# Woodland Private Study Group v. State > Supreme Court of New Jersey · November 16, 1987 · 109 N.J. 62 URL: https://www.frixlaw.com/law-library/cases/9702210 ## Case - **Full name:** Woodland Private Study Group, Minnesota Mining and Manufacturing Company, and Rohm and Haas Company, Respondents, v. State of New Jersey, Department of Environmental Protection, and Robert E. Hughey, Commissioner, of the Department of Environmental Protection, Appellants - **Court:** Supreme Court of New Jersey - **Decided:** November 16, 1987 - **Citations:** 109 N.J. 62; 533 A.2d 387; 18 Envtl. L. Rep. (Envtl. Law Inst.) 20263; 27 ERC (BNA) 1834; 1987 N.J. LEXIS 373 - **Precedential status:** Published - **Opinion:** Dissent by O'Heen - **Judges:** Clifford, O'Heen - **Cited by:** 55 later opinions in the Frix Law Library ## Citator (automated) - No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases. - Full citator and citing cases: https://www.frixlaw.com/law-library/cases/9702210 ## How later opinions describe it (automated extraction) - holding that application of the internal communication exception depends on "whether the agency action has a `substantial impact' on the rights or interests of the parties" ## Opinion text O’HEEN, J., dissenting. This case presents a close call in defining the proper relationship between the judicial and executive branches of government. I believe that the better view is that the judiciary should not crystallize into a rule 1 the management practices of an *77 executive agency, particularly in the rapidly evolving field of hazardous waste cleanup. To place this issue in perspective, it helps to restate the role of administrative agencies in our governmental structure. With the growth of industrialized societies, modern legislatures were presented with complex issues regarding governmental regulation of private conduct. Legislatures increasingly entrusted to regulatory agencies the responsibility of developing the details of such programs. L. Jaffe, Judicial Control of Administrative Action 3 (1965). Though resistant at first to the new forms, Schechter Poultry Corp. v. United States, 295 U.S. 495 , 55 S.Ct. 837 , 79 L.Ed. 1570 (1935), courts increasingly recognized and deferred to the agency’s policymaking role: “[Although the administrative process has had a different development and pursues somewhat different ways from those of courts, they are to be deemed collaborative instrumentalities of justice and the appropriate independence of each should be respected by the other.” United States v. Morgan, 313 U.S. 409, 422 , 61 S.Ct. 999, 1005 , 85 L.Ed. 1429, 1435-36 (1941), cited in Bernard Schwartz, Administrative Law 20 (1976). Once courts recognized that the choice of policy was for the agency, the next distinctive trend in the development of administrative law was to require procedural fairness before an agency could act as a lawmaker by formulating interstitial mandates that affected public conduct or by adjudicating private rights. Hence, the 1946 enactment of the Federal Administrative Procedure Act, 5 U.S.C. § 551 to 559. Under our Constitution, administrative agencies are part of the executive branch of government. N.J. Const. of 1947 art. *78 V, § 1, para. 11; In re Kallen, 92 N.J. 14, 20 (1983); In re Uniform Admin. Procedure Rules, 90 N.J. 85, 92-93 (1982). Administrative agencies implement the programs and policies that have been statutorily delegated to them by the Legislature. See 1 Davis, Administrative Law Treatise § 1:2 at 8-9 (2d ed. 1978). In exercising their responsibilities, “[ajdministrative agencies enjoy a great deal of flexibility in selecting the proceedings most suitable to achieving their regulatory aims.” Bally Mfg. Corp. v. New Jersey Casino Control Comm’n, 85 N.J. 325, 338 (1981) (Handler, J., concurring). As we noted in In re Uniform Admin. Procedure Rules, supra, 90 N.J. at 104 , even in the adoption of substantive mandates of conduct the choice of procedural mechanism is typically made by the agency head, who “can opt for either a rule making proceeding, an adjudication as a contested case or some other flexible proceeding which is appropriate to achieve the regulatory aims of the agency.” Id. (emphasis added). Agency policy may be implemented and effectuated in a variety of ways: by regulations, internal guidance memoranda, executive orders, and interpretative rules or on a case-by-case basis. By no means is this an exhaustive list. Moreover, we have consistently held that because the choice of procedure is one historically left to the discretion of the agency such administrative determinations should be given deference by the courts. Department of Labor v. Titan Constr. Co., 102 N.J. 1, 18 (1985); Texter v. Human Servs. Dep’t., 88 N.J. 376, 385-86 (1982). In Vermont Yankee Nuclear Power Corp. v. Natural Resources Defense Council, 435 U.S. 519 , 98 S.Ct. 1197 , 55 L.Ed. 2d 460 (1978), the United States Supreme Court cautioned reviewing courts against engrafting their own notions of proper procedure upon agencies entrusted by Congress with substantive functions. Id. at 524 , 98 S.Ct. at 1202 , 55 L.Ed.2d at 467 . “[Cjourts are ill-equipped for ‘social-cost accounting,’ particularly when looking over an administrative policy maker’s shoulder. Not only do courts lack the administrator’s presumed investigative resources, analytic com *79 petence, and technical literacy, but they view social policy issues through the refracting prism of judicial review.” Diver, “The Optimal Precision of Administrative Rules,” 93 Yale L.J. 65 , 108 (1983) (footnote omitted) [hereinafter Diver]; see also Oakwood, at Madison, Inc. v. Township of Madison, 72 N.J. 481, 633 (1977) (Clifford, J., concurring) (“judiciary has increasingly been solicited to become the problem-solver of our society”). Here we deal not so much with the agency’s choice of procedures to mandate conduct by the regulated public as with the choice of procedures to guide conduct of the agency itself. The touchstone for decision is, of course, the New Jersey Administrative Procedure Act (APA), N.J.S.A. § 52:14B-1 to -15. In the Act, our Legislature balanced the need for procedural requirements of notice and hearing against the need for procedural flexibility in the administrative process by specifically excluding from the definition of “rule”: “(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.” N.J.S.A. § 52:14B-2(e). As the majority opinion demonstrates, the words of the statute embracing matters of “internal management or discipline” and “intraagency statements” do not prevent courts from deciding what is a rule. Courts and commentators have given other content to the words of such statutes. 2 Some would distinguish between what are called primary and secondary rules. In this scenario, the administrative rule-maker is seen as promulgating two kinds of rules: “ ‘external’ rules[,] addressed principally to the regulated public, and ‘internal’ rules, addressed to persons charged with the enforcement of external rules.” Diver, supra, 93 Yale L.J. at 76. Another *80 commentator has suggested that the way to separate these rules is to determine whether each is “merely a decision rule with a conduct side effect or instead an independent conduct rule.” Dan-Cohen, “Decision Rules and Conduct Rules: On Acoustic Separation In Criminal Law,” 97 Harv.L.Rev. 625, 632 (1984). The majority's example of an agency rule, that employees not accept lunch offers from the regulated public, would almost certainly meet many of the Metromedia standards. 3 A final test suggested is that of “definitiveness”: whether the rule channels discretion definitively or tentatively. If the court finds that the discretionary power of the agency is definitively limited, the pronouncement is a legislative rule. The question, then, is whether a rule definitively or tentatively channels discretion. See Asimow, “Nonlegislative Rulemaking and Regulatory Reform,” 1985 Duke L.J. 381 , 391 [hereinafter Asimow]. Some courts have phrased the question, in part, in terms of whether the action “substantially affects the rights of those over whom the agency exercises authority.” Pickus v. United States Bd. of Parole, 507 F.2d 1107, 1113 (D.C.Cir.1974); see also Commonwealth of Pennsylvania v. United States, 361 F.Supp. 208 (M.D.Pa.), aff'd, 414 U.S. 1017 , 94 S.Ct. 440 , 38 L.Ed.2d 310 (1973) (since law on discontinuance of carrier service has not been substantively changed, APA procedures are not required). From this discussion, we may deduce that the labels of legislative and non-binding rules have “ ‘fuzzy perimeters' ” and “ ‘establish no general formula.’ ” Batterton v. Marshall, 648 F.2d 694 (D.C.Cir.1980) (citations omitted). That court would view the issue in terms of “the underlying purposes of the procedural requirements at issue”: does the judicial deci *81 sion advance the “essential purpose of * * * notice and comment opportunities [so as] to reintroduce public participation and fairness to affected parties after governmental authority has been delegated to unrepresentative agencies”? Batterton, supra, 648 F.2d at 703 (footnote omitted). I do not see that this fundamental policy of representative government would be advanced in this case were we to require the agency to follow the rule-making process in deciding how it shall discharge its statutory obligations. As judges we are used to the adversary system. We like to hear from the other side. But what we see through Diver’s “refracting prism of judicial review,” we need not engraft upon an agency of government entrusted with cleaning up the residue of industrial society’s waste products. I believe that the DEP’s administrative order is best analogized, in concept but not in direction, to the federal EPA’s similar guidance memorandum, which has been seen as conforming “to the pattern of internal management common in every federal agency.” Anderson, “Negotiation and Informal Agency Action: The Case of Superfund,” 1985 Duke L.J. 261 , 313 n. 196 [hereinafter Anderson]. In this case, the DEP had to choose between assuming responsibilities for the removal job itself or letting the discharger clean up the waste site. The Spill Act has entrusted extraordinary discretion to the Department of Environmental Protection in this regard. See Woodland Private Study Group v. State of New Jersey, 616 F.Supp. 794 (D.N.J.1985). In implementing its environmental mandate, DEP has sought to safeguard the public’s trust and confidence that the site would be properly cleaned up. AO-69’s limitation on the extent to which an alleged discharger may conduct the first phase of the cleanup process — the remedial investigation and feasibility study (RI/FS) — seeks to guarantee public confidence that the site will be fully restored to environmental safety. DEP’s control over the RI/FS process is critical in light of the temptation of parties responsible for the discharge to downplay the environmental conditions and the cost of site cleanup. Indeed, *82 the federal EPA incurred an enormous loss of public confidence when it invited dischargers to recommend how the pollution should be cleaned up. “Critics charged that the EPA had relaxed cleanup requirements as an inducement to private parties to clean up sites themselves, had agreed to cost-reimbursement settlements short of what [was recoverable under the law], had allowed politics to interfere with the proper administration of the Fund, and, in general, had failed to follow acceptable management practices.” Anderson, supra, at 280 (footnotes omitted). In this context there is not a little irony in federal EPA Administrator Ann Gorsuch Burford being held in contempt of Congress for failing to disclose the details of her negotiation of cleanup plans with alleged dischargers and in DEP Commissioner Robert Hughey being found to have violated the law by directing his staff that they alone should decide how best to clean up a hazardous waste site. When courts overly “judicialize” the management of other agencies of government, they should not lose sight of the natural tendencies of the governed: Agency decisionmakers, like all rational beings, seek to function efficiently by maximizing utility — both their own and that of the regulatory program for which they are responsible. Given a fixed budget and many competing uses of available resources, efficient operation involves a constant weighing of the net marginal costs and benefits of a proposed course of action. Thus, in order to undertake a new legislative or nonlegislative rulemaking project, an agency must conclude that the net marginal benefits to the regulatory program or to the agency from adopting an incremental rule outweigh the net marginal bureaucratic costs of adopting it. [Asimow, supra, at 404 (footnote omitted).] See also Smith, “Judicialization: The Twilight of Administrative Law,” 1985 Duke L.J. 427 (administrative process has become so formalized that it has lost sight of original goal of effectuating governmental policy). Faced with these obstacles, the agency may simply decide to forget the whole thing. Asimow, supra, at 407-08. In my view, AO-69 was essentially an internal policy choice of the Executive Branch. The pros and cons of the policy *83 choice had been fully aired. The DEP Commissioner knew that EPA had made the contrary choice. He took this site off the Superfund list because, after hearing the debate, he disagreed with the federal decision to allow dischargers to participate in the cleanup process. What policy goal of administrative law does increased formalism serve? Had the Governor or the Commissioner decided this to be the State’s overarching policy and had the policy been effectuated through a speech at a cabinet or staff meeting, would we then rule that the policy could not be implemented in the absence of a written rule adopted after thirty days’ notice? In my view, the administrative order primarily addressed the way that government governed itself. I would let the Executive Branch achieve that end through its choice of administrative actions. Justice STEIN concurs in this opinion. For affirmance — Chief Justice WILENTZ and Justices CLIFFORD, HANDLER, POLLOCK and GARIBALDI — 5. For reversal — Justices O’HERN and STEIN — 2. At most, the issue here is one of due process, in the sense of procedural fairness. In Callen v. Sherman’s, Inc., 92 N.J. 114, 134 (1983), we emphasized: *77 Fairness between the state and an individual finds expression through due process, a concept representing the minimal standards of reason and justice governing that relationship. That sense of fairness cannot be imprisoned in a crystal, but must be allowed to grow with the changing relationships of people to each other and to their government. The language of the New Jersey Administrative Procedure Act is similar to the federal Administrative Procedure Act and to the Uniform Law rendition adopted by many states. Hence, it is useful to look to precedent elsewhere. The "no-free-Iunch" rule is a statement of general policy; it has consequences beyond the agency itself; it is intended to apply uniformly to all similarly situated persons. See Metromedia, Inc. v. Director, Div. of Taxation, 97 N.J. 313, 331-32 (1984). --- Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/9702210. Public record. Not legal advice.