News
March 15, 2017

Has New Jersey’s Site Remediation Reform Act Ushered in a Dramatic Expansion of Spill Act Liability?

Advisory

"New Jersey's Spill Act1 was a pioneering effort by government to provide monies for a swift and sure response to environmental contamination."2 To achieve this objective, the Spill Act provides for strict liability and, since 1990, includes a contribution cause of action for private parties seeking to recover a portion of their cleanup costs.3 "In order to accomplish a fair and equitable ultimate sharing of the remediation burden among all responsible parties and thereby to promote contamination cleanup, [the Spill Act] casts a broad net encompassing 'all other dischargers and persons in any way responsible for a discharged hazardous substance. . . . '"4 Confronted with the Spill Act's strict liability scheme, courts in New Jersey have universally required that a contribution plaintiff establish that the defendants—whether prior owners, neighbors, or waste generators—are 'dischargers' or 'in any way responsible' before recognizing contribution claims.5 All that changed on March 3, 2017, when the Appellate Division announced its decision in Matejek v. Watson.

The facts in Matejek are reminiscent of a hypothetical from a first year tort class. In 2006, oil appeared on the surface of a brook that ran through a residential condominium complex. The New Jersey Department of Environmental Protection (NJDEP) stepped in and removed, at public expense, oil tanks from five adjoining condominium units. NJDEP confirmed that removing the tanks stopped oil from appearing in the brook. However, NJDEP took no further remedial action and never closed its file. In 2009, the Legislature adopted the Site Remediation Reform Act (SRRA)6 and overhauled New Jersey's site remediation program by mandating that private parties who are 'dischargers' or 'in any way responsible' for a discharge must engage a private Licensed Site Remediation Professional (LSRP) to oversee and certify the completion of site remediation projects including tank removals. Then, in 2013, one of the five owners, the Matejeks, sued their neighbors pursuant to the Spill Act. In this action, the Matejeks sought an order compelling all five owners to participate in, and share equally the cost of, an investigation, and if necessary, further remediation, of the property sufficient to allow an LSRP to approve the actions as complete.

Rather than take the traditional route, and hold that a Spill Act contribution plaintiff can only proceed after linking the defendants with the discharge, the trial judge found that "even though there was no evidence yet as to the precise source of the contamination" the Spill Act could be read to include an obligation "to participate in the investigative process."7 As a result, the parties were ordered to jointly retain an LSRP to investigate and, if necessary, remediate the condominium units. In arriving at this result, the trial court concluded that NJDEP's open file constitutes a cloud on title to all five condominium units. After making this finding, the trial court noted that due to the SRRA there was no realistic prospect of NJDEP ever conducting additional activities or formally approving the long-standing tank removals. The court also emphasized the fact that NJDEP removed all five tanks. The court was troubled because plaintiffs were faced with the prospect of "either doing nothing or proceeding on their own in gathering evidence necessary to seek contribution from other dischargers."8 Based upon this concern, the court found that equity demanded "a remedy that would fairly burden all the potential dischargers with an investigation into the actual cause . . ." (emphasis supplied).9

On appeal, the Appellate Division commended the trial court for adopting what it approvingly called "an inventive solution."10 The Appellate Division noted that nothing in the Spill Act prohibited an order compelling potential dischargers to contribute to an investigation, and fully endorsed the use of equitable considerations to mold a novel Spill Act remedy even in the absence of any evidence of a discharge by any of the five owners.

Both courts recognized that their rulings were likely to spawn additional litigation depending upon the outcome of the LSRP's investigation.11 However, neither court seemed troubled by the lack of common liability which is traditionally a precondition to contribution claims. Likewise, these courts did not seem concerned that this newly fashioned Spill Act remedy could force an innocent party to litigate twice; first when confronted with a demand to participate in an investigation and then again when the facts are ultimately developed. Moreover, when balancing the equities, neither court seemed to give much weight to the Matejek's failure to exhaust their administrative remedies by pressing NJDEP to investigate further in 2006 when the tanks were removed or in 2009 when the SRRA was being phased in. Finally, neither court explained how a regulatory obligation that apparently never triggered an administrative demand or citation to any of the condominium owners and was never reduced to a lien could constitute such a significant cloud on title that an entirely new Spill Act remedy was warranted. All of these issues may need to be sorted out in future Spill Act litigation.

Unless there are further appeals or Legislative action, the Matejek decision will encourage potentially responsible parties to seek to spread the cost of site investigations to prior site owners, neighbors, or waste generators before assembling any evidence that these entities face Spill Act liability. These disputes are likely to be cumbersome and expensive and may further frustrate the 'swift and sure' process envisioned by the Spill Act. Moreover, the willingness of the New Jersey courts to fashion remedies in environmental cases will also encourage plaintiffs to seek additional equitable relief in Spill Act cases. As the Appellate Division acknowledged, the Matejek decision has the potential to take the Spill Act far beyond "what the Legislature likely anticipated when authorizing a private right for contribution."12

  1. Spill Compensation and Control Act, N.J.S.A 58:10-23.11 et seq.

  2. Marsh v. New Jersey Dept. of Environmental Protection, 152 N.J. 137, 144 (1997).

  3. See Hous. Auth. v. Suydam Investors, L.L.C., 177 N.J. 2, 18, 826 A.2d 673 (2003).

  4. Pitney Bowes, Inc. v. Baker Indus., Inc., 277 N.J. Super. 484, 487–88, 649 A.2d 1325 (App. Div.1994); see also Cyktor v. Aspen Manor Condo. Ass'n, 359 N.J. Super. 459, 476, 820 A.2d 129 (App. Div.2003).

  5. See generally Morristown Associates v. Grant Oil Co., 220 N.J. 360 (2015).

  6. N.J.S.A 58:10C-1 et seq.

  7. Slip Opinion at 3.

  8. Slip opinion at 6.

  9. Id.

  10. Id. at 7.

  11. Id. at 8.

  12. Id. at 4.

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