IN THE MATTER OF CONTESTING OF INVOICE FOR FY 2019 FLEMINGTON WET WEATHER FACILITY (NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION)

• Court: New Jersey Superior Court Appellate Division
• Decided: December 21, 2020
• Docket: A-5201-18T2
• Status: Unpublished

Opinion

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court ."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-5201-18T2

IN THE MATTER OF CONTESTING OF INVOICE FOR FY 2019 FLEMINGTON WET WEATHER FACILITY __________________________

Submitted October 20, 2020 – Decided December 21, 2020

Before Judges Gilson and Gummer.

On appeal from the New Jersey Department of Environmental Protection.

Offit Kurman, PA and George J. Tyler, PC, attorneys for appellant Raritan Township Municipal Utilities Authority (George J. Tyler, of counsel and on the briefs; James Aversano, III, on the briefs).

Gurbir S. Grewal, Attorney General, attorney for respondent New Jersey Department of Environmental Protection (Melissa H. Raksa, Assistant Attorney General, of counsel; Patrick S. Woolford, Deputy Attorney General, on the brief).

PER CURIAM

Raritan Township Municipal Utilities Authority (RT Authority) appeals

from a final agency determination by the New Jersey Department of Environmental Protection (DEP), which denied the RT Authority's request to

recalculate the 2019 fee for a wastewater treatment plant. Finding nothing

arbitrary, capricious, or unreasonable in the DEP's determination, we affirm.

I.

The RT Authority, which is a public entity, operates two wastewater

treatment plants: its Main Plant and the Flemington Wet Water Facility (WW

Facility). The Main Plant handles most of the wastewater from the RT

Authority's service area. The WW Facility operates during heavy wet weather ,

when more than 1.35 million gallons per day of wastewater is anticipated to flow

to the Main Plant. When such weather occurs, the RT Authority diverts the

excess flow to the WW Facility. Consequently, the WW Facility discharges

wastewater only on certain days, which averages out to about one day per month.

The DEP regulates the discharge of pollutants to the surface and ground

waters of New Jersey under the Water Pollution Control Act (the Act), N.J.S.A.

58:10A-1 to -43. Entities that discharge wastewater are required to have a New

Jersey Pollutant Discharge Elimination System (NJPDES) permit. N.J.A.C.

7:14A-2.1(d); N.J.A.C. 7:14A-2.4(a) and (b).

A-5201-18T2 2 In 2009, DEP issued the most recent NJPDES permit for the WW Facility,

which became final in 2010. 1 The permit designated the WW Facility as a

"major" facility because it has the capacity to handle 3.85 million gallons of

wastewater per day and a major facility is defined as a facility that can handle

one million gallons or more of wastewater per day. N.J.A.C. 7:14A-1.2.

The Act authorizes the DEP to "establish and charge reasonable annual

administrative fees, which fees shall be based upon, and shall not exceed, the

estimated cost of processing, monitoring and administering the NJPDES

permits." N.J.S.A. 58:10A-9. For publicly owned facilities that discharge to

surface water, like the WW Facility, the NJPDES fee is based, in part, on

whether the facility is permitted as a "major" or "minor" facility. N.J.A.C.

7:14A-3.1 tbl. III.

The DEP has promulgated regulations governing how it calculates

NJPDES fees. N.J.A.C. 7:14A-3.1. The fees for permits are proposed each year

in an annual fee report, which lists all the proposed fees for individual facilities.

N.J.A.C. 7:14A-3.1(b)(3). The DEP is required to hold a hearing for comments

1 The RT Authority has appealed the final NJPDES permit, and that appeal is pending in the Office of Administrative Law. The designation of the WW Facility as a major facility is not being challenged in that administrative appeal. Moreover, the RT Authority is not challenging the permit in this appeal. A-5201-18T2 3 on the report and public notice is provided at least thirty days in advance.

N.J.A.C. 7:14-3.1(b)(2). Thereafter, invoices for the annual fees are sent to

individual facilities.

For at least fifteen years before 2019, the WW Facility was charged annual

NJPDES fees as if it were a minor facility. For fiscal year (FY) 2019, however,

the DEP calculated the fee for the WW Facility based on its designation as a

major facility. Consequently, the proposed fee increased by more than 125%

and went from a fee of just over $5500 for FY 2018 to a fee of just over $12,400

for FY 2019.

The proposed FY 2019 NJPDES fee and assessment were included in

DEP's annual fee report, issued in April 2019. That fee report was posted on the

DEP's website, and notices of the report were mailed to the RT Authority and

other permit holders. The report was then opened to public comment, and the

DEP held a public hearing on the report on May 1, 2019. 51 N.J.R. 1073(a)

(June 17, 2019). The RT Authority did not submit any comments on the FY

2019 annual fee report.

On May 10, 2019, DEP sent the RT Authority an invoice for $12,476.78

for the FY 2019 NJPDES fee for the WW Facility. Three weeks later, on June

4, 2019, the RT Authority requested a recalculation of the fee, pointing out that

A-5201-18T2 4 the WW Facility does not run continuously and runs only during severe wet

weather. The RT Authority also requested an explanation of the fee, noting that

the FY 2019 fee had gone up by almost $7000.

On June 17, 2019, DEP published its final FY 2019 annual fee report and

assessment of fees. Ibid. Two weeks later, on July 1, 2019, DEP sent the RT

Authority a letter denying its request for a recalculation of the FY 2019 fee.

DEP acknowledged that it had previously calculated the fee for the WW Facility

as if it were a minor facility. DEP went on to explain that it was correcting that

mistake by calculating the FY 2019 fee based on the WW Facility being a major

facility.

The RT Authority now appeals from the DEP's denial of its request to

recalculate the FY 2019 fee for the WW Facility. The RT Authority also

requested an adjudicatory hearing before the DEP to challenge the denial of the

recalculation. In December 2019, DEP denied that request, and the RT

Authority filed a separate appeal from that decision. We denied a request to

consolidate that separate appeal, and that appeal is still pending. See In re

Denial of Hearing Request, No. A-2341-19T2.

A-5201-18T2 5 II.

We begin our analysis by addressing a procedural issue. DEP contends

that we should not consider the merits of this appeal because the RT Authority

failed to challenge the designation of the WW Facility as a major facility and

failed to challenge the final FY 2019 DEP annual fee report. We disagree.

The RT Authority is not challenging the designation of the WW Facility

as a major facility. Instead, it appeals from the DEP's final decision to deny a

recalculation of the FY 2019 fee assessment for the WW Facility. It is

undisputed that the WW Facility was permitted as a major facility. It is also

undisputed that before FY 2019, DEP calculated the fee for the WW Facility as

if it were a minor facility, even though it was a major facility. Accordingly, the

RT Authority is not seeking to change the designation of the WW Facility from

a major to a minor facility. Rather, it is seeking to have the FY 2019 fee

recalculated.

DEP regulations expressly allow permit holders to object to an assessment

and to request DEP to recalculate a permit fee. N.J.A.C. 7:14A-3.1(a)(6). To

request a recalculation, the permit holder must send DEP a written request

within thirty days of the assessment of the fee. Ibid.

A-5201-18T2 6 DEP sent the RT Authority an invoice for the FY 2019 fee for the WW

Facility on May 10, 2019. Less than thirty days later, on June 4, 2019, the RT

Authority sent DEP a written objection requesting a recalculation. Accordingly,

procedurally the RT Authority properly requested the recalculation. 2

III.

On this appeal, the RT Authority raises three arguments, contending (1)

the DEP's decision was arbitrary, capricious, and unreasonable because it lacked

factual support and ignored the unique nature of the WW Facility; (2) DEP

should be estopped from changing its assessment of the WW Facility as a minor

facility to assessing it as a major facility; and (3) the prior assessments of the

WW Facility as a minor facility were a de facto rule that cannot be changed

without proper rule-making procedures. We are not persuaded by any of these

arguments.

A.

An appellate court's review of an administrative agency's final decision is

limited. Commc'ns Workers of Am., AFL-CIO v. N.J. Civ. Serv. Comm'n, 234

N.J. 483, 515 (2018). An agency's decision will not be reversed unless "(1) it

2 The issue of whether the RT Authority properly sought an adjudicatory hearing concerning the recalculation is a separate issue that is currently not before us on this appeal. Instead, it is part of the separate pending appeal. A-5201-18T2 7 was arbitrary, capricious, or unreasonable; (2) it violated express or implied

legislative policies; (3) it offended the State or Federal Constitution; or (4) the

findings on which it was based were not supported by substantial, credible

evidence in the record." Univ. Cottage Club of Princeton N.J. Corp. v. N.J.

Dep't of Env't Prot., 191 N.J. 38, 48 (2007) (citing In re Taylor, 158 N.J. 644,

656 (1999)). Moreover, courts generally afford substantial deference to an

agency's interpretation of a statute that it is charged with enforcing. An

appellate court, however, is not "bound by the agency's interpretation of a statute

or its determination of a strictly legal issue." Ibid. (quoting In re Taylor, 158

N.J. at 658).

"'[A] strong presumption of reasonableness' attends an agency's exercise

of its statutorily delegated duties, which 'is even stronger when the agency has

delegated discretion to determine the technical and special procedures to

accomplish its task.'" Caporusso v. N.J. Dep't of Health & Senior Servs., 434

N.J. Super. 88, 103 (App. Div. 2014) (alteration in original) (quoting In re Holy

Name Hosp., 301 N.J. Super. 282, 295 (App. Div. 1997)). "As long as the

agency decision is contemplated under its enabling legislation, the action must

be accorded a presumption of validity and regularity." A.M.S. ex rel. A.D.S. v.

Bd. of Educ., 409 N.J. Super. 149, 159 (App. Div. 2009) (citation omitted).

A-5201-18T2 8 B.

For FY 2019, DEP calculated the fee for the WW Facility based on the

facility being a major facility. That calculation was consistent with the Act and

DEP's regulations. See N.J.A.C. 7:14A-3.1(c) tbl. III. In denying the

recalculation, DEP acknowledged it had changed how it calculated the fee for

FY 2019 as compared to prior years. DEP conceded that it had incorrectly

calculated prior fees by assessing the WW Facility as if it were a minor facility.

The issue before us is whether that correction was arbitrary, capricious, or

unreasonable. We hold it was not. The DEP, like any governmental entity, can

correct mistakes. See, e.g., Playmates Toys, Inc. v. Dir, Div. of Tax'n, 316 N.J.

Super. 509, 513-14 (App. Div. 1998), aff'd o.b., 162 N.J. 186 (1999)

(recognizing that state agencies have the inherent power to correct clerical

mistakes, especially where the agency has the responsibility to take in or

disburse monies); see also Hill v. Dir, N.J. Div. of Tax'n, 29 N.J. Tax 318, 322

(App. Div. 2016) (finding no error in agency's issuance of deficiency notices

after it erroneously refunded taxes paid).

Indeed, DEP's right to modify, revoke, and reissue permits for technical

mistakes, including errors in calculation and errors made in determining permit

conditions, is specifically set forth in its regulations. N.J.A.C. 7:14A-6.4(a),

A-5201-18T2 9 (b)(14). Furthermore, absent legislative restrictions, administrative agencies

have "inherent power to reconsider and redetermine prior decisions in

appropriate circumstances." In re Int'l Union Loc. 54, 203 N.J. Super. 297, 340

(App. Div. 1985) (citing In re Trantino, 89 N.J. 347, 364 (1982)). This power

is "limited by considerations of fairness and reasonableness." Ibid. (citing

Trantino, 89 N.J. at 364).

The RT Authority also argues that DEP did not properly consider the

unique nature of the WW Facility. The record establishes that the DEP was

well-aware that the WW Facility did not operate every day and operated only in

severe weather conditions. Nevertheless, there is nothing arbitrary, capricious,

or unreasonable in the DEP treating and assessing the WW Facility as a major

facility because it has the capacity to receive wastewater flows of up to 3.85

million gallons per day. In its decision denying the recalculation, DEP

represents that its assessment of the WW Facility was consistent with its

assessment of "all NJPDES permittees." The RT Authority has submitted

nothing to rebut that representation.

C.

The RT Authority next argues that DEP should be estopped from applying

the "major" facility fee to the WW Facility because it had previously assessed

A-5201-18T2 10 the facility as a "minor" facility. Equitable estoppel does not apply in this

situation.

"Equitable estoppel may be invoked against a governmental entity only 'to

prevent manifest injustice.'" Berg v. Christie, 225 N.J. 245, 280 (2016) (quoting

O'Malley v. Dep't of Energy, 109 N.J. 309, 316 (1987)). "The essential elements

of equitable estoppel are a knowing and intentional misrepresentation by the

party sought to be estopped under circumstances in which the misrepresentation

would probably induce reliance, and reliance by the party seeking estoppel to

his or her detriment." In re Johnson, 215 N.J. 366, 379 (2013) (quoting

O'Malley, 109 N.J. at 316-17).

The RT Authority has shown none of the elements of equitable estoppel.

Moreover, it has shown no manifest injustice. As already discussed, DEP made

a mistake: prior to FY 2019, it assessed the fees on the WW Facility as if it

were a minor facility. There is no showing that mistake was an intentional

misrepresentation by the DEP. Nor is there a showing that the mistake induced

reliance by the RT Authority. The RT Authority always knew that the WW

Facility was a major facility. The DEP is not seeking to change the assessment

for prior years. Instead, it has properly calculated the FY 2019 assessment and

presumably will do so in the future.

A-5201-18T2 11 D.

Finally, the RT Authority argues that the DEP's assessments of fees prior

to FY 2019 were a "de facto" rule and DEP cannot change that rule without

appropriate rule-making procedures. The DEP's incorrect assessment of the fee

for the WW Facility before FY 2019 was not a rule. Indeed, the fee was

inconsistent with the DEP's rules, which had been duly adopted. See N.J.A.C.

7:14A-3.1. The minimum fee for a major facility discharging wastewater was

adopted pursuant to appropriate rule-making procedures by the DEP in 2007.

See 39 N.J.R. 381(b) (Feb. 5, 2007). The RT Authority's claim that the FY 2019

fee violates principles set forth in Metromedia, Inc. v. Director, Division of

Taxation, 97 N.J. 313, 331-32 (1984), lacks sufficient merit to warrant further

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

Affirmed.

A-5201-18T2 12