Toxic Tort and Environmental Law Update: January 2013 - New Jersey Supreme Court Clarifies Requisite Nexus for Liability Under the Spill Act

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In New Jersey Dept. of Environmental Protection v. Dimant, 212 N.J. 153 (2012), the New Jersey Supreme Court held that the New Jersey Department of Environmental Protection (NJDEP) must establish, by a preponderance of the evidence, a reasonable connection between (1) a discharge, (2) the discharger, and (3) the contaminated resource at issue, to recover damages under New Jersey’s Spill Act.

 

In Dimant, perchlorethylene (PCE) was detected in private wells in Bound Brook, N.J., located near several dry cleaners and gasoline service stations, including the defendant Sue’s Clothes Hanger, a dry cleaning business.  NJDEP sampled a pipe leaking on to the pavement in the exterior of Sue’s and detected PCE at 3,000 ppb.  A NJDEP study generated over 10 years later identified Sue’s as a source of groundwater contamination in the Bound Brook private wells.  The NJDEP brought a Spill Act claim against Sue’s, seeking contribution for investigation and remediation costs, and natural resource damages.  The trial court dismissed the Spill Act claim, finding that the NJDEP had not established by a preponderance of the evidence that Sue’s discharged the PCE found in the private wells.  The New Jersey Appellate Division affirmed.

 

The NJDEP petitioned the Supreme Court to clarify the nexus required for liability under the Spill Act.  Under the Spill Act, “[a]ny person who has discharged a hazardous substance, or is in any way responsible for any hazardous substance, shall be strictly liable, jointly and severally, without regard to fault, for all cleanup and removal costs no matter by whom incurred.”  N.J. Stat. Ann. § 58:10-23.11g.c.(1).  The court explained that, when a discharge has occurred, regardless of the size, and a responsible discharger is identified, the NJDEP must establish a reasonable link between the discharge, discharger and contaminated site, by a preponderance of the evidence.  The court noted that it is not enough for a plaintiff to simply prove that a defendant produced a hazardous substance and that the substance was found at the contaminated site.  With regard to Sue’s, the court found that the NJDEP failed to show how the PCE dripping from a pipe onto the pavement at Sue’s reasonably could have made its way to the private wells.

 

The Dimant decision may change the NJDEP’s behavior in pursuing Spill Act claims.  The biggest impact could be seen in “two site” cases because the NJDEP will now have to establish a plausible migration pathway for contaminants from one site to a natural resource to recover.  In addition, in multi-discharger cases, the NJDEP will have to be selective in deciding which discharger to pursue and will no longer be able to simply select a “deep pocket.”  Importantly, the reasonable nexus requirement will likely increase NJDEP’s costs in pursuing Spill Act claims, which will likely be passed on to the discharger found to be liable for damages.  Whether the increased costs create an impediment to NJDEP Spill Act claims will be an important issue to monitor.

 

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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