Posted on: 8/20/2012
Matthew D. Cassidy, Marc S. Gaffrey
View Latest Articles
Recently, the New Jersey Appellate Division addressed the contribution provision of the New Jersey Spill Compensation and Control Act, N.J.S.A. 58:10-23.11 to -23.24 as it relates to cleanup and removal of hazardous substances sought by government and private party plaintiffs. In Dalton v. Shanna Lynn Corp., et. al., Nos. A-0048-10T1, A-1944-10T1 (N.J. Super. Ct. App. Div. April 19, 2012) and New Jersey Department of Environmental Protection v. Occidental Chemical Corp., et. al., Nos. A-4620-10T2, A-4623-10T2, A-4625-10T2, A-4628-10T2, A-0067-11T2 (N.J. Super. Ct. App. Div. April 24, 2012), the court interpreted and applied the contribution provision of the Spill Compensation and Control Act differently based on whether the plaintiff was the State or a private party, making actual cleanup and removal a prerequisite only for contribution claims asserted by private parties. The statutory authority granted to the New Jersey Department of Environmental Protection (NJDEP) within the Spill Compensation and Control Act, coupled with certain Spill Act Directives set forth by the NJDEP, are the bases for the Appellate Division’s seemingly divergent decisions. The opinions demonstrate that the State, as a plaintiff, enjoys much broader and express power(s) compared to a private plaintiff.
It is important to examine the definitions of “cleanup” and “removal” costs within the Spill Compensation and Control Act as they relate to the New Jersey Department of Environmental Protection’s Spill Act Directives.
Within the Spill Compensation and Control Act, “cleanup and removal costs” are defined as "all costs associated with a discharge, incurred by the State or its political subdivisions or their agents or any person with written approval from the department in the (1) removal or attempted removal of hazardous substances, or (2) taking of reasonable measures to prevent or mitigate damage to the public health, safety, or welfare, including but not limited to, public and private property, shorelines, beaches, surface waters, water columns and bottom sediments, soils and other affected property, including wildlife and other natural resources, and shall include costs incurred by the State for the indemnification and legal defense of contractors pursuant to sections 1 through 11 of P.L.1991, c.373 (C.58:10-23.11f8 et seq.). For the purposes of this definition, costs incurred by the State shall not include any indirect costs for department oversight performed after the effective date of P.L.1997, c.278 (C.58:10B-1.1 et al.), but may include only those program costs directly related to the cleanup and removal of the discharge; however, where the State or the fund have expended money for the cleanup and removal of a discharge and are seeking to recover the costs incurred in that cleanup and removal action from a responsible party, costs incurred by the State shall include any indirect costs."
N.J.S.A. 58:10-23.11f(a)(1) of the Spill Compensation and Control Act provides that, whenever a hazardous substance is discharged, the NJDEP may act to clean up and remove same or it holds the authority to direct one or more of the following: arrange for the cleanup and removal of the discharge; direct the discharger to clean up and remove, or arrange for the cleanup and removal of, the discharge. Further, the Spill Compensation and Control Act sets forth consequences for any discharger’s non-compliance with the NJDEP’s directive. Any discharger who does not comply with directives set forth by the NJDEP can be held liable to the department in an amount equal to three times the cost of cleanup and/or removal. That discharger can potentially have its license suspended or revoked as well as their permit held if they operate a hazardous or solid waste facility. Essentially, this section of the statute allows the NJDEP to either issue a directive or seek treble damages.
Additionally, N.J.S.A 58:10-23.11g(c)(1) provides the following with respect to liability for cleanup and removal costs: "Any 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. Such person shall also be strictly liable, jointly and severally, without regard to fault, for all cleanup and removal costs incurred by the department or a local unit pursuant to subsection b. of section 7 of P.L.1976, c.141 (C.58:10-23.11f)."
Effectively, N.J.S.A. 58:10-23.11g(c)(1) of the Spill Compensation and Control Act grants the NJDEP authority to bring a public action based on joint and several liability against any discharger responsible for the discharge of any hazardous substance. A private plaintiff does not enjoy this right.
As outlined above, specific provisions of the Spill Compensation and Control Act separate the NJDEP or the State from any other private party plaintiff. In Dalton, which will be discussed further below, the Appellate Division was forced to base its decision on the “plain meaning” of the statute because it could not incorporate either 58:10-23.11f(a)(1) or 58:10-23.11g(c)(1) of the Spill Compensation and Control Act. Those conditions apply only to the “department” or the NJDEP. Plaintiffs in Dalton were not permitted to preemptively seek contribution because, in fact, they did not expend any funds to remediate or cleanup the site at issue. However, in NJDEP v. Occidental Chemical Corp., where plaintiff is the NJDEP, the court looked to the “implied power” to hold that the NJDEP did not have to perform a cleanup and/or removal as a condition to seek contribution. The court may have been better off to assert that the NJDEP in fact possesses express power to order dischargers to pay cleanup and/or removal costs before the department has completed a cleanup itself.
In Dalton v. Shanna Lynn Corp., plaintiffs filed a complaint against defendants in which they alleged violations of the Spill Compensation and Control Act as a result of the discharge from an underground fuel oil storage tank on property acquired by them from the defendants. Specifically, plaintiffs appealed a lower court’s ruling that they could not go forward with a contribution claim because plaintiff did not conduct a cleanup, remediation, and/or removal of the hazardous substances on the property at issue. Until plaintiffs performed a “voluntary or government-ordered cleanup of the property,” they could not avail themselves of the remedies afforded by the Spill Compensation and Control Act. The court in Dalton noted: "Here, plaintiffs have expended no funds to remediate the property. The only funds expended have been to pay an expert to identify the site of the 1988 spill. They have yet to demonstrate that they even know the extent of the spill much less the nature of the work to remediate the site and its cost. Thus, they do not qualify for contribution from the Shanna Lynn defendants or for compensation from DEP or the Spill Compensation Fund. Requiring plaintiffs to have undertaken remediation of the property does not render the ERA superfluous. It simply provides standing to parties to seek relief as warranted or permitted by other statutes, rules and regulations. It provides no substantive rights. Superior Air Prods., supra, 216 N.J. Super. at 58. We, therefore, affirm the 2002 order granting partial summary judgment dismissing the ERA and Spill Act claims against the Shanna Lynn defendants and Lerco."
However, in NJDEP v. Occidental Chemical Corp., the court was asked to determine whether contribution claims brought by the NJDEP under the Spill Compensation and Control Act and the Joint Tortfeasors Contribution Law were permissible. The NJDEP filed environmental cleanup suits against nine defendant business entities for the discharge of hazardous substances from a manufacturing plant in Newark, New Jersey. Rather than look to the “plain meaning” of the Spill Compensation and Control Act, the court invoked the special provisions of the Spill Compensation and Control Act to permit the NJDEP to direct the dischargers to pay cleanup and/or removal costs before a cleanup and/or removal even took place. Thus, the court used the NJDEP’s explicit authority to refute defendant’s argument that a party, specifically the State, cannot seek contribution without first performing a cleanup.
The New Jersey State Legislature’s intent has been consistent with the court’s position. In 1991, the Spill Compensation and Control Act was amended to permit private plaintiffs, such as those in Dalton, to file a cause of action to recover cleanup and/or removal costs for the discharge of any hazardous substances, embodied in N.J.S.A. 58:10-23.11f(a)(2). Also, plaintiffs are permitted to recoup cleanup and/or removal costs from the NJDEP, based on N.J.S.A. 58:10-23.11k, which encompassed the Spill Compensation Fund. The Spill Compensation Fund levied a tax on a number of large chemical and petroleum facilities, and the revenue generated from that tax was deposited into the Spill Compensation Fund.
N.J.S.A. 58:10-23.11f(a)(2)(a) provides that “whenever one or more dischargers or persons cleans up and removes a discharge of a hazardous substance, those dischargers and persons shall have a right of contribution against all other dischargers and persons in any way responsible for a discharged hazardous substance or other persons who are liable for the cost of the cleanup and removal of that discharge of a hazardous substance.” The provisions set forth currently in the Spill Compensation and Control Act allow a private plaintiff to seek contribution only after that plaintiff has mitigated by performing the requisite cleanup and/or removal of hazardous substances or discharges on the site at issue.
The Appellate Division, therefore, interpreted and applied the provisions set forth in the Spill Compensation and Control Act differently in the Dalton and Occidental Chemical Corp. matters. Each involved two different types of plaintiffs: one private and one a state actor. A private plaintiff is restricted as it is only permitted to seek contribution from dischargers once that private plaintiff has performed cleanup and/or removal at a polluted site. The NJDEP, on the other hand, has broad express power based on the directive. NJDEP has the ability to pursue a public action based on joint and several liability or it can issue directives and order dischargers to pay for the cost of cleanup and/or removal before any remediation has taken place. Simply put, as a plaintiff, the NJDEP is in a class of its own.
Matthew D. Cassidy
Associate, Environmental Department
Hoagland, Longo, Moran, Dunst & Doukas
New Brunswick, NJ
Marc S. Gaffrey
Partner, Environmental Department
Hoagland, Longo, Moran, Dunst & Doukas
New Brunswick, NJ