Court Reverses Revocation of NFA Letter

Levelor operated a vinyl blind manufacturing facility in Hoboken from 1951 to 1988. By way of merger, Dean Witter acquired Levelor as wholly-owned subsidiary in 1988. This transaction triggered ISRA and Levelor entered into adminstrative consent order with NJDEP. In 1990, Levelor sold property. Investigation detected VOCs in soil and groundwater, and PHC above residential standards in soils.

Levelor proposed remedy consisting of engineered cap and declaration of Environmental Restrictions consisting of Classification Exception Area (CEA) restricting use of groundwater.  Calpro initially refused ti agree to restrictions and then filed for bankruptcy but eventually entered into settlement allowing proposed remedy to be implemented. NJDEP issued NFA in 1998.

Prior to issuance of NFA, Calpro entered into Memorandum of Agreement with NJDEP in 1998 to implement redevelopment plan for site but NJDEP terminated in 2000 after Calpro railed to conduct any remediation at the site. In 2001, a related entity to Calpro,  Monroe Center Development (MCD), entered into another MOA to develop site for mixed use. NJDEP conditionall approved remedial plan in 2002 that would have provided for removal of cap and additional soil/groundwater remediation. In 2004, MCD discovers more extensive VOC contamination in soil and groundwater than previously known. In April 2009, NJDEP rescinds 2001 MOA for MCD's failure to implement remedial measures NJDEP  and then rescinds 1998 NFA letter in June 2009. NJDEP then issues a Spill Act Directive to plaintiff (as successor of Levelor and Dean Witter).

Plaintiff argues that the NJDEP's letter revoking  NFA was not supported by any specific findings of fact, and was therefore arbitrary and capricious. Court agrees, saying it was not the court's job to "scour the record" to ascertain if there was a basis for the agency's action. Ct says that NJDEP did not adequately articulate the basis for its conclusions that the plaintiff had "failed to adequately investigate the site" and to disclose the true levels of the contamination. Court said NJDEP failed to explain why recission was the proper regulatory response eleven years after its NFA had recognized elevated levels of VOCs in groundwater and why the original remedy was no longer protective. The court also said that NJDEP did not explain why after issuing the NFA based on non-residential use, the agency then approved removal of the cap in connection with a residential development that was not originally contemplated. While NJDEP subsequently tried to address these deficiencies in its briefs, the court said the NJDEP should have supported its conclusions when it decided to revoke the NFA letter.

Accordingly, the court vacated the recission of the NFA letter and remanded the matter back to the NJDEP for further consideration, including the opportunity for the plaintiff to submit supplemental materials prior to issuing another final determination.    Morgan Stanley Services Corp. v NJDEP, 2011 N.J.Super. Unpub. LEXIS 182 (App. Div. 1/26/11)