CSG Law Alert: DEP Commissioner Clarifies Dirty Dirt “Broker” Definition
Two recent losses for the New Jersey Department of Environmental Protection in the Office of Administrative Law may provide some much-needed clarity on who is considered a “broker” under New Jersey’s “Dirty Dirt Law.”
New Jersey’s solid waste industry’s checkered past of anticompetitive practices and organized crime has resulted in stringent requirements and restrictions for individuals operating in the solid waste industry. The Solid Waste Management Act (“SWMA”) empowers the New Jersey Department of Environmental Protection (“DEP”) with broad authority to supervise and control solid waste hauling and disposal. In addition, any business engaged in the collection, transportation, and disposal of solid or hazardous waste must obtain an A-901 License. Applicants must file detailed personal and financial disclosure statements, submit to fingerprint checks, and undergo intensive background investigations.
In 2020, amendments to the SWMA, commonly referred to as the “Dirty Dirt Law,” required businesses engaged in soil and fill recycling to comply with A-901. The amendments expanded background checks to include solid waste salespersons, consultants, and brokers. The Dirty Dirt Law also broadened the statutory definition of “broker” of solid waste from exercising significant control over solid waste management services to any “person who for direct or indirect compensation arranges agreements between a business concern and its customers for the collection, transportation, treatment, storage, processing, transfer or disposal of solid waste or hazardous waste, or the provision of soil and recycling services.” N.J.S.A. 13:1E-127(n).
DEP’s expansive interpretation of the new definition was challenged inn NJDEP v. Cyprexx Services, LLC and NJDEP v. AltiSource Solutions, Inc. In both of those matters, the respondents hired independent contractors to perform cleanup and solid waste removal services at foreclosed properties. DEP issued penalties to both respondents for engaging in waste management as a “broker” without an A-901 license. After DEP issued the penalties, the Dirty Dirt Law expanded the definition of broker. When respondents challenged the penalties, the DEP attempted to apply the new definition. The Administrative Law Judges (“ALJs”) rejected DEP’s argument for retroactive application of the Dirty Dirt Law and held that the companies were not required to obtain A-901 licenses because they were not brokers under the prior test, i.e. they did not exercise significant control over solid waste management services.
The DEP Commissioner affirmed the ALJ’s initial decisions. The Commissioner emphasized that the DEP had failed to cite clear authority establishing that a property preservation service company would be considered a “broker” even under the new more expansive definition. Specifically, the Dirty Dirt Law provides that a broker “arranges agreements between a business concern and its customers” for waste management services. The Commissioner explained that respondents did not arrange agreements between two other parties. Rather, each company contracted with an independent contractor, which then subcontracted the work. The Commissioner also noted that DEP provided no authority that the agency had ever considered such a subcontract to be an agreement “between a business concern and its customers” under the amended broker definition.
DEP is expected to promulgate rules and regulations implementing the Dirty Dirt Law sometime this year. Those implementing regulations will likely further clarify DEP’s interpretation of broker. Given the Commissioner’s recent decisions, the DEP’s overreaching interpretation argued to the ALJs is not likely to re-emerge, and, if it does, it will be susceptible to judicial challenge.