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The New Jersey Appellate Division has reversed several severe penalties assessed under the Freshwater Wetlands Act and several related statutes, which were levied against an owner of historic property in Lebanon and Washington Townships in New Jersey. The case, which was initially heard before the Office of Administrative Law, was appealed after the NJDEP Commissioner allegedly failed to properly consider the conclusions of the Administrative Law Judge before issuing severe penalties against the offending parties.
In this case, entitled Asdal Builders, LLC v. New Jersey Department of Environmental Protection, the property owner allegedly redeveloped farmland and several buildings listed on the State Register of Historic Places. The owner allegedly converted the properties into a “zero energy” bed-and-breakfast without the necessary NJDEP approvals. The redevelopment was considered to be a first-of-its-kind “green building,” as no fossil fuels are used or relied upon to heat the structures.
Asdal’s legal problems began when the property owner was accused of improperly engaging in activities that required a stream encroachment permit without first having received such a permit. The NJDEP also alleged that some freshwater wetlands had been impacted by the redevelopment efforts, and that other environmental violations had occurred during construction. After the case was heard by an Administrative Law Judge, NJDEP’s Commissioner upheld $166,000 in penalties against the corporate entities, as well as penalties against one of the individual officers.
On appeal from the Commissioner’s decision, the Appellate Division of the New Jersey Superior Court determined that it was improper for the NJDEP to assess liability against one of the individual officers and that NJDEP misapplied the law relating to the liability of a "responsible officer.” In addition, the Court rejected the manner in which the penalties were assessed against the corporate entities, specifically rejecting NJDEP's conclusion that large penalties were warranted by a "continuing violation.” The court expressly rejected the argument that violations were “ongoing” simply because the renovated historic structures remain on the property. In common NJDEP parlance, continuing violations refer to ongoing pollution violations, which were not at issue in the Asdal case. Finally, the appeals court rejected NJDEP's imposition of maximum penalty assessments in this case, noting that the conduct of the builders was not a “knowing" offense. The court observed that the highest penalties are typically reserved for intentional violations.
The Asdal case confirms what many environmental lawyers who represent clients in permitting, compliance and enforcement matters already know: NJDEP Commissioner’s must strictly construe the applicable law when reviewing decision of an Administrative Law Judge, or their decisions may be thrown out on appeal. In addition, it is imperative that NJDEP give deference to or, at a minimum, consider credibility determinations made by Administrative Law Judges in evaluating conduct and behavior by alleged offenders.