Woodland Private Study Group v. State

No. A-4040-84T1 (507 A.2d 300, 209 N.J. Super. 261) (N.J. Super. Ct. App. Div. April 8, 1986)

The court holds that an administrative order issued by the Department of Environmental Protection (DEP) Commissioner insuring DEP control of any remedial investigation/feasibility study of hazardous discharges under the New Jersey Spill Act is a rule subject to the procedural requirements of the Administrative Procedure Act and is therefore invalid. Despite the Cmmissioner's characterization of it as a policy statement, the court finds that the order, entitled "Participation of Responsible Parties in the Development of Remedial Investigations and Feasibility Studies," does not merely state internal guidelines but establishes policy applicable to an industry.

Counsel for Plaintiffs
William H. Hyatt Jr., William J. Friedman
Pitney, Hardin, Kipp & Szuch
163 Madison Ave., CN 1945, Morristown NJ 07960-1945
(201) 267-3333

Counsel for Respondents
W. Cary Edwards, Attorney General
Michael K. Cole, Ass't Attorney General
Dept. of Law & Public Safety
8th Fl., Justice Complex, CN080, Trenton, NJ 08625
(609) 292-8740

[16 ELR 20645]

Dreier, J.:

On June 24, 1984, Robert E. Hughey, Commissioner of the Department of Environmental Protection (DEP) issued Administrative Order No. 69 (AO69), a "policy statement" entitled "Participation of Responsible Parties in the Development of Remedial Investigations and Feasibility Studies," reproduced in Appendix A, attached to this opinion. Plaintiffs, Minnesota Mining and Manufacturing Company and Rohn and Haas Company, known collectively as Woodland Private Study Group, have appealed from the issuance of AO69, contending that it is, in fact, a rule adopted without the formalities required by the Administrative Procedure Act, N.J.S.A. 52:14B-1 et seq.

The factual background of the underlying dispute between Woodland Private Study Group and the DEP is set forth in detail in Judge Brotman's opinion in Woodland Private Study Group v. State of New Jersey, 616 F. Supp. 794, 796-798 [16 ELR 20025] (D.N.J. 1985) and need not be repeated here. Plaintiffs have informed us, however, that they have appealed the summary judgment granted by Judge Brotman. That opinion assumed the validity of AO69, although the issue apparently was neither briefed nor argued. The issue before us is the validity of AO69 which insures DEP control of the formulation and supervision of a remedial investigation/feasibility study of a hazardous discharge controlled by the New Jersey Spill Act. Application of the Spill Act could potentially result in treble damages upon the entities responsible for the pollution, N.J.S.A. 58:10-23.11f(a), as well as a superseding first lien to secure payment therefor upon statutorily designated property of the polluter. N.J.S.A. 58:10-23.11f(f).

Plaintiffs contend that by our earlier denial of the DEP's motion to dismiss this appeal, we have already determined that AO69 is a rule. The issue raised in that motion was the timeliness of the appeal, and plaintiffs assert that our denial necessarily determined the applicability of the one-year time limitation of N.J.S.A. 52:14B-4d to challenge compliance with procedures necessary to adopt a rule. We disagree. Our denial might also have meant that there was a significant issue whether this statement was a rule subject to the one-year limitation, and that we merely wished to have a full development of the issue in a plenary appeal.

On the merits, we must now determine whether the Administrative Order is a rule. N.J.S.A. 52:14B-2(e) provides:

"Administrative rule" or "rule," when not otherwise modified, means each agency statement of general applicability and continuing effect that implements or interprets law or policy, or describes the organization, procedure or practice requirements of any agency. The term includes the amendment or repeal of any rule, but does not include: (1) statements concerning the internal management or discipline of any agency; (2) intraagency and interagency statements; and (3) agency decisions and findings in contested cases.

Six factors to be applied in interpreting this statute are noted in Metromedia Inc. v. Director Div. of Taxation, 97 N.J. 313, 331-332 (1984). The regulation is subject to the Act if it

. . . (1) is intended to have wide coverage encompassing a large segment of the regulated or general public, rather than an individual or a narrow select group; (2) is intended to be applied generally and uniformly to all similarly situated persons; (3) is designed to operate only in future cases, that is, prospectively; (4) prescribes a legal standard or directive that is not otherwise expressly provided by or clearly and obviously inferable from the enabling statutory authorization; (5) reflects an administrative policy that (i) was not previously expressed in any official and explicit agency determination, adjudication or rule, or (ii) constitutes a material and significant change from a clear, past agency position on the identical subject matter; and (6) reflects a decision on administrative regulatory policy in the nature of the interpretation of law or general policy. These relevant factors can, either singly or in combination, determine in a given case whether the essential agency action must be rendered through rule-making or adjudication.

All appear satisfied here, although the Supreme Court there noted that the various factors could be balanced even if some were applicable and others not.Despite the Commissioner's designation of the statement as an administrative order, we determine it to be a rule subject to the procedural requirements for adoption stated in the Administrative Procedure Act.

We also reject DEP's claim that the thrust of AO69 was adjudicatory. Metromedia makes it clear that the six-part test determines the import of the regulation, not its genesis within a specific dispute, nor its initial application to a single case. Cf. Shapiro v. Albanese, 194 N.J. Super. 418 (App. Div. 1984) and Iuppo v. Burke, 162 N.J. Super. 538, certif. den. 79 N.J. 462 (1978), both decided before Metromedia. DEP further urges that the regulation is merely astatement of internal policy and is, therefore, without "independent operative effect," relying upon Rutgers Council v. N.J. Bd. Higher Education, 126 N.J. Super. 53, 64 (App. Div. 1973). We find, however, that AO69 states more than internal settlement guidelines. It establishes policy applicable to an industry.

Administrative Order 69 is invalidated.

Administrative Order No. 69

WHEREAS, it is necessary to insure that a remedial investigation and feasibility study (RI/FS) of a site which is scheduled for a publicly funded RI/FS will be properly and reliably performed; and

[16 ELR 20646]

WHEREAS, it is necessary to insure the maximum degree of public confidence in the results of an RI/FS;

NOW, THEREFORE, I, Robert E. Hughey, Commissioner of the Department of Environmental Protection, pursuant to the authority vested in me by N.J.S.A. 13:1D-1 et seq., the Solid Waste Management Act, N.J.S.A. 13:1E-1 et seq., the Water Pollution Control Act, N.J.S.A. 58:10A-1 et seq., and the Spill Compensation and Control Act, N.J.S.A. 58:10-23.11 et seq., do hereby adopt the attached policy statement regarding "Participation of Responsible Parties in the Development of Remedial Investigations and Feasibility Studies" (Attachment A).

This Order shall take effect immediately.