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Original WP 5.1 Version
(NOTE: This decision was approved by the court for publication.)
This case can also be found at 326 N.J. Super. 372.
SUPERIOR COURT OF NEW JERSEY
JOHN ZUCCARELLI, III,
Argued: September 28, 1999 - Decided: December 13, 1999
Before Judges Muir, Jr., Wallace, Jr. &
On appeal from the Commissioner of New
Patrick D. Kennedy argued the cause for
Susan J. Vercheak, Deputy Attorney General,
The opinion of the court was delivered by
WALLACE, JR., J.A.D.
Appellants, John Zuccarelli, III (Zuccarelli, III) and Lillian
and John Zuccarelli (Zuccarelli) appeal from a decision and order
of the Commissioner of the Department of Environmental Protection
(DEP), denying their application to reopen and vacate a 1992
settlement agreement. In their appeal, appellants contend: (1) the
unconstitutionality of the waste flow regulations mandates voiding
or substantially modifying the agency order adopting the settlement
agreement; (2) Zuccarelli, III is entitled to reimbursement for the
monetary penalties paid based on the unconstitutional waste flow
regulations; (3) the Commissioner's failure to grant a hearing
strips Zuccarelli, III of his vested property right in his license
and renders the decision arbitrary, capricious, and unreasonable;
and (4) they clearly have standing. We disagree with these
contentions and affirm.
In the first matter captioned, Department of Environmental Protection and Energy, Divisions of Solid Waste Management and Hazardous Waste Management v. National Waste Disposal, Inc. OAL Dkt. Nos. ESW 8300-88, ESW 3265-89, EHW 9221-89 and ESW 9458-90 (consolidated)(decided January 6, 1992), the Administrative Law Judge (ALJ) found that National Waste and Zuccarelli, III had engaged in wholesale and egregious violations of the rules and regulations governing solid waste and recommended a fine of $6,016,286, revocation of National Waste's solid waste collection license, and debarment of Zuccarelli, III from the solid waste industry. Approximately $4,620,775 of the monetary penalty was attributed to waste flow violations, while the remaining $1,395,511 monetary penalty was attributed to the ALJ's findings that National Waste had operated at least four solid waste transfer stations without any engineering design approval. In addition, the ALJ found violations of asbestos disposal requirements and that National Waste falsified origin and destination documents.
In the second action captioned, In the Matter of Allegations of Violations of Law and the Administrative Code by National Waste Disposal, Inc. and John M. Zuccarelli, III, individually and as President and Sole Owner of National Waste Disposal, Inc. OAL Dkt. No. ESW 3740-90 (decided June 26, 1992), another ALJ found that appellants had falsified origin and destination forms, violated the tariff regulations by overcharging, and violated the solid waste flow rules. The ALJ recommended imposing penalties of $479,000 and a one-year continuance of National Waste's Certificate of Public Convenience and Necessity while the Company operated under the general supervision of the DEP.
While these matters were pending before the Commissioner, the parties reached a final settlement agreement on November 25, 1992. By order dated December 4, 1992, the Commissioner affirmed the terms of the settlement as just and reasonable and as disposing of all issues in both cases. The principle terms of the settlement agreement provided that: (1) National Waste could operate for three years from the date of settlement, but the Company would have to be sold to a buyer approved by the DEP on or before December 31, 1995; (2) National Waste would cease operations no later than January 1, 1996, irrespective of whether a sale had been consummated; (3) National Waste would pay a monetary penalty of $3.5 million; and (4) Zuccarelli, III would not participate in the solid waste and recycling business for a period of five years following the cessation of National Waste's operations. Some of the other numerous provisions in the settlement agreement limit the appellants' ability to contest the terms and conditions of the settlement and prohibit Zuccarelli, III's parents from purchasing the Company from him.
Following approval of the settlement agreement, several significant court decisions affected the validity of New Jersey's waste flow regulatory scheme. On May 16, 1994, the United States Supreme Court held that a local New York waste flow control ordinance violated the Commerce Clause. C & A Carbone, Inc. v. Town of Clarkstown, 511 U.S. 383, 389-95, 114 S. Ct. 1677, 1681-84, 128 L. Ed.2d 399, 407-10 (1994). Following the C & A Carbone decision, the Third Circuit Court of Appeals concluded that New Jersey's "waste flow regulations discriminate against interstate commerce on their face or in effect," and remanded the matter to the District Court for a determination whether those regulations could survive application of the "heightened scrutiny test" for constitutionality under the Commerce Clause as set forth in C&A Carbone. Atlantic Coast Demolition & Recycling, Inc. v. Board of Chosen Freeholders of Atlantic County, 48 F.3d 701, 717-18 (3d Cir. 1995) (Atlantic Coast I).
Following the remand, on July 15, 1996, the District Court applied the "heightened scrutiny test" of Commerce Clause constitutional analysis and determined that "New Jersey's system of flow control of waste violates the Commerce Clause of the United States Constitution." Atlantic Coast Demolition & Recycling v. Board of Chosen Freeholders of Atlantic County, 931 F. Supp. 341, 358 (D.N.J. 1996) (Atlantic Coast II). On May 1, 1997, the Third Circuit affirmed the District Court's conclusion that New Jersey's present waste flow control system is unconstitutional under the Commerce Clause of the United States Constitution. Atlantic Coast Demolition & Recycling, Inc. v. Board of Chosen Freeholders of Atlantic County, 112 F.3d 652, 673 (3d Cir. 1997) (Atlantic Coast III).See footnote 1 The United States Supreme Court denied certiorari on November 10, 1997, ___ U.S. ___, 118 S. Ct. 412, 139 L. Ed.2d 316 (1997).
As a result of these decisions, Zuccarelli, III and National Waste filed an action in federal district court seeking reconsideration of the terms of the settlement agreement since the solid waste flow rules which National Waste allegedly violated had been declared unconstitutional. The complaint was dismissed for lack of jurisdiction and the Third Circuit affirmed on appeal. John Zuccarelli, III v. Robert C. Shinn, Jr., No. 95-5693 (3d Cir. Dec. 29, 1995).
On November 5, 1997, we decided the appeal in In re Fiore & Son, Inc., 305 N.J. Super. 192 (App. Div. 1997). In Fiore, a solid waste hauler appealed from a decision of the Commissioner of DEP assessing a monetary penalty, revoking the Corporation's Certificate of Public Convenience and Necessity, and ordering permanent debarment of the individual owners from participating in the solid waste industry in New Jersey. Id. at 194. We held the unconstitutionality of New Jersey's waste flow regulations should be applied retroactively in that case. Id. at 204-05. On appeal, the New Jersey Supreme Court affirmed our decision, holding that "Carbone and Atlantic Coast II should apply retroactively to cases in the pipeline challenging those aspects of the State's waste flow regulations that discriminate against interstate commerce." In re A. Fiore & Sons, Inc., 158 N.J. 105, 107 (1999).
Meanwhile, after our decision in Fiore, Zuccarelli, III sent a letter dated December 12, 1997 to the Commissioner of DEP requesting a review of the November 25, 1992 settlement agreement and order affirming the settlement. Thereafter, appellants:
petitioned the Department to determine that all punitive aspects of the settlement agreement be deemed void and unenforceable, that a hearing be conducted to determine the Zuccarellis' rights to reimbursement of all settlement monies directly attributable to waste flow violations, that the debarment of the Zuccarellis from the solid waste industry be deemed void and that any impediment to the right of the Zuccarellis to engage in the solid waste industry be lifted.
The Commissioner denied the petition, concluding that
appellants could have continued their litigation on the merits in
1992, but instead opted for a comprehensive settlement. Further,
the Commissioner noted that the continuing five-year debarment
period of Zuccarelli, III did not justify revisiting the settlement
agreement. Finally, the Commissioner explained that in addition to
the waste flow violations, appellants had "established an egregious
record of regulatory violations." This appeal followed.
The central issue is whether the unconstitutional waste flow regulations should be applied retroactively to appellants who reached a comprehensive settlement agreement, based in part, on charges for waste flow violations.
In deciding to give retroactive application to the Atlantic Coast II ruling in Fiore, we were guided by Reynoldsville Casket Co. v. Hyde, 514 U.S. 749, 115 S. Ct. 1745, 131 L. Ed.2d 820 (1995) and Harper v. Virginia Dep't of Taxation, 509 U.S. 86, 113 S. Ct. 2510, 125 L. Ed.2d 74 (1993). We expressed that:
Both Reynoldsville and Harper clearly point to retroactive application. As stated in Harper: When this Court applies a rule of federal law to the parties before it, that rule is the controlling interpretation of federal law and must be given full retroactive effect in all cases still open on direct review and as to all events, regardless of whether such events predate or postdate our announcement of the rule.
[305 N.J. Super. at 204 (emphasis added).]
See also Reynoldsville, supra, 514 U.S. at 758, 115 S. Ct. at 1751,
131 L. Ed.
2d at 830 ("New legal principles, even when applied
retroactively, do not apply to cases already closed.")
145 N.J. 233, 249 (1996).]
Further, the Court noted that in deciding whether to apply a new
rule retroactively, a court should consider the purpose of the new
rule and the effect a retroactive application would have on the
administration of justice. Id. at 251; see also State v. Purnell,
161 N.J. 44, 56 (1999) (under retroactivity analysis, a court is
required to "assess the impact that retroactive application of the
new rule of law would have on the administration of justice").
[Id. at 449.]
In determining to give the Olds decision limited "pipeline"
retroactivity, the Court explained that limited retroactivity would
"adequately protect existing relationships." Id. at 450. Further,
the Court noted that the application of pipeline retroactivity to
pending cases "serves the interests of justice by permitting
resolution of their claims on the merits." Id. Perhaps more
importantly, the Court recognized that complete retroactive
application potentially exposes the judicial system to the undue
burden of revisiting numerous matters already concluded. Id.
Clearly, the 1992 settlement agreement was not the product of
fraud or misrepresentation. Moreover, appellants were not
compelled to settle their cases in 1992. Instead, they could have
contested the DEP's numerous claims and even raised the
constitutional argument that was subsequently upheld in the
Atlantic Coast cases. However, appellants elected to enter into a
comprehensive settlement agreement which permitted them to continue
operating for several years in order to find a suitable purchaser
of their business. Consequently, we reject appellants' request to
either modify or void the settlement agreement with DEP.
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