Court Opinion

ID: 9929837
Source: CourtListenerOpinion
Date Created: 2024-02-05 15:05:56.927452+00
Date Added: 2024-06-11T10:55:51.593041
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
            APPROVAL OF THE APPELLATE DIVISION

                                SUPERIOR COURT OF NEW JERSEY
                                APPELLATE DIVISION
                                DOCKET NO. A-0511-22

IN RE APPEAL OF THE NEW
JERSEY DEPARTMENT OF
ENVIRONMENTAL PROTECTION'S                 APPROVED FOR PUBLICATION
SEPTEMBER 6, 2022 DENIAL OF                       February 5, 2024
REQUEST FOR ADJUDICATORY
                                               APPELLATE DIVISION
HEARING UNDER N.J.A.C.
7:26C-9.10, DATED MAY 12, 2022,
CONCERNING THE DEPARTMENT'S
APRIL 20, 2022 NOTICE OF
REMEDIATION IN PROGRESS
WAIVER RESCISSION.
___________________________________

         Submitted December 12, 2023 – Decided February 5, 2024

         Before Judges Whipple, Mayer and Enright.

         On appeal from the New Jersey Department of
         Environmental Protection.

         Roy D. Prather III (Beveridge & Diamond, PC), and
         John H. Paul (Beveridge & Diamond, PC) of the New
         York and District of Columbia bars, admitted pro hac
         vice, attorneys for appellant Clarios, LLC (Roy D.
         Prather III and John H. Paul, on the briefs).

         Matthew J. Platkin, Attorney General, attorney for
         respondent New Jersey Department of Environmental
         Protection (Sookie Bae-Park, Assistant Attorney
         General, of counsel; Bethanne Sonne Prugh, Deputy
         Attorney General, on the brief).
              Riker Danzig, LLP, attorneys for intervenor 760 New
              Brunswick Urban Renewal Limited Liability Company
              (Steven T. Senior, of counsel and on the brief;
              Michael Steven Kettler, on the brief).

      The opinion of the court was delivered by

WHIPPLE, P.J.A.D.

      In this appeal we consider whether a Remediation in Progress waiver

(RIP waiver) issued by the New Jersey Department of Environmental

Protection (NJDEP) conveys a property interest to the recipient that is

constitutionally protected by the right to due process. We conclude it does not

and affirm.

      Clarios, LLC (Clarios) appeals from the September 6, 2022 decision by

NJDEP to deny its request for an adjudicatory hearing concerning its April 20,

2022 decision to rescind Clarios's RIP waiver. 760 New Brunswick Urban

Renewal Limited Liability Company (760 New Brunswick or intervenor) has

intervened in the action as the current owner of the premises at issue, 760

Jersey Avenue, New Brunswick (the Site).

                                       I.

                                 RIP Waivers

      In 1983, the Legislature enacted one of the country's first industrial site

environmental clean-up statutes, Environmental Cleanup Responsibility Act

(ECRA), to address the handling and disposal of hazardous substances upon

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the closure or transfer of industrial establishments, including the cleanup of

those substances if they have been discharged into the environment. ECRA

was enacted to prevent the abandonment of contaminated industrial sites and

place the financial responsibility for remediation on the owners and operators

rather than on the taxpayers. See Senate Energy and Environment Comm.

Statement to A. 1231-L (1983); N.J.S.A. 13:1K-7.          In 1993, ECRA was

substantially amended and replaced by the Industrial Site Recovery Act

(ISRA) to streamline, and promote greater certainty in, the regulatory process;

the basic purposes of the law, however, remained unchanged.

      The owner or operator of an industrial establishment is subject to ISRA

when they cease operations or transfer ownership or operation of the industrial

establishment.   N.J.S.A. 13:1K-9(a).       Before doing so, ISRA requires the

owner or operator of an industrial establishment to remediate its industrial

establishment and obtain a final remediation document. N.J.S.A. 13:1K-9(b).

To expedite transfers and cessations of contaminated industrial sites, ISRA

permits alternatives to obtaining a final remediation document prior to the

cessation of operations or transfer of property, including an RIP waiver. See

N.J.A.C. 7:26B-5.4.    An RIP waiver allows the owner or operator of an

industrial establishment to apply to the NJDEP to close or transfer ownership

or operations, provided that the industrial establishment is already in the

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process of remediation and specific requirements are met.              N.J.S.A.

13:1K-11.5; N.J.A.C. 7:26B-5.4.

      An RIP waiver does not exempt the owner or operator from its statutory

obligation under N.J.S.A. 13:1K-9(b) to remediate the industrial establishment

but acknowledges remediation at the property is ongoing; for as long as that

remediation is ongoing, the RIP waiver recipient's ISRA obligation to

remediate its industrial establishment is suspended. The issuance of an RIP

waiver "may not relieve the owner or operator or any person responsible for

conducting the remediation of the industrial establishment, of the obligations

to remediate the industrial establishment pursuant to ISRA, this chapter[,] and

any other applicable law." N.J.A.C. 7:26B-1.8(b).

      As its name indicates, an RIP waiver is contingent on remediation being

in progress; if remediation falls out of compliance, the RIP waiver applicant no

longer qualifies for the suspension under N.J.S.A. 13:1K-11.5, and the NJDEP

may rescind the RIP waiver. That is what occurred here.

                                      II.

      The Site ownership history is relevant to our discussion.          Delphi

Automotive Systems, LLC (Delphi) previously owned the Site where it

manufactured automobile batteries. In 2006, Delphi sold the property to a

corporate predecessor of Clarios (Johnson Controls Battery Group, Inc.) and

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filed a General Information Notice (GIN) with NJDEP, as required under

ISRA. NJDEP assigned case number E20060211 and required Delphi to enter

into a remediation agreement for the Site and establish a remediation funding

source to cover the cost of remediation efforts. Under ISRA, Delphi became

the party responsible for remediation of the Site.

      In January 2007, Clarios announced plans to cease operations at the Site

and soon filed with NJDEP a GIN and an application for an RIP waiver.

NJDEP assigned case number E20070027 and granted the RIP waiver.

NJDEP's grant of the RIP waiver was based on statutorily required

certifications by Clarios, including that (a) a Preliminary Assessment Report

had been submitted for the Site under the previously commenced ISRA case by

Delphi (ISRA Case No. E20060211), (b) there was no discharge of hazardous

substances at the Site during Clarios's ownership, and (c) a remediation

funding source was established in an amount equal to the estimated costs of

remediation.

      Clarios then conveyed the Site to DeNovo New Brunswick, LLC

(DeNovo), which later conveyed the Site to 760 New Brunswick.

      In January 2013, DeNovo signed a remediation certificate with the

NJDEP, to assume from Delphi the responsibility for completing remediation

at the Site, pursuant to ISRA Case No. E20060211.        Based on estimates

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provided by the licensed site remediation professional supervising DeNovo's

remediation efforts, beginning in 2019, the balance of the remediation funding

source—initially established by Delphi and subsequently assigned to

DeNovo—fell below the estimated cost of completing the remediation. This

failure to maintain a remediation funding source in an amount of the estimated

cost of the remediation caused the remediation pursuant to ISRA Case No.

E20060211 to become non-compliant with the requirements of N.J.S.A.

13:1K-9(e)(3).

      In addition, NJDEP determined the Site's 2019 remedial investigation

report was incomplete and needed to be withdrawn, which resulted in a

cascade of noncompliance, culminating in a missed deadline for completion of

the entire remedial action for the Site on February 28, 2022. Thus, on April

20, 2022, NJDEP issued a letter to Clarios, advising:

            The Site is out of compliance for failure to submit the
            remedial investigation report by the regulatory
            timeframe of March 1, 2019[;] failure to complete the
            remedial action by the regulatory timeframe of
            February 28, 2022, pursuant to N.J.A.C. 7:26C-
            3.2(a)[;] and failure to establish and maintain a
            remediation funding source pursuant to ISRA,
            N.J.S.A. 13:1K-6 [to -14], in accordance with
            N.J.A.C. 7:26C-5.2(a)1.

                  ....

            [Because] the previous case [fell] out of compliance
            with the remediation schedule, [NJDEP] may rescind

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            the waiver and require the applicant to complete the
            remediation pursuant to N.J.A.C. 7:26b-3.3(a).
            Accordingly, ISRA case number E20060211 is not in
            compliance and therefore [NJDEP] hereby rescinds
            [Clarios's] Remediation in Progress Waiver approval
            dated March 12, 2007.

      On May 12, 2022, Clarios requested an adjudicatory hearing to challenge

NJDEP's decision to rescind the RIP waiver. NJDEP denied this request in a

letter dated September 6, 2022, stating that the rescission of an RIP waiver is

not an action for which an adjudicatory hearing is provided pursuant to either

N.J.A.C. 7:26C-9.10(a) or the Administrative Procedure Act.             Clarios

appealed.

                                      III.

      Because administrative agencies serve executive functions, we are

permitted only limited review of agency decisions and are permitted to

intervene only when "an agency action is clearly inconsistent with its statutory

mission or with other State policy." George Harms Const. Co. v. N.J. Tpk.

Auth., 137 N.J. 8, 27 (1994).         We review an agency's purely legal

determinations de novo. G.C. v. Div. of Med. Assist. and Health Servs., 249

N.J. 20, 40 (2021).

      "The Fourteenth Amendment to the United States Constitution and

Article I, Paragraph 1 of the New Jersey Constitution protect individuals from

deprivations of life, liberty, and property, without due process of law."

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Thomas Makuch, LLC v. Twp. of Jackson, 476 N.J. Super. 169, 184-85 (App.

Div. 2023); see also Greenberg v. Kimmelman, 99 N.J. 552, 568 (1985).

Absent a statutory requirement, due process protections are not implicated if

neither a liberty interest nor a property interest is threatened. Bd. of Regents

v. Roth, 408 U.S. 564, 569-70 (1972). Clarios's arguments on appeal turn

entirely on its purported protected property right in the continued validity of

its RIP waiver.

      Clarios argues NJDEP's grant of the RIP waiver in 2007 created a

property interest protected by a right to due process in that the RIP waiver

operates like a license—well-recognized to be in the nature of a property

right—that permits the receiving party to conduct certain activities and

exempts it from obligations subject to the State's stipulations. The RIP waiver,

Clarios asserts, allows the receiving party to enjoy certain benefits (i.e., relief

from ISRA requirements that would otherwise be applicable), and if the

benefits of the waiver are taken away, the holder of the waiver is entitled to a

hearing pursuant to the constitutional guarantee of procedural due process.

Clarios argues NJDEP's rescission of its RIP waiver puts Clarios at risk of

having to assume financial responsibility for the Site's remediation, which

affects Clarios's property interest.

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      The property interest protected by the Fourteenth Amendment "may take

many forms over and above the ownership of tangible property."           Thomas

Makuch, LLC, 476 N.J. Super. at 185 (quoting Nicoletta v. N.J. Dist. Water

Supply Comm'n, 77 N.J. 145, 154 (1978)). "Accordingly, a person may have a

property interest in a 'benefit.'"      Ibid. (quoting Roth, 408 U.S. at 577).

Contrary to Clarios's assertion, the economic advantage an entity receives from

a benefit does not translate to a property interest; rather, the primary

requirement for converting a "benefit" to a protected property interest is a

"legitimate claim of entitlement." Ibid. (quoting Nicoletta, 77 N.J. at 154-55

(quoting Roth, 408 U.S. at 577)). Therefore, "[t]o have a property interest in a

benefit, [an entity] clearly must have more than an abstract need or desire for

it. [They] must have more than a unilateral expectation of it." Ibid. (first

alteration in original) (quoting Roth, 408 U.S. at 577). Instead, a "legitimate

claim of entitlement" can be found when "rules or understandings that secure

certain benefits . . . support claims of entitlement to those benefits." Roth, 408

U.S. at 577; see also Nicoletta, 77 N.J. at 154 (collecting cases examining

"entitlement" to property interests).

      To that end, courts define property interests by examining "existing rules

or understandings that stem from an independent source such as state law. . . ."

Roth, 408 U.S. at 577; see also New Brunswick Sav. Bank v. Markouski, 123

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N.J. 402, 411 (1991). "In deciding whether a state or local statute, ordinance,

or regulatory scheme creates a property interest, courts look to see if they

substantively limit official discretion" to bestow or revoke the benefit at issue.

Thomas Makuch, LLC, 476 N.J. Super. at 185 (citing Town of Castle Rock v.

Gonzales, 545 U.S. 748, 756 (2005)).          "[A] benefit is not a protected

entitlement if government officials may grant or deny it in their discretion."

Castle Rock, 545 U.S. at 756. We should, therefore, "examine the statutes,

regulations, and case law concerning [the RIP waiver] . . . to determine the

scope of [appellant's entitlement and property] interest." J.E. ex rel. v. State,

Dep't of Hum. Servs., 131 N.J. 552, 564 (1993).

      Under ISRA and the associated regulation, the RIP waiver authorizes the

"owner or operator of an industrial establishment . . . to close operations or

transfer ownership or operations at an industrial establishment without

obtaining departmental approval of a remedial action workplan or a negative

declaration or without the approval of a remediation agreement" so long as

"the industrial establishment is already in the process of a remediation . . . ."

N.J.S.A. 13:1K-11.5(a); see also N.J.A.C. 7:26B-5.4(b). In addition, N.J.A.C.

7:26B-1.8(a) provides that an "owner or operator is authorized to transfer

ownership or operations of an industrial establishment, or in the case of a

cessation of operations authorize the cessation as it relates to ISRA

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compliance, without, or prior to the issuance of, a final remediation document"

following NJDEP's "approval of a remediation in progress waiver application

pursuant to N.J.A.C. 7:26B–5.4(d)." "The issuance of an authorization letter"

as referenced in N.J.A.C. 7:26B-1.8(a)(3), however, "may not relieve the

owner or operator . . . of the obligations to remediate the industrial

establishment pursuant to ISRA . . . and any other applicable law." N.J.A.C.

7:26B-1.8(b).

      Thus, both the relevant statute and the related regulation state the action

permitted by the RIP waiver is the "close [of] operations or transfer [of]

ownership or operations [at an] industrial establishment."              N.J.S.A.

13:1K-11.5(a); N.J.A.C. 7:26B-5.4(b).       The benefit conferred by the RIP

waiver is that the owner or operator may effect such close of operations or

transfer of ownership prior to "obtaining departmental approval of a remedial

action workplan or a negative declaration or without the approval of a

remediation agreement."      N.J.S.A. 13:1K-11.5(a).     Once that closure or

transfer is complete, the recipient of the RIP waiver has received the benefit of

that waiver. In this case, Clarios was granted the RIP waiver on March 12,

2007, following notice on January 4, 2007, of its intention to cease operations

at the Site. Clarios did cease operations at the site and, later, conveyed the

property to DeNovo on August 5, 2011. At that point, Clarios had received the

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sole benefits provided by the RIP waiver.

      However, the RIP waiver does not suspend the need to remediate the

industrial establishment.    It waives only the requirement to provide for

remediation before the close of operations or the transfer of ownership. In

addition, the regulation that provides for the issuance of RIP waivers explicitly

limits the authority of the waiver to relieve the recipient of "the obligations to

remediate the industrial establishment pursuant to ISRA . . . and any other

applicable law." N.J.A.C. 7:26B-1.8(b).

      Although Clarios relied for upwards of fifteen years upon the suspension

of their remediation obligation, this reliance has only been based on their

unilateral expectation that the prior remediation agreement would remain

compliant. It has not been based on any regulatory or statutory provisions. In

fact, the relevant provisions actively undercut such reliance. The letter NJDEP

sent to Clarios, dated March 12, 2007, granting the RIP waiver stated:

            This authorization [to transfer ownership of the Site
            without the submission of a remediation certificate or
            similar] shall be limited to the above referenced
            transaction only and shall not restrict or prohibit
            [NJDEP] or any other agency from taking regulatory
            action under any other statute, rule[,] or regulation.
            By issuing this Letter of Authorization, [NJDEP]
            continues to reserve all rights to pursue appropriate
            enforcement actions allowable under the law for
            violations of ISRA as associated with this transaction.

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From the outset, NJDEP explicitly noted the limitations inherent in this waiver

and the reasonable scope of Clarios's right to rely on it. Thus, not only has

Clarios already received the benefit to which it is entitled by the RIP waiver —

that is, the ability to cease operations or transfer ownership without obtaining

final remediation approval—but also Clarios has no legitimate grounds for

relying on any further benefit—namely, the continued delay of their

responsibility for remediation of the industrial establishment. Without lawful

grounds for reliance on a benefit, Clarios has neither a legitimate claim to

entitlement nor a property interest associated with that benefit.

      Clarios argues the Mathews factors require that notice and some form of

hearing be afforded to it. The Mathews factors derive from the United States

Supreme Court's decision in Mathews v. Eldridge and are used to determine

whether given "administrative procedures . . . are constitutionally sufficient" to

satisfy "the specific dictates of due process" in a particular situation. 1 424

1
            [P]rior decisions indicate that identification of the
            specific dictates of due process generally requires
            consideration of three distinct factors: First, the
            private interest that will be affected by the official
            action; second, the risk of an erroneous deprivation of
            such interest through the procedures used, and the
            probable value, if any, of additional or substitute
            procedural     safeguards;     and[,]    finally,   the
            Government's interest, including the function involved
            and the fiscal and administrative burdens that the

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U.S. 319, 334-35 (1976).       But we would only undertake an analysis of

Mathews factors when the right to due process is implicated in the first place,

by a threat to a liberty or property interest. No property interest exists here, so

"constitutionally sufficient" hearing procedures are not required, and analysis

of the Mathews factors is irrelevant.

      Notably, under this record, the RIP waiver's rescission only implicates

Clarios's duty to remediate the Site and does not pose any apparent threat to

the continuing viability of the sales transaction from 2011. In the April 20,

2022 rescission letter, NJDEP outlined the processes by which the RIP waiver

was granted and then rescinded; the letter also stated when the RIP waiver is

rescinded, NJDEP may "require Clarios to complete the remediation pursu ant

to N.J.A.C. 7:26b-3.3(a)." There is no mention of interfering with the prior

completed benefits of the waiver—only of requiring Clarios to fulfill

obligations that were never removed by the waiver in the first place.

      Any remaining arguments raised by the parties are without sufficient

merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).

     Affirmed.
________________________

            additional or substitute procedural requirement would
            entail.

            [Mathews, 424 U.S. at 334-35.]

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