The opinion
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APPROVAL OF THE APPELLATE DIVISION
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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.
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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.
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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.
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