Appeals Court Denies Challenge to NJDEP Oversight Costs

North Bergen LLC purchased industrial property that was under Administrative Consent Order (ACO) between its former owner and DEP. Former owner requested that DEP terminate the ACO and allow North Bergen to proceed under ISRA remediation agreement.


NJDEP subsequently issued over two dozen oversight cost invoices to North Bergen. The company paid  $1,515 but refused to pay the outstanding balance of oversight costs on grounds that the costs were “excessive, unreasonable and duplicaye".  North Bergen filed an "oversight cost review request in July 2007. NJDEP responded that it would attempt to resolve informally instead of referring the matter for administrative review by the but a technical dispute arose leading North Bergen to submit a Technical Review Panel (TRP) request. In November 2008, the TRP advised North Bergen that no further action was needed for soils but that vapor intrusion testing and further ground water sampling was still required. North Bergen


North Bergen refused to pay five additional invoices, again alleging that the costs were excessive, unreasonable and duplicative, that NJDEP's activity description was generic and inadequate to determine the work actually performed by NJDEP, and also claimed that NJDEP's remediation approach wasted substantial NJDEP time and resources. After each objection, NJDEP offered to resolve the matter informally.


Finally, In December 2009, NJDEP advised North Bergen that if payment is not received within 30 days, the agency would have no choice but to send the invoice to a collection agency and stop work on the case. North Bergen then filed a lawsuit, arguing that that DEP's refusal to send the billing dispute to the Office of Administrative Law for a contested hearing was arbitrary, capricious and unreasonable. At the time of the lawsuit, the outstanding balance of unpaid oversight costs was $43,420.09. NJDEP countered that its December  2009 correspondence does not amount to final agency action and that North Bergen has failed to exhaust its administrative remedies.


The trial court agreed and appellate division affirmed, holding that a general refusal to pay all charges did not qualify as a conforming submission. The court said that a objects to the charges as "excessive and unreasonable" and to the work description as "generic and inadequate”. The court said the record was insufficient to determine if North Bergen was lawfully assessed the oversight costs charged by NJDEP. North Bergen LLC v NJDEP, 2011 N.J.Super. Unpub. LEXIS 1868 (App. Div. 7/12/11).