A New Jerseyappellate division court ruled that a property owner is entitled to have an administrative hearing regarding the rescission of a no further action (NFA) letter by the New Jersey Department of Environmental Protection (NJDEP). In the Matter of Crompton Colors, Inc., No. A-0778-09T1 (App. Div. 10/27/11)
In this case, Hartz Mountain Industries acquired an industrial property in 1965 located in Bloomfield, NJ and leased it to Peerless Bindery. The property consisted of a warehouse and an office building. In 1990, the warehouse was demolished and a 10,000-gallon heating oil tank was removed. According to a Discharge Investigation and Corrective Action Report submitted to NJDEP, petroleum product was encountered in the soil and floating on the groundwater. Contaminated soil was excavated and the floating product was vacuum pumped. Groundwater monitoring wells initially did not reveal any petroleum above detection detected but a second round 1.1 ppm. Additional soil was excavated with some residual petroleum in fill materials left in place and covered by the eight-inch concrete foundation for the new warehouse that was being constructed. In 1991, the property was subdivided into two lots. One lot was occupied by the new warehouse that was leased by a predecessor of Crompton Colors and a day care center leased the office building located on the second lot.
Four years later, the NJDEP requested additional remedial measures. A Remedial Action Workplan was submitted in January 1996 which NJDEP determined was unacceptable.HartzMountainthen submitted a Remedial Investigation Report (RIR) that discussed the results of supplemental soil and groundwater sampling. The RIR revealed elevated levels of SVOCs that are often associated with fill material. Because the contamination was detected upgradient of the former tank, the RIR concluded that the contaminants were from an off-site source. NJDEP issued a conditional NFA letter for the former tank but required further investigation to confirm that the source of the contamination was off-site. Hartz did not implement this additional investigation. All the correspondence with the NJDEP referenced a street address of60 West Street, the original address of the undivided property. However, after the property had been subdivided, the warehouse was re-designated as50 West Street.
In 2001, Crompton Colors ceased operations at the warehouse which triggered the requirements of theNew Jerseythe Industrial Site Recovery Act (ISRA). Crompton filed a General Information Notice (GIN) using the50 West Streetaddress and an Expedited Review Application on the basis of the former NFA letter. However, NJDEP responded that the site known as50 West Streetwas not eligible for an expedited review because it had not previously issued an NFA letter. Crompton then prepared and submitted a Preliminary Assessment, revised GIN with the correct lot number and a Negative Declaration. Crompton did not disclose, however, the presence of soil and groundwater contamination that had been identified in the 1996 NFA letter. In 2002, the NJDEP issues a NFA letter.
In 2004, mercury contamination was discovered at a child care center known as Kiddie Kollege inGloucesterCounty. In the aftermath of this incident, the NJDEP mapped all known child care centers and schools, drew a 500 foot radius around every child care center and school, and examined all open and closed cases within the radius to determine whether any of them could potentially affect the child care facilities. Because a child care center was located at theBloomfieldproperty, NJDEP reviewed the NFA determination and concluded that contamination not addressed by Hartz in 1996 was located at50 West Street. As a result, the NJDEP not only rescinded the NFA letter in 2002 but also directed Hartz and Crompton’s successor, Chemtura, to submit a Remedial Investigation Workplan to investigate potential vapor intrusion at the child care center. .
Hartz responded that NJDEP did not have a basis to reopen the case or to require a vapor intrusion study, and requested an administrative hearing. The agency rejected the claims that the contamination was from an off-site source because the nearest source was over a half-mile away in a downgradient direction. The agency also denied the request for a hearing, stating that Hartz was merely requesting to submit documentation and perform studies it had been required to provide and perform as part of its original application for the 2002 NFA.
The court disagreed, however. It said rescission of the NFA was a revocation of the permission the NJDEP gave Hartz in 2002 to convey the property free and clear of any remedial obligations under IRSA. The court also found that the directives to perform environmental studies fell within the purview of N.J.S.A. 13:1K-13.1b which expressly provides that NJDEP is required to give a recipient of an order requiring abatement of a violation notice of its rights to a hearing.
While Hartz will get its administrative hearing, it has a steep hill to climb to overturn NJDEP’s conclusion that the contamination that triggered the re-opener is indeed from an off-site source since the administrative law judge will be reviewing NJDEP’s determination under an arbitrary and capricious standard. Thus, this may turn out to be a classic pyrrhic victory.