Court Opinion

ID: 5130045
Source: CourtListenerOpinion
Date Created: 2021-11-30 15:09:33.560071+00
Date Added: 2024-06-11T08:23:15.439381
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
                            APPROVAL OF THE APPELLATE DIVISION
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 Internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.

                                                    SUPERIOR COURT OF NEW JERSEY
                                                    APPELLATE DIVISION
                                                    DOCKET NO. A-5515-18

IN THE MATTER OF
INNOVATIVE SOLUTIONS
CORPORATION'S APPEAL OF
THE DENIAL OF APPLICATIONS
FOR INCENTIVE PAYMENTS
SUBMITTED UNDER THE NEW
JERSEY SMARTSTART
BUILDINGS PROGRAM.
_______________________________

               Submitted October 14, 2021 – Decided November 30, 2021

               Before Judges Hoffman, Whipple and Geiger.

               On appeal from the New Jersey Board of Public
               Utilities, Docket No. QC19020243.

               Stuart P. Schlem, attorney for appellant Innovative
               Solutions Corporation.

               Andrew J. Bruck, Acting Attorney General, attorney
               for respondent New Jersey Board of Public Utilities
               (Sookie Bae, Assistant Attorney General, of counsel;
               Matko Ilic, Deputy Attorney General, on the brief).

PER CURIAM
      Petitioner Innovative Solutions Corporation appeals from the July 10,

2019, order of the Board of Public Utilities (Board) denying its petition for

financial incentives under the N.J. SmartStart Buildings Program (the

program). We affirm.

      Petitioner is a New Jersey corporation whose majority shareholder and

sole full-time employee was Alok Jain (Jain) until Fall 2016, when his son,

Anshul Jain (Anshul), completed his education and joined the company.

Petitioner provides energy efficient light bulbs to individually owned hotels

and motels in New Jersey under the program. The Board offers the program

pursuant to the New Jersey Electric Discount and Energy Competition Act

(EDECA), N.J.S.A. 48:3-49 to -98. The program provides financial incentives

for non-residential customers of New Jersey utility companies who participate

in the program to install energy efficient measures, including energy efficient

light bulbs.      TRC Energy Services Corporation (TRC) administers the

program.

      To be eligible to receive financial incentives, a participant must submit

an application package to TRC before the participant installs equipment. See

N.J. BD.   OF   PUB. UTILS., 002-FY14-04/14, NJ SMARTSTART BUILDINGS GAS

COOLING APPLICATION (2014).       "The package must include an application

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signed by the customer; a complete (current) utility bill; and technology

worksheet and manufacturer's cut sheets (where appropriate)." Ibid. If TRC

approves the application package, the customer will receive an approval letter

stating the estimated authorized incentive amount and the date by which the

equipment must be installed. Ibid. The equipment may only be installed after

receiving an approval letter. Ibid. All equipment must be purchased within

twelve months of the date of the application. Ibid. After installation, the

customer must submit a finalized invoice, with separate labor and material

costs, and any additional documents requested in the application or initial

approval letter. Ibid. Petitioner's payments were denied after installation, but

we refer to this as denial of the whole application, pre- and post-installation,

for incentives.

      Petitioner has participated in the program as an agent or vendor for

hotels and motels throughout New Jersey by obtaining applications from the

hotels or motels and submitting the applications to the program administrator

with the requisite documentation. Petitioner either installs the LED bulbs for

the hotel or motel at no cost to the hotel or motel, or the hotel or motel installs

the bulbs. No money is exchanged between the hotel or motel and petitioner.

Petitioner submitted evidence to TRC that the light bulbs were installed, such

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as an invoice to the hotel or motel, indicating the quantity of light bulbs

installed, the cost for each light bulb, and either no charge for the installation

or that the hotel or motel installed the light bulbs themselves. The hotel or

motel would provide a written statement confirming the installation of the light

bulbs to be submitted to TRC. Upon approval, TRC would pay petitioner the

cost of the light bulbs.

      Participants in the program have one year to submit the required

invoices and documentation in order to receive payment after installation.

Between February 3, 2014, and June 29, 2015, petitioner submitted three

applications, which are not on appeal. Unfortunately, during this time, Jain

endured several serious health issues, which affected his physical and mental

well-being, so petitioner did not submit the paperwork for eighteen

applications, which are the subject of this appeal. At various points between

March 27, 2015, and September 23, 2016, TRC denied the eighteen

applications because petitioner did not provide the required documentation or

request an extension prior to the applications' one-year expiration dates. TRC

attached a chart to its ultimate denial letter on January 21, 2019, showing

which required documents were either missing or received for each of the

subject applications.

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      In the Fall 2016, Jain's son, Anshul, completed his education, joined the

business, and assumed Jain's responsibilities. In October 2016, Anshul began

communicating with TRC regarding applications that had been cancelled due

to inactivity. Anshul first inquired about the three earlier applications. TRC

granted an extension on those applications, requesting copies of the

applications and a doctor's note documenting Jain's medical conditions. Two

applications were withdrawn. TRC paid one.

      In December 2016, Anshul asked TRC about twenty-one applications

cancelled due to inactivity, which included the eighteen applications on appeal.

TRC responded, advising how petitioner could appeal and advised "[g]iven the

significant number of rejections and the significant passage of time since they

occurred, the facts will have to be especially extraordinary and well-

supported."

      In March 2017, Anshul sent TRC a letter appealing the cancellations and

attached documentation of Jain's medical conditions. TRC denied the appeal

stating:

              We begin by noting that we recognize [Jain] had some
              significant medical issues that might have justified
              some extension of [New Jersey's Clean Energy
              Program's] normal deadlines. Indeed, in October
              2016, we granted your appeal seeking more time to

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provide information for [three] projects that had been
rejected in September 2016.

That said, the present appeal involves much more
troubling facts. Specifically:

• According to your letter, your father had a series of
  health issues between December 12, 2013[,] and
  November 20, 2015, a [two]-year-long period that
  ended over a year ago.
• The last of the appealed projects was completed on
  November 20, 2015, well over a year ago.
• On January 3, 2017, you inquired about how to
  appeal the rejections of these projects. We told you
  how to, but cautioned that, to succeed, the relevant
  facts would have to be extraordinary and well-
  supported given the number and age of the
  rejections.

• Despite the above, it still took more than [two]
  more months for the present appeal to be filed.

• Although there is some indication [Jain] may still
  be under continuing care for a continuing issue, it's
  been over [three] years since it was known that his
  health issues were likely to interfere with his
  ability to run the business and more than a year,
  and probably substantially longer, since his
  condition became reasonably stable.
The [p]rogram has administrative deadlines for many
reasons, including its need for accurate budgetary
forecasting. For good cause shown, where the delays
are relatively minor, the reasons for them are
excusable and reasonable, and the applicant is
proceeding diligently to reduce the delays and their
effects, we will consider granting relatively minor
extensions. The present case is not such a case. The

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                         6
            delays and requested extensions are much longer than
            usual. The health problems that contributed to the
            delays do not seem to be of the type that would excuse
            such long delays. The attempts to deal with [the]
            situation have been dilatory at best. Accordingly, our
            present thinking is that we should deny this appeal.

            However, if you think we are mistaken or that we
            should consider other facts, documents, or arguments,
            you should submit them to us by March 27, 2017.

      Anshul submitted a follow-up appeal letter with supporting documents.

TRC granted petitioner's appeal to reactivate the applications on March 28,

2017, but stated:

            We remain extremely concerned about the dilatoriness
            involved in this appeal, as detailed in our March 13,
            2016 email below. However, we are compassionate
            and sympathetic to your father's medical condition and
            the fact that you were a student during the relevant
            times. We accordingly have GRANTED this appeal to
            reactivate [the applications that are the subject of this
            appeal] . . . and to allow further processing of them on
            the following conditions, all of which must be
            satisfied by April 28, 2017. If any of the following
            conditions are not met by April 28, 2017, the
            applications will be cancelled.

                    ....

            The conditions for further processing and possible
            approval are that for each application you must submit
            to the Program Manager, in a form acceptable to the
            Program Manager, all of the following:

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                                      7
            1. The final invoice actually submitted to the
               customer.
            2. Documentation that the invoice was paid and of the
               date of payment (i.e., copy of customer's cancelled
               check or copy of bank statement showing
               receipt/deposit of the payment)[.]
            3. The date(s) installation commenced and was
               completed (e.g., work orders, time sheets,
               construction logs).
            4. A signed statement from the customer, on the
               customer's letterhead, certifying the date(s)
               installation commenced and was completed.
            5. A valid Tax Clearance Certificate.
            6. Any other information or documentation the
               Program Manager requires.

      Although these requirements were called "enhanced requirements," a

valid Tax Clearance Certificate, an invoice for the purchase of the equipment,

and proof of payment (in the form of a "finalize[d]" invoice) are normally

required for the application. The requirements were "enhanced" in that TRC

required petitioner to submit the "final invoice actually submitted to the

customer," as well as additional proof of payment, "i.e., copy of customer's

cancelled check or copy of bank statement showing receipt/deposit of the

payment," and "[a] signed statement from the customer, on the customer's

letterhead, certifying the date(s) installation commenced and was completed."

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                                     8
      On April 28, 2017, Anshul sent the program manager an email

containing the requested documents, except for the Tax Clearance Certificates

for two applications. Anshul told TRC, "[a]fter repeatedly contacting the tax

office and the [taxpayer], the state still hasn't given [the Tax Clearance

Certificates] to us yet." Anshul later sent the Tax Clearance Certificate for one

of the applications to TRC on May 1, 2017.

      On May 10, 2017, TRC advised Anshul by email that the applications

were denied because of missing required documents, explaining that "none of

the close-out submissions contained the information requested in item [two]

(Proof of Payment) and [four] (Signed statement from customer on their

letterhead)."   Further, multiple applications were missing Tax Clearance

Certificates or included Tax Clearance Certificates that were either expired or

had incorrect names that did not match the utility bills for that application.

Also, multiple applications included invoices that listed a different LED

product than originally approved without proof of Energy Star qualification.

      On November 30, 2018, petitioner submitted an appeal to the Appeal

Committee of the Board. On December 17, 2018, TRC denied petitioner's

request to re-open the applications by email to Anshul, stating "[w]e have

DENIED your request to re-open this matter because we have given your

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                                       9
company numerous chances to complete the allegedly open applications, your

responses have been dilatory at best, and your latest response still has not

provided complete, current, and accurate application information."          The

program administrator further stated:

            This matter has been going on for at least [five] years
            -- the application for #24148 was received by the
            Program Manager on December 16, 2013.               By
            contrast, the SmartStart program was designed and is
            financed so that applications should be completed in
            no more than [one] or [two] fiscal years. Projects that
            extend longer, among other things, either tie[]up
            financing that could be used for other more productive
            projects or, if their commitments have been released,
            cause budgetary problems in the years in which they
            are paid.

      On February 19, 2019, petitioner filed a petition with the Board to

contest the denials of eighteen applications and requested a formal hearing.

On July 10, 2019, the Board denied petitioner's appeal without a hearing. This

appeal followed.

      Our review of an agency's final administrative determination is limited.

In re Carter, 191 N.J. 474, 482 (2007). We do not ordinarily overturn such

determinations "in the absence of a showing that it was arbitrary, capricious or

unreasonable, or that it lacked fair support in the evidence." Ibid. (quoting

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                                        10
Campbell v. Dep't of Civ. Serv., 39 N.J. 556, 562 (1963)). In reviewing an

agency's final administrative determination, the court considers:

            (1) whether the agency's action violates express or
            implied legislative policies, that is, did the agency
            follow the law; (2) whether the record contains
            substantial evidence to support the findings on which
            the agency based its action; and (3) whether in
            applying the legislative policies to the facts, the
            agency clearly erred in reaching a conclusion that
            could not reasonably have been made on a showing of
            the relevant factors.

            [Mazza v. Bd. of Trs., Police & Firemen's Ret. Sys.,
            143 N.J. 22, 25 (1995) (citing Campbell, 39 N.J. at
            562).]

      We are "in no way bound by the agency's interpretation of a statute or its

determination of a strictly legal issue," Mayflower Sec. Co. v. Bureau of Sec.

Div. of Consumer Affs. Dep't of Law & Pub. Safety, 64 N.J. 85, 93 (1973), but

we give great weight to "[a]n administrative agency's interpretation of a statute

it is charged with enforcing," In re Saddle River, 71 N.J. 14, 24 (1976).

Moreover, we give great deference to an agency's "interpretation and

implementation of its rules enforcing the statutes for which it is responsible ."

In re Freshwater Wetlands Prot. Act Rules, 180 N.J. 478, 488-89 (2004).

"Where an agency's expertise is a factor, a court defers to that expertise,

particularly in cases involving technical matters within the agency's special

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competence." In re Adoption of Amends. to the Ne., Upper Raritan, Sussex

Cty. & Upper Del. Water Quality Mgmt. Plans, 435 N.J. Super. 571, 583 (App.

Div. 2014).

      The SmartStart Buildings Program's terms and conditions state the

process for post-installation approval:

              After installation is completed, the [c]ustomer, or an
              agent authorized by the [c]ustomer, must finalize and
              submit an invoice for the purchase of the equipment
              (material cost must be broken out from labor costs),
              and any other required documentation as specified on
              the equipment application or in the Program
              Manager's initial approval letter.

                    ....

              The Program Manager reserves the right to verify
              sales transactions and to have reasonable access to
              [p]articipating [c]ustomer's facility to inspect both
              pre-existing product or equipment (if applicable) and
              the Energy-Efficient Measures installed under this
              Program, either prior to issuing incentives or at a later
              time.

              [N.J. BD. OF PUB. UTILS., 002-FY14-04/14, NJ
              SMARTSTART BUILDINGS G AS COOLING A PPLICATION
              (2014) (emphases added).]

      When a customer misses the deadline, TRC sends them an expiration

letter, which details the procedure for obtaining an extension.           If the

installation is in progress or completed, the customer has thirty days to either

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                                       12
request an extension or submit the required paperwork. Extension requests

must be in writing from the customer and include the circumstances that led to

the extension request, the percentage of the project completed, and must not be

for longer than six months. Moreover, a program participant may request a

formal hearing regarding an application pursuant to N.J.A.C. 14:1-1.5. The

request must meet the form and content requirements of N.J.A.C. 14:1-5.1(a),

which states:

            All petitions shall comply with the provisions of
            N.J.A.C. 14:1-4 to the extent applicable; shall clearly
            and concisely state the facts and relief sought; shall
            cite by appropriate reference the statutory provision or
            other authority under which the Board's action is
            sought; and in addition, shall contain such information
            or statements as are required by provision of the
            statute and the applicable provision of these rules, or
            such other rules or orders adopted by the Board
            pertaining to certain petitions, or as may be required
            by the Board in a particular proceeding.

            [N.J.A.C. 14:1-5.1(a).]

      Under the Administrative Procedure Act (APA), N.J.S.A. 52:14B-1 to -

31, "[i]n a contested case, all parties shall be afforded an opportunity for

hearing after reasonable notice." N.J.S.A. 52:14B-9(a). The APA defines a

"contested case" as a

            proceeding . . . in which the legal rights, duties,
            obligations, benefits or other legal relations of specific

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                                      13
             parties are required by constitutional right or by
             statute to be determined by an agency by decisions,
             determinations, or orders, addressed to them or
             disposing of their interests, after opportunity for an
             agency hearing . . . .

             [N.J.S.A. 52:14B-2.]

      However, "where no disputed issues of material fact exist, an

administrative agency need not hold an evidential hearing in a contested case.

The mere existence of disputed facts is not conclusive. An agency must grant

a plenary hearing only if material disputed adjudicative facts exist." Frank v.

Ivy Club, 120 N.J. 73, 98 (1990) (alteration in original) (citations omitted).

      Petitioner argues that the Board's decision was arbitrary and capricious

because petitioner "substantially complied with the demands to the extent

possible."    Specifically, petitioner contends that each of the subject

applications included the documents required as set forth in the form

applications and that TRC's request that each hotel provide a signed customer

statement on company letterhead is unreasonable because fifteen of the hotels

involved here "were individually owned franchises which did not have

letterheads with logos."     Petitioner also argues that it was arbitrary and

capricious for the Board to deny the applications on the grounds that multiple

applications were missing Tax Clearance Certificates or included Tax

                                                                           A-5515-18
                                      14
Clearance Certificates that were either expired or had incorrect names that did

not match the utility bills for a particular application, since those entiti es

changed names after installation was completed. Finally, petitioner argues that

it was arbitrary and capricious for the Board to deny the applications on the

grounds that four of the applications involved light bulbs that either did not

match the products listed in the initial application, or that were no longer

considered Energy Star qualified.     Petitioner also argues that had it been

afforded a formal hearing it could have demonstrated that the light bulbs were

Energy Star qualified. We disagree.

      A review of the submitted documents shows that at least one of the

required documents is missing for each of the eighteen applications that are the

subject of this appeal.    This is true even if the non-letterhead customer

statements that petitioner provided were considered proper proof of payment.

Petitioner submitted customer statements from each of hotels as "proof of

payment"; the statements, however, do not state that payment was made. Even

if these statements were accepted as proof of payment, at least one outstanding

required document for each of the applications remained.

      But TRC did, at least in part, deny many of the applications because the

customer statements for those applications were not on company letterheads.

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                                      15
This enhanced requirement that petitioner submit a signed customer statement

on company letterhead certifying the dates that installation commenced and

was completed was imposed for the purpose of verifying that the hotel, and not

petitioner itself, was the one certifying that installation took place on the

particular date. This requirement was not unreasonable considering that on

March 18, 2017, when TRC imposed this requirement, the applications were

between two and three years old.

      It was not arbitrary or capricious to impose "enhanced requirements" in

this case because of the lengthy delays involved. As TRC explained to Anshul

on March 13, 2017, "[t]he Program has administrative deadlines for many

reasons, including its need for accurate budgetary forecasting." The enhanced

requirements also comport with the program terms and conditions, which

provide that "[t]he Program Manager reserves the right to verify sales

transactions and to have reasonable access to Participating Customer's facility

to inspect both pre-existing product or equipment (if applicable) and the

Energy-Efficient Measures installed under this Program, either prior to issuing

incentives or at a later time." Thus, the Board's actions did not violate express

or implied legislative policies, and the record contains substantial evidence to

support the findings on which the Board based its action. Accordingly, the

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                                     16
Board's decision was not arbitrary or capricious agency action, see Mazza, 143

N.J. at 25, so we have no reason to interfere with the denials.

      Finally, petitioner argues that the Board's failure to conduct a hearing

unfairly prejudiced petitioner because a hearing would have allowed petitioner

to explain its position. As stated above, "where no disputed issues of material

fact exist, an administrative agency need not hold an evidential hearing in a

contested case."   Frank, 120 N.J. at 98.     Importantly, "bald allegations or

naked conclusions . . . are insufficient to require an agency head to transmit

the matter . . . as a contested case."     J.D. ex rel. D.D.H. v. N.J. Div. of

Developmental Disabilities, 329 N.J. Super. 516, 525 (App. Div. 2000).

Petitioner has not identified material disputed adjudicative facts that would

require an evidentiary hearing; rather, petitioner merely asserts that it could

have explained the issues which formed the basis of the Board's action.

      Affirmed.

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