Court Opinion

ID: 4205052
Source: CourtListenerOpinion
Date Created: 2017-09-21 14:11:52.459176+00
Date Added: 2024-06-11T14:41:16.995705
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
                      APPROVAL OF THE APPELLATE DIVISION
     This opinion shall not "constitute precedent or be binding upon any court."
      Although it is posted on the 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-1405-15T3

CEDAR KNOLLS 2006, LLC,

        Appellant,

v.

NEW JERSEY DEPARTMENT OF
ENVIRONMENTAL PROTECTION,

     Respondent.
________________________________

              Argued May 2, 2017 – Decided September 20, 2017

              Before Judges Rothstadt and Sumners.

              On appeal from the New Jersey Department of
              Environmental Protection.

              Jeffrey W. Cappola, argued the cause for
              appellant (Wilentz, Goldman & Spitzer, PA,
              attorneys; Mr. Cappola, on the brief).

              Kimberly A. Hahn, Deputy Attorney General,
              argued the cause for respondent (Christopher
              S. Porrino, Attorney General, attorney;
              Melissa H. Raksa, Assistant Attorney General,
              of counsel; Ms. Hahn, on the brief).

        The opinion of the court was delivered by

SUMNERS, J.A.D.
     In   accordance   with   the   Brownfield   and   Contaminated        Site

Remediation Act (Brownfield Act), N.J.S.A. 58:10B-1 to -31, a

"person" who owns contaminated property may be entitled to a

Hazardous Discharge Site Remediation Fund Innocent Party Grant

(innocent party grant) to pay for remediation of the property.

The New Jersey Department of Environmental Protection (DEP) denied

the request of plaintiff Cedar Knolls 2006, L.L.C. to receive an

innocent party grant for property in the Township of Hanover based

on the determination that Cedar Knolls did not qualify as a person

under the Brownfield Act due to the manner in which it acquired

the property.      Having considered the arguments in light of the

record and applicable law, we reverse.

     In 1977, Robert Higginson purchased the property.             When he

passed away sixteen years later, he bequeathed the property to his

wife, Evelyn, in two fifty-percent shares placed in two separate

trusts.1 Less than two years later, Evelyn assigned her respective

shares in the property by putting one fifty-percent interest into

Evelyn    B.   Higginson   1996   Qualified   Seven   Year   Annuity     Trust

Agreement (Seven Year Trust) and the other fifty-percent interest

into Evelyn B. Higginson 1996 Qualified Ten Year Annuity Trust

1
 Our use of first names is for convenience because the individuals
involved share a last name. We mean no disrespect.

                                      2                                A-1405-15T3
(Ten Year Trust).   When the Seven Year Trust expired in 2003, the

trustees transferred the trust's interest in the property to

Evelyn's son, William.2   (Pa69).       In 2006, William transferred his

interest in the property to the newly created Cedar Knolls.           And

when the Ten Year Trust expired the same day that Cedar Knolls was

created, the trustees transferred the remaining fifty-percent

interest in the property from the trust to William, which he

simultaneously transferred to the company.           Thus, Cedar Knolls

became the sole owner of the property.

     A little over nine years later, Cedar Knolls applied to the

DEP for an innocent party grant to cover the costs to remediate

the contaminated property.    To obtain a grant, Cedar Knolls had

to meet the following requirements:

          A person qualifies for an innocent party grant
          if that person acquired the property prior to
          December 31, 1983 and continues to own the
          property until such time as the authority
          approves the grant, the hazardous substance
          or hazardous waste that was discharged at the
          property was not used by the person at that
          site, and that person certifies that he did
          not discharge any hazardous substance or
          hazardous waste at an area where a discharge
          is discovered.

          [N.J.S.A. 58:10B-6(a)(4).]

2
  Evelyn, William, and another individual were trustees of both
trusts.

                                    3                            A-1405-15T3
The DEP communicated a tentative decision to Cedar Knolls denying

the application because the entity was not a "person" under the

Brownfield Act who acquired the property prior to December 31,

1983.

     Cedar Knolls sought reconsideration contending the property's

transfer to trusts among family members - Robert to Evelyn to

William to Cedar Knolls, which was solely owned by William - does

not constitute a change of ownership, under the Industrial Site

Recovery Act (ISRA), N.J.A.C. 7:26B-2.1(a)(17), and qualifies

Cedar Knolls as a person under N.J.S.A. 58:10B-6(a)(4), as a result

of Robert's purchase of the property in 1977.    The DEP disagreed

and issued a final agency decision rejecting the application.    The

agency determined that "Cedar Knolls is not the same 'person' that

acquired the property prior to December 31, 1983[]" because the

property was initially acquired by Robert, but is now currently

owned in its entirety by Cedar Knolls.   This appeal ensued.

     Before us, Cedar Knolls contends the DEP has misinterpreted

the law governing innocent party grants.   It argues that it is a

person under the Brownfield Act and there was no "change in

ownership" as it has been since the sole owner of the property

well before December 31, 1983, through Robert's 1977 acquisition

that continued through the subsequent family transfers.   We agree.

                                4                           A-1405-15T3
     We begin with a review of the well-established applicable

legal principles.    "Generally we will not upset a State agency's

determination in the absence of a showing that it was arbitrary,

capricious or unreasonable, or that it lacked fair support in the

evidence, or that it violated a legislative policy expressed or

implicit in the governing statute." In re Camden Cnty. Prosecutor,

394 N.J. Super. 15, 22-23 (App. Div. 2007) (internal quotations

omitted) (quoting Cnty. of Gloucester v. Pub. Emp't Relations

Comm'n, 107 N.J. Super. 150, 156 (App. Div. 1969) aff'd, 55 N.J.
333 (1970)).   Although we "must give deference to [an] agency's

findings of facts, and some deference to its 'interpretation of

statutes and regulations within its implementing and enforcing

responsibility,'    we   are   'in   no    way   bound   by   the   agency's

interpretation of a statute or its determination of a strictly

legal issue.'" Utley v. Bd. of Review, Dep't of Labor, 194 N.J.
534, 551 (2008) (citations omitted).

     To determine whether Cedar Knolls qualifies as a person that

is entitled to an innocent party grant, we review the legislative

history of the innocent party grants, which were created by

Sections 27 and 28 of L. 1993, c. 139. Chapter 139 made significant

amendments to what had been known as the Environmental Cleanup

Responsibility Act (ECRA), L. 1983, c. 330, and, in the process,

changed the act's name to ISRA.           See Des Champs Labs., Inc. v.

                                     5                               A-1405-15T3
Martin, 427 N.J. Super. 84, 96 (App. Div. 2012).           In addition to

amending and renaming ECRA, Chapter 139 contained new sections,

including Sections 27 and 28, which were allocated to N.J.S.A.

58:10B-5 and —6, respectively.       Pursuant to Section 1 of L. 1997,

c. 278, Sections 23 through 43 and Section 45 of Chapter 139 were

designated as the Brownfield Act.          Consequently, ISRA and the

Brownfield Act are part of a unified legislative strategy to

address the remediation of contaminated sites.

     With   respect   to   changes   in   ownership   of   property   that

triggered ISRA, Chapter 139 defined a transfer in ownership to

include "any transaction or proceeding through which an industrial

establishment undergoes a change in ownership."       It also contained

the following definitional sections for purposes of ISRA:

            "Change in ownership" means:

                 (1) the sale or transfer of the business
            of an industrial establishment or any of its
            real property;

                 (2) the sale or transfer of stock in a
            corporation   resulting  in   a  merger   or
            consolidation involving the direct owner or
            operator or indirect owner of the industrial
            establishment; [or]

                 (3) the sale or transfer of stock in a
            corporation, or the transfer of a partnership
            interest, resulting in a change in the person
            holding the controlling interest in the direct
            owner or operator or indirect owner of an
            industrial establishment;

                                     6                            A-1405-15T3
               . . . .

         "Change in ownership" shall not include:

              (1) a corporate reorganization not
         substantially affecting the ownership of the
         industrial establishment;

              (2)   a   transaction    or   series   of
         transactions involving the transfer of stock,
         assets or both, among corporations under
         common ownership, if the transaction or
         transactions will not result in the diminution
         of the net worth of the corporation that
         directly owns or operates the industrial
         establishment by more than 10%, or if an equal
         or greater amount in assets is available for
         the    remediation    of     the    industrial
         establishment before and after the transaction
         or transactions;

              (3)   a   transaction    or   series   of
         transactions involving the transfer of stock,
         assets or both, resulting in the merger or de
         facto merger or consolidation of the indirect
         owner with another entity, or in a change in
         the person holding the controlling interest
         of the indirect owner of an industrial
         establishment, when the indirect owner's
         assets would have been unavailable for cleanup
         if the transaction or transactions had not
         occurred; [or]

              (4) a transfer where the transferor is
         the   sibling,    spouse,   child,  parent,
         grandparent, child of a sibling, or sibling
         of a parent of the transferee[.]

         [N.J.S.A. 13:1K-8.]

Although these definitional sections are not among the parts of

Chapter 139 that became the Brownfield Act, they nevertheless

                               7                          A-1405-15T3
reflect the Legislature's concerns with respect to changes of

ownership at the time the innocent party grants were established.

      In construing a statute, "[w]e are required to 'effectuate

the legislative intent in light of the language used and the

objects sought to be achieved.'"           Wendling v. N.J. Racing Comm'n,

279 N.J. Super. 477, 482 (App. Div. 1995) (quoting State v.

Maguire, 84 N.J. 508, 514 (1980)).            Courts "must give effect to

the language employed by the legislative body."           Dixon v. Gassert,

26 N.J. 1, 9 (1958).

      Our review of the legislative history and the language of the

statutes leads us to reverse the DEP's final agency decision,

which in essence would have us find that a transfer of a property

solely among parents and a child through the vehicle of trusts

does not qualify as a property eligible for a remediation innocent

party grant.    Innocent party grants were clearly intended to help

the   owners   of   a   contaminated       property   defray   the   costs    of

remediation if they were not responsible for the contamination and

had acquired the property prior to enactment of ECRA in 1983,

assuming they satisfied the other requirements.                  As remedial

statutes, we liberally construe ISRA and the Brownfield Act to

effectuate their important social goals.              N.J.S.A. 13:1K-7; and

N.J.S.A. 58:10B-1.2; See In Re Robert Mitchell Center, 223 N.J.

Super. 166, 173 (1988).

                                       8                               A-1405-15T3
       The definitional section concerning changes of ownership in

N.J.S.A. 13:1K-8, especially with respect to what is not a change

of ownership, reflects the Legislature's concern that there be a

basic continuity of beneficial ownership between the entities,

retention of the prior entity's liability by the resulting entity,

and preservation of the prior entity's available assets by the

resulting     entity   to   meet   its    remediation   responsibilities.

Nevertheless, ISRA allows for corporate mergers, inter-corporate

transfers, gifts or inheritance among family members, and other

types of transfers.

       In short, the Legislature appears to have been more concerned

with    the   substance     of   ownership   and   continuity   than   the

technicalities of the legal form.         Hence, the transfers to Cedar

Knolls qualifies it as a "person" under N.J.S.A. 58:10B-6(a)(4),

to receive an innocent party grant to remediate the property.

       Reversed.

                                      9                           A-1405-15T3