NJ Environmental Law Update: The Courts Giveth And Taketh Away

April 6, 2017

 

Two environmental law decisions issued in March will separately expand and restrict the ability of private parties associated with contaminated properties to assert related claims under the New Jersey Spill Act.  The first, Matejek v. Watson, will make it easier for private parties in certain situations to sue each other under the Spill Act for contribution towards investigation and remediation costs associated with contaminated properties.  The second, NL Industries, Inc. v. State of New Jersey, will make it more difficult for private parties to assert Spill Act contribution claims against the State for properties contaminated prior to 1977.

Matejek v. Watson

On March 3, the New Jersey Appellate Division decided in Matejek v. Watson that equitable considerations and the general mandate of the New Jersey Spill Act to promote public health, safety and welfare allow potentially liable parties to obtain contribution towards the costs of an environmental investigation from other potentially liable parties without linking them to the contamination at issue.

In Matejek, several condominiums were located along a contaminated brook.  While addressing the contamination, the New Jersey Department of Environmental Protection (NJDEP) ordered the removal of underground storage tanks (USTs) from each of the five properties.  The NJDEP did nothing else to determine the source of the contamination and did not close the case.  Years later, the owners of one condominium sued the other owners pursuant to the New Jersey Spill Act to clear the cloud on title created by the open NJDEP case.  The plaintiffs sought an order from the court obligating the other owners to “participate in and equally share in an investigation and, if necessary, remediation of the property.”  The plaintiffs offered no evidence regarding the source of the contamination addressed several years earlier.

Despite the lack of a nexus between the defendants and the contamination at issue – normally a prerequisite to Spill Act contribution claim like the plaintiffs’ – the trial judge found that the fact that the NJDEP had removed USTs from each defendant’s property was sufficient to require them to participate in the investigation process and issued the order sought by the plaintiffs.  Certain of the defendants appealed and argued that the lack of nexus precluded any obligation to participate in the investigation and remediation.  The Appellate Division affirmed the trial court’s decision, stating that “we do not interpret the Spill Act as being so narrow or ineffectual as to permit a private action only on proof that another caused contamination in whole or in part,” and that forcing a single potentially liable party to bear the entire costs of an investigation would be inequitable and would not be “in the best interest of the health, safety and welfare of the people[.]”

The decision in Matejek expands traditional notions of Spill Act liability by enabling private parties to assert contribution claims against other for investigation costs without requiring a nexus between the defendants and the contamination at issue.  This may result in an increase in Spill Act contribution claims among private parties.  However, the success of such claims will be highly dependent on the specific factual circumstances of each individual case.  Also, additional litigation will likely occur among the parties after an investigation is completed to allocate liability among the actual dischargers and to provide remedies to any defendants who were exonerated by the results of the investigation.

NL Industries, Inc. v. State of New Jersey

Three weeks later after the decision in Matejek, on March 27, the New Jersey Supreme Court decided in NL Industries, Inc. v. State of New Jersey that the doctrine of sovereign immunity precludes Spill Act contribution claims against the State regarding discharges that occurred prior to 1977.

In NL Industries, the company provided contaminated “slag” materials for purposes of constructing a seawall in Raritan Bay in the early 1970s pursuant to a plan approved by the State.  The company was later required to investigate and remediate the contaminated areas pursuant to the Spill Act.  NL Industries subsequently sued the State under the Spill Act to obtain contribution towards related costs, and asserted that the State’s approval of the construction plan and its ownership of a portion of the contaminated area rendered it a “person in any way responsible” for a discharge of a hazardous substance.  NL Industries also argued that the State waived any claim of sovereign immunity against such claims based on the New Jersey Supreme Court’s 1983 decision in another environmental law case, Department of Environmental Protection v. Ventron Corp., which applied Spill Act liability retroactively to discharges that occurred prior to the 1977 enactment of the statute.

NL Industries prevailed at the trial level, and the State appealed.  However, the Appellate Division reversed the trial court, finding that nothing indicated clear intent by the Legislature to strip the State of its sovereign immunity privilege with respect to pre-Spill Act discharges.  In a long dissent, Justice Albin noted that this decision may lead to “absurd” results in which private parties and the State are equally liable for the remediation of pre-1977 discharges, but the private parties will be forced to bear all related costs.

The decision in NL Industries means that property owners who are liable for cleanup costs at sites that were contaminated prior to 1977 may not be able to assert related Spill Act contribution claims against the State.  These property owners may therefore have to assume a greater share of the cleanup liability themselves and seek to attribute greater shares of related liability to other private parties.



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