measures had been taken by Bench Realty in the upland areas to control soil erosion, including the placement of hay bales and silt fence, no reforestation or sediment removal had been implemented. Pacione took six soil borings in the cleared Cornwall Run Corridor to estimate the depth of the sediment that had eroded into the wetlands. Based on those borings, his prior observations, aerial photography predating and postdating the clearing, and the February 2005 LOI delineating wetland boundaries on the Property, Pacione estimated that the transported sediment averaged two feet deep and covered approximately three acres of regulated areas, equaling approximately 9, 600 cubic yards.
An inspection performed by Pacione and DEP employee Janice Arnett on July 7, 2008, in the presence of representatives of Westrum, confirmed that sediment control measures were not completely effective, causing sediment to continue to flow into the wetlands and transition areas from the cleared uplands. Photographs taken by Arnett show the sediment plume from the upland fields coming down the hill and moving into the transition area, having escaped any hay bales and fencing.
Arnett also took three soil borings between the wetland boundary shown on the LOI and area north of the fill pile area, which she concluded demonstrated that the wetlands extended beyond the boundary delineated in the LOI to the area under the fill pile. Her borings taken north of the fill pile confirmed the area was uplands, leading her to conclude that the wetlands extended up and ended somewhere under the fill pile, as there was no indication of a discontinuity between the point of her sample and the toe of the fill pile.
Arnett also reviewed extensive pre-existing data, including national wetlands inventory mapping, landscape project mapping, and soil surveys as a means of determining conditions in the fill pile area. Based on her observations of these sources, she found that the soils in the fill pile area were of a type (muck/hydric) found in wetlands, and that the area formerly contained a stream and the same type of vegetation that exists along Cornwell Run. The topography maps also showed that before the disturbance was created, the elevation in the fill pile area and the Cornwell Run was almost identical.
Bench Realty's expert, James Schmid, Ph. D., disputed, among other things, not only the amount of wetlands in the Corridor area, but the volume of sediment deposited therein and its origination. As to the former, Schmid concluded that the size of the wetlands identified in the 2005 LOI was overstated because DEP placed "too few flags to go around the total slope" of the flood plain and because he could not find any hydric soils in the northern section of the disturbed wetlands along the Corridor. Yet Schmid did not proffer any alternative wetlands delineation. And although he performed his own soil borings in the Corridor to determine the wetland boundaries, the results of which conflicted with those of Pacione in 2006, Schmid never informed DEP of his results before the administrative hearing and never submitted data to support his conclusions. Instead, he took issue with the soil borings taken by Pacione, testifying that
[w]hen I go out into the field, I was looking for sediment. I didn't find it. And I don't find it, for that matter, in Mr. Pacione's notes. He says that he did some borings out here and saw a change in color of the soil at a depth of two to four feet. He doesn't tell us what the soils [were] that he was boring through. He doesn't tell us what the soil was underneath where he bore down to; so he just says he sees a change of color.
Well, to me, that says if those were bright brown soils that he was simply boring in uplands. He said I didn't look for any wetland boundary. He just assumed that he was in a wetland field without making any tests to confirm that.
In places where he found -- if he found brown dirt, which he doesn't tell us what he found, but if it was brown dirt that was two feet deep, that was in an upland; that wasn't in a wetland. That's very simple.
Schmid did acknowledge, however, that there was cutting of mature trees within the flood plain of the Cornwell Run, some of which were growing in wetlands along that watercourse. However, he did not find that there had been "any significant sedimentation of Cornwell Run as a result of the work on the subject property." Nor did he see "evidence of significant erosion in the uplands on the subject property, nor in Cornwell Run below."
Specifically, Schmid disagreed with DEP's assessment that over 9, 000 cubic yards of sediment was deposited in the Cornwell Run Corridor. According to Schmid, there was removal of the trees in the elbow and there is a trace of a drainage course that arises several hundred feet to the northwest of the Cornwell Run and flows into the Run. This is a swale, without definite banks and bed, which is not a deep gully and "not the kind of thing that I have often seen in erosional gullies and farm fields in New Jersey." The "light patch" or "comma" of sediment that is visible appears to have "come down the tributary from the fields above." The patch "appears confined to the swale" and Schmid saw "no other evidence of sedimentation in this whole vicinity here." Thus, as to DEP's assessment, Schmid saw "no photographic evidence . . . no topographic evidence . . . no soils that resemble sediments on the ground. I see vegetation that is very dense covering the whole area which would not have had time to regrow."
Schmid also disagreed with DEP's theory of the cause of the sedimentation. Schmid opined that sediment had been conveyed in years past to the Cornwell Run Corridor on the Property from farming operations conducted to the east of the Property, via the Cornwell Run as it passed under the railroad on the eastern border of the Property through a concrete culvert. That culvert is now clogged and as a result there is no stream in the corridor for several hundred feet on the Property itself west of the railroad.
Finally, Schmid disputed that the wetlands extended under a portion of the fill pile. Schmid took his own soil borings south of the fill pile and concluded the area was not a wetland, although one of his borings did reveal wetland conditions within a small area. He also took a sample from a pit under the fill pile, which he claimed turned up soil that was not hydric or indicative of wetlands.
Arnett, however, disagreed that this was original pre-disturbance soil. She testified that the soil was homogenous, rather than layered, which would be expected if the sample was original soil. She concluded that the sample consisted of soil and sediment that had filtered down from the fill pile itself and had been deposited on top of the original soil layers. In addition, as even DEP concedes that the entire fill pile is not located over wetlands, it is possible that Schmid's sample was from an uplands portion of the fill pile.
At the close of evidence, on May 13, 2010, the ALJ issued an Initial Decision finding Bench Realty and Westrum jointly and severally liable for remediation of the FWPA violations in the Cornwell Run Corridor and finding Bench Realty alone liable for remediation of the fill pile area. The ALJ also approved DEP's assessment of penalties.
In so holding, the ALJ found DEP's reports, photographs and soil borings more credible than Schmid's testimony. The ALJ further found that "the visual evidence of sedimentation descending to and entering the transition and wetland areas is more than sufficient to establish that there has been a deposition of sediment from the cleared upland areas into the Cornwell Run Corridor." The ALJ ultimately determined that 3.86 acres of wetlands and transition areas were disturbed in the Cornwell Run Corridor and 0.75 acres of wetlands and transition areas were disturbed beneath the fill pile, totaling 4.61 acres of disturbed regulated areas.
Specifically, the ALJ found DEP had established by a preponderance of the evidence the existence and extent of sedimentation in the Cornwell Run Corridor and that the upland areas cleared by Bench Realty were the major source of this sediment:
Pacione's credible report of March 2005 and follow-up of July 2005 include photos which clearly demonstrate that sediment was transporting down from the cleared upland into the transition and wetland areas in the Cornwell Run. . . . Additionally, Pacione detailed his borings, taken in May 2006. He testified that he had identified the A horizon, that is, the beginning of the original wetland layer, under significant depths of sediment. . . . And I find that the visual evidence of sedimentation descending to and entering the transition and wetland areas is more than sufficient to establish that there has been a deposition of sediment from the cleared upland areas into the Cornwell Run Corridor.
In so finding, the ALJ rejected Bench Realty's argument that other sources were responsible for the sedimentation and that the presence of understory vegetation in the area belied DEP's claim of how much sedimentation had occurred:
That there may have been some sediment moving into the area from the upland even when the elbow existed, and some deposition from the east-lying area on the far side of the railroad is not to be doubted, but given the removal of the trees it is also not to be doubted that the effects of erosion and sedimentation have increased to a substantial degree. The relatively recent stabilization of the area through the use of effective sedimentation controls and, no doubt, the lack of some of the canopy due to the cutting of trees in the transition and wetlands, has allowed for some recovery of the understory vegetation, and this is perhaps a good sign for the future. But this fact does not lessen the fact that the preponderance of the credible evidence points to the correctness of the DEP's position.
As to the finding that the wetlands extended under the fill pile, the ALJ first noted that the creation of the fill pile effectively eliminated any ability to directly observe the underlying environment, necessitating some means of accessing the pre-existing soils under the pile or some other indirect method of detecting the environment. Also, while DEP's own wetlands delineation conducted for the 2005 LOI did not identify the area under the fill pile as wetland, the ALJ found:
[t]he soil survey information did however identify hydric soils as present up to and beyond the pile area. And Mr. Pacione's boring fifty yards downstream from the toe of the pile confirmed the presence of hydric soil. According to Janice Arnett, her boring at SB-1, taken north of the LOI line and slightly below the toe of the pile, found all of the necessary indicators of wetland to be present at that location. If this is true, then perhaps the LOI line does not accurately reflect the limit of the wetlands south of the toe of the pile. Arnett concluded that, given her findings at SB-1 and the fact that she observed no indication of a dividing line existing between her boring site and the toe of the pile that reflected a limit to the wetlands, they necessarily continued to some point under the pile. However, . . . the borings performed . . . north of the pile confirmed that wetlands did not exist in that area. Arnett placed the limit of the under-pile wetlands at several feet to the north of the toe of the pile.
In other words, Arnett conducted her own inspections of the fill pile area to determine the delineation of any wetlands in accordance with the procedures outlined in a federal manual. As the ALJ explained, Arnett's sample from above the LOI line and slightly below the foot of the fill pile revealed wetland conditions, and no dividing line existed between that point and the fill pile. Arnett estimated the wetlands line somewhere under the fill pile analyzing the soil boring data in conjunction with the topography of the area.
On the issue of partnership liability, the ALJ reasoned:
[T]he issue is what the partnership did, what it knew, not what an individual purportedly exposed to individual liability knew or did. There is no reason why the knowledge and conduct of one partner should not be attributed to the partnership, and the fact that the "innocent" partner may be left to answer with the widow/partner of the deceased partner is no reason to reduce whatever the proper assessment of the partnership's conduct is. The issue is not whether vicarious liability is to be placed upon Ench; it is whether the partnership's actions were "intentional, deliberate, knowing or willful." The removal of the trees by the partnership was certainly willful, deliberate and intentional. And the partnership surely knew of the presence of wetlands, at least in the Cornwell Run Corridor. When the trees were removed, no steps were taken by Bench to deter erosion and sedimentation from impacting these areas after the deliberate removal of a substantial area of upland trees. While it may be the case that the contractor took down some trees in the transition and wetland areas that were not part of its charge under its agreement with Bench, Bench is both responsible for what happens on its land and is clearly responsible for the impact of the authorized tree cutting on the upland.
Finally, the ALJ approved DEP's penalty assessment, which was based on one violation per month during the period from the date of the original NOV issued to Bench Realty (April 13, 2005) to October 2008, and for penalty calculation purposes, the affected disturbed area was deemed to include the fill pile area starting in April 2005. DEP assessed penalties of $9, 000 for each of the thirty-one months from the NOV until January 4, 2008, when the Environmental Enforcement Enhancement Act (EEEA) became effective and penalties of $21, 000 for each of the ten months from January 4, 2008 to October 2008, resulting in a total penalty of $489, 000.
In rejecting Bench Realty's argument that the EEEA should not be applied retroactively, the ALJ found the violations to be of a continuing nature:
The FWPA and the [EEEA] each recognize that in the context of violations of environmental laws, the damage caused to the environment by an activity carried out in violation of the law does not stop at the end of the day or days when the violator carried out the physical conduct that created the damage or the conditions that led to the damage. That is why the laws provide that for each day on which the violation continues there is a new violation, and a penalty can be assessed for each such day. If a violator of environmental laws seeks to end the ongoing liability for daily penalties, it can take the necessary steps to remediate the violation. If it does not do so, it cannot reasonably complain that it is somehow unfair for the DEP to seek to obtain penalties for each day in which the violation continues. Even if sediment stopped entering the wetlands and transition area at some point, if the effects of the violation remain, the violation is properly deemed ongoing.
In a final decision dated February 21, 2011, the Commissioner adopted the ALJ's findings of fact and conclusions of law. Specifically, the Commissioner found that the ALJ's determination "was based on the detailed testimony and reports of Pacione and Arnett, aerial photographs of the Property before and after tree clearing, photographs of the site taken in 2005 before sediment control measures were implemented, and detailed soil borings conducted by Pacione." With particular regard to the fill pile, the Commissioner found that:
Arnett was qualified as an expert in freshwater wetlands identification without objection; she provided detailed testimony about her personal investigation of the fill pile area and the extensive materials she reviewed to reach her conclusion that the wetlands extended beyond the boundary delineated in the LOI and under a portion of the fill pile. Arnett's conclusion is supported by maps, soil surveys, and photographs in evidence, as well as by soil borings taken by Arnett between the wetland boundary shown on the LOI and the fill pile area, which demonstrated that the wetlands extended beyond the boundary delineated in the LOI.
The Commissioner further stated that while Schmid testified that the LOI and soil maps relied on by Arnett were incorrect, he
did not produce any soil borings or other documentation to support that conclusion, and his expert report also failed to include any sample results to substantiate his position. Schmid testified that a soil sample he took from a test pit in the fill pile area showed the wetlands did not extend under the area, but Arnett testified that the sample consisted of fill sediment, not soil, because the sample was homogenous and lacked the layering of an original soil profile. Schmid conceded that the soil boring he performed closest to the toe of the fill pile was located in a wetland, but claimed that wetland did not extend into the fill pile area.
The Commissioner further upheld the penalty assessment:
[B]efore the December 1, 2008 AONOCAPA issued, [DEP's] NOV of April 2005, AONOCAPA of October 2006, and amended AONOCAPA of December 13, 2007 all put Bench [Realty] on notice that the violations were ongoing and that restoration was required to stop the ongoing violation, but Bench [Realty] chose to allow the violation to continue rather than to fully address it, thereby assuming the risk of additional penalties. In addition, the record does not support [Bench Realty's] contention that, as early as March 2003, actual remediation measures were imposed to minimize erosion and sediment deposition into the wetland and transition areas of the Property. Rather, the testimony of DEP's witnesses established that restoration was not attempted until after the April 2005 NOV and that restoration attempts were not successful and did not entirely stop the flow of sediment into the Cornwell Run Corridor.
In so ruling, the Commissioner agreed with the ALJ's finding of major conduct:
Here, Ench admitted that he authorized a contractor to clear trees on the Property; knew trees were removed from three distinct areas, including along Cornwell Run; and knew that trees from one cleared upland area were placed in the fill pile area. . . .
Further, Ench admitted knowing that a section of the Property contained wetlands, and Bench must be charged with knowledge of wetlands in the Cornwell Run Corridor before tree clearing occurred based upon its delineation of those wetlands in its 1988 application to the ACOE for a wetlands jurisdictional determination of the Property and the 1986 DEP wetlands map, which both identified wetlands within the Cornwell Run Corridor.
The Commissioner also rejected Bench Realty's argument that because Ench was not familiar with Bench Realty's previous applications for wetlands delineations, they could not be used as a basis for a finding of major conduct:
In addition, during the time the violations were continuing, Ench signed the 2004 LOI application which also delineated wetlands. While Ench claimed he was not familiar with Bench's 1988 application for a wetland delineation and that he never read the 2004 LOI application, those applications are binding on Bench Realty because they were made by members of the partnership, Kasper and Ench, in furtherance of partnership business. See N.J.S.A. 42:1A-1 et seq.; Affiliated FM Ins. Co. v. Kushner Cos., 265 N.J.Super. 454, 466 (Law Div. 1993). The fact is that Ench knew there were streams and wetlands on the Property but nevertheless directed the illegal clearing of forested wetland areas without ever bothering to check his partnership or public records of wetland maps, which would have identified at least some of those areas as wetlands.
In light of the foregoing, I agree with the determination that Bench Realty's activities that disturbed the Cornwell Run Corridor wetlands and created the fill pile constituted major conduct. As a partnership and the Property owner, Bench must be charged with knowledge of the 1988 and 2004 applications for wetlands delineations regardless of the claimed ignorance of one of its partners. In addition, the tree clearing was deliberate and authorized by Ench; the fill pile was created as part of tree clearing activities; Ench knew cleared trees and stumps were placed in the fill pile area; and the fill pile was located immediately above the wetland boundary as delineated in the LOI application signed by Ench. Thus, even if previous studies and the 2005 LOI did not identify the fill pile area as a wetland, due care and investigation would have warranted avoiding disturbing that area because, at a minimum, Bench Realty was on notice that it was comprised of wetland transition areas.
Finally, as to the application of the EEEA and the continuing nature of the violations, the Commissioner reasoned:
[T]he failure to restore a disturbed freshwater wetlands or transition areas allows environmental damage to continue and constitutes an ongoing violation, which may be subject to a new statutory remedy such as an enhanced penalty. Here, because disturbances to wetlands and transition areas were already subject to penalty before enactment of the EEEA, the maximum daily penalty amount for such ongoing violations can be increased for the time period following the statutory enactment.
On appeal, Bench Realty raises the following issues:
I. THE DEPARTMENT'S FINAL DECISION WAS NOT SUPPORTED BY PREPONDERANCE OF THE CREDIBLE EVIDENCE.
A. Standard of Review
B. There is no credible evidence that the wetland disturbances to the Cornwell Run occurred in the manner alleged by DEP
C. There is no credible evidence that the stump pile is located in regulated wetlands
D. There is no credible evidence that Bench failed to implement and maintain sediment control measures
II. THERE IS NO CREDIBLE EVIDENCE OF A DELIBERATE VIOLATION OF THE FRESHWATER WETLAND PROTECTION ACT
A. There is no basis for asserting that Bench had "prior knowledge" based on the 1988 Wetland Delineation or the 2004 Letter of Interpretation
B. The Uniform Partnership Act does not serve as a legal basis for attributing deliberate conduct to Bench and/or Robert Ench
C. There is no evidence that the removal of trees from wetlands in the Cornwell Run Corridor was deliberate
D. The stump pile was not intentionally or deliberately placed in freshwater wetlands
III. DEP'S PENALTY ASSESSMENT IS ARBITRARY, CAPRICIOUS AND UNREASONABLE
IV. THE MANNER IN WHICH THE DEPARTMENT INVESTIGATED AND PURSUED THIS ENFORCEMENT ACTION WAS VIOLATIVE OF THE PRINCIPLES OF FUNDAMENTAL FAIRNESS
V. THE PLAIN LANGUAGE OF THE WETLAND ACT DOES NOT ALLOW PENALTIES FOR TRANSITION AREA VIOLATIONS ASSOCIATED WITH FARMING
VI. THE ENVIRONMENTAL ENFORCEMENT ENHANCEMENT ACT, P.L. 2009, C. 246, IS IMPROPERLY RELIED UPON AS A BASIS FOR ENHANCED PENALTIES
We discern no merit to these contentions and accordingly affirm substantially for the reasons stated by the Commissioner in his written opinion of February 21, 2011. We add the following comments.
We "will not reverse the ultimate determination of an agency unless [we conclude] that it was 'arbitrary, capricious or unreasonable, or that it lacked fair support in the evidence, or that it violated legislative policies' expressed or implied in the act governing the agency." In re Freshwater Wetlands Gen. Permit No. 16, 379 N.J.Super. 331, 341 (App. Div. 2005) (quoting Campbell v. Dep't of Civil Serv., 39 N.J. 556, 562 (1963)). In exercising our review powers, we traditionally defer to an agency's expertise in cases involving technical matters within the agency's special competence.
N.J. Chapter of the Nat'l Ass'n of Indus. & Office Parks v. N.J. Dep't of Envtl. Prot.,
241 N.J.Super. 145, 165 (App. Div.), certif. denied, 122 N.J. 374 (1990); Schwerman Trucking Co. v. Dep't of Envtl. Prot., 125 N.J.Super. 14, 18-19 (App. Div. 1973). "This deference is even stronger when the agency, like DEP in regard to wetlands, 'has been delegated discretion to determine the specialized and technical procedures for its tasks.'" In re Freshwater Wetlands Gen. Permits, 372 N.J.Super. 578, 593 (App. Div. 2004) (quoting Newark v. Natural Res. Council, Dep't of Envtl. Prot., 82 N.J. 530, 540, cert. denied, 449 U.S. 983, 101 S.Ct. 400, 66 L.Ed.2d 245 (1980)). Indeed, the agency has the "staff, resources and expertise to understand and solve those specialized problems." Bergen Pines Cnty. Hosp. v. N.J. Dep't of Human Serv., 96 N.J. 456, 474 (1984). Thus, to substitute our judgment for that of any agency, we must be convinced that the agency's decision was clearly mistaken and "'so plainly unwarranted that the interests of justice demand intervention.'" Clowes v. Terminix Int'l, Inc., 109 N.J. 575, 588 (1988) (quoting State v. Johnson, 42 N.J. 146, 162 (1964)). Moreover, we "do not reverse an agency's determination 'because of doubt as to its wisdom or because the record may support more than one result.'" In re Freshwater Wetlands Gen. Permits, supra, 372 N.J.Super. at 593 (quoting In re N.J. Pinelands Comm'n Resolution, 356 N.J.Super. 363, 372 (App. Div.), certif. denied, 176 N.J. 281 (2003)).
In addition, although we are not bound by an agency's determination on a question of law, In re Distribution of Liquid Assets, 168 N.J. 1, 11 (2001), we "'extend substantial deference to an agency's interpretation of its own regulations[, ]'" In re Freshwater Gen. Permit No. 7, 405 N.J.Super. 204, 213 (App. Div.) (quoting In re Freshwater Wetlands Gen. Permit No. 16, supra, 379 N.J.Super. at 341), certif. denied, 199 N.J. 132 (2009). Likewise, "[t]he imposition of a penalty by an administrative agency will ordinarily be affirmed so long as it is jurisdictionally permissible, supported by the record to the extent fact-finding is involved, and neither arbitrary nor unreasonable." Pressler, Current N.J. Court Rules, comment 3.5 on R. 2:10-1 (2004); see also Knoble v. Waterfront Comm'n of N.Y. Harbor, 67 N.J. 427, 431-32 (1975).
Guided by these principles, we are satisfied that DEP's factfinding of violations of the FWPA and its imposition of the resultant penalty are supported by sufficient credible evidence in the record and comport with applicable law. We discern no abuse of agency discretion in the determinations we are asked to review on this appeal.
It is the declared public policy of this State to protect our inland waterways and freshwater wetlands:
The Legislature therefore determines that in this State . . ., it is in the public interest to establish a program for the systematic review of activities in and around freshwater wetland areas designed to provide predictability in the protection of freshwater wetlands; that it shall be the policy of the State to preserve the purity and integrity of freshwater wetlands from random, unnecessary or undesirable alteration or disturbance; and that to achieve these goals it is important that the State expeditiously assume the freshwater wetlands permit jurisdiction currently exercised by the United States Army Corps of Engineers pursuant to the Federal Act and implementing regulations.
Under the FWPA, a "freshwater wetland" is defined as
an area that is inundated or saturated by surface water or groundwater at a frequency and duration sufficient to support, and that under normal circumstances does support, a prevalence of vegetation typically adapted for life in saturated soil conditions, commonly known as hydrophytic vegetation; provided, however, that the department, in designating a wetland, shall use the 3-parameter approach (i.e. hydrology, soils and vegetation) enumerated in the April 1, 1987 interim-final draft "Wetland Identification and Delineation Manual" developed by the United States Environmental Protection Agency, and any subsequent amendments thereto[.]
The FWPA also protects transition areas that lie outside the wetlands. A "transition area" is "an area of land adjacent to a freshwater wetland which minimizes adverse impacts on the wetland or serves as an integral component of the wetlands ecosystem." N.J.S.A. 13:9B-3; see also N.J.A.C. 7:7A-2.5(a). The extent of transition area required at any given wetland location can vary in accordance with the "resource value" of the wetlands themselves, which may be classified as "exceptional, " "ordinary" or, if neither of these, "intermediate." N.J.A.C. 7:7A-2.4.
Regulated activities under the FWPA, which cannot be undertaken without a freshwater wetlands permit, N.J.S.A. 13:9B-9 and N.J.A.C. 7:7A-2.1, include "[t]he removal, excavation, disturbance or dredging of soil, sand, gravel, or aggregate material of any kind" in a freshwater wetland, N.J.S.A. 13:9B-3(1), "[t]he dumping, discharging or filling with any materials" in a freshwater wetland, N.J.S.A. 13:9B-3(3), and "[t]he destruction of plant life which would alter the character of a freshwater wetland, including the cutting of trees[, ]" N.J.S.A. 13:9B-3(6); see also N.J.A.C. 7:7A-2.2(a).
In the absence of a waiver, the FWPA also prohibits the following activities in transition areas: "[r]emoval, excavation, or disturbance of the soil[, ]" N.J.S.A. 13:9B- 17(a)(1), "[d]umping or filling with any materials[, ]" N.J.S.A. 13:9B-17(a)(2), and "[d]estruction of plant life which would alter the existing pattern of vegetation[, ]" N.J.S.A. 13:9B-17(a)(5); see also N.J.A.C. 7:7A-2.1(a); N.J.A.C. 7:7A-2.6(a); N.J.A.C. 7:7A-2.5(f).
The FWPA exempts certain activities from wetland permit and transition area requirements, including "[n]ormal farming, silviculture, and ranching activities." N.J.S.A. 13:9B-4(a). However, the regulations establish that such activities are only exempt when they are "part of an established, ongoing farming, ranching or silviculture operation." N.J.A.C. 7:7A-2.8(c). "Established, ongoing farming, ranching or silviculture operation" means "activities on areas subject to a farming, ranching, or silviculture use as of June 30, 1988, which use has been pursued continuously since June 30, 1988." N.J.A.C. 7:7A-1.4. Furthermore, the "exemptions apply only to the portion of the property which meets all requirements for the exemption." N.J.A.C. 7:7A-2.8(b)(3).
Violators of the permitting requirement are subject to both civil administrative penalties and the requirement to restore the wetlands. As to the latter, the clear terms of the FWPA allow DEP to issue a compliance order requiring "restoration to address any adverse effects upon the freshwater wetland or transition area resulting from any violation." N.J.S.A. 13:9B-21(b)(4).
In assessing penalties, "each day during which each violation continues shall constitute an additional, separate, and distinct offense." N.J.S.A. 13:9B-21(d). FWPA regulations direct DEP to use two factors, "conduct and seriousness, to determine the amount of the base daily civil administrative penalty[, ]" assigning each violation a point value for each factor. N.J.A.C. 7:7A-16.8(c). "Major conduct" is defined as "an intentional, deliberate, purposeful, knowing or willful act or omission by the violator." N.J.A.C. 7:7A-16.8(c)(1)(i). "Moderate conduct" encompasses "any unintentional but foreseeable act or omission by the violator." N.J.A.C. 7:7A-16.8(c)(1)(ii). All other conduct is considered "minor." N.J.A.C. 7:7A-16.8(c)(1)(iii). The "seriousness factor" is assigned points "based on the acreage of wetlands and/or transition areas impacted and the resource value of the freshwater wetlands." N.J.A.C. 7:7A-16.8(c)(2).
As for partnership liability, under the Uniform Partnership Act (1996), N.J.S.A. 42:1A-1 to -56, a "partner's knowledge, notice, or receipt of a notification of a fact relating to the partnership is effective immediately as knowledge by, notice to, or receipt of, a notification by the partnership, except in the case of a fraud on the partnership committed by or with the consent of that partner." N.J.S.A. 42:1A-3(f); see also Affiliated, supra, 265 N.J.Super. at 469 ("The fact that one single partner may not have had all of the relevant knowledge regarding the fire and the pending insurance application is irrelevant in determining what the partnership itself knew.").
In determining the nature, duration and extent of the claimed regulatory violations, as well as the resultant damages, the ALJ, and ultimately the Commissioner, were entitled to give greater weight to the opinion of DEP's experts than to that of Schmid, Bench Realty's expert. ZRB, LLC v. N.J. Dep't of Envtl. Prot., 403 N.J.Super. 531, 562 (App. Div. 2008); Rubanick v. Witko Chem. Corp., 242 N.J.Super. 36, 48-49 (App. Div. 1990), mod. on other grounds, 125 N.J. 421 (1991); Indeed, a factfinder is not obligated to accept the opinion of an expert witness or to accept all of an expert's opinion. State v. Carpenter, 268 N.J.Super. 378, 381-83 (App. Div. 1993), certif. denied, 135 N.J. 467 (1994); Todd v. Sheridan, 268 N.J.Super. 387, 401 (App. Div. 1993). In this regard, an ALJ's credibility determination should be disturbed only if arbitrary and capricious, or not supported by sufficient, competent and credible evidence in the record. N.J.S.A. 52:14B-10(c); see also N.J.A.C. 1:1-15.9(b).
In this case, Schmid contradicted many of the findings of the DEP's experts concerning the area of wetlands disturbed, the volume of sediment found in Cornwell Run, and its source. In each instance, however, the ALJ found DEP's expert witnesses' conclusions more persuasive and convincing that Bench Realty committed knowing violations of the FWPA. In this vein, as noted, DEP's inspection of the Property in 2005 uncovered extensive tree cutting in uplands north of Cornwell Run and in a one-acre portion of the freshwater wetlands and transition area along Cornwell Run. The agency also found the deposition of tree stumps and soil in about 0.75 acres in wetlands and transition area north of Cornwell Run, as well as about 9, 400 cubic yards of sediment discharged into the wetlands, which DEP experts opined was transported into the Corridor largely as a result of the tree clearing rather than by agricultural operations being conducted on a portion of the Property. Subsequent inspections revealed that while some remedial measures had been taken to control erosion, significant amounts of sediment continued to flow into regulated wetlands. Visual evidence depicting sedimentation entering the Cornwell Run Corridor from the cleared upland areas support the agency's findings.
Equally clear to the ALJ is that Bench Realty, through its partners, knew at least a portion of the Property contained wetlands. In fact, Bench Realty identified wetlands in the Cornwell Run Corridor as early as its 1988 application to the ACOE. Moreover, according to his testimony, Ench authorized a contractor to clear trees from the Property; knew that trees were cleared from three distinct areas on the Property in the winter of 2002-2003; and knew that trees and attached soil from a cleared portion of the Property were deposited in the fill pile area.
On the other hand, Schmid never really disputed with any alternative wetlands delineation the amount of wetlands identified either in the 1988 mapping or the 2005 LOI, both of which Bench Realty was aware. Moreover, while Pacione acknowledged additional potential sources of sediment — namely that sediment from farming operations may have already been moving into the wetlands from the upland before the tree clearing occurred — that possibility did not alter the DEP witnesses' expert opinions that tree removal substantially increased the effects of erosion and sedimentation. Also, the farming exemption claimed by Bench Realty applies only to areas that were actually farmed, not to an entire property. N.J.S.A. 13:9B-4(e); N.J.A.C. 7:7A-2.8(b). In this regard, Bench Realty offered no proof that either the Cornwell Run Corridor or the fill pile area were ever used for farming or the harvesting of forest products before its tree clearing operation occurred.
Concerning the fill pile, Arnett's soil boring near its base was indicative of wetlands. Although Schmid denied the accuracy of DEP's soil surveys and further denied finding hydric soil in his own 2008 borings, his locations were further from the toe of the pile than Arnett's. Schmid also conceded, however, that the closest boring he performed did reveal a small wetland area, which he deemed isolated and unrepresentative. And while Arnett's finding may have conflicted with the 2005 LOI application and previous wetlands mapping that showed the wetlands did not extend to the fill pile area, that area was located barely outside the boundary of the previous wetlands delineation and was evidently within the transition area. Moreover, there was evidence, as the ALJ found, of "an intermittent watercourse running up to and quite likely into the very area of the fill pile."
Lastly, concerning the penalty assessed, there was disagreement as to the effectiveness of Bench Realty's restoration efforts as well as the degree of its culpability. As to the former, Arnett's July 2008 inspection revealed that the sediment control measures Bench Realty had undertaken were in disrepair and therefore not completely effective, allowing sediment to continue to move into the wetlands.
As to the latter, Bench Realty argues that there is no evidence of the deliberate removal of trees from wetlands in the Cornwell Run Corridor or that the fill pile was intentionally placed in wetlands. Firstly, DEP did not ultimately seek to hold Ench personally liable for the assessed penalties, only Bench Realty as a partnership. Nevertheless, Ench directly authorized a contractor to clear trees on the Property, knew that a section of the Property contained wetlands, knew trees were removed from an area, among others, along Cornwell Run and that trees from one cleared upland area were placed in the fill pile area. Specifically, Bench Realty at least had knowledge of the presence of wetlands as delineated in the 1988 report of its consultant and the 2004 LOI application. Bench Realty does not deny that it submitted the 1988 wetlands delineation, which identified 6.8 acres of freshwater wetlands within the Cornwell Run Corridor, as part of its application to ACOE for a jurisdictional determination. Also, Ench does not deny that, on behalf of Bench Realty, he signed the 2004 LOI application, which was filed with a report that placed the wetlands boundary just south of the fill pile. There is thus sufficient evidence in the record, consistent with the Uniform Partnership Act, to impute knowledge to Bench Realty of the existence of wetlands in the general area where the tree clearing activities took place.
There is also evidence from which it may reasonably be inferred that Bench Realty knew, or should have known through investigation, that a portion of the fill area was over wetlands. Because the 2005 LOI placed the wetland boundary at the southern toe of the fill pile, Bench Realty was at least expected to know that the fill pile bordered wetlands and therefore necessarily contained transition area. Moreover, as the Commissioner found, the December 2007 AONOCAPA provided notice that the fill pile area might be a violation site requiring restoration, but after receipt of that AONOCAPA and an NOV in August 2008, Bench Realty made no effort to follow up or investigate, much less take remediation measures.
Finally, Bench Realty argues that the enhanced penalties of the EEEA were wrongly applied retroactively because the charged violations occurred years before the EEEA became effective. There is no merit to this contention. The EEEA took effect on January 4, 2008, and increased the maximum daily penalty assessment for FWPA violations from $10, 000 per day to $25, 000 per day. N.J.S.A. 13:9B-21(d). The ALJ agreed with DEP's reliance on the EEEA to increase the daily penalty assessment against Bench Realty from January 4, 2008 to October 2008.
We discern no error in the EEEA's application here. As the ALJ noted:
[t]he FWPA and the [EEEA] each recognize that in the context of violations of environmental laws, the damage caused to the environment by an activity carried out in violation of the law does not stop at the end of the day or days when the violator carried out the physical conduct that created the damage or the conditions that led to the damage.
Thus, assessment of penalties under the FWPA may begin when a violation occurs, and each day the illegal activity continues constitutes a new, distinct violation. N.J.S.A. 13:9B-21(d). Hence, the failure to restore a disturbed freshwater wetlands or transition area allows environmental damage to continue and constitutes an ongoing violation, which may be subject to a new statutory remedy such as an enhanced penalty. Here, as the Commissioner concluded, because disturbances to wetlands and transition areas were already subject to penalty before enactment of the EEEA, the maximum daily penalty amount for such ongoing violations could be increased for the time period following the statutory enactment.
For all these reasons we uphold the Commissioner's determinations finding Bench Realty liable for the regulatory violations charged and imposing $489000 in civil administrative penalties for such conduct